£140 Basic State Pension ??

kilrail

I see it was mentioned again in the budget with the promise of more detail in the Spring (Isn't it Spring now?)
I just wondered how it will work, I know it is only for new pensioners reaching state retirement age at whatever year is agreed (and hopefully before 2016 being selfish), but is it really that simple.
For example, as I opted out of Serps and am already drawing my Aviva pension as a result, I would only stand to receive the basic state pension in 2016 which currently is £102.15 rising to £107.45 in April, so depending on inflation etc I will be in line for a reasonable boost in my income as a result of the £140 (or whatever it will be in say 2016).
I assume those who have stayed in Serps or S2P and have accumulated some additional pension will be compensated as well, or will they?
I would appreciate any expert opinion but I suspect it is a case of "Wait and see" when the Spring announcement is made.

AirlieBird

I guess you haven't seen the existing thread on this topic...

https://forums.moneysavingexpert.com/discussion/3863111

dunstonh

£140 Basic State Pension ??

It is not a £140 basic state pension. It is a £140 single state pension (i.e. no SERPS/second state pension/graduated)

(Isn't it Spring now?)

Spring began Tuesday, 20 March 2012, and ends Tuesday, 19 June 2012.

For example, as I opted out of Serps and am already drawing my Aviva pension as a result, I would only stand to receive the basic state pension in 2016 which currently is £102.15 rising to £107.45 in April, so depending on inflation etc I will be in line for a reasonable boost in my income as a result of the £140 (or whatever it will be in say 2016).

Not necessarily. The amount of additional state pension you would have been paid had you contracted in is expected to be deducted from the £140 (early indications were upto £40 of the £140 would be deducted).

I assume those who have stayed in Serps or S2P and have accumulated some additional pension will be compensated as well, or will they?

Only to the amount they have accrued to the point of introduction. Not future benefit.

It is expected that most people who contracted out of SERPS/S2P will be better off. Some wont be but those that wont will be marginal amounts.

Lets say you contracted out pension lost was £35p.w. and your Aviva protected rights was £45pw. The early indications (and subject to change, clarification or could just have been incorrect leaks at the time) are that you would get £140 minus £35 plus your £45 (and any other provision).

I potentially stand to be a big gainer as my protected rights pot is projecting a £150pw real terms figure. Plus, I am self employed so dont qualify for serps/S2P and will have enough years under the new scheme to build up entitlement there.

It is examples like that which make you wonder how it can be cost neutral on average as there has to be losers to compensate for the gainers. Although, again, early indications are that the savings will be made through the removal of means tested benefits and the costs of putting those in place.

kilrail

AirlieBird wrote: »

I guess you haven't seen the existing thread on this topic...

https://forums.moneysavingexpert.com/discussion/3863111

Sorry, no I hadn't but I've read it all with interest now!

And Dunstonh, many thanks for the enlightenment!

dunstonh

And Dunstonh, many thanks for the enlightenment!

I thought the best bit was the dates for Spring

jem16

dunstonh wrote: »

I potentially stand to be a big gainer as my protected rights pot is projecting a £150pw real terms figure. Plus, I am self employed so dont qualify for serps/S2P and will have enough years under the new scheme to build up entitlement there.

Perhaps I am missing something but doesn't the removal of that £40 ( assuming your protected rights is more than £40) just bring you back to the same level of the basic state pension that you would have been getting so nothing has really changed?

wakeupalarm

Yes, those that contracted out haven't earned any additional state pension, but have instead earned their own protected rights pot.

If you allowed them to have an increased state pension as well as having their own protected rights pot after having paid lower NI contributions they would be benefiting twice over having paid less.

As Dunstonh says most people who contracted out will be better off, they will more than likely receive a larger overall pension than if they remained contracted in.

Dunstonh's own example shows an inbuilt benefit to the self-employed which shows any change is going to be an even livelier debate than the age related pension changes announced in the budget.

dunstonh

erhaps I am missing something but doesn't the removal of that £40 ( assuming your protected rights is more than £40) just bring you back to the same level of the basic state pension that you would have been getting so nothing has really changed?

i only have about 10 years contracted out. So, my reduction would be less than than the £40.

jem16

dunstonh wrote: »

i only have about 10 years contracted out. So, my reduction would be less than than the £40.

I knew I was missing something.

I won't be a gainer, I assume, with 35 years so far of being contracted out. I wonder if I will end up a loser as, according to a pension forecast, I'm supposed to inherit around £40pw from my late husband's SERPS. Mind you that's a total mystery as he was also contracted out for the majority of his working life.

taktikback

dunstonh wrote: »

i only have about 10 years contracted out. So, my reduction would be less than than the £40.

If you don't mind me asking -how did you manage to accrue such a large protected rights pot in only 10 years contracted out?. £150 per week would translate to a pot of £100k+

Weren't there limits on what could be accrued due to the UEL?