Flat rate pension

artha

Apologies if this has already been discussed but I couldn't find any other thread.

The current government has made much play on the change to a flat rate pension from 2015/16. I reach state pension age in july 2016 and thought I would benefit from this. I am alarmed however to have read on the Institute For Fiscal Studies website that the introduction of the flat rate pension is not payable at that point but only accruable from that point. Hence, the first beneficiaries of the flat rate pension may be many decades down the line? Smoke and mirrors for political gain without the true facts being revealed?

jamesd

You probably mean A simple flat rate pension, but not anytime soon. We simply don't know what will end up being done yet.

This government does have past form on this, announcing ending the requirement to buy an annuity when the last Labour government already did that back when it introduced Alternatively Secured Pensions. The last Labour government also introduced the gradual flat-rating of pensions discussed in that paper.

It wouldn't be surprising if this government again claimed credit for something that's already been done to sweeten the pill of something else they want to do. Last time it was no need to buy an annuity as cover for increasing the death tax on those who die before age 75 in exchange for making pensions a better inheritance tax dodge. And reducing the GAD limit on drawdown, at a time that couldn't have been worse for doing that.

soperman

The Government announced in this year's budget that their aim is to introduce a £140 flat rate pension from 2016. The previous option of accruing this from 2016 has been superseded. However, this is fraught with difficulty and no detail has been released for consultation yet.

artha

Thanks Jamesd and soperman. Once again I, like many people I guess, have only seen the vote grabbing headline without appreciating that this is probably not going to have any significant impact on pensioners during the lifetime of the current parliament.
I also(probably mistakenly now) had thought that this pension increase was supposed to be a "sweetener" to offset the freezing of the age related personal allowance.

Note to self. Must question more closely my MP when they come looking for a vote next time:cool: