Penalised for putting a 'bit by for your old age' no longer

DervProf

pqrdef wrote: »

Of course the alternative is that we waste money paying benefits to people who don't need them, who will then be seen taking public money and frittering it on inessentials.

I think you mean that paying state pension to those who have large private pensions is a waste of money.

As I understand it, when it comes to retirement we are all means tested, and those with little or no savings/pension receive a "top up". Those with savings/pension do not get all or any of this benefit. I think that the problem lies in that there are many with fairly modest savings who don't get any help from the state, simply because they have bothered to save. The may well have paid all of their taxes/NI throughout their life, but will get a small state pension than someone who may or may not have paid much tax, and hasn't made their own provision for retirement.

A flat rate state pension seems to be the right thing to have. Everyone gets the same, if you want more money in retirement, save for it.

I was once told by a client (a financial advisor) that it wasn't really worth me contributing to my private pension, unless I increased the amount quite dramatically. He explained that someone not paying anything into a pension would end up with nearly as much income as myself each week due to being means tested and getting benefits that I would not be able to get.

StevieJ

elantan wrote: »

thats whats going to happen to me ... i will go from 160 to 140 when i retire

I don't think that will happen, there will be transitional arrangements that will last for years, my guess is that you will still get the £160.

StevieJ

DervProf wrote: »

I think you mean that paying state pension to those who have large private pensions is a waste of money.

As I understand it, when it comes to retirement we are all means tested, and those with little or no savings/pension receive a "top up". Those with savings/pension do not get all or any of this benefit. I think that the problem lies in that there are many with fairly modest savings who don't get any help from the state, simply because they have bothered to save. The may well have paid all of their taxes/NI throughout their life, but will get a small state pension than someone who may or may not have paid much tax, and hasn't made their own provision for retirement.
.

There are 'cut offs' but I suppose it depends how much your pension is. I pointed out earlier that those with a private pension receive up to around £20 a week extra from a top up called 'saver credit' I think other benefits kick in as long as your private pension and state pension are below the minimum guarantee (£143), although there is probably a a tailing off of entitlement up to a certain level, say £180 a week.

RenovationMan

Flat rate pension means flat rate for everyone, not flat rate for those who haven't paid anything in and a top up for those with extra serps. Those who were expecting £160 will get £140 in order to balance out the people who were going to receive £120.

That's how I see it working. There will be a cut-off point and eveyone retiring after the cutoff point will be on the flat rate. Thank god I contracted out for at least part of my working life.

StevieJ

RenovationMan wrote: »

Flat rate pension means flat rate for everyone, not flat rate for those who haven't paid anything in and a top up for those with extra serps. Those who were expecting £160 will get £140 in order to balance out the people who were going to receive £120.

That's how I see it working. There will be a cut-off point and eveyone retiring after the cutoff point will be on the flat rate. Thank god I contracted out for at least part of my working life.

I don't think so but it makes one wonder why the govt have allowed rumour to take over when they could have easily sketched out a general plan i.e. broad transitional arrangements for those contracted out. Maybe they are allowing this to fester to see what expectations are and what they can get away with? I can however see those contracted out being the main financiers for this plan

elantan

StevieJ wrote: »

I don't think that will happen, there will be transitional arrangements that will last for years, my guess is that you will still get the £160.

i dont think i will recieve the £160 though ... i am only 39 years old so a long way from retirement .... by the time i retire i will be on the recieving end of the changes ... that is ofcourse if i get a pension at all

StevieJ

RenovationMan wrote: »

Flat rate pension means flat rate for everyone, not flat rate for those who haven't paid anything in and a top up for those with extra serps. Those who were expecting £160 will get £140 in order to balance out the people who were going to receive £120.

That's how I see it working. There will be a cut-off point and eveyone retiring after the cutoff point will be on the flat rate. Thank god I contracted out for at least part of my working life.

This article by the Beeb from last year seems to cover most angles, I note that 2050 seems to be quoted a lot by the govt sources, even by then transitional arrangements will be in force.

Even if contracting out were to stop immediately, its impact will still be felt in years to come.
Anybody who has been contracted out at some point in their life will have their single flat-rate state pension reduced, to reflect the fact that they paid lower NI contributions.
The government estimates that in 2050, around half the people receiving their state pension would have it reduced for the contracting out offset.
The government has not set out how it would calculate this offset but does give an example.
It considers a person who was contracted out through an employer's defined benefit plan some time between 1978 and 1997.
That person has built up a guaranteed minimum pension (GMP) of £40 per week which is designed to reflect the S2P foregone by contracting out.
If the state pension was worth £177.60 a week at their state pension age, this would be reduced by the £40 to £137.60 a week.

http://www.bbc.co.uk/news/business-13061754

Gettingeven

Personally, from what I can deduce, longevity is a load of claptrap. People are not really living much longer, there are just more people living longer, which is not the same thing. People who reached age 65 some 50 years ago probably still went on to live until @ 77/78, and the lifespan is not that much more for people reaching 65 now.

One of my grandfathers, born in the 1890s, died at 82, my other grandad died at 99 and one-half!

All of this reforming of the pension system is just another way of cutting costs by the government.

The pensions selling industry will be seen as what it was - as big a scandal as the endowment mis-selling. I know people who paid £25 per month into a pension plan which was subject to £2.50pm policy charge and a 5% initial charge on every contribution. These plans were often sold to people who had no chance of building up worthwhile fund and should never have taken out the plans in the first place! Shocking scandal!

N1AK

Gettingeven wrote: »

Personally, from what I can deduce, longevity is a load of claptrap. People are not really living much longer, there are just more people living longer, which is not the same thing. People who reached age 65 some 50 years ago probably still went on to live until @ 77/78, and the lifespan is not that much more for people reaching 65 now.

Then what you can deduce personally isn't particularly accurate. Obviously the decrease in child death, loss of life at an early age etc increases the average age however that is nowhere near sufficient to account for the increase in average age we have seen over the previous 4 decades. Various figures support that including the % of people who die at different ages, the average pension length etc that can be found online.

The last government did a fairly good job of opening up the pension and annuity market to bring in more competition. The current governments attempt to stop the bizarre situation where having a small pension pot can be completely pointless is also a good move.

Gettingeven

N1AK wrote: »

Then what you can deduce personally isn't particularly accurate. Obviously the decrease in child death, loss of life at an early age etc increases the average age however that is nowhere near sufficient to account for the increase in average age we have seen over the previous 4 decades. Various figures support that including the % of people who die at different ages, the average pension length etc that can be found online.

The last government did a fairly good job of opening up the pension and annuity market to bring in more competition. The current governments attempt to stop the bizarre situation where having a small pension pot can be completely pointless is also a good move.

Taken from stats ref. the USA, but I dare say they apply here, too....

"The reality is that the average 1946-born baby boomer retiring this year can expect to live about 18 years. Compare that to his or her grandparents who retired at age 65 in the 1960's and could expect to live 15 years, and you see the proper comparison. The correct evaluation involves life expectancy at age 65, not at birth! The truth, surprising to many, is that the average increase in life expectancy for a 65-year-old is only about three or so years. The increase is even smaller for retirements at ages beyond 65."

Now, ask yourself why we are told that on the one hand we are all 'living longer', which we aren't (not to any great degree, anyway), and yet, tomorrow, we will be told that because of obesity, life style, diabetes etc etc, the coming generations will actually have a shorter life span.

Now, which is it?

BTW - can you publish the stats that show that people are living significantly longer? I'm sure you wont find any. But you will find stats that show that MORE people are living longer,which, as I say, is not the same thing.

The problem is that without immigration our state pensions are not sustainable. There are fewer children being born, and an aging population, which means that there will be fewer in work to pay the tax and national insurance required to sustain the current position.

But the longevity argument - I don't accept it. It's too small a difference to warrant such huge jumps in state pension ages. I quoted my grandparents in my previous post, and their 'longevity', but what I didn't post was that my dad died at 70 (cancer), my mum at 71 (MRSA)!