Proper Pensions Petition - please sign

villain

I will take that as a slur. All it says is that the pensions system the govt are proposing will penalise the very people it wants to help! So I'm being "disingenous"? How, exactly?

The present state pensions system isn't going to "work" in the future. The government is proposing something that won't work either (in fact it could well penalise the less well off) which will cost the country as a whole. Therefore it's a crap govt idea, and one possible alternative is to make sure people are going to actually benefit themselves (and the country) by saving and are therefore encouraged to save.

EdInvestor

Any low-paid people who get offered this pension later and can only afford one thing - the pension or a mortgage - should always go for the latter and opt out.

After all they are already compulsorily paying into two state pensions via their NI, and if they are not paid much, they will get proprotionately more from the second state pension than in the past.

And the property is likely to offer even more 'free money' in the end.

jamesd

Steve Bee, the starter of the petition, is Head of Pensions Strategy for the Royal London Group including Scottish Life, a pension provider. The petition proposal would be good for pension providers.

villain, it's deliberate policy to reduce the amount paid on means tested benefits to pensioners and one of the purposes of this NPSS plan is to help to achieve that, by raising the pension income of the lowest income pensioners so they no longer qualify. For low earners this is in effect a transfer of the cost of benefits from general taxation to they and their employers over their working lives.

To achieve the effect of the petition would require elimination of means-testing for many benefits paid to pensioners.

In the upper middle it requires the change of the reduction in age allowance, which makes a basic rate tax payer pay 33% tax on taxable pension income between roughly 20k and 25k, when they received only 28% tax rebate.

At the higher end it will require tax breaks for those on 40% tax in retirement but not while some money was paid into the pension during their working lives, so they recover the difference between the 28% tax rebate on those contributions and the 40% being paid in retirement.

A possible alternative would be making income from this scheme, at least the mandatory part of it, tax and means testing exempt. That sounds interesting except the scheme is putting away a minimum of 5% of gross pay for perhaps 55 years. Here are the todays money annual pension values for various growth rates for someone making 15,000 all their working life, assuming 5% annuity rate and 3% inflation. 2%: 3750, 3%: 5250, 4%: 7500, 5%: 11000, 6%: 16250. 4% is a reasonable market tracker expectation, 6% a conservative higher risk expectation. Full benefits and zero tax on at least 12,000 per person of income once you add the basic state pension? That's more than I'm living on comfortably now, without any need for benefits and still paying for my home. I can't see that being an easy sell to those who have to pay for the benefits.

Ian_W

villain wrote: »

I will take that as a slur. All it says is that the pensions system the govt are proposing will penalise the very people it wants to help! So I'm being "disingenous"? How, exactly?

Take it how you wish - but the petition is based on the proposition that means tested benefits make pensions/retirement savings not worthwhile. So you must end means tested benefits to make it worthwhile which means:
1. Not means testing - so all pensioners get them irrespective of their financial position. As there is no Benefits Fairy, that means increasing taxation which will hardly help the lower paid or reducing the benefits which will hardly help poorer, and generally older, pensioners.
OR
2. Abolishing the benefits which would help the tax payer but at great cost to the worst-off of pensioners.

villain wrote: »

The present state pensions system isn't going to "work" in the future. The government is proposing something that won't work either (in fact it could well penalise the less well off) which will cost the country as a whole. Therefore it's a crap govt idea

In the 40yrs I've been paying tax the benefit system has changed dramatically and I'd be very surprised, though I may not be around to see it, if it doesn't in the next 30 or 40yrs. So using to-days benefits, which are paid to address to-day's perceived problems, to say there is no incentive to save for retirement a long time in the future is IMO foolish.
The incentive to save for retirement is to be better off later in life so you won't need means tested benefits - if they're still available - and won't be left in relative poverty - if they're not. It's called personal responsibility.

exil

"I will take that as a slur. All it says is that the pensions system the govt are proposing will penalise the very people it wants to help! So I'm being "disingenous"? How, exactly?"

Exactly? Because this (abolishing means-tested benefits like pension credit) is the only way a scheme such as this could guarantee you would be better off, because at the time you are contributing you have no idea if when you retire your total income will be large enough that you won't qualify for pension credit or whatever its equivalent will be at the time.
And of course no government in the year 2007 can give a guarantee on behalf of a government in 40 years time so the petition is worthless.

If you are arguing against the scheme per se, as you're entitled to do, why not word your petition accordingly. The Mail of course can't argue against it as it approves of the principle of people saving for retirement. So it comes up with this angle as a back-door attack on benefits for poor pensioners.

EdInvestor

I find this scheme a bit puzzling. It only applies to people who are working.Yet anyone who is working full time and contracted in will not be eligible for benefits when s/he retires because the two state pensions will push income above the benefit level.

Since contracting out is to be abolished in 2012, it follows that everyone with a full work record in future will not need means-tested benefits whether they are in the NPSS or not.

So the petition seems pointless for a start.

But the idea of the NPSS seems flawed as well.Isn't it targeting the wrong group?

The people who will be eligible for pension credit later (as now) are those who are not now eligible for the full state pensions - some of the self employed, carers, non working parents, people on benefits etc.

The Govt has taken steps to improve the situation here with the 30 year rule and other changes to the basic state pension, but many of these people will still be needing pension credit to some extent.

Yet the NPSS will not be open to these people. So those who might need it can't use it and those who can use it don't need it.

:huh: :huh: :huh:

seven-day-weekend

I think it is better to have a pension of your own that you have contributed to and is your entitlement, rather than have to rely on means-tested benefits that can be withdrawn at any time .

To be quite honest, after thirteen years of non-pensionable employment in my youth (but paying NI), thirteen years on HRP, and then paying for less than ten years into the Local Authority Pension Scheme (contracted out), my own pension that I've contributed to won't be much more (if any) than someone who hasn't ever contributed anything.

On todays figures I will get around £90 pw State Pension (including add-ons) from age 60 and around £42 pw LA Pension at £65.

Pension Credit would make up any Pensioner's money up to around £120 pw. People in this position may also well qualify for Housing/Council Tax Benefit, which we will not be eligible for as we have too many savings and our own house.

So I end up not much better off (and maybe poorer once CTB and HB are taken into consideration) than if I'd never contributed anything.

However, my LA Pension has a Spouse's Pension if I die before my husband and a lump sum of £5000. Also, these pensions are mine by right and I am not answerable to anyone else about how much I have in savings, I don't have to keep filling forms in to get it, and I don't have anyone going through my finances.

These figures are what I personally will get. My husband has/will be getting his own pensions too. So as a couple we are probably better off than people who have not contributed anything.

I'd rather have my own pension, as I said at the beginning.

Just my two pennorth.

Andy_L

villain wrote: »

If people realise this (cue the Daily Mail well after the event) they will vote with their feet.

I suggest that the demographic of Daily Mail readers means that most of them won't be receiving means tested benefits & will be making their own retirement provision & would thus be in favour of something that stops the proles getting benefits