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Has the flat rate pension been delayed or killed?
Comments
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How did you manage to accumulate £170 SP on top of your Teachers' Pension? Presumably either by not teaching your whole working life or by inheriting some spousal additional pension.
To make it clear, for teachers (and any other person who has been contracted out for all of their working life), only the Basic State pension would be paid which is currently £107.45. No SERPS/S2P would be payable as it's part of your teachers' pension.
The new flat rate pension had been rumoured to have a deduction of up to £40pw depending on how long you were contracted out. In other words bringing it back down to basic level.
Of course this is all rumours.
I was one of those teachers who had a life both before and after teaching!.0 -
This isn't necessarily true, if you earn under about £33k now (which most part-time teachers would), you accrue second state pension even if you are contracted out.
Also prior to about 1997 a contracted out deduction is applied to the additional pension which is usually about the same as the SERPS element, but it can vary particularly if you leave the scheme before retirement.
I don't think it's rumours at all, it's pretty certain. They will have to apply a contracted out deduction where people have had the NI rebates which they've been able to invest in another scheme, or as part of of a final salary scheme. Otherwise it would be incredibly unfair on those who didn't contract out.
I didn't know that.
If you were an FE lecturer (as I was) rather than a school teacher, even full timers are on well below that figure!0 -
This isn't necessarily true, if you earn under about £33k now (which most part-time teachers would), you accrue second state pension even if you are contracted out.
That's a rather ambiguous statement.
If you are a member of the Teachers' Pension scheme you are contracted out and earning no additional pension , be it SERPS/S2P.
The only way you could earn S2P would be to have another job as well as your teaching job where you are paying NI. A part-time teacher who has no other job will not earn any S2P.0 -
Yes, they will. It's been the case since 2002 that if your income is below a certain level (about £33k in today's terms) and you're in a contracted out final salary scheme, you will still earn some S2P.That's a rather ambiguous statement.
If you are a member of the Teachers' Pension scheme you are contracted out and earning no additional pension , be it SERPS/S2P.
The only way you could earn S2P would be to have another job as well as your teaching job where you are paying NI. A part-time teacher who has no other job will not earn any S2P.
This is because S2P is banded, rather than replacing 20% of earnings above the LEL (as per SERPS), there is an initial 40% band, then a 10% band (there used to be a 20% band at the top end but that's gone now).
The contracted out deduction is based on a flat 20% (as per SERPS). So if earnings are below about £33k, there is a "top-up" S2P accrual based on the difference. For people earning below the LET (£14700 this year) they get an even bigger top up as they are treated as if they earn £14700, so not only getting S2P based on a higher income but also the higher accrual rate.
ETA: just been searching for a good explanation of this, and they are few and far between, with a plethora of rubbish saying you don't get S2P if you're contacted out.
This document was the best I found - it explains all the changes quite well - page 11 explains how S2P works for members of contracted out schemes, note the figures quoted are from around 2001/2 so add 10 years of wage inflation, the LET quoted there of £9500 is now £14700, and the £21600 figure will now be about £33k.
http://www.parliament.uk/briefing-papers/SN00255.pdf
The wiki entry gives the basics:
http://en.wikipedia.org/wiki/State_Second_Pension0 -
Yes, they will. It's been the case since 2002 that if your income is below a certain level (about £33k in today's terms) and you're in a contracted out final salary scheme, you will still earn some S2P.
This is because S2P is banded, rather than replacing 20% of earnings above the LEL (as per SERPS), there is an initial 40% band, then a 10% band (there used to be a 20% band at the top end but that's gone now).
The contracted out deduction is based on a flat 20% (as per SERPS). So if earnings are below about £33k, there is a "top-up" S2P accural based on the difference. For people earning below the LET (£14700 this year) they get an even bigger top up as they are treated as if they earn £14700, so not only getting S2P based on a higher income but also the higher accural rate.
As far as I know that is only true for contracted out (SERPS only) schemes. The Teachers' Pension Scheme is also contracted out of S2P and clearly states this on their webiste.
"The Teachers' Pension Scheme is also contracted-out of the State Second Pension (S2P) as the benefits paid are better than the state would pay. And though you’re contracted out, you’ll still get the Basic State Pension on top of anything you get from the Teachers' Pension Scheme. "
https://www.teacherspensions.co.uk/public/the-scheme/about-the-scheme.aspx0 -
You can't be contracted out of SERPS now as it doesn't exist! Read the parliament briefing document I posted above - that explains how it works. The same applies to all contracted out schemes, if the teachers pension scheme document doesn't mention this then it's wrong!As far as I know that is only true for contracted out (SERPS only) schemes. The Teachers' Pension Scheme is also contracted out of S2P and clearly states this on their webiste.
"The Teachers' Pension Scheme is also contracted-out of the State Second Pension (S2P) as the benefits paid are better than the state would pay. And though you’re contracted out, you’ll still get the Basic State Pension on top of anything you get from the Teachers' Pension Scheme. "
https://www.teacherspensions.co.uk/public/the-scheme/about-the-scheme.aspx0 -
whitesatin wrote: ».........My husband has a pension from when he retired two years ago, aged 51, so we should be ok. He has a long wait to get his state pension, .........
if one of you has retired at 51 then unless it was forced retirement through ill-health I don't see that you have the slightest cause for complaint.The questions that get the best answers are the questions that give most detail....0 -
You can't be contracted out of SERPS now as it doesn't exist!
I'm well aware of that.Read the parliament briefing document I posted above - that explains how it works. The same applies to all contracted out schemes, if the teachers pension scheme document doesn't mention this then it's wrong!
It certainly doesn't mention it and I certainly haven't been building up any although it would be a pretty small amount as I'm near that top amount.0 -
It is important not to mix up what has happened with contracting out via money purchase schemes and what happens with contracting out via defined benefit schemes. Some phrase but different in what it does.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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