MSE News: Government outlines flat-rate state pension

twentyfour11

so in other words I am £37.50 pw worse off then if I was one year younger and as I will have to work post 65 years old I will have to pay higher NI to pay for the people who get higher pension pay outs.

Its a great system for me....Its called lose lose

gadgetmind

twentyfour11 wrote: »

Its a great system for me....Its called lose lose

I still can't see how you're losing anything beyond what you've been expecting.

Anyway, there might well be further tweaks to phase it in a little.

twentyfour11

government has been saying for some time its a flat rate and there was talk of £144 pa. My pension forecast is £107.50 pw so in my maths I am worse off.

Experts on here say NI for self employed may rise to cover the cost so as I ahve to work past 65 I get less then others and will have to pay more NI.

gadgetmind

twentyfour11 wrote: »

government has been saying for some time its a flat rate and there was talk of £144 pa. My pension forecast is £107.50 pw so in my maths I am worse off.

Fair enough, but the talk of £144 was just that, talk. And it's only been talked about since the Green Paper in April 2011, so for most of your working life you've known that basic SP is all you'll be getting.

I do have sympathy for your position, but you should never put anything into your retirement planning spreadsheet until it's rock solid. Even this white paper is far from being the end of it.

BLB53

so in other words I am £37.50 pw worse off then if I was one year younger and as I will have to work post 65 years old I will have to pay higher NI to pay for the people who get higher pension pay outs.

Its a great system for me....Its called lose lose

The biggest gainers from the new system will be the self employed so its very frustrating to reach SPA a year before as otherwise, as you rightly say, you would have got the new rate of £144 assuming you have the full 35 yrs NI record.

Jaycee_Dove

twentyfour11 wrote: »

I am 65 on 30th May 2016. I am self employed for about 35 years. Prior to this I worked from age of 16.

I did a pension forecast recently and was given a pension forecast of about £107.50 per week.

I see the new system comes in circa 2017 where its a flat rate of about £144 per week.

Does this mean I lose out?

In a sense, yes.

I am in a similar position - self employed, low income. I have recently had to take some years out to become a full time carer so could not build up a proper pension but did save a little into an ISA knowing there was going to be no second state pension.

Also I made sure that I did the right thing and always paid the Class 2s (and as it turns out for 9 more years than I need have done).

I, too, will reach retirement age before the new system so get no benefit from the equalising of the self employed and employed pension rates. Meaning I lose out by around £35 pw.

Now I will have to lose my carer's allowance on reaching SP age and defer receiving my pension as well (so having almost nothing to live on in that period) just to bump up my SP after those years to the level that employed people with probably lots more money and savings will get from their SP who are only slightly younger.

I am resigned to doing this but it is going to be very tough.

Yet the only other alternative is to literally get rid of my small ISAs, squander it all and claim pension credit (which my savings will otherwise disallow). That way by using the state I can get the same level of SP as will be the right of others who by chance were born just a year or so later than me.

I do appreciate this new system will work in the long run and is sound and that there must be winners and losers (and so tough luck to some of us). Also there are some pluses (eg retiring earlier - though women retiring over the next 4 years are seeing a steep rise in retirement age - mine has changed twice over the recent past). So that factor is not as clearcut as some are making out.

But there just seems to be something wrong with any pension scheme that makes you far better off by never having saved at all or if you have done so modestly then to squander it all and claim pension credit instead.

Let us put it this way, after 40 years of working would I advise anyone young to save? In my experience - if you think you can save a lot so you can live comfortably off the income - yes. If you can only save modestly - do not bother. You will not be rewarded for trying to do the right thing in our society.

Old_Slaphead

gadgetmind wrote: »

You can defer but won't move onto the new system as a result.

However, you are able to claim pension two years before many on the new system, so that extra £11,128 in pension will cover almost six years of the extra £1898 per year that they'll get so they won't start winning until age 73.

Swings and roundabouts.

As it's to go up in line with life expectancy you could say the post 2017 pensioners will be able to claim for an extra 2 years to compensate

Jaycee_Dove

BLB53 wrote: »

The biggest gainers from the new system will be the self employed so its very frustrating to reach SPA a year before as otherwise, as you rightly say, you would have got the new rate of £144 assuming you have the full 35 yrs NI record.

Indeed - feels like you have just lost a jackpot lottery ticket, doesn't it!

twentyfour11

I am surprised that they allow such a differential. I would be amazed if the government will do anything about it (whatever party).

Just_landed

gadgetmind wrote: »

As you're retiring before it's implemented, it's entirely neutral and you'll be getting exactly what you've been expecting all along.

I wouldn't be at all surprising if NI for the self employed didn't go up in the future to cover it earning a much bigger pension.

However. it does seem to be an anomaly that some who've paid at the lower rate of NI (lower than employed people and possibly self employed in the future) may get the full flat rate. As this will be on top of whatever provision they will have provided for themselves with what they've saved on NI over the years, they are certainly winners.

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And what about class 4 NI

Link :- http://www.hmrc.gov.uk/ni/intro/basics.htm#1

That you stop paying when you get to retirement age.