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MSE News: Government outlines flat-rate state pension

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  • freddysmith
    freddysmith Posts: 2,002 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Todays Money Box might be interesting to some
    http://www.bbc.co.uk/programmes/b0080g47
  • bigfreddiel
    bigfreddiel Posts: 4,263 Forumite
    edited 16 January 2013 at 11:14PM
    I have already retired early in my mid fifties due to ill health having paid 32 years Nat Ins contributions and was told by HMRC that I do not need to pay any more. Do the changes mean I will need to pay 3 more years contributions in order to get my full state pension at the age of 67?
    Moneybox Live on radio 4 today answered the above and more

    http://www.bbc.co.uk/podcasts/series/moneybox

    and the actual podcast

    http://downloads.bbc.co.uk/podcasts/radio4/moneybox/moneybox_20130116-1500a.mp3

    the podcast may only be available for a few weeks so download it now

    cheers

    fj
  • Paul_Herring
    Paul_Herring Posts: 7,484 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    gadgetmind wrote: »
    However, the statements say that S2P is an estimate, and might be wrong (and particularly for those contracted out pre 1997) and you won't find out exact numbers until later.

    Dunno why it might be wrong for those contracted out. Surely they have records? Does anyone know?

    Probably for the same reason I don't know when, if ever, and how much, if any, state pension I'll be getting when I retire; in recent times, they can't seem to let a parliament go by without messing around with the legislation at least once.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Probably for the same reason I don't know when, if ever, and how much, if any, state pension I'll be getting when I retire; in recent times, they can't seem to let a parliament go by without messing around with the legislation at least once.

    The feeling is that these latest changes "have legs" because -
    1) They are in line with many recent smaller changes in that they attempt to break the link between earnings and state pension. The idea is that those who feel they need more than SP should be saving for themselves.
    2) They have come from the Mandarins rather than party diktat and seem to have general cross party approval.
    3) Once someone's foundation value has been established, record keeping regards S2P contribution level etc. becomes unnecessary so it will be hard to revert to a more complicated system.
    4) The move away from means testing (so as to encourage people to provide for themselves rather than relying on state generosity) also seems to be entrenched. This is partly why we've seen this new flat rate and also why age related personal allowance is being merged with the higher personal allowance for (nearly) everyone.

    I just wish they'd stop messing with personal pensions. :mad:
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    I've an HMRC pension statement from 2011 which states on it "each extra qualifying year is worth £1.70/week"

    Yes, that's band 1, which is now a fixed (but index linked) amount rather than depending on complex band 1 calculations. Band 2 is then 10% of your earnings between 14700 and 40040, divided by the number of years between your state pension age and age 16, and then again divided by 52 to get a weekly amount.

    Every year between 2012 and 2030, the intention was to increase the band 1 amount and twiddle the band 2 boundaries so as to get a single figure. The green paper that lead to the recent changes had accelerating this merge as one option.

    And yes, I'm so sad that I have the above calculations (including the merge) in my retirement spreadsheet! Come 2017, I can check HMG's workings against mine and then ditch it all!
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Tillydot
    Tillydot Posts: 135 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    I am 62 and self employed, I get £92 state pension and £28 NHS pension. I missed the new ruling of 30 years to get a full pension as when I started to receive my state pension it was 39 years. Its so confusing. I will carry on working as long as I can but worry if I couldnt work what I would still be able to apply for pension credits after 2017 if necessary?
  • BLB53
    BLB53 Posts: 1,583 Forumite
    I will carry on working as long as I can but worry if I couldnt work what I would still be able to apply for pension credits after 2017 if necessary?
    As I understand the proposals, the safety net of pension credit will continue to apply for people who have reached retirement age before 2017. Pension income below £143 will be topped up to that figure. It is means tested so they will take into account things like savings and investments.
  • gadgetmind wrote: »
    Yes, that's band 1, which is now a fixed (but index linked)

    Is that for everyone and is it retrospective ?
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Is that for everyone and is it retrospective ?

    I'm pretty sure it's for everyone earning above LEL and it's for all S2P accrual since April 6th 2010.

    See here -
    http://www.scottishlife.co.uk/scotlife/web/site/Adviser/TechnicalCentralArea/Informationguidance/General/TheStateSecondPensionExplainedPage.asp
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Old_Slaphead
    Old_Slaphead Posts: 2,749 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    edited 17 January 2013 at 12:35PM
    No still can't see that. It does say....

    "From 06/04/10, Band 2 (10% band) and Band 3 (20% band) were merged so that all earnings between the low earnings threshold and the UAP will accrue additional pension at a rate of 10%. From an unspecified future date, the Band 1 (40% band) will be replaced by a weekly flat-rate band. The 10% accrual component will be withdrawn around 2030, leaving a wholly flat-rate benefit. The bands based on the 2012/13 tax year are set out below"

    Can't find anywhere on Google where band 1 fixed at £1.70. They're still using 40% in their 2012/3 examples

    From my research it looks as though an average-waged person will be currently accruing S2P at around £2-£2.50per week for each year of being contracted in.

    Seems a bit unfair that contracted out are allowed to buy back in at £4.11 post 2017
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