MSE News: Government outlines flat-rate state pension

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
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  • zagfleszagfles Forumite
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    It does not matter what the so called experts say based on my situation I am going to be worse off. I know I have two final salary pensions but I worked for them and put extra in when while my friends were more concerned at just having a good time.

    This government is always changing their mind and who knows they may bring the new rate forward to April 2015.
    Final salary? Contracted out presumably? Then you would get a deduction applied to the £144 if you'd been under the new rules. You do realise that don't you? It's been mentioned several times in this thread, it's in the white paper. In all likelyhood you'll be no worse off at all from missing the cut-off date.
  • edited 20 March 2013 at 7:46PM
    CRISPIANNE3CRISPIANNE3 Forumite
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    edited 20 March 2013 at 7:46PM
    zagfles wrote: »
    Final salary? Contracted out presumably? Then you would get a deduction applied to the £144 if you'd been under the new rules. You do realise that don't you? It's been mentioned several times in this thread, it's in the white paper. In all likelyhood you'll be no worse off at all from missing the cut-off date.

    Could be because my forecast is at the moment is £123.00 per week in todays money and obviously includes the second part. The government are saying the new amount will be £144 and has we know that is again in todays money. So based on the two figures quoted please explain how I am not going to be worse off.

    If its the case they take away the bus pass, heating allowance and free prescriptions for those receiving the £144 then I probably would be no worse off.

    What am I missing here.
  • hansihansi Forumite
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    I am a pensioner cuurently receiving the basic state pension and the State Second Pension. Will this remain the same when the new system kicks in, because it will be considerably more that £144 per week.
  • zagfleszagfles Forumite
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    hansi wrote: »
    I am a pensioner cuurently receiving the basic state pension and the State Second Pension. Will this remain the same when the new system kicks in, because it will be considerably more that £144 per week.
    You won't be affected.
  • edited 20 March 2013 at 11:43PM
    jem16jem16 Forumite
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    edited 20 March 2013 at 11:43PM
    (text removed by Forum Team)

    For every year you have been contracted out there will be a deduction (yet to be finalised exactly what it will be) applied to the £144. You would not receive £144.
  • As one of the 400,000 women who have had their state pension date altered by almost 3 years, but who will fall 4 months short of the April 2016 date, I feel that I have been dealt a double whammy. I too will have contributed for over 30 years and will still be contributing for at least another 3 years. How unfair! I understand that people are living longer, but the government should have implemented one or the other.
  • SnowManSnowMan Forumite
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    Could be because my forecast is at the moment is £123.00 per week in todays money and obviously includes the second part. The government are saying the new amount will be £144 and has we know that is again in todays money. So based on the two figures quoted please explain how I am not going to be worse off.

    If its the case they take away the bus pass, heating allowance and free prescriptions for those receiving the £144 then I probably would be no worse off.

    What am I missing here.

    Had you reached SPA the day after implementation the calculation of what you would receive would be based on the better of

    a) The new scheme calculation of up to £144 less a deduction for contracting-out
    b) What you have been paid under the current scheme so perhaps £123pw based on your figure.

    Because in your case the deduction for contracting-out in a) is likely to be significantly more than £21pw then the current scheme basis b) will give the bigger answer.

    Or put another way it would make no difference to your state pension amount whether you reach SPA the day before or the day after the scheme is introduced. Either way you get the £123pw.

    So you simply don't lose out.
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  • trenchwarstrenchwars Forumite
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    So let me get this straight ...

    I'm going to have to pay another 1.4% in NI contributions and my employer is going to pay another 3.4% which will be passed on to me one way or the other raising my tax or pension bill by about £2k a year, or cutting my pension benefits.

    In exchange for this when i retire in ~ 35 years time I am going to get inflation-adjusted £144 pounds a week instead of £107 pounds. Except I almost certainly won't get this as the goverment keep fiddling with the pension rules and the chances of the current arrangements being in place when I retire are next to zero.

    So my contracted out second pension has been replaced with the possibility of a slightly higher state pension that I have no contractual right to, and is basically paid at the whim of the government.

    What also annoys me is that public sector workers will benefit from the increased flat-rate pension, but the government has already indicated that it won't pass on the cost of the 3.4% raise in NI contributions. So this is basically another tax raid on private sector final salary pension schemes. The government won't be satisfied until it has killed them all off.
  • edited 20 March 2013 at 9:18PM
    wakeupalarmwakeupalarm Forumite
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    edited 20 March 2013 at 9:18PM
    As one of the 400,000 women who have had their state pension date altered by almost 3 years, but who will fall 4 months short of the April 2016 date, I feel that I have been dealt a double whammy. I too will have contributed for over 30 years and will still be contributing for at least another 3 years. How unfair! I understand that people are living longer, but the government should have implemented one or the other.

    If you have worked for 30 years already and maybe another 3 years, your total state pension is likely to be more than £144 anyway, if you were contracted out, your contracted out pension plus your basic state pension of £107.45 is likely to be more than £144 as well. The change to a flat rate pension will have minimal effect for someone in your situation.

    It mainly benefits self-employed, those who contracted-out, and the very low paid. It penalises massively the younger generations who's state pension will be capped at £144.
  • wakeupalarmwakeupalarm Forumite
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    trenchwars wrote: »
    What also annoys me is that public sector workers will benefit from the increased flat-rate pension, but the government has already indicated that it won't pass on the cost of the 3.4% raise in NI contributions. So this is basically another tax raid on private sector final salary pension schemes. The government won't be satisfied until it has killed them all off.

    The public sector is once again being protected, but please bare in mind that it's not really a increase in NI for private(and public sector) final salary employees, rather it's the removal of a discount compared to what everyone else is paying in NI contributions.

    Even after the removal of this discount I'm sure most people would rather have any final salary pension than the alternatives.
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