MSE News: Government outlines flat-rate state pension

Froglet

If they have paid in the contributions to get the second state pension then that should still be paid out.Give everyone a fair basic,then allow those that have paid the extra,to get it back.But stop the secondary pension facility(actually i believe it has already hasn't it?) as you can't opt out any more.

That way no one would lose but would be able to get a forecast of what they would get and not being able to,or need to get pension credit would then have the choice of carrying on saving /paying into a private pension and be rewarded when retiring.

Or does that sound too simple!!

jobdone1

I cant wait to cast my vote

Paul_Herring

Froglet wrote: »

If they have paid in the contributions to get the second state pension then that should still be paid out.

That won't be happening, which is another of the perceived problems.

People who earn more will be paying more NI, but won't be getting any extra pension for it.

Mail reckon it'll affect about 6.5 million people, points out that someone on £22,000 will be paying £270 extra a year for no gain, (and mentions some sort of NI rebate but doesn't go into detail.)

jobdone1

Paul_Herring wrote: »

That won't be happening, which is another of the perceived problems.

People who earn more will be paying more NI, but won't be getting any extra pension for it.

Mail reckon it'll affect about 6.5 million people, points out that someone on £22,000 will be paying £270 extra a year for no gain, (and mentions some sort of NI rebate but doesn't go into detail.)

I will fall into this band and am far from happy i always believed:mad: i was doing the right thing but now i am being punished JOKE

vigman

Apologies if I have missed the obvious, but folks are saying they are falling short of the new scheme by x months. Where are the dates for cut-off/starting points for the new system please?

I will be 65 in August 2018. I have retired on ill health grounds on a small work pension. My wife will be 65 in July 2019. If we have paid the necessary contribution years should we both get the £144 pw (equivalent then), and will my small work pension be excluded from the calculation?

Thanks in advance

Vigman

PS Also both paid a lot of extra years when self employed!!

Paul_Herring

vigman wrote: »

Where are the dates for cut-off/starting points for the new system please?

Likely to be the start of the 2017 tax year (April 6th.)

If you reach your retirement age on that date, you'll be on the flat rate; before that date, the current system. Note that is is your retirement age that counts, not when you start claiming (so, for example, if your retirement date is before then, but you defer until after, you'll still be on the current system, not the new one.)

I will be 65 in August 2018. I have retired on ill health grounds on a small work pension. My wife will be 65 in July 2019. If we have paid the necessary contribution years should we both get the £144 pw (equivalent then), and will my small work pension be excluded from the calculation?

That's my understanding of the situation; you'll be getting £144 (or whatever - I've yet to see which of the 12 inflation indices they're planning on using to uprate the value; RPI, RPIJ, RPIX, CPI...) plus your work pension.

Mindovermatter_2

I'm a bit confused, after 18 years NI contrbution I have £29/week S2P. So total pension to date is £93.47 per week.... Many years to go..

so in 2017 will they look at my latest statement and if it is lower than £144 (or equivalent) they will do away with my S2P? And I will then just be on the flat rate?

Or (as I hope) will I be on flat rate, plus my earnt S2P?

Paul_Herring

Mindovermatter wrote: »

[STRIKE]so in 2017 will they look at my latest statement and if it is lower than £144 (or equivalent) they will do away with my S2P? And[/STRIKE] I will then just be on the flat rate?

Yes.

Or (as I hope) will I be on flat rate, plus my earnt S2P?

No. You're going to lose that S2P.

bowlhead99

As someone earning a higher salary, paying higher NI, and previously on course for a better-than-average state pension, I am presumably one of the people losing out relative to those who were not already on course for a better-than-average pension.

- One view is that the people who have paid in only small amounts of NI should not be able to get the same as people who have paid in lots.

- The opposing view is that someone maxing out their NI contributions by earning above the upper limit is clearly on a healthy salary and should be able to make their own independent provision while passing extra tax or NI or whatever you want to call it to help out those less fortunate.

- Then there will be people in the middle ground who want it both ways because it's not fair that someone can work fewer years than them or pay less in per year than them and get the same out, because they don't deserve it, And, it's also not fair that a high earner should be able to get more out than them because we are trying to pay a reasonable standard of living and high earners probably already have a reasonable standard of living.

We now have people working and planning their pension 40 years and taking their pension 40 years. So there are 80 years' worth of people growing up in slightly different economic circumstances. With any set of changes, unless we maintain 80 different legacy rulesets and employ a lot of people to do the horrendously inefficient administration and education around it, there will always be someone who gets caught by being on one side or another of a change in rules and can see the grass is greener on the other side and feels they've been screwed.

The fundamental problem is that people are living longer but don't want to work longer (and even if they did, good luck finding a job as a 70 year old when a 20 year old is eager to do it for less). Paying in a small fraction of your salary for relatively shorter proportion of your life does not really support getting paid back a reasonable amount of your salary for a longer period of your life.

So people need to put money away themselves and if they can't or don't we will have a safety net at a flat rate that you can collect if you paid in long enough.

People on higher salaries pay relatively more in than they get out, but this is how tax has always worked. NI is thought of as being ringfenced for pensions but it's not as if the cash paid in by you is personally ringfenced for you, because in practice what you can reliably get paid out is what the country can get from earners paying in when you're a retiree. If the money was going to be personally ringfenced for you, there wouldn't be any subsidy for those putting in only small amounts and it wouldn't work as a welfare thing and doesn't need to be done by government.

I guess this sort of thinking doesn't help anyone who feels they have been shafted with only a few years before retirement, or is jealous of what their neighbour will get out per pound paid in, compared to what they get, but despite the outcry I suspect the idea is not completely without merit.

If you remove personal emotions from it (tough because it's an emotive subject) - I'm curious to know how would you all have designed it from scratch? And given we are where we are - would you focus on building something that works best going forward, or minimises change looking backward?

Mindovermatter_2

Paul_Herring wrote: »

Yes.

No. You're going to lose that S2P.

Thanks, so I should have contracted out.....