MSE News: Government outlines flat-rate state pension

gadgetmind

ekeir wrote: »

As I understand it there is no advantage to anybody from being on the new flat rate pension anyway.

Those with many qualifying years for basic but very few for SERPs/S2P will be those who stand to gain the most. This will mainly be the self-employed but also those who've looked after kids of been on benefits.

Hopefully, the long-term self-employed will have used the fact that they pay much less NI than those on PAYE (and less tax if they pay themselves via dividends, etc.) so salt away plenty into private pensions.

AlwaysLearnin

gadgetmind wrote: »

Those with many qualifying years for basic but very few for SERPs/S2P will be those who stand to gain the most. This will mainly be the self-employed but also those who've looked after kids of been on benefits.
.

Could it also work okay for people who have been contracted out as part of a DB pension then?

For example, if you've built up X amount to date contracted out, is it the case that if £144-X is less than remaining years*annual accrual rate (£144/35?) you still get the full £144, or will the COD come in to play?

jamesd

Yes, it can help those who've been contracted out for most of their working lives. They get the deduction for being contracted out but can then work more years and get back up to £144. Can't go over £144 unless you start out above £144, so those with a mixture of contracted in and contracted out work are less likely to gain.

Public sector workers are those who are most likely to benefit from this because that's where most of the contracted out schemes that are still operating are.

AlwaysLearnin

Thanks. Is there any clarification re how the contracted out deduction will work as yet? If not, is there even any idea when there will be?

zagfles

AlwaysLearnin wrote: »

Thanks. Is there any clarification re how the contracted out deduction will work as yet? If not, is there even any idea when there will be?

http://www.dwp.gov.uk/docs/single-tier-pension-transition-technical-note.pdf

Para 42 onwards. Not very detailed though.

AlwaysLearnin

Hmmm. So, I think it's a case of current accrued basic state pension at 2016, plus the annual accrual rate from then to retirement/no further contributions, I think...

My current pensionable salary is based on salary less basic state pension, so just trying to get my head round how it will work if after 2016 - if it's based on flat rate amount instead, I guess I could potentially fall just short (hope to retire/leave early).

Never easy is it?!

Thanks

redlegbeau

I think its about time all us oldies who wont qualify for the new £144 should petition the government. its not fair - my husband and myself have worked full time most of our life but we dont qualify for the new pension amount - everybody should be on the same pension not them and us

gadgetmind

redlegbeau wrote: »

my husband and myself have worked full time most of our life but we dont qualify for the new pension amount

You may well qualify for more under the "old scheme" and will be allowed to retain this higher pension under the new rules.

Have you got recent state pension statements?

zagfles

redlegbeau wrote: »

I think its about time all us oldies who wont qualify for the new £144 should petition the government. its not fair - my husband and myself have worked full time most of our life but we dont qualify for the new pension amount - everybody should be on the same pension not them and us

If you've worked full time most of your lives you'll almost certainly be better on the old scheme not the new scheme. Unless you were self employed.

So many people simply don't get it. The new flat rate replaces the basic state pension and SERPS/S2P. Most people get more under the basic + SERPS/S2P than they'd get under the new flat rate. And for those who were contracted out, a deduction will be applied to the flat rate to bring it down to probably about the basic state pension level anyway.

It's really only the self employed who are the big gainers out of this - plus possibly people with credits pre 2002 which didn't count towards SERPS.

bigfreddiel

zagfles wrote: »

So many people simply don't get it. The new flat rate replaces the basic state pension and SERPS/S2P. Most people get more under the basic + SERPS/S2P than they'd get under the new flat rate. And for those who were contracted out, a deduction will be applied to the flat rate to bring it down to probably about the basic state pension level anyway.

well people don't get it - tough innit!

you just need to find out -its not hard - you have the internet, programs on r4 - mb live explained it all - cab may help - and finally there's no such thing as a free lunch - don't tell me anyone is taken in by the 'promise' of a bigger flat rate pension than what they would get under the old scheme when 'we' heve no money!

i can't believe no one can work this out for themselves and if so its sad innit!

cheers


fj