MSE News: Government outlines flat-rate state pension

Paul_Herring

SnowMan wrote: »

[...]but Steve Webb has to be given credit also for the very clear, open and non-political way he has announced this.

You may want to have words with Simon Hoggart :rotfl: (Not that I found Mr Hoggart's arguments convincing, coming as they do, from a purported political sketch writer - I can only presume his writings on wine are somewhat more informed.)

Sister_X

I have worked in NHS since 16. Had a pension since 18. currently 47 and poss planning to retire at 55 (but will need part time job post retirement until I get my state pension). Govt says new pension plans make it easier for us to plan for retirement as we will all know what we will bet BUT says NHS staff like me will get less state pension as we have paid less NI contributions AND NHS might drop our NHS pensions or make us pay more. HELP!!! I was considersing retiring in 7 years time and now I am completely CLUELESS to how much NHS pension I will recieve (despite TWO previous quotes which I have based my plans on). So, quite frankly, I now have NO IDEA what to do. Does anyone know how much LESS a state pension people like me will recieve? 10%, 20%, 50%???????????

SnowMan

Sister_X wrote: »

I have worked in NHS since 16. Had a pension since 18. currently 47 and poss planning to retire at 55 (but will need part time job post retirement until I get my state pension). Govt says new pension plans make it easier for us to plan for retirement as we will all know what we will bet BUT says NHS staff like me will get less state pension as we have paid less NI contributions AND NHS might drop our NHS pensions or make us pay more. HELP!!! I was considersing retiring in 7 years time and now I am completely CLUELESS to how much NHS pension I will recieve (despite TWO previous quotes which I have based my plans on). So, quite frankly, I now have NO IDEA what to do. Does anyone know how much LESS a state pension people like me will recieve? 10%, 20%, 50%???????????

Your state pension accrued to 2017 will be protected so 0% less might be a better guess.

While you may have to pay some increased national insurance after 2017 you will probably get some extra state pension to more than compensate you (there is a bizarre quirk in the proposals which means that some members of contracted-out final salary schemes such as the NHS will get more state pension than others with the same contribution record who have not been contracted-out).

They won't be reducing the NHS scheme benefits further because of this state pension change (unlike some private employer final salary schemes). Obviously there have been a number of changes proposed for the NHS scheme because of the Hutton report which will affect you but that is unrelated to the announcement today.

The NHS will have to pay some extra employer national insurance but ultimately the Government could reallocate that to the NHS so they would still have the same funding for healthcare.

Overall in terms of your pension from the NHS and state scheme combined you will probably either be a bit better off or it will be neutral overall as a result of the state pension changes announced today.

Paul_Herring

Sister_X wrote: »

Does anyone know how much LESS a state pension people like me will recieve? 10%, 20%, 50%???????????

There is a calculation on pages 46 and 47 of the document referenced in post #35 (link in post #35 ) to work out your 'foundation amount' (the effective amount you will have accrued by 2017).

The simpler calculation is if you've never contracted out:

[the number of years of full NI contributions] / 35 * £144

The same calculation applies to the years you were contracted in, if you did contract out.

For your contracted out years, the formula is the above, with a 'rebate derived amount' subtracted for which there is (that I can find):
1) No clear definition
2) Certainly no numbers given

After 2017, you'll accrue £4.11 per year of NI contributions until you hit 35 years of contributions. (And if you have contracted out years, subsequent years will, I presume, swap out those years bringing you a full £4.11 for that year.)

Wywth

posh*spice wrote: »

You're going to paying more NI contributions.

Really?

Please explain further.

Wywth

Paul_Herring wrote: »

The removal of the ability to opt-out for starters. ...

Well as I was advised to opt back in years ago, I don't see that as a great disadvantage.

Paul_Herring

Wywth wrote: »

Well as I was advised to opt back in years ago, I don't see that as a great disadvantage.

Depends on your attitude and age. As I pointed earlier you can start you pension with your contracted out rebates from 55. Your state pension on the other hand has to wait until your late 60s.

Wywth

Paul_Herring wrote: »

Depends on your attitude and age. As I pointed earlier you can start you pension with your contracted out rebates from 55. Your state pension on the other hand has to wait until your late 60s.

But the average person could not live on the contracted out part of todays pension. (especially if you were to take it from 55)

You could still take a private pension at 55 if you want.

But as I pointed out earlier, for many if they were to retire at 55 they would not get the full state pension (whenever they are entitled to it) anyway under the new rules.

Edit: Just looked at my pension statement and in particular the contarcted out portion (for the years I was contracted out).

Why does it suggest I can't take it until I am 60, whereas the rest of my private pension suggests I could take it from age 55?

BobQ

SnowMan wrote: »

Having taken the time to read the white paper it is clear this is an extraordarily well thought out proposal. It was well worth the wait.

It really is massively simplifying the system. Everyone earns the same amount of pension each year - couldn't be simpler or fairer.

It will make it very easy for people to plan for their futures and will keep most people out of means testing.

They are also protecting the rights that people have built up before 2017.

I like the way they have thought through the practical issues and will in 2017 send a statement to everyone telling them what rights they have built up and how much pension they will build up each year subsequently. There is an example statement in the white paper itself.

It is going to be a pretty big job producing those statements. But once they've done that the saving in administrative costs to run the system must be massive.

I am not a fan of the coalition (understatement of the year) but Steve Webb has to be given credit also for the very clear, open and non-political way he has announced this.

I just hope it gets all party support. Because low paid workers accrue the same entitlement as high paid workers it is surely something that the labour party should support.

If you are not a supporter of Cameron, you are clearly either (a) naive or (b) one of those who win under the proposals.

Overall its saving money which is obviously handy for austerity purposes but not in the long term interest of most people.

It is good for low paid workers which I support but therre are many self employed people who have spent their lives without paying into a pension that will benefit in a way that many do not really deserve.

BobQ

Paul_Herring wrote: »

For your contracted out years, the formula is the above, with a 'rebate derived amount' subtracted for which there is (that I can find):
1) No clear definition
2) Certainly no numbers given

r.)

That was my conclusion too. Their definition of rebate derived amount is very unhelpful. Anyone know what it means?