State pension changes - impact on those due to retire soon?

kidmugsy

harz99 wrote: »

Especially as there will be a General Election before 2017, so those of us who are, or perceive ourselves to be, disadvantaged by these proposed changes will have the opportunity to express our displeasure at the ballot box!

The discussion here make sit pretty clear that not many will be disadvantaged in the near term - the problem seems to be jealousy by those who will not be advantaged.

BobQ

wakeupalarm wrote: »

Those contracted-in will also continue to pay the FULL NI contributions they have always paid, not some reduced amount but they will be prevented from accumulating any further state pension.

Those who contracted-out knew they were contracting out of the Additional State Pension, and were building up their own funds via occupational pensions as you say, now they can build further state pension that those contracted-in can't. They are being given two bites of the cherry.

Those contracted-in are having to pay into it but are being denied the option to accumulate any more than the £144 that those who are contracted-out are being given the option to even though they already have contracted-out occupational funds/pension to cover the additional state pension they opted out of.

The changes particularly hit younger workers as they are limited to £144.

I can see the argument you make and I agree that anyone paying the full rate after 2017 should be able to accrue additional pension. Also I do not see why it should be capped. Surely we should be encouraging everyone to accummulate as big a pension as possible.

I had a contracted out pension for part of my working life. I cannot ever recall having the option of contracting out it was just something employers did. Had I been given the option I would have paid into the SSP too. Post 2017, the proposal may not be fair, for the reasons Altman explains, but is it fair that someone who has been contracted out for only part of their employment history should be banned from accumulating further state pension? What do you think would be fair?

I do agree that the young are being disadvantaged by the proposals. It amazes me that they do not protest more about these things.

jamesd

BobQ wrote: »

I can see the argument you make and I agree that anyone paying the full rate after 2017 should be able to accrue additional pension. Also I do not see why it should be capped.

So it's cost-neutral. You have to keep on paying in but you get nothing back for it but supporting those who didn't or didn't pay in much.

What's starting to bother me is that this is feeling more like a state welfare benefit for all rather than a state pension because of the breaking of the link to earnings. And I don't want pensions to be welfare but something you've paid into to get as a right.

uk1

I'm unable to find the answer to this ... so others might have a better grip!

My state pension is due in September 2015. I plan to defer it. Is it likely that I will be able to benefit from the current deferment rate ie 1% for every 5 weeks when I retire or is it likely that any new legislation of 1% for every 10 weeks be imposed on retirees retiring before the new scheme starts in May 2017 or later? Or will any new deferment rates only be for people retiring under the new scheme?

Recognise this may only be guesswork at this stage .....

Thanks.

kidmugsy

uk1 wrote: »

is it likely that any new legislation of 1% for every 10 weeks be imposed on retirees retiring before the new scheme starts in May 2017 or later? Or will any new deferment rates only be for people retiring under the new scheme?

Although the current rate is loopily generous to the pensioner (and therefore loopily expensive to the taxpayer) I'd be mildly surprised if it's altered before the 2015 election.

SnowMan

uk1 wrote: »

I'm unable to find the answer to this ... so others might have a better grip!

My state pension is due in September 2015. I plan to defer it. Is it likely that I will be able to benefit from the current deferment rate ie 1% for every 5 weeks when I retire or is it likely that any new legislation of 1% for every 10 weeks be imposed on retirees retiring before the new scheme starts in May 2017 or later? Or will any new deferment rates only be for people retiring under the new scheme?

Recognise this may only be guesswork at this stage .....

Thanks.

The White Paper says in relation to the single tier pension that they will

continue to allow people to defer claiming their state pension and receive a higher weekly state pension in return. The deferral rate will be finalised closer to the planned implementation date. It will no longer be possible to receive deferred state pension as a lump-sum payment.

The fact that it won't be finalised until closer to the implementation date suggests to me that the current deferral rules will apply until the new system is implemented.

As anyone reaching SPA before the implementation date remains on the old system then you would expect the old deferral rules will apply to them.

Annex E also talks about it and says

However, the deferral award will change under single tier.

Implying perhaps those reaching SPA before implementation and who at date of implementation are still in deferment will come under the old deferral basis?

zzzLazyDaisy

harz99 wrote: »

Especially as there will be a General Election before 2017, so those of us who are, or perceive ourselves to be, disadvantaged by these proposed changes will have the opportunity to express our displeasure at the ballot box!

Yep - next general election 7th May 2015 according to this article :j

http://www.parliament.uk/about/how/elections-and-voting/general/

Although they could still do a lot of damage to a lot of people, in the meantime

jamesd

If you reach state pension age before the changes come into effect, the existing rules will apply to you because you will get your pension completely according to the current rules.

I haven't seen a mention of 1% per ten weeks for deferring in new rules, do you have a source for that? That rate is bad enough that in most cases I would suggest that people not defer. 1% for five weeks is usually good enough to do for one to three years for a man or two to five for a woman.

SnowMan

jamesd wrote: »

If you reach state pension age before the changes come into effect, the existing rules will apply to you because you will get your pension completely according to the current rules.

I haven't seen a mention of 1% per ten weeks for deferring in new rules, do you have a source for that?

Annex E (page 99) para 54

For modelling purposes, the Department for Work and Pensions has assumed a deferral rate of one per cent for every ten weeks’ deferral. This rate will be finalised closer to the planned implementation date, taking into account the value of the income foregone by the delay in drawing a single-tier pension and the fit with the Government’s agenda for supporting people who wish to work for longer.

bigfreddiel

jamesd wrote: »

I haven't seen a mention of 1% per ten weeks for deferring in new rules, do you have a source for that? That rate is bad enough that in most cases I would suggest that people not defer. 1% for five weeks is usually good enough to do for one to three years for a man or two to five for a woman.

The above is correct, its in all the sunday papers - Times and Mail.

Basically 1% will take 10 weeks and no option for a lumpsum - must be taken as pension

Funny these little wrinkles hidden in the small print, similar to the contacted out affect, you won't be due for £144 as stated by the pensions minister on last week's Moneybox live program on Radio 4 - check out the last five seconds of the podcast.

fj