Flat Rate Pension one year earlier - April 2016

wendywhite

Hi I read somewhere that the new state pension scheme would impact detrimentally on final salary pension scheme members....how can this be please?

zagfles

Perelandra wrote: »

... but, of course, there's nothing to say that there aren't further changes coming along. I'm still assuming that it'll become means-tested at some point too...

There's virtually no chance of it becoming means tested, that's the whole point of these reforms, to reduce means testing in retirement and encourage pension savings.

zagfles

wendywhite wrote: »

Hi I read somewhere that the new state pension scheme would impact detrimentally on final salary pension scheme members....how can this be please?

Public or private sector? The contracted out NI rebate will go so employees and employers will pay more NI. Employees will pay 1.4% more, employers 3.4% more.

In the public sector the govt have said they won't reduce scheme benefits or increase contribution rates to reflect the extra employer NI, so it's very good news for public sector employees, they get extra state pension for a mere 1.4% extra NI, a bargain.

For private sector, the govt have said schemes will be able to increase employee contribution rates or reduce benefits to reflect the extra employer NI costs, so private sector employees will end up paying the extra 1.4% employee NI plus extra 3.4% either in increased conts or lower benefits. They'll get extra state pension, but at a bigger cost, but it still may be beneficial for some particularly those about 10 years from retirement.