Flat Rate Pension one year earlier - April 2016

jamesd

kuepper wrote: »

I don't see how treating pensioners differently isn't discrimination

Well, there's clearly discrimination. Women will be getting the flat rate at younger ages than men, because state pension ages haven't equalised yet. To be more fair they should be equalised as part of this work so all get it at the same age. But there would be lots of grumbling about that even though it's removing a gender difference.

kuepper wrote: »

There will have to be a date when the new pension it is introduced and the day before it is some ppl will get the existing pension of the day and those retiring the next day will probably be about £40 a week better off.

Some will be better off, some will be worse off. Workers who already have £144 or more will be worse off the earlier they are affected by the new system because they keep on adding to their pension entitlement at between £1.70 and £2.80 a week for each year they work under the current rules. Those who haven't worked much or as much will be better off if they retire soon after the new system applies, along with those who paid lower NI while self employed but will get the £144 instead of £107.

kuepper wrote: »

To rub it in you're gooing to have ppl who've made contributions all their life getting the low rate

Right. For those who retire fairly soon after the change they will get transitional protection. They will lose years of additional state pension accrual but will get over £144 if they have accrued that. The younger you are, the more you lose out from this.

kuepper wrote: »

to paraphrase Orwell: All pensioners are equal but some are more equal than others

Women are more equal in this case. The changes are mainly of benefit to them and the self employed. Those with long work histories are the main losers. And this tends to be a gender difference, with women on average being shorter workers and men longer.

What's interesting is that AgeUK advocated an earlier start even though it as implemented will harm working people by lowering their state pension levels.

I might gain from this, it depends how long I work. The less I work the greater the chance that I'll end up better off under the new system than the old one. New one definitely rewards working less over working more.

There is one other potential winner from this: Gordon Brown. This plan is a far bigger reduction in the pensions of working people than anything he ever did.

kuepper

jamesd wrote: »

Some will be better off, some will be worse off. Workers who already have £144 or more will be worse off the earlier they are affected by the new system because they keep on adding to their pension entitlement at between £1.70 and £2.80 a week for each year they work under the current rules.

I don't understand this. How can anyone be already getting £144 or more, I thought the basic state pension for a single person is £107.45?

jamesd

There are two main parts to the state pension, the Basic State Pension and the Additional State Pension (earned via the SERPS and now S2P part of NI contributions). The Basic State Pension is currently 107.45. The Additional State pension can increase the total state pension to as much as around £250 a week.

The flat rate cut to pensions for employees eliminates those two and replaces them with just £144.

It's a cut for employees because even a person working a full working life on minimum wage ends up with around £190 a week in basic and additional state pensions combined, so they lose out greatly, along with just about everyone else who's an employee and who works a fairly full working life.

As transitional protection those who already have accrued more than £144 if the new system is introduced will get the higher amount calculated under the current rules. But any extra years won't then get them any more, even though they would get more additional state pension for each year worked under the current system. So employees become bigger losers the farther they are from retirement age. Each year earlier it comes in costs employees one more year of additional state pension accrual that they would have had.

Many people look just at the basic state pension and think great, 144 is more than that, so it's an increase. But they forget the great value of the additional state pension portion that's being lost.

srcandas

jamesd wrote: »

There are two main parts ....................................But they forget the great value of the additional state pension portion that's being lost.

Great summary James.

Personally I lose a little because of this but I think it is a very sensible change that was needed. Any change was going to create winners and losers, and us brits love a good winge, but something had to be done. The country cannot keep borrowing

And while it may look painful to some short-term this and other simplifications will hopefully save government costs and thus there may be other rewards to compensate in the future (e.g. better targeted help for those who really need it).

It strikes me most, and I stress most - not all, of those complaining are not in great shape for retirement anyway and haven't gone out of the way to help themselves.

And those some way off retirement have seen the writing on the wall for sometime and if they haven't already then they should act now.

Finally I do think some need to think about what they want from retirement. You don't need £50000 a year to enjoy life. Above all retirement gives to many freedom of time, a decreased spend requirement, and many opportunities

daidogs

Hi Jamesd
Are you absolutely sure about this. My understanding is that at the introduction date of the Flat Rate Pension the maximum anyone will get is £144, regardless of any benifits accrued in addtional state pension entitlement.
I would really love it if you are right, as it means I will get about £211 per week rather than the flat rate!

kuepper

jamesd wrote: »

There are two main parts to the state pension, the Basic State Pension and the Additional State Pension (earned via the SERPS and now S2P part of NI contributions). The Basic State Pension is currently 107.45. The Additional State pension can increase the total state pension to as much as around £250 a week.
.

Sorry to sound so ignorant (but I obviously am and it's pathetic I don't know as I am 65 in September). How do I know if my pension will be increased by SERPS/S2P?

daidogs

kuepper wrote: »

Sorry to sound so ignorant (but I obviously am and it's pathetic I don't know as I am 65 in September). How do I know if my pension will be increased by SERPS/S2P?

You need to go on the Government pensions website.
You have to register on it (with your NI number). You can then apply for a quote which they will send you by post.

jem16

daidogs wrote: »

Hi Jamesd
Are you absolutely sure about this. My understanding is that at the introduction date of the Flat Rate Pension the maximum anyone will get is £144, regardless of any benifits accrued in addtional state pension entitlement.
I would really love it if you are right, as it means I will get about £211 per week rather than the flat rate!

There will be a transition period - set out here.

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

So yes what jamesd is aying is correct.

srcandas

daidogs wrote: »

You need to go on the Government pensions website.
You have to register on it (with your NI number). You can then apply for a quote which they will send you by post.

When I registered I was sent two days later by post a card with a 12 digit number. I use this to log-on and I can get a state pension quote within seconds on-line.

It gave basic plus the extra making £199 in total (my retirement will be 2017 so after the change.

However they do say the quote is subject to checking for 'contracted out'.

ps: Can't see how the gov could rob people of already accumulated extra pension. People impacted number millions and are of fighting age. Blood would flow :rotfl:

And in any case they could tax it if they wanted more - much more acceptable

kuepper

srcandas wrote: »

When I registered I was sent two days later by post a card with a 12 digit number. I use this to log-on and I can get a state pension quote within seconds on-line.

However they do say the quote is subject to checking for 'contracted out'.

Thanks I've just done that so should know soon.

sorry to keep asking Qs revealing my ignorance but how do you find out about 'contracted out', how come the govt wouldn't know?