Secret Steal Of Our NI Contributions

grizzly1911

zagfles wrote: »

The new single tier state pension is actually very good news for public sector employees. They'll pay a little more in NI, 1.4%, but they'll get a better state pension as a result which will be worth much more.

The govt have already said they won't reduce pension accrual for public sector schemes to make up for the increased employer NI contributions, so for just 1.4% extra they get better occupational pensions than almost anyone else plus the same state pension as those who don't have such generous schemes.

How will the state pension be better than under the old scheme?

Is this 1.4% increase on top of the 1-3% increase that they are having to pay for the reduced terms and benefits in the "generous" occupational pension?

BobQ

coastline wrote: »

Thing is here many people were "contracted out" as part of their pension arrangements which meant around 1% of NI was built into second pensions and private sector.
The new scheme in 2016 will pay £144 providing employees have 35 years NI contributions....heres the catch.
All those years of contracting out are now 1% short of a full yearly NI contribution which have to be built up somehow from 2016.Workers with many years left can pay the new rate and build up to 35 years...but others may not have time or might be able to pay a yearly sum to build back up to 35 years.
Regarding blaming political parties for taxation its been a policy for decades to reduce income tax and park it another way..
In the 1970-1980's basic income tax was 38% and VAT 5% now they are equal at 20%...

Anyone in a contracted out pension scheme paid less NI because they got the equivalent of the second pension paid as part of their occupational scheme. After 2016 they will not be contracted out, so will pay the full NI and begin earning the second pension. I do not see why this is a "catch" If you do not pay for part of the state pension why should you get the earnings related top up? Those who will get free pension are the self employed who paid even more reduced NI contributions but still get treated as if they had paid the full NI contributions.

BobQ

grizzly1911 wrote: »

How will the state pension be better than under the old scheme?

Is this 1.4% increase on top of the 1-3% increase that they are having to pay for the reduced terms and benefits in the "generous" occupational pension?

It will be better because from 2016 anyone who was contracted out ceases to be and then pays 1.4% extra NI but now earns the state second pension. If someone was contracted out for say 30 years up to 2016 worked for another 15 years in the same job under the existing system they would get a state pension of £107 but now they will build up 15 years of second pension probably enough to get a £144 state pension.

Yes it is an additional 1.4% on top of any increases in occupational pension contributions in the public sector. Its possible that this may tip the balance for those thinking of leaving occuaptional schemes, but it is extra pension. In the long term its bad for every worker.

The_Magnificent_Spoon

DecentLivingWage wrote: »

Writing cheques the next government will have to honour?

This has to be the most hypocritical, laughable post I've seen here, possibly ever. Good one.

A._Badger

markharding557 wrote: »

You pensioners better make the best of it while you can because austerity is coming to you in a couple of years or so and rightly so, why should working age people have to take all the cuts.
You have had it easy so far so stop moaning:mad:

What a nasty post. What a nasty person.

The difference between pensioners and you is that they have already paid into the system. They were lied to by politicians, who took their money under false pretences.

Jennifer_Jane

markharding557 wrote: »

You pensioners better make the best of it while you can because austerity is coming to you in a couple of years or so and rightly so, why should working age people have to take all the cuts.
You have had it easy so far so stop moaning:mad:

grizzly1911 wrote: »

What cuts have you received then that you feel are unfair, many will no doubt be affecting the pensioners too?

Will you be replying to grizzly's post, markharding557?

Please list the cuts that you personally are being subjected to.

In the meantime I have to see how I can spend the additional £2.28 pw I shall be receiving in April. Perhaps you could help with this, perhaps an extra bottle of milk and some bread?

In truth, "austerity" has only really hit me because of increased VAT, and the freezing of the personal allowance (the incorrectly nick-named granny tax) and high inflation with low savings rates, which hurts everyone on low incomes who need to keep savings liquid for emergencies.

By the way, using the :mad: smiley is just horrible.

But I'm sure we will all be sympathetic when we get the list of cuts by which you are affected.

You may even change some of our minds about who actually is the "nasty party" (although having watched the Parliamentary Investigation into the NHS whistleblowers and all that - I'm still convinced it's Labour).

zagfles

BobQ wrote: »

It will be better because from 2016 anyone who was contracted out ceases to be and then pays 1.4% extra NI but now earns the state second pension. If someone was contracted out for say 30 years up to 2016 worked for another 15 years in the same job under the existing system they would get a state pension of £107 but now they will build up 15 years of second pension probably enough to get a £144 state pension.

Yes it is an additional 1.4% on top of any increases in occupational pension contributions in the public sector. Its possible that this may tip the balance for those thinking of leaving occuaptional schemes, but it is extra pension. In the long term its bad for every worker.

Yes. Also, in a contracted out scheme currently the employee gets a 1.4% NI rebate and the employer gets 3.4%. For private sector contracted out schemes, there will be legislation enabling schemes to reduce benefits or increase the employee contribution, to make up for the employer's loss of the 3.4% rebate, so private sector employees will face a 4.8% increase in NI plus contributions (or a loss in scheme benefits of the same value).

But for public sector schemes the govt have announced there'll be no loss in benefits or additional contributions to reflect the loss of the employer's NI rebate. So they'll get the bigger pension for a mere 1.4% extra NI, a bargain! For someone on an average salary it'll cost £280 a year to get £1924 more in state pension, if they've got enough years left of their working life to build the full amount - if not it'll be less but they won't be paying the £280 extra for as many years so it'll still be a bargain.

Anyone who leaves a public sector scheme because of this NI increase wants their head examining.

BobQ

zagfles wrote: »

Anyone who leaves a public sector scheme because of this NI increase wants their head examining.

By 2016 public sector workers will have had 2 years of pay freeze, three years of capped pay and not all of them get progression pay via guaranteed pay steps. Also they will have faced progressive pension contribution increases of 6% (varies with scheme) plus the 1.4% NI increase and a move to the less attractive career average schemes.

By then the question will not be is my pension a good deal (it clearly is and better than most people in the private sector). The question will be "Can I afford to keep paying into the scheme with my other financial commitments"?

Once the economy picks up, many of these will do what the Governmemt wants and move to different jobs in the private sector if they ever create an environment that enables them. The question will then be can we recruit nurses, teachers, scientists, from abroad since those we have invested effort to train them will have been working in car sales or financial services or whatever. Alternatively we will be paying more for private services or though public funded outsourcing contracts.

vivatifosi

howee wrote: »

QUOTE "or the library van with a qualified librarian £32k on board (union insistence),"

umm ok that bit I have not researched but I do wonder when I see them sat there for an hour without a single visitor. lol

I work for a real local authority in the real world. I can't with 100% certainty say that some authorities don't have vans with qualified librarians on board, but I know that many don't. I also doubt that the drivers earn anywhere near £32k. For good measure, I should add that many LA's have also introduced performance related increments that have to be earned and aren't just awarded. For that matter, I know an awful lot of qualified librarians with degrees and masters in the subject who would love to earn £32k. It isn't a profession to enter if you want a high salary.

grizzly1911

BobQ wrote: »

By 2016 public sector workers will have had 2 years of pay freeze, three years of capped pay and not all of them get progression pay via guaranteed pay steps. Also they will have faced progressive pension contribution increases of 6% (varies with scheme) plus the 1.4% NI increase and a move to the less attractive career average schemes.

By then the question will not be is my pension a good deal (it clearly is and better than most people in the private sector). The question will be "Can I afford to keep paying into the scheme with my other financial commitments"?

Once the economy picks up, many of these will do what the Governmemt wants and move to different jobs in the private sector if they ever create an environment that enables them. The question will then be can we recruit nurses, teachers, scientists, from abroad since those we have invested effort to train them will have been working in car sales or financial services or whatever. Alternatively we will be paying more for private services or though public funded outsourcing contracts.

Continuing <1% increases in salary will mean more immediately the "can I afford" will mean that consumption reduces in order to maintain the contribution.