MSE News: State pension changes to make workers worse off, unions say

macktartan_2

What about the people who have paid into the system all their working lives and now everyone is to receive £144.00 even those who have never paid into the system, it seems totally unfair if an increase is not imminent for persons currently in receipt of pension to represent what their contributions amounted to as if everyone is to receive the same what was tha point in paying NI contributions when you would receive the same as someone not having paid any.

jem16

macktartan wrote: »

What about the people who have paid into the system all their working lives and now everyone is to receive £144.00 even those who have never paid into the system

You will have to have 35 years of NI contributions to qualify for the £144.

jamesd

jem16 wrote: »

You will have to have 35 years of NI contributions to qualify for the £144.

Not so, credits will be provided. 35 years on benefits for the unemployed will be sufficient. Or 35 years of getting child benefit without ever trying to work. Those who have never contributed in any way at all to the NI system but have only ever been a drain on tax payers will end up with the same state pension as someone who pays NI for a full 50 or so year working life. 35 years of working today would get more in state pension and more total income than 35 years of just child or unemployment benefit, even if on means tested benefits in retirement.

The new system is fundamentally inequitable, replacing means tested benefits from the benefits budget with pension from the NI budget above benefit levels as a right for those who have relied on and should continue to rely on safety nets as a result of failure to contribute even though they are capable of contributing.

itch_for_a_glitch

Help, please !
I qualify for SRP in 2021, I have 35+ years NI contributions (mostly contracted out, I have an occupational pension), what do you reckon I'll get ?
My wife is in a similar situation.

jamesd

Your foundation amount will be reduced because of the contracting out. Once the new system is in place any extra years of working or buying contributions will entitle you to an increase in that until you reach £144. The limit is not just 35 years, once the new system has started, not before.

If either of you looks likely to have work pension plus state pensions that will pay you more than £20,000 a year you should lean about Flexible Drawdown. This lets you pay money into a personal pension and take it all out without any restrictions other than having to be 55 or older. The limit is calculated for each person individually, not a household or couple. The first 25% is tax free, the rest is taxed as normal income in the years in which you take it. It's one of the greatest boons for those with final or average salary pensions in the current pension system. Once you take Flexible Drawdown money you can never again pay any pension contributions, nor can any employers. You can use Capped Drawdown to get 25% plus perhaps 6-8% of the rest a year until you're sure you won't want to make more contributions. The 6-8% increases as you get older.

itch_for_a_glitch

jamesd wrote: »

Your foundation amount will be reduced because of the contracting out. Once the new system is in place any extra years of working or buying contributions will entitle you to an increase in that until you reach £144. The limit is not just 35 years, once the new system has started, not before.

If either of you looks likely to have work pension plus state pensions that will pay you more than £20,000 a year you should lean about Flexible Drawdown. This lets you pay money into a personal pension and take it all out without any restrictions other than having to be 55 or older. The limit is calculated for each person individually, not a household or couple. The first 25% is tax free, the rest is taxed as normal income in the years in which you take it. It's one of the greatest boons for those with final or average salary pensions in the current pension system. Once you take Flexible Drawdown money you can never again pay any pension contributions, nor can any employers. You can use Capped Drawdown to get 25% plus perhaps 6-8% of the rest a year until you're sure you won't want to make more contributions. The 6-8% increases as you get older.

That wont affect me (less than £20k pension in total)
So for my 35+ years contributions I'll get around £110 and someone on benefits all their lives gets £144 ? Sounds about right.

xylophone

So for my 35+ years contributions I'll get around £110 and someone on benefits all their lives gets £144 ? Sounds about right.

Have you read

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

jamesd

itch_for_a_glitch wrote: »

So for my 35+ years contributions I'll get around £110 and someone on benefits all their lives gets £144 ? Sounds about right.

Yes, to start with. You will still be able to pay in after the new scheme comes in to get yourself closer to £144. Not before then, only after. So you'll potentially end up with whatever the contracted out bit pays you plus the £144.

Each person gets a foundation calculation and the calculation under new rules will be more generous to those who have been on benefits for all of their life. At 35 years they wouldn't have been contracted out so their foundation amount would be £144. Their current system payout would be lower but each person will get the higher of the two calculations. They won't be able to benefit from paying in any more after the new system starts.

This is one of the deliberate effects of the new system. It's in effect a liberal redistribution of wealth from the workers to the non-workers.

JezR

On the current system though they would have still got roughly the same amount of money, just with different labels attached.

itch_for_a_glitch

xylophone wrote: »

Have you read

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

I have now ! Thanks.