MSE News: Pensioners to be given £25 a week state pension boost

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  • WelshpatWelshpat Forumite
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    And just how is this a good option? After doing the calculations on gov.uk, based on myself (recently retired), female aged 62, to get, say, the maximum extra £25 per week, I would have to pay the government a lump sum of £23,350 in Oct 2015!!!!!!! :eek:Sounds like another name for an annuity to me except it would be government owned!!!


    An ISA seems to be a much better option. At least I would have control over my own money and it's not taxed.
  • greenglidegreenglide Forumite
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    Welshpat wrote: »
    I would have to pay the government a lump sum of £23,350 in Oct 2015!!!!!!! :eek:Sounds like another name for an annuity to me except it would be government owned!!!

    For your £23,350 you would get £1,300 per year (it sounds more as an annual amount to me!) inflation protected by the triple lock (at present) with 50% inheritable.

    For an inflation linked annuity (by CPI, not triple lock) £23,350 would get around £750 pounds or so by my calculations.

    It is a payment guaranteed for life so it is an annuity.

    Could you really get the same in a ISA? Really? Guaranteed?

    Guarantees usually cost a lot more than this!
  • edited 3 April 2014 at 3:00PM
    Jaycee_DoveJaycee_Dove Forumite
    223 Posts
    edited 3 April 2014 at 3:00PM
    As discussed in the earlier thread on this a week or so ago, by far the best option is to defer your pension.


    Example, as a female, aged 61 plus , but with a low pension I reached SPA last May. I have deferred almost a year so far.


    If I defer to May 2015 I will achieve the £25 pw extra pension and be almost at the point of the £150 (or so) pw new SP arriving in May 2016.


    To do this I will not have had to physically pay the government a penny of my savings. Instead I will simply have had to forego taking my pension for 2 years and so 'loaning' then around £13,000.


    At age 62/63 (as I am now) this is far less than I would have to find and pay to the government to achieve the same result (£25 pw extra on my pension) via this new idea.


    It is no contest in my opinion. Deferral by the current generous system (one that will presumably go after the 2016 re-organisation) wins by a mile.


    If you have the savings to buy £25 pw extra then surely you have enough to defer for 2 years.


    Defer and you are the winner. Pay up via this new scheme and you have become the chancellor's new best friend.
  • edited 3 April 2014 at 3:03PM
    greenglidegreenglide Forumite
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    edited 3 April 2014 at 3:03PM
    You could, of course, do both!

    Each has its limit as to how much you can make.

    Or neither.

    Anyone who has just liberated their money from a DC pension scheme could invest it for £1,300 worth of State Pension. Better than joint index linked annuities.
  • SeekTruthSeekTruth Forumite
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    greenglide wrote: »
    For your £23,350 you would get £1,300 per year (it sounds more as an annual amount to me!) inflation protected by the triple lock (at present) with 50% inheritable....
    My understanding is that it is treated identically to Additional Pension; so tied to CPI, not triple-lock.
  • JezRJezR Forumite
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    And you don't have to go back very far to years when CPI valorisation was not properly paid on additional state pensions. (Yes I am thinking of you Mr Darling.) It is always at the government's whim.
  • Jaycee_DoveJaycee_Dove Forumite
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    I am sensing that come the introduction of the new two tier pension in 2016 a lot of people will suddenly wake up to quite a few truths that they had not envisaged.


    Firstly, that someone next door retiring days after they have done, but paying, say, 5 - 10 years LESS in NIC contributions will be getting up to £35 pw MORE in state pension than they are. Forever.


    You can argue all you like about fairness evened out by pension credit or second pension, but the reality is that the ones worst effected will be those who have saved a small amount (ie done the right thing) and so get no pension credit unless they go buy a sports car with those savings first and those who were low earners, had no second pension etc.


    Suddenly a lot of people are going to realise the incredible unfairness of the new flat rate pension. They will see friends and neighbours who worked for years less, blew all their money on holidays and did not take time off to care for family - just stuck them in a home to let the state pay instead perhaps - getting far more state pension than they are.


    They will be told they can 'make up the difference' by paying the government £23,000 pounds (which the ones most in need will probably not have). They will then ask - but why should I have to give the government all my savings to receive the same pension as someone born weeks or months after me get anyway and who have paid in less?


    This is very predictably going to end in tears.


    Whichever government wins the next election is going to face mass protests, possible appeals to the EU over the unfairness of a two tier pension and a voter rebellion.


    The media are seemingly uniformly presenting this new government scheme as a great idea to help those missing out on the new pension.


    Why is nobody out there seeing it as a smokescreen to try to win over those who might spot what is coming in April 2016 and start these protests now?


    For me it looks like a plan to cover their own backsides rather than a way to help the disenfranchised.
  • OblivionOblivion Forumite
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    I am sensing that come the introduction of the new two tier pension in 2016 a lot of people will suddenly wake up to quite a few truths that they had not envisaged.


    Firstly, that someone next door retiring days after they have done, but paying, say, 5 - 10 years LESS in NIC contributions will be getting up to £35 pw MORE in state pension than they are. Forever.



    Exactly. This is where I, as someone just turned 65, am stuck. I have 47 years of NI but will still only qualify for the lower basic rate of state pension for the rest of my life. This government have betrayed us.
    ... Dave
    Happily retired and enjoying my 14th year of leisure
    I am cleverly disguised as a responsible adult.
    Bring me sunshine in your smile
  • Jaycee_DoveJaycee_Dove Forumite
    223 Posts
    Oblivion wrote: »
    Exactly. This is where I, as someone just turned 65, am stuck. I have 47 years of NI but will still only qualify for the lower basic rate of state pension for the rest of my life. This government have betrayed us.



    Are they counting on 'conning' enough into buying what in truth they have already paid for by this new scheme that it will defuse any anger?


    On the face of it this looks a good deal, and in some senses (eg versus annuities) it is. But it really is only an option if you have the money and if you have the money then you don't actually need the extra pension because you have many choices to use it to increase your income.


    The state pension is supposed to be a safety net and a reward for your work over 40+ years. The ones most disenfranchised by the new two tier system are the ones least in a position to afford to buy more per week.


    But the media seems only to be portraying this as a good thing and a nice way to help out those treated badly by the cliff edge in April 2016.


    I hope someone in the media points out what seems obvious to me - that this only helps those already well enough off not to really need it - and does little if anything to shift the essential injustice of having a two tier pension and a steep cliff edge at the changeover.


    The reality of that will dawn over the next 2 years.
  • zagfleszagfles Forumite
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    Oblivion wrote: »
    Exactly. This is where I, as someone just turned 65, am stuck. I have 47 years of NI but will still only qualify for the lower basic rate of state pension for the rest of my life. This government have betrayed us.
    So you get no SERPS/S2P (or equivalent benefits from a contracted out scheme)? Were you self-employed?

    There's a lot of people who will be far worse off under the new scheme. Under current rules today, someone on NMW for they working life would get about £190 in state pension (basic+S2P). Under the new rules they'll get about £144.
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