Single Tier Pension Deduction

greenglide

kidmugsy wrote: »

That sounds to me as if one of his political advisers has made a blunder in drafting the speech. It can safely be ignored, I suggest.

Unless they intend reducing the pension credit amount;)

SnowMan

There was an item on moneybox yesterday about those close to State Pension Age who are now able to get statements of their estimated entitlement under the transitional arrangements of the new state pension system (it's the first item starting at 42 seconds)

http://www.bbc.co.uk/programmes/b04k2lrx

They are manually calculating statements allowing for the new system for those born before 5th August 1955 (who also reach State Pension Age after 6th April 2016 when the new system comes in).

So the new statements can be requested by:

males: born between 6th April 1951 and 5th August 1955, and
females: born between 6th April 1953 and 5th August 1955.

Yorkie27

Thank you for the information on the money box programme which was very helpful.

With the calculations being done manually I will now write and see how this has been worked out and see if it is correct

xylophone

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

Had you seen this?

greenglide

Yorkie27 wrote: »

With the calculations being done manually I will now write and see how this has been worked out and see if it is correct

What exactly do you think is wrong?

You have been contracted out for all of your working life so you have a large rebate derived amount. Because the old rules calculation gives you more than the new rules calculation so you get that.

You were never going to get the full nSP amount (the £144 amount that was discussed) because of the rebate derived amount. This is the way it was supposed to work.

At least with being in the public sector you will get all of your GMP inflation proofed by the pension scheme (DWP inflation proofing ends for people with a SPA after 5/04/2016) private sector schemes would appear not to have to take on this responsibility.

SnowMan

Interesting report from the DWP about the number of people receiving a new State Pension statement

Remember here we are talking about

males: born between 6th April 1951 and 5th August 1955, and
females: born between 6th April 1953 and 5th August 1955.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/375692/state-pensions-statement-statistics-nov-2014.pdf

Table 1 is the interesting part of that.

80% of individuals who have requested a statement have the starting amount based on the current scheme rules and around 20% are based on the new scheme rules.

However there is a gender split:

90% of males who have requested a statement have the starting amount based on the current scheme rules and around 10% are based on the new scheme rules.

65% of females who have requested a statement have the starting amount based on the current scheme rules and around 35% are based on the new scheme rules

JohnB47

SnowMan wrote: »

80% of individuals who have requested a statement have the starting amount based on the current scheme rules and around 20% are based on the new scheme rules.

Just taking that part as an example, does this mean that for 80%, the calculation based on the current system produced a starting amount that was greater than that calculated under the new? And that for 20% the calculation based on the new system produced the higher starting amount?

SnowMan

JohnB47 wrote: »

Just taking that part as an example, does this mean that for 80%, the calculation based on the current system produced a starting amount that was greater than that calculated under the new? And that for 20% the calculation based on the new system produced the higher starting amount?

Yes.

Although that is based on contributions to date.

It is hard to draw conclusions from the figures.

It doesn't mean that 20% of this age group are better off under the new system of course. For example under the existing system an individual might have accrued additional state pension after 6th April 2016 to push them up to and above the single tier pension by the time they reached SPA. In that case they would actually be worse off at SPA even though their starting amount might have been higher under the new system.

Also the sub-group of the 80% who have already earned more than the full single tier pension under the existing scheme will be potentially worse off than had the existing scheme continued because they won't be able to accrue further state pension after 6th April 2016.

But some of those who have their starting amount based on the existing system (and whose starting amount is below the full single tier pension amount), for example some who have contracted-out for most of their working lives, could actually be better off than had the existing system continued, because they could be accruing more state pension after 6th April 2016 under the new scheme than under the existing scheme.