Pension forecast April 2016

ekeir

Thank you Jem16. for a civilised response.
I should say first of all that my logic was obviously faulty and I never said otherwise. Secondly if the information that I would get no more under the new rules was on the internet I never found it. I certainly never saw it stated in this forum.
The faulty logic I applied was that the new system is supposed to far more efficient and cost neutral. Assuming then that saving is passed on to all pensioners then that would be a small increase. Note that I have never said that I expected to get more. Only that I thought I might get more. In fact at first I feared I might get less simply because I have a distrust of all governments.
I am not disappointed with what I am getting I was just shocked to see what they were quoting i.e. "new state pension rules" £70, "existing state pension rules" £120.
I retire towards the end of April 2016.

zagfles

We've had several long threads on here discussing this. Including loads of people who are totally incredulous that they aren't better off under the new rules! So you're far from alone.

The problem seems to be the way the govt have spun it and the way the media have reported it.

The fundamental misunderstanding seems to be the assumption the flat rate pension is replacing just the basic state pension.

It isn't. It's replacing the basic state pension and the additional state pension (SERPS/S2P) and contracting out.

For most people the old scheme gave a better deal. As your quote shows. Most people accrue more than £35 or so in additional state pension or contracted out equivalent, so they're worse off under flat rate.

But of course there have to be transitional rules, as people make plans based on current rules, so people are given the amount they've accrued under the old rules if that's more (as it usually is).

There are some winners under the new rules, eg the self-employed who never got any SERPS/S2P and people who got credits which only counted towards the basic state pension.

jem16

ekeir wrote: »

Secondly if the information that I would get no more under the new rules was on the internet I never found it. I certainly never saw it stated in this forum.

That's what I was confused with. You seem to have taken part in a few threads on here regarding the new pension. Your last thread seemed to have confirmed that you were going to get less than the full flat rate and jamesd more or less told you that your current forecast under the old rules would probably be what you get. That thread was a year ago.

https://forums.moneysavingexpert.com/discussion/comment/63449496#Comment_63449496

seven-day-weekend

So....under the new system someone who has paid in for 39 years and contracted out, gets less basic SRP than someone who has not paid in at all?

Under the old scheme, even if you contracted out, you got the basic SRP.

Have I understood this correctly?

(ETA: Just seen zagfles' post above which partially explains it, thanks).

jem16

seven-day-weekend wrote: »

So....under the new system someone who has paid in for 39 years and contracted out, gets less basic SRP than someone who has not paid in at all?

Under the old scheme, even if you contracted out, you got the basic SRP.

Have I understood this correctly?

No, not quite.

I have been contracted out for all of my working life. My current forecast shows I'm entitled to only the basic state pension. That's what I will get.

seven-day-weekend

jem16 wrote: »

No, not quite.

I have been contracted out for all of my working life. My current forecast shows I'm entitled to only the basic state pension. That's what I will get.

Yes, you will get the Basic State Pension, I understand that. What I don't understand is why someone who has contracted out, under the new scheme, will only get £70 (as in the OP). That's LESS than the basic.

I didn't realise that the new flat rate includes all the add-ons, until I read zagfles' post above, but even so, the basic rate now is more than £70, surely it's not going to be less in 2016?

OldBeanz

My brother with a maths degree who has only worked in the public sector told me recently that the change to £144 per week would be an unexpected bonus when he retired in 2016.
There is a great deal of ignorance re this change.

greenglide

seven-day-weekend wrote: »

Yes, you will get the Basic State Pension, I understand that. What I don't understand is why someone who has contracted out, under the new scheme, will only get £70 (as in the OP). That's LESS than the basic.

I didn't realise that the new flat rate includes all the add-ons, until I read zagfles' post above, but even so, the basic rate now is more than £70, surely it's not going to be less in 2016?

No.

If you have 30 years under the current rules you will get at least the current basic £113 plus any AP from SERPS/S2P.

If you have 35 years and have never been contracted out you will get at least £144. If you have been contracted out the new rules amount is reduced by the rebate derived amount but you still get, at least, the old rules amount.

Government really likes to simplifying things! Probably why it is no longer called "flat rate pension" or "single tier" - it is now "new State Pension".

In around 10 years or so it will be more "flat rate" as the transition rules work themselves out but people will be paid under the old system for over 40 years!

seven-day-weekend

So if someone has, say £44 pw in contracted out add-ons, under the new system they will get £144 - £44 = £100 from State Pension? (Made up to the current basic).

Plus of course the amount from the Pension they were contracted into.

So it works out really the same.

drumtochty

Yes, seven day apart from one little fact..

Lets say you have a rebate derived amount of £44 as you illustrated.

So your new system pension is £100 and your old system is £113 so you get te higher.

Now say the pension you were contracted into was total crap and the payment is only £25 a week.

The government in the House of Lords debated said that is tough so you may well get less pension added on from your other pension than was reduced by the rebate derived amount.

Yes a simplified flat rate pension.