MSE News: David Cameron - We will give pensioners security and dignity

jamesd

ebjb wrote: »

We saved for our retirement but all our savings mean nothing with the interest rates so low

You might want to start a topic of your own in this section that says how much you have and how you're currently using it. There are usually things that can be done to increase the income available.

ebjb wrote: »

These new rules for pensioners are a slap in the face for present pensioners and David Cameron should be ashamed of himself.

He has the option to defer his state pension, which can be done once even after claiming it. The pension will be increased by 1% for every five weeks of deferral, 10.4% a year. He'd also get the usual inflation-linked increases. Part of the increase can be inherited by you. This is a very good deal if he's in normal good health, better than the buying more pension option at his age and better than open market annuities - around three times as good. The rate for those who reach state pension age after the flat rate comes in is about half of this.

Those who reach or reached state pension age before the flat rate comes in will also be able to buy more state pension from late 2015. The cost depends on the age of the person. For a person in normal good health or better it looks like a fairly good deal compared to the interest rates of current mainstream savings accounts. At his age this is not as good as deferring. This option is not available to those who reach state pension age after the flat rate comes in.

ebjb wrote: »

WHERE on earth are you getting this information from james d ? My husband worked for 50 years from age 15 until age 65 - low paid but paid full national insurance contributions all these years, and now at age 67 gets the grand (?) sum of £144.17p per week state pension (not the £190 you have quoted for a low earner)

I'm using the current rules, not the ones that applied for your husband or the ones that will apply under the flat rate system.

For your husband there are two main possibilities, or some of each:

A. He could have spent a lot of time in contracted out work pension schemes. That would reduce the Additional State Pension part of his state pension but he'd get the money instead from a workplace pension. I don't know if he paid into any of these workplace schemes so I can't allow for years in them.

B. The earnings-related parts changed over time, becoming more generous to low earners each time:

1. In 1961 the State Graduated Pension was introduced, which is shown as Graduated Retirement Benefit on pension statements, and this continued until 1975.
2. In 1978 SERPS was introduced to replace the State Graduated Pension.
3. In 2002 the State Second Pension was introduced and greatly increased state pension accrual for low earners.

I don't know when our husband reached 65 so I can't say how long he spent in each of those systems. In general, the more recently he reached state pension age, the more he'd get if he was a low earner because he'd have more time under the S2P rules.

ebjb wrote: »

Now under the new rules you only have to work 30 years to get the new basic rate which is MORE than my husband's £144.17p - where is the fairness in that I would ask Mr Cameron?

It's people getting the benefits that they were paying for for others when they retire themselves. Your husband was paying NI to pay for the state pensions of those under the SGP, SERPs then S2P systems and is getting what he's entitled to for those systems.

ebjb wrote: »

It's a disgrace that pensioners who worked all these extra years will be getting less on the old rules than those on the new rules.

Under the new flat rate rules low through high earners all get their state pensions cut to pay for the higher pensions for non-workers. It would be unfair to cut the pensions of existing pensioners to increase the state pension of your husband and others with less than the flat rate. Those other pensioners paid in when those were the rules and deserve the higher pensions that they are entitled to under the rules that applied when they paid in.

ebjb wrote: »

If we had our time over we wouldn't save for our retirement, but spend every penny. That way we would get extra help in our old age.

You could. Then you would have to live on what the rest of society thinks is the minimum it takes to live on, instead of more. The means tested systems aren't intended to be good living, just a safety net.

zagfles

jamesd wrote: »

I'm using the current rules, not the ones that applied for your husband or the ones that will apply under the flat rate system.

For your husband there are two main possibilities, or some of each:

A. He could have spent a lot of time in contracted out work pension schemes. That would reduce the Additional State Pension part of his state pension but he'd get the money instead from a workplace pension. I don't know if he paid into any of these workplace schemes so I can't allow for years in them.

B. The earnings-related parts changed over time, becoming more generous to low earners each time:

1. In 1981 the State Graduated Pension was introduced,

1961

which is shown as Graduated Retirement Benefit on pension statements..
2. In 1978 SERPS was introduced to replace the State Graduated Pension.
3. In 2002 the State Second Pension was introduced and greatly increased state pension accrual for low earners.

I don't know when our husband reached 65 so I can't say how long he spent in each of those systems. In general, the more recently he reached state pension age, the more he'd get if he was a low earner becuase he'd have more time under the S2P rules.

Yes so someone on low pay would only get the benefit of the current rules for 2002 accrual onwards. So it's a bit misleading to quote the £190pw figure as that applies to nobody - nobody has a full working life under the post 2002 rules. It's a theoretical amount that would apply if the current rules continued for another 40 years.

It's clear from this and other threads that the govt spin on this has completely backfired. You've got existing pensioners incensed that this wonderful new "higher" pension doesn't apply to them. You've got people who retire shortly after 2016 incensed that their "flat rate" pension is reduced massively because they contracted out, in return for govt subsidy of their contracted out scheme.

A lot is sheer ignorance or just the usual clueless political ranting, but I'm wondering if the govt could consider applying the new rules to existing pensioners. It might not cost that much - for recent pensioners they'll have benefitted from the post 2002 rules and so often have enough S2P to make their pension more than the flat rate. For older pensioners obviously any increase will be paid for less time in general, and those who do get an increase are likely to be those who've been in low paid employment and so less likely to have savings/other pensions, so more likely to be on pension credit/housing benefit - any extra state pension will reduce these.

And for those who've contracted out - it'll demonstrate that the massive benefit of the govt subsidy into their contracted out scheme will massively reduce their "new rules" calculation, so maybe they had nothing to whinge about in the first place, they are better off as they are!

Nick_C

ebjb wrote: »

WHERE on earth are you getting this information from james d ? My husband worked for 50 years from age 15 until age 65 - low paid but paid full national insurance contributions all these years, and now at age 67 gets the grand (?) sum of £144.17p per week state pension (not the £190 you have quoted for a low earner) Now under the new rules you only have to work 30 years to get the new basic rate which is MORE than my husband's £144.17p - where is the fairness in that I would ask Mr Cameron?

And under the new rules, your husband wouldn't get his pension until he is 68!

Things change. The pension crisis has been looming and foreseeable for the last 30 years, but successive governments have failed to tackle the problem effectively until now.

As a nation, we cannot continue spending money that we don't have.

Trix3y

The first thing I would like to take issue with is David Camerons assertion that the new pension,heating allowance plus free bus pass enable retired people to live comfortably. I sometimes wonder what planet politicians inhabit. Has he or any of his wealthy ministers tried to exist on the state pension. It is a disgustingly low amount for the years many have worked and contributed too,and is one of the lowest in Europe and the civilised world. It is no good keep telling people to save for retirement,you need to earn a decent income before you can save any money. The generation that are now retired had to deal with high mortgage rates and very average salaries (although I accept things are not much better for many young people now).In respect of the heating allowance,this amount has not risen in years despite the huge increases in gas and electricity. In reality a cold winter will mean many older people sitting in unheated rooms unable to afford to heat their homes properly. A national scandal in the 21st century,especially when this country appears to spend money in other countries without a problem.As for the bus pass although welcome ,due to cuts in funding many bus services are being cut particularly in rural areas leaving people trapped in their homes.The so called interest rates on savings which many retired people enjoyed in the past as a means to be able to live on have now all but gone. The Governor of the Bank of England apologized for this a few months ago but said there had to be losers in this recession.So officially anyone who retired in the past five years, and who was relying on earning some interest on any small savings they had accumulated, have had this wiped out. What a way to treat a section of the population. No wonder a lot of the voting public is moving away from the main parties,fed up totally with being lied too and patronized by a group of society that have no connection whatsoever with the people they are supposed to serve.I see very little in the media about savings. I presume they all believe retired people are living the high life,are all rich and are drowning in shares,bonds and holidays!

dunstonh

The first thing I would like to take issue with is David Camerons assertion that the new pension,heating allowance plus free bus pass enable retired people to live comfortably. I sometimes wonder what planet politicians inhabit.

Its not meant to live comfortably. It is meant to be the minimum.

It is a disgustingly low amount for the years many have worked and contributed too,and is one of the lowest in Europe and the civilised world.

Actually, it is not actually one of the lowest. That is myth based tables that only show the basic state pension not the inclusion of Graduated, SERPS and S2P and importantly, pension credits and associated benefits.

It is no good keep telling people to save for retirement,you need to earn a decent income before you can save any money.

Why not?

he generation that are now retired had to deal with high mortgage rates and very average salaries (although I accept things are not much better for many young people now).

High mortgage rates for about 4 years in their 40 year working life. However, they also benefited from much higher investment returns than those of today. They also had MIRAS.

So officially anyone who retired in the past five years, and who was relying on earning some interest on any small savings they had accumulated, have had this wiped out.

Relying on savings interest for income in retirement is not a good thing to plan to do. Interest rates do not keep up with inflation over the long term and using the interest to live on means the capital falls in value over the long term which in turn means the interest falls in real terms and capital erosion will be inevitable.

No wonder a lot of the voting public is moving away from the main parties,fed up totally with being lied too and patronized by a group of society that have no connection whatsoever with the people they are supposed to serve.

To parties that have no solution to the problem and dont need to say what their options are because some people are silly enough to believe they will be able to do something that the main parties cannot do.

Nick_C

Trix3y wrote: »

The first thing I would like to take issue with is David Camerons assertion that the new pension,heating allowance plus free bus pass enable retired people to live comfortably. I sometimes wonder what planet politicians inhabit. Has he or any of his wealthy ministers tried to exist on the state pension. It is a disgustingly low amount for the years many have worked and contributed too,and is one of the lowest in Europe and the civilised world. It is no good keep telling people to save for retirement,you need to earn a decent income before you can save any money. The generation that are now retired had to deal with high mortgage rates and very average salaries (although I accept things are not much better for many young people now).In respect of the heating allowance,this amount has not risen in years despite the huge increases in gas and electricity. In reality a cold winter will mean many older people sitting in unheated rooms unable to afford to heat their homes properly. A national scandal in the 21st century,especially when this country appears to spend money in other countries without a problem.As for the bus pass although welcome ,due to cuts in funding many bus services are being cut particularly in rural areas leaving people trapped in their homes.The so called interest rates on savings which many retired people enjoyed in the past as a means to be able to live on have now all but gone. The Governor of the Bank of England apologized for this a few months ago but said there had to be losers in this recession.So officially anyone who retired in the past five years, and who was relying on earning some interest on any small savings they had accumulated, have had this wiped out. What a way to treat a section of the population. No wonder a lot of the voting public is moving away from the main parties,fed up totally with being lied too and patronized by a group of society that have no connection whatsoever with the people they are supposed to serve.I see very little in the media about savings. I presume they all believe retired people are living the high life,are all rich and are drowning in shares,bonds and holidays!

The current rate of Pension Credit is £226.50 per week for a couple. Its not a fortune, but you should be able to live comfortably on that; many people live on far less, including working people.

Pensioners don't have the same costs as working people. We have time to shop around and get bargains. We have the time to cook meals from scratch. We don't have to pay the cost of getting to work, or have to buy work clothes. I am amazed how cheaply I can live since I stopped work, and I'm fed up with winging selfish pensioners.

The generation that suffered high mortgage interest rates also saw massive wage inflation and house price inflation. Yes, I remember 15% mortgage interest rates, but my home (now worth around £170K) only cost me £25K and is paid for. Many pensioners who are home owners have the option of downsizing and releasing capital.

I wouldn't like to be starting out again. I went through higher education with a generous grant and my fees paid. Young people who want to get a degree start their working life with massive debts and unaffordable housing.

Pensioners - some of you don't know when you are well off!

Doc_N

Trix3y wrote: »

The first thing I would like to take issue with is David Camerons assertion that the new pension,heating allowance plus free bus pass enable retired people to live comfortably..........

........As for the bus pass although welcome ,due to cuts in funding many bus services are being cut particularly in rural areas leaving people trapped in their homes.

There's an ominous silence as to what's going to happen to the bus pass after next May - so far as I'm aware no party has committed itself to keeping it, but there have been plenty of veiled threats about removing it, or means-testing it.

I suspect that situation will change as we approach the General Election and the opinion polls give a clearer picture. Whichever party (if it's just one) gives a firm commitment to retaining it on a universal basis could well pick up enough votes to make a substantial difference to the outcome of the election - and to the political shape of the next government.

Any party not giving such a commitment could lose the election over it - large numbers of voters, and voters who are prepared to turn out and vote!

The costs of the scheme are always exaggerated, and the benefits always underplayed. Anyone threatening to remove the universal bus pass is likely to regret it later.

Trix3y

Thank you to the above person for destroying my post but I stand by every word I have said.(Glad to read of some Tory support,not much evidence of it in the other posts) It seems to be how society is now, I am comfortable so everyone else must be !!!!less. Just for the record, I worked for 44 years and contributed to the system the whole time. I worked in the caring profession so did not earn a high salary, and therefore could not save a lot towards my retirement. I had to bring up children on my income only but worked so I did not have to draw any benefits,only child benefit which everyone got. I am afraid despite you cherry picking my post, I do not feel that I receive an adequate pension for the amount I actually contributed. As many other people have posted, it seems you need to be either working in a well paid job and therefore can afford to pay into a decent private pension, or else not work and just continue with state support and any extras provided.

mgdavid

Trix3y wrote: »

..... I had to bring up children on my income only ..........

Sounds like there's a back story here that hasn't been shared with us?

Edwardbear

Firstly its not much use writing lots of views on MSE unless you also worry the pants off your MP, write every day if need be and if you have time to write so much every day on MSE you have time to annoy your MP.Exactly why will there be a new pension deal for those of a certain age leaving older pensioners on a lower rate, seems odd and totally unfair.I recall quite recently a proposal that as long as you had a few years in contributions you would get a full pension, making a fool of those who had contributed for 40 years, but then all governments just tie us up in knots , with reams of rules, which they change on a regular basis.Has any other single person out there realized they are being discriminated against because they only get a 25% rebate.The Council Tax introduced by the government then they wash their hands of it and let the Councils make up their own rules and before long that 25% will be removed as government reduces funding further and then all you single people will be subsidizing even further those households of 2 or more adults.Why does this government keep crowing on that the personal allowance is rising and everyone will get it, when they know once you have a certain income, which is still within the 20% bracket, they will claw back that personal allowance, more deviousness and lies.How does this government decide that for example a knee operation should be fully funded on the NHS, yet if you are almost blind you have to pay for a lifetime of expensive high prescription lenses and if your teeth are aching and falling out you have to remortgage to pay for dental care because few dentists want to work for the NHS.