MSE News: Only 45% of those retiring to get full 'single-tier' state pension 12 January 2015 at 1:43PM in Pensions, Annuities & Retirement Planning 49 replies 5.3K views

Former_MSE_Joanne

"Less than half of those reaching state pension age between 2016 and 2020 will be entitled to a full new state pension, it has been revealed..."

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Only 45% of those retiring to get full 'single-tier' state pension




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redux

Other forum discussion this morning:

http://forums.moneysavingexpert.com/showthread.php?t=5151036

redux

If this becomes more widely known, maybe the government just blew the election

hugheskevi

Less than half of those reaching state pension age between 2016 and 2020 will be entitled to a full new state pension, it has been revealed.

Revealed in January 2013, to be precise.

The current means-tested state pension,

It is not means-tested.

But a freedom of information request submitted by Hargreaves Lansdown has revealed that just 45% of those retiring between 2016 and 2020 are set to receive the full state pension amount.

A Government White Paper in January 2013 showed this.

The Department for Work and Pensions (DWP) insists that no one would lose out as a result of the changes and many people would be better off.

Not a very good description. No-one will lose out in the short run compared to what they would have received, but many will lose in comparison to the current system, potentially significantly, in the longer-run.

"The new state pension will tackle inequalities of the past, with women, carers, lower earners and the self-employed set to benefit the most."

A bit too simplistic, the groups mentioned are too large. It is a shame there is a continuing insistence on presenting this as higher pension, rather than the actuality which is as a pension cut (albeit with winners and losers) with the amount of pension paid out in total significantly reduced in the long-run.

Given this, I find it quite amusing that some are irritated that soon-to-be-pensioners are not going to benefit from a windfall gain (ie getting a lot more pension than they ever expected) whilst nothing is said about young workers who are the big losers from the reform.

redux

It's impossible to edit at the moment.

This is for my post above

If this becomes more widely known, maybe the government just blew the election

Pensions minister Steve Webb last June:

“I have no interest in people not getting what they expect. When I’ve spoken about
new state pension before, I’ve focused on the longer-term, as eventually everyone
will get the full single-tier if they have 35 years of national insurance contributions.
For example, my son starts work in a few years time and he will get the flat-rate,
that’s it.

“In the meantime, some people will get more and others less than the full single-
tier amount.”

http://www.telegraph.co.uk/finance/personalfinance/pensions/10896342/One-million-pre-retirees-to-receive-less-than-155-flat-rate-state-pension.html

jamesd

redux wrote: »

If this becomes more widely known, maybe the government just blew the election

A substantial number also don't get the current full basic state pension, for the same sorts of reasons. It's not a big deal, it's what was expected when it was introduced.

atush

AND no mention here or elsewhere that many who WONT get the full new SP were contracted out and either have separate DC pots in reflection of this, or in DB schemes getting a stonking retirement (that they deserve of course- no public sector bashing here).

dunstonh

This is stating the obvious and was known about years ago.

redux

atush wrote: »

AND no mention here or elsewhere that many who WONT get the full new SP were contracted out and either have separate DC pots in reflection of this, or in DB schemes getting a stonking retirement (that they deserve of course- no public sector bashing here).

Fine for employed people but ...

I'm considering an example of someone a few years older than me.

What happens for someone aged 60 in April 16, self-employed since age 16 so 44 years contributions? Do they transfer to the new scheme with a starting value of currently £113.10, and add £4.24 a week per year of contributions for the next 6 or 7 years, or do they already have the full new £148 pension built in?

atush

Self employment is a choice in the main. And private pension savings should be part of it?

Anyway, age 62 is too young to retire so Nics will continue, earning them closer to the flat rate for each year worked after 2016. they can also buy extra SP, although the details aren't completely set yet?

greenglide

redux wrote: »

Fine for employed people but ...

I'm considering an example of someone a few years older than me.

What happens for someone now aged 60, self-employed since age 16 so 44 years contributions? Do they transfer to the new scheme with a starting value of currently £113.10, and add £4.24 a week per year of contributions for the next 6 or 7 years, or do they already have the full new £148 pension built in?

Someone self employed who has never contracted out who has 35 years contributions will get the full rate of nSP.

This is true of anyone who has never contracted out and has 35 years - they will get at least the full nSP rate.