State Pension in 5 years time and NI

mgdavid

Funding retirement in this situation won't be a problem as you will have an extra couple of years to build up your retirement pot. You just have to accept the concept of working for the extra year or two - or saving a bit extra so you can retire early, which many people already do.

GunJack

mgdavid wrote: »

Funding retirement in this situation won't be a problem as you will have an extra couple of years to build up your retirement pot. You just have to accept the concept of working for the extra year or two - or saving a bit extra so you can retire early, which many people already do.

yes, but how many times can the govt change the goalposts?? THAT's the PITA about it, once fair enough, but more than that? That's when planning and fairness go out of the window.

p00hsticks

GunJack wrote: »

yes, but how many times can the govt change the goalposts?? THAT's the PITA about it, once fair enough, but more than that? That's when planning and fairness go out of the window.

But the goalposts that are moving are actually life expectancy figures - the government is basically shadowing that by moving the pension age so that as far as possible the years a person claims a state pension remain constant. I believe that when the state pension was originally introduced, on average people only received it for a year or two before dying - now we have pensioners who have been receiving it for decades.

If you start to plan your pension at the age of 18, thinking that if you retire at age X and will need to fund a retirement of Y years, then you'll have to revisit those figures a number of times over your working life to check that you're still on track and adjust your targets.

Similarly the state needs to do the same - if life expectancy continues to increase and the government doesn't raise the state pension age to match, then the books won't balance as pension funding will need to be increased.

And remember that we're only talking about State Pension Age, not when people necessarily retire. Like many others, I aim to retire earlier than 66 and so am funding a private pension and investing so that I can afford to do so, even though that has meant less disposable income during my working years. Much of my pension planning is not dependent on State Pension age - the State pension, when it comes, will supplement my income but will not form the bulk of it.

jamesd

GunJack wrote: »

yes, but how many times can the govt change the goalposts?? ... That's when planning and fairness go out of the window.

For the state pensions it seems fair enough. Not so much so for private pensions where what matters is when you get the money you need to retire on. But the plan is to increase that age from 55 to 57 as well, forcing more use of non-pension investing for retirement.

kidmugsy

boxedin wrote: »

how many times can the govt change the goalposts?? THAT's the PITA about it, once fair enough, but more than that? That's when planning and fairness go out of the window.

For most of your working life, you needed to have made 44 years of contributions to get the full, basic state pension. Those bounders in government have lowered that to 35. I trust you will write and tell them not to pay you the full basic pension? I mean, fair's fair, eh?

GunJack

kidmugsy wrote: »

For most of your working life, you needed to have made 44 years of contributions to get the full, basic state pension. Those bounders in government have lowered that to 35. I trust you will write and tell them not to pay you the full basic pension? I mean, fair's fair, eh?

think it was me who posted that...but anyhow, where does 44 years come into it? I only ever remember it being 30, or are you talking about contracted-into SERPS? If that's so, I've only ever been contracted out so may have missed it....

p00hsticks

GunJack wrote: »

think it was me who posted that...but anyhow, where does 44 years come into it? I only ever remember it being 30, or are you talking about contracted-into SERPS? If that's so, I've only ever been contracted out so may have missed it....

Until 2010 men needed 44 years NI contributions to get a full state pension, and women needed 39. The Pensions Act 2007 reduced this to 30 years for both men and women at the same time as it raised the pension age to 66.

boxedin

Thanks for the replies.


The main reason I posted was because I saw a comment on a newspaper article by someone who had calculated that their pension would would drop to £29 per week because of them having contracted out of SERPS due to being in a FS scheme (after all if you are in a FS scheme why do you need a state pension as well). I am assuming £4.25 less for each year lost.


This I am assuming was based on the paragraph already highlighted and discussed


Under the new rules, anyone retiring after April 5th 2016 will need 35 years NI to potentially be eligible for the maximum signle tier rate (c £150), but will have an amount deducted for those years where you were contacted out (and therefore paid less NI).


I will get a further BT19 quote and ask for the foundation amount


I have been diligent about pensions all my life at the expense of short term gratification/property, and would have been in a position to retire had I been made redundant at 50 on a bigger FS pension than I am projected to be on now however things changed such as


Earliest Age at which you could retire changed from 50 to 55
State Retirement age up to 66
AVC's through company were with Equitable Life
Final Salary scheme shut switched to Contributory Pension
Final Salary scheme benefits reduced /withdrawn/frozen
Redundancy terms changed so no pension in the event of redundancy if over the age of 55
Final Salary scheme in deficit reliant on top ups from the company. (not really sustainable)



If only I had have gone in to BTL

jamesd

The reduction from being contracted out isn't the full 1/35th because a person who was contracted out continued to accrue the basic state pension while contracted out. A closer estimate would be (additional state pension) x (years contracted out) / (total years worked).

The real value involves calculating the notional income that a work pension would have to pay under its guarantees for the years contracted out. That value won't be 35ths of the additional state pension amount. This very rough estimate ignores things like years that were never included in the additional state pension total so it'll probably over-state the reduction.

Asking for the foundation amount as you are is the only way to know what it really will be.

dunroving

mgdavid wrote: »

absolutely right; but one cannot help wondering how SP for all will be affordable in 20 to 30 years time, given the current rate of increase in longevity etc.

The way public health is going, I could see life expectancy levelling out sometime in the not-too-distant future, and maybe even going down.