Pension changes 2016

webbit

they encourage you to save for your senior years, and as a railway employee we have a final average scheme, this scheme is a contracted out scheme. This means employees get a 1.4% rebate on NI contributions, this is being abolished by the government, so we will be £20 a month worse off minimum. More stealth taxes by the back door, disgraceful.

atush

It is more disgraceful you are here ranting about what you dont understand.

You dont understand that being 'contracted in' will mean you get a larger SP when you retire. Not to mention your Final Salary scheme is a very good one, great even. And far better than Joe public gets.

The major pensions changes this year do not affect you, unless (wisely IMO) you open a DC pension alongside your current one.

The changes in 2016 re the state pension are going to make sure the lower paid and SE get as good a pension as the higher paid. Not too disgraceful IMO.

232607

Not quite. By ceasing to be contraced out you'll start to build up the difference between the current state pension (approx £110 pw) and the new higher rate (approx £148 pw). This means you'll have a higher state pension than you otherwise wise would as compensation for the loss of £20 pw.

greenglide

Not quite. By ceasing to be contraced out you'll start to build up the difference between the current state pension (approx £110 pw) and the new higher rate (approx £148 pw). This means you'll have a higher state pension than you otherwise wise would as compensation for the loss of £20 pw.

Ermm - no!

Contracting out ends from 6/4/2016 because, from then, there is nothing to contract out from.

The State Second Pension (S2P, previously SERPS, originally Graduated Retirement Benefit (GRAD)) will end then. People who were Contracted Out will pay more, people who are not contracted out will pay the same but will no longer accrue further Additional Pension.

Things change, people in a Defined Benefit are already at a major better scheme so you are still massively better off.

jem16

greenglide wrote: »

Ermm - no!

Can you explain what is wrong with what 232607 stated as far as building up extra pension is concerned?

232607

jem16 wrote: »

Can you explain what is wrong with what 232607 stated as far as building up extra pension is concerned?

Yes I would also be interested to understand what was wrong with my explanation. Looking at my on personnel situation....Contracted out all my working career up to now & will probably retire in 8-10 years. This period should just about,ish give me enough time to catch up to the new higher rate SP. I felt this was relevant to the OP as they would most likely be in the same situation.

Triumph13

232607 wrote: »

I felt this was relevant to the OP as they would most likely be in the same situation.

Unless of course the OP is very close to state pension age and is about to come back shocked and angry now that we've told him he won't get the full single tier pension 'as advertised'!

xylophone

See https://www.gov.uk/new-state-pension/how-its-calculated



"Your starting amount will include a deduction if you were contracted out of the Additional State Pension. You may have been contracted out because you were in a certain type of workplace, personal or stakeholder pension.

If your starting amount is less than the full new State Pension

You may be able to get more State Pension by adding more qualifying years on your National Insurance record after 5 April 2016 (until you reach the full new State Pension amount or reach State Pension age - whichever is first).

Each qualifying year on your National Insurance record after 5 April 2016 will add about £4.24 a week (which is £148.40 divided by 35) to your new State Pension.

Example

You had a starting amount from your National Insurance record before 6 April 2016 of £120 a week.

You have another 5 qualifying years on your National Insurance record after 5 April 2016 (each year adding £4.24 a week to your State Pension) equalling £21.20 a week.

This adds up to £141.20 a week for your State Pension.

If your starting amount is more than the full new State Pension

The difference between your starting amount and the full new State Pension is called your ‘protected payment’.

Your protected payment is paid on top of your new State Pension and increases each year in line with inflation.

Any qualifying years you have after 5 April 2016 won’t add more to your State Pension."

jem16

232607 wrote: »

Contracted out all my working career up to now & will probably retire in 8-10 years. This period should just about,ish give me enough time to catch up to the new higher rate SP.

Yes you should get another £33.92-£42.40 added to your foundation amount which is likely to be the current basic state pension so perfectly correct. Unfortunately I can't do this as already retired and will only receive the basic state pension having been contracted out. Happy enough though as it's what I expected.

jem16

Triumph13 wrote: »

Unless of course the OP is very close to state pension age and is about to come back shocked and angry now that we've told him he won't get the full single tier pension 'as advertised'!

Previous posts indicate he's about 45/46 so it will apply.

webbit

tory stealth tax, and you need 30 years contracted in to get the full "new" state pension