Pension changes 2016

atush

You irritated me by making false claims, and not checking facts before your rant. I will appologize only for the maths o level comment the rest stands.

You will need 35 years, get a pension foudnation amt in april 2016. Any years of nics after that will help bring you up to the full rate.

Larger earners, and those in DB pensions will lose out under the new system. To make it more fair to the lower paid and SE.

But there are further restrictions incl a new min period of 10 years contribs to get any pension. Currently you can get a SP entitlement with only a few years worked.

DB pensions, esp publicly funded ones, are a great burden on the nations finances and taxpayers. To keep them going (instead of ending them) they have to be adjusted to make them more fair and affordable as people are living longer.

It is life.

C_Mababejive

I may be wrong but i think a lot of people were mis-informed or indeed not informed about what contracting out meant. It wont have as great an impact on those who are is FS/DB schemes but for many others ,the simple fact is that many of them were told by employers that it is good for them to contract out as they will save NI deductions from their pay..no mention as to what they would loose. The motivations for those employers are that it would save them money and a lot of admin.

I think that had people been properly informed at that time as to what the real implications were, a good proportion of them would never have contracted out.

jamesd

roy_c wrote: »

In total I will have worked about 42 years, contracted out about 24 years at the lower NI rate but even so £67.84 sounds very low for someone that has paid NI for all those years.

This means that your foundation amount will probably be about £130-140 a week.

At the start of the flat rate a foundation amount will be calculated for each person. There are two parts, that, old rules and new rules. You can forget the new rules calculation because for someone who has contracted out a lot it will be the lower of the two numbers and you get the higher of the two.

The old rules calculation starts out with the basic state pension. A person needs to pay in for 30 years to get the full basic state pension so that's the least you'll get. You'll also get something extra for the 18 years when you weren't contracted out. You might even already have more entitlement under the current rules than the flat rate level.

If your foundation amount is less than the full flat rate each year that you work after the flat rate comes in or each year you buy after that will increase your state pension by 1/35th of the flat rate until you either reach the maximum flat rate or state pension age.

So it's likely that you'll be able to get the full flat rate, at worst by buying some extra years after you stop normal work.

jamesd

webbit wrote: »

tory stealth tax

The last Labour government introduced the first flat rate measure when they introduced the Upper Accrual Point for the earnings-related state pension contributions with the plan being never to increase it, so gradually it would move towards nobody getting any earnings-related part to their state pension.

The Liberal Democrat policy was to do that faster and so with them in coalition we have that Liberal Democrat policy and the elimination of earnings related accrual for state pensions from April 2016.

So the correct people to blame if you don't like it are Labour for first introducing it and the Liberal Democrats for making it happen faster.

webbit wrote: »

you need 30 years contracted in to get the full "new" state pension

For a person working only under the new system it is 35 years. For a person who worked for a long time under the current system they could have more than the flat rate in as little as fifteen or so years from the combination of basic state pension and earnings-related additional state pension. Once they get to that maximum it doesn't matter how much more you work and pay NI, you get no more state pension for your money.

Under the previous system you'd continue increasing your earnings-related part for as long as you worked and weren't contracted out and hadn't reached state pension age. If contracted out the work scheme or personal pension pot would pay the extra instead of the state pension.

So blame Labour and the Liberal Democrats for taking state pension money from ordinary working people to give it to those who haven't worked much. It's a cut from around £190 under current rules to around 150 or whatever the flat rate ends up beings for a low earner with a full working life.

agarnett

atush wrote: »

You irritated me by making false claims, and not checking facts before your rant. I will appologize only for the maths o level comment the rest stands.

You will need 35 years, get a pension foudnation amt in april 2016. Any years of nics after that will help bring you up to the full rate.

Larger earners, and those in DB pensions will lose out under the new system. To make it more fair to the lower paid and SE.

But there are further restrictions incl a new min period of 10 years contribs to get any pension. Currently you can get a SP entitlement with only a few years worked.

DB pensions, esp publicly funded ones, are a great burden on the nations finances and taxpayers. To keep them going (instead of ending them) they have to be adjusted to make them more fair and affordable as people are living longer.

It is life.

It may be life where you come from, Jim, but it ain't as we know it!

I think you thoroughly deserved that rebuke from the OP.

British Railway workers of any reasonable vintage have been through a lot in their careers and at times, it is probably only the thought of their pension maintaining some stability that has kept them working where they do.

You asked the OP if he got a Maths O'level. I think you deserve to be asked the same question, because something tells me you didn't.

The effect of changes of the past few years on contracted out arrangements are an almighty mess.

One poster suggested that the OP will have been investing NI rebates as part of the contracting out into his own personal pension. Are we sure about that ? If the OP started pre-1987 and has remained in the same DB scheme ever since, then it may be that he has no separate SERPs or S2P personal pension. The contracted out bit is all wrapped up inside his DB scheme, and as clear as mud to decipher.

Another poster said the OP is in the group that stands to get the most out of the changes - in view of the reluctance of employers to meet their true liabilities in DB schemes, and the government's noises encouraging them to renege (good railways word that one, which atush may never have heard unless he was around at the time!) I wouldn't be quite so sure about that either.

It is quite clear from the other railway workers who have joined the thread that there is real concern amongst them as a group.

Pensions were always meant to be very long term promises. They've been dismantled left right and centre in ways which threaten to break, and in many cases long ago broke, the original promises.

Workers have been caused to be looking at their pension promises at this time far more carefully and cynically than ever before.

It is not up to regulars in this forum to smack them down when they dare to call foul, because foul it actually is. So please try to keep your hair on! Whether there is any advantage to be played still very much remains to be seen.

Personally I think we've been seeing just as much smoke and mirrors lately from both government and industry as we might from any burning hairdressers!

coyrls

agarnett wrote: »

One poster suggested that the OP will have been investing NI rebates as part of the contracting out into his own personal pension.

I don't think he contracted out into his own personal pension, I think his DB scheme was contracted out, i.e. the contacted out contributions went into the DB scheme.

webbit

coyrls wrote: »

I don't think he contracted out into his own personal pension, I think his DB scheme was contracted out, i.e. the contacted out contributions went into the DB scheme.

That is correct, but as some people have said I will be better off by getting a larger state pension, all well and good, but as I have said the railway companies will be millions worse off also and they way they plan to claw it back, will mean reduced benefits when we eventually are able to start drawing on it, ie the rate at which the benefits are calculated , so what we get in one hand we lose in the other. It will still probably be better to stay in the scheme, for the death in-service benefits.

coyrls

webbit wrote: »

That is correct, but as some people have said I will be better off by getting a larger state pension, all well and good, but as I have said the railway companies will be millions worse off also and they way they plan to claw it back, will mean reduced benefits when we eventually are able to start drawing on it, ie the rate at which the benefits are calculated , so what we get in one hand we lose in the other. It will still probably be better to stay in the scheme, for the death in-service benefits.

It's pretty much certain that is will be better to stay in the scheme, regardless of death in-service benefits.

SJG1

webbit wrote: »

That is correct, but as some people have said I will be better off by getting a larger state pension, all well and good, but as I have said the railway companies will be millions worse off also and they way they plan to claw it back, will mean reduced benefits when we eventually are able to start drawing on it, ie the rate at which the benefits are calculated , so what we get in one hand we lose in the other. It will still probably be better to stay in the scheme, for the death in-service benefits.

Also have to add they take the basic state pension into account when working out our final pension. It is x/60ths minus the basic state pension. I know with Network Rail it is minus 1.5 x the basic state pension. So with a big jump in the state pension under the new system will we see a big reduction in our final salary pension? Yet to be seen what happens there.

atush

there are a think 2 bits of the nwew pension, basic rate, and higher total flat rate (for those w/enough years or who made S2P contribs before 2016
)

So would imagine it will be minus the basic, but you'd need to ask your union or the administrators.