Old and new state pension

Independent

When the new state pension kicks in (Apr 2016 is it ?) will older pensioners on the old state pension (£115pw approx) have their pension increased to the new level (£149pw approx). Sorry about the approximate figures for date and amounts.

jem16

Independent wrote: »

When the new state pension kicks in (Apr 2016 is it ?) will older pensioners on the old state pension (£115pw approx) have their pension increased to the new level (£149pw approx). Sorry about the approximate figures for date and amounts.

No they won't.

If anyone is just on the current basic state pension of around £113pw, it's more than likely that they were in a contracted out pension scheme. If that's the case they would get less then the new state pension amount of £148pw as that would only be got for someone with the full 35 years and no contracting out. Anyone with that kind of NI record will already be receiving well more than £148pw.

Independent

jem16,

Thanks for the answer. I do feel an injustice here as older pensioners are being penalised.

The old basic state pension is £113/115 approx.
The new basic state pension is £148. approx.

These are the base amounts before extra contributions add to these amounts.

How can this be fair.

molerat

Definitely unfair. Under the old scheme you can get up to £280.31 per week, under the new £151.20. It cuts both ways.

seven-day-weekend

Independent wrote: »

jem16,

Thanks for the answer. I do feel an injustice here as older pensioners are being penalised.

The old basic state pension is £113/115 approx.
The new basic state pension is £148. approx.

These are the base amounts before extra contributions add to these amounts.

How can this be fair.

The £113 will have add-ons. The £148 won't. Many people already have more than £148 per week.

greenglide

But to get £280 per week you would need to have earned it by paying in to GRAD / SERPS / S2P over the years. Anyone who has accrued that level of AP would tend to be over the nSP maximum already and will get this as the "Protected Payment" when they reach SPa.

People who have been contracted out for most / all of their working life havent paid into SERPS / S2P so it is quite reasonable / sensible that during the transition they don't get significantly more that previously.

Anyone who has never been contracted out will find it difficult to get just the basic pension as "most" would have accrued AP. In particular when S2P replaced SERPS the low paid accrue more AP than they used to.

The people that the old system failed were people who worked part time in more than one job and the self employed.

Is it perfect. No.

In the long term is it better than the old system? Yes.

Is the transitional protection perfect? Of course not. How could it be?

mumps

Independent wrote: »

jem16,

Thanks for the answer. I do feel an injustice here as older pensioners are being penalised.

The old basic state pension is £113/115 approx.
The new basic state pension is £148. approx.

These are the base amounts before extra contributions add to these amounts.

How can this be fair.

I won't get my pension till 64 years 9 months, if I was a bit older I could have retired at 60. I won't even benefit from the new pension as my old pension is also exactly the same, within pence I think. Personally I am more worried about the extra years at work or years with lower income. I am my husbands carer, have been for over 20 years and feel worn out.

Just wanted to add not everyone will get the £148, e.g. if they haven't got enough years or were contracted out.

Mojisola

Independent wrote: »

Thanks for the answer. I do feel an injustice here as older pensioners are being penalised.

The old basic state pension is £113/115 approx.
The new basic state pension is £148. approx.

These are the base amounts before extra contributions add to these amounts.

How can this be fair.

If you retire under the old scheme with an income of less than £151.20, you can claim Pension Credit.

Is that still going to be the case under the new pension system?

jamesd

Independent wrote: »

When the new state pension kicks in (Apr 2016 is it ?) will older pensioners on the old state pension (£115pw approx) have their pension increased to the new level (£149pw approx). Sorry about the approximate figures for date and amounts.

No, nor should they.

If a person had a sufficiently full working life as an employee to get the £115 basic state pension the only way that they could have just that is if they were contracted out of the additional earnings-related state pension (SERPS and more recently S2P). These people or their employer chose to have that money used to increase the value of their private pension instead of their state pension. That's where the money is coming from, the employer or other private pension, not the state pension. It hasn't vanished, it's just being paid by someone else, and probably at a higher level too.

For the transition period those who haven't reached state pension age when the flat rate comes in will get the chance to continue working for longer, up to state pension age, paying full NI to increase their pension to the full flat rate cap and also keep any private pension that they have accumulated.

Those who do reach state pension age have a range of options that are better. One of the really big deals is that they can defer their state pension and it will be increased by 10.4% for each year, inflation-linked and mostly inheritable. Those who reach state pension after the flat rate cap comes in only get 5.8% and it's not inheritable. A person can defer once even if they have already claimed their state pension.

agarnett

jamesd wrote: »

These people or their employer chose to have that money used to increase the value of their private pension instead of their state pension. That's where the money is coming from, the employer or other private pension, not the state pension. It hasn't vanished, it's just being paid by someone else, and probably at a higher level too.

This sounds like bias against "these people's" genuine concern, which doesn't sound like you, jamesd!

Did I read somewhere that there are around 4 million of "these people" due to reach State Retirement Age between April 2016 and April 2025 or maybe it was 40% of all persons reaching SRA between those dates (and who will not receive the flat rate pension)?

I am one of them, and you are right - the money has not vanished, but it could easily have been spent, just like women on reduced NI stamp spent theirs except there was no visible accumulation of any SERPS pot.

Those of us who also have an old 1978 onward contracted out DB scheme are uncertain what your "increase the value of their private pension instead of their state pension" actually will mean when we finally get there and if our deferred DB scheme benefits actually survive that long without wind up.

It seems DB schemes don't regularly provide any statement of benefits to deferred members anymore, even when you ask for a transfer value. Even when old statements of benefit are to hand, the GMP aspects and changes to benefits at SRA are a confusing mess to interpret on mine. I am pretty sure however that at SRA, a deduction kicks in which was intended to level up total pensions income from scheme retirement date up to SRA and beyond (so no extra overall income at SRA). But it isn't clear.

It really should not be the lucky dip that it has been turned into.

hyubh

agarnett wrote: »

It seems DB schemes don't regularly provide any statement of benefits to deferred members anymore,

They never did, as a class. The LGPS does (statutory requirement on administering authorities since 2004), but that's quite unusual (many other public sector schemes didn't even issue annual benefit statements for active members until relatively recently).