Old and new state pension

jamesd

mollymoneybags wrote: »

Not so. I receive the basic as I have been self-employed all my life, dutifully paying my full quota of self-employed stamps. My Nat Ins contributions did NOT entitle me, over the years, to full dole payments, full sick pay, maternity payments, and sundry other welfare state amenities, but it DID entitle me to use the National Health service and guaranteed me the BASIC STATE PENSION. I had nothing to contract out of.

Yes, that's all true, just less common so I didn't think it useful to mention it in this case.

mollymoneybags wrote: »

However all arguments about contracting-out, SERPS, graduated pensions, private pensions etc etc, are irrelevant. If the government has decided that one year the basic is £115, and the next it is £148, then that is what I should get, and that should be the starting point for everybody else’s to be built on top of that.

Yes, the government could have done that but they didn't. Not really a surprise because it would be hugely expensive to do it and some people could end up with around £300 a week in state pension - the "basic" at that level plus their Additional State Pension entitlement.

Instead what happened was that the last Labour government introduced the Upper Accrual Point for the earnings-related S2P part of the pension and said that this would not increase, so inflation would gradually cause people to stop accumulating any more Additional State Pension. The current government brought that forward and set a new single tier level that replaces the combination of Basic State Pension and Additional State Pension after 6 April 2015, while the Basic State Pension and Additional State Pension remain unchanged for those receiving them.

The current system is a better deal than the single tier/flat rate one for long term employees, who even on a low income could get to £190 or so a week under the current system, because of their earnings-related Additional State Pension that continues accruing for the whole working life, even after the Basic part stops at 30 years worth. Instead under the flat rate they'll get it capped at the £155 or whatever it ends up being.

For the self-employed the flat rate rules have them accruing state pension at the same rate as employees once the flat rate comes in, 1/35th of the flat rate for each year of contributions.

Packaged in with all that was a stealth gradual tax rise. The current means-tested Pension Credit is paid for out of the general taxation budget as welfare. The state pension is paid out of the NI money. The flat rate is set at a level so far fewer people will get the welfare-based top-up paid for from general taxation. Instead it'll be paid for out of the NI money. So there's now a built in gradual reduction in the general tax means tested budget, paid for by the cut to long term employees who can only get up to the flat rat's cap level, not as much as they could get under the current system. No that any politician is going to explain this to voters, particularly not the ones who did it.

To put all that more succinctly, the flat rate pension is a cut to the state pensions for long term employees to pay more to those who don't do much paid and the self-employed.

I'll probably be one of those who benefits due to lots of time outside the UK and then contracted out.

MABLE

brewerdave wrote: »

.....I'm in a similar position in that my latest forecast is showing a total of £131.79 -HOWEVER, I'm still not trusting that this is getting the contracted out deduction correct so all my future spreadsheet planning is based on £115.95:rotfl:

Mine is due in September of this year so will be interesting to see whether the AP will in fact decrease or increase. However we are only talking about £13 a week if I do not get it. Hopefully will be something.

brewerdave

MABLE wrote: »

Mine is due in September of this year so will be interesting to see whether the AP will in fact decrease or increase. However we are only talking about £13 a week if I do not get it. Hopefully will be something.

..bit more confused now, logged on to Government Gateway to get an up to date Forecast...but it failed even tho' I'm 8 weeks from 65th birthday HOWEVER I looked at the latest historical forecast (which I can't remember asking for!) last October amd its showing ASP of ~ £33, which is a fair bit more than a previous figure. I've decided today ,to defer anyway for at least a year.:)

MABLE

brewerdave wrote: »

..bit more confused now, logged on to Government Gateway to get an up to date Forecast...but it failed even tho' I'm 8 weeks from 65th birthday HOWEVER I looked at the latest historical forecast (which I can't remember asking for!) last October amd its showing ASP of ~ £33, which is a fair bit more than a previous figure. I've decided today ,to defer anyway for at least a year.:)

I thought if you are within 4 months away from your state pension age you can not now obtain a forecast. However someone on this forum may be able to confirm this.

molerat

MABLE wrote: »

I thought if you are within 4 months away from your state pension age you can not now obtain a forecast. However someone on this forum may be able to confirm this.

That is what it states on the front page

Although it also states within 4 months of age 60 for women but MrsM got one last week at 60/2mths but they did play with something last week and updated a few bits.

viv0147

April 2013 my state pension was £154.95 + savings credit £14.42, which goes down after every pension increase.

When my state pension goes up my savings credit goes down, For 2014/15 I had £159.11 single mans pension because of my contributions, and £12.50 pension savings credit total £171.61.

From April 2015 my pension is £162.51+ £10.30 pension savings credit total £172.81 so in affect my pension increase is only £1.20! Why? It just doesn't seem fair.

Don’t get me wrong I am reasonably happy with my state pension when you compare with the money people in the rest of the world receive! Then we have at the opposite end of the spectrum we have people who are so wealthy it makes you sick who avoid paying tax etc.

brewerdave

MABLE wrote: »

I thought if you are within 4 months away from your state pension age you can not now obtain a forecast. However someone on this forum may be able to confirm this.

..oops -I thought it was up to 6 weeks before - apparently you can apply by post up to 30 days before but not online.

mollymoneybags

Hugheskevi - It’s sad to read your grudging comment ‘The main thing that surprises me is that there appears to be large numbers of existing and soon-to-be pensioners/near-pensioners who think they either have been or should be given an unexpected hand-out worth about £2,000 p/a despite the state of the country's finances.’
The government hands out plenty of state funds to people who have NOT paid anything in, so there’s no reason why existing pensioners should not be entitled to this rise in basic payment. It’s certainly not a hand-out as we’ve all contributed what was asked of us. The Joseph Rowntree Foundation has assessed £263 (2014) as minimum standard income for a pensioner couple. A basic of £132 for everyone; raising current pension basic, and lowering the proposed 2016 figure; would be a more honest restructuring, and would at least create a genuinely equitable single-tier baseline.
We all know this new scheme is a cost-cutting measure, and we all know the government is indulging in playing the generations off against each other. While we argue over who may suffer the most, the government carries on making life comfortable for the upper echelons, meanwhile telling us to fight over the crumbs. ‘The state of the country’s finances; …..don’t make me laugh…..There’s plenty of money swilling around these islands. Our 13 new UK billionaires can testify to that. The choices that are made are matters of political will, not driven by finance.

hugheskevi

Hugheskevi - It’s sad to read your grudging comment

I'm sad to read lots of posts from greedy pensioners

The government hands out plenty of state funds to people who have NOT paid anything in, so there’s no reason why existing pensioners should not be entitled to this rise in basic payment.

I'm unclear why you think the taxpayer should fund an unexpected windfall for you? Arguing that the taxpayer already hands out 'plenty of state funds' already is hardly an argument to further the burden imposed on them??

It’s certainly not a hand-out as we’ve all contributed what was asked of us.

And if that only adds up to about 70-80% of the actual cost (taken at cohort level) then so be it, someone else pays.

In this case, a generation who will pay in more than they expect to get out.

The Joseph Rowntree Foundation has assessed £263 (2014) as minimum standard income for a pensioner couple. A basic of £132 for everyone; raising current pension basic, and lowering the proposed 2016 figure; would be a more honest restructuring, and would at least create a genuinely equitable single-tier baseline.

What a surprise - current pensioners should get more, future pensioners should get less.

Are you arguing that existing pensioners with more than £150 p/w should have their State Pension entitlement reduced to create this baseline? Or would this just be an enhancement for some and preservation of a privileged position for the rest?

xylophone

April 2013 my state pension was £154.95 + savings credit £14.42, which goes down after every pension increase.

When my state pension goes up my savings credit goes down, For 2014/15 I had £159.11 single mans pension because of my contributions, and £12.50 pension savings credit total £171.61.

From April 2015 my pension is £162.51+ £10.30 pension savings credit total £172.81 so in affect my pension increase is only £1.20! Why? It just doesn't seem fair.

From State Pension uprating – 2010 onwards
Standard Note:
SN 05649
19 January 2015
Djuna Thurley
Business and Transport Section



" In April 2012, the Savings Credit threshold was increased and the maximum Savings Credit reduced to pay for the above-earnings increase in the Standard Minimum Guarantee.

In debate on the draft Uprating Order, Steve Webb explained that:

To help manage expenditure, we have funded the above-earnings increase to the standard minimum guarantee by increasing the savings credit threshold, which means that those with higher levels of income could see less of an increase. However, given the increase to the basic state pension, no one should have a lower weekly income as a result of uprating. This approach enables us to target resources for the poorest pensioners on the guarantee credit.

The same happened in 2013/14 and 2014/15.71 It will happen again in 2015/16 (see below).

Uprating in 2015/16

In December 2014, the Government announced that the basic State Pension would rise by 2.5% in April 2015 – a cash rise of £2.85 pw.

The Standard Minimum Guarantee sees the same cash increase, partly paid for by a rise in the Savings Credit threshold:

In line with government policy, the basic State Pension will be increased by the triple lock – the highest of average growth in earnings, inflation or 2.5%.

The rise in April 2015 will be 2.5%, a cash increase of £2.85 per week for the full basic State Pension. As a result of the triple lock, someone on a full basic State Pension can expect to receive around £560 more in 2015-16 than if it had been uprated by average earnings since the start of this Parliament.

The benefits of the triple lock uprating will also be passed on to the poorest pensioners through an increase in the standard minimum income guarantee in Pension Credit to match the cash rise in the basic State Pension.

This will partly be paid for through a rise in the Savings Credit threshold by 5.1%. As a consequence of the increase in the Pension Credit standard minimum income guarantee, the full new State Pension will rise to at least £151.25 per week. The actual amount will be set in autumn 2015.72

The detailed rates for 2015 were announced on 4 December 2014.73 Pensions Minister Steve Webb said:
.......................From next year, the single person rate of the guarantee credit will rise by £2.85, which means that income from that safety net benefit will be worth £151.20 a week. For couples the increase will be £4.35, taking the new total to £230.85 a week. Of course, I look forward to a world where the new state pension is in payment, which will significantly reduce the number of people in the scope of means-tested pension top- ups.
As in previous years, resources needed to pay the above-earnings increase to the standard minimum guarantee will be found by increasing the savings credit threshold, meaning that those with higher levels of income may see less of an increase than they would otherwise have done."