The Real Truth of new 'flat rate' pension (where everybody gets different amounts)

toymaker1

Hello.
Can someone tell me if Pension Credit is paid in addition to the existing State Pension amount, or is the State Pension amount included in the Pension Credit which is paid? For example, if an existing State Pension was, say, £60.00 per week and Pension Credit was calculated to be £130.00 per week, would total income be £130 plus £60, so total weekly income would be 190.00, or would the £60 be included within the 130.00?, and total weekly income would therefore be £130.00.

Thanks for any advice.

greenglide

Pension credit stays exactly the same for anyone whose SPa date is before 6/4/2016.

Anyone who receives the new state pension does not qualify for the savings credit but otherwise pension credit remains in place unchanged. However the nSP amount for anyone who has 35 qualifying years so gets the full nSP amount of around £151 (once all of the transitional protection is out of the way) is higher than the dingle person Pension Credit so there will be nothing to claim.

greenglide

After April 2016 - not entirely sure how it's going to work out yet.

We do know that the state scheme will pay nothing to inflation proof the GMP for anyone with an SPa date after 5/4/2016.

I cannot see any private schemes voluntarily inflation proofing this as it cannot be in the rules.

There was a comment made ages ago that public sector schemes "would be expected" to meet this but whether this will happen in practice is anyone's guess!

I have an interest in this as a have a LGPS pension with a GMP (both pre and post 88 I think) so it will be "interesting "!

xylophone

is higher than the dingle person Pension Credit so there will be nothing to claim.

And who might that be?:)

http://en.wikipedia.org/wiki/Dingle,_Liverpool

xylophone

I have an interest in this as a have a LGPS pension with a GMP (both pre and post 88 I think) so it will be "interesting "!

https://www.whatdotheyknow.com/request/guaranteed_minimum_pension_gmpin

As the old song says http://www.allthelyrics.com/lyrics/johnny_nash/there_are_more_questions_than_answers-lyrics-224254.html

And there are those who avoid the question....

http://www.theyworkforyou.com/wrans/?id=2014-01-06c.181793.h

Martin51

Public sector pensions will almost certainly have GMP indexation protected because I believe that the Hutton report protected those currently close to retirement! I doubt that in any case the Government would take on public sector workers head on without having some alternative route. It's a zero-cost game for the Government if they just re-route the payment from one department to another. Just how this will be effected if the GMP/COD reconciliation process is being abolished ...? Maybe there'll be a one-off reconciliation at SPA which will have the GMP 'fixed', and this will be used for future uprating as per the current rules. The admin will likely be taken on by the scheme? Any other thoughts/proposals by those who know much more about pensions and how they work?

Those in the private sector will be cast adrift because Government believes that they will just grumble and get on with it.

At the moment we are in a period of near-zero inflation. The BoE are tasked with keeping this at 2%. If Art Carney manages this, this will still erode any pre-88 GMP significantly over time (about £10k in my case over 20 years). But if inflation soars ...?

hyubh

Martin51 wrote: »

Public sector pensions will almost certainly have GMP indexation protected because I believe that the Hutton report protected those currently close to retirement!

Completely separate things. Moreover, other parts of the Hutton report were just ignored (e.g., closing public sector schemes to private sector employers - last government did the opposite).

It's a zero-cost game for the Government if they just re-route the payment from one department to another.

Not for the LGPS... Also, even in the unfunded schemes it would make possible pensioners with GMP getting a greater total pension (scheme+state) than they would have otherwise received. On the other hand, the numbers affected by not fully increasing GMP would (I imagine) be proportionally more in a public sector scheme compared to a private sector one given how they revalue GMP in deferment.

agarnett

jamesd wrote: »

You don't have anything remotely close to a similar full contribution record. You may have been paying some NI but the amounts show that you had a radically different contracted in/out or employed/self-employed or on/off benefits profile from okydoky.

Er yes, in fact i expect my official contribution record is a bit different from most. Apparently I paid five figures in NI in one year in the 70s/80s - how I managed it when my annual salary was not that much is anyone's guess.

Grumbling about it now you're aware how it works is fine, but please try not to potentially confuse others by claiming it's in some way related to the new system, except as one of the two calculation methods - new or old - used to calculate the foundation amount for the flat rate system. With a person getting the higher of the two amounts from those calculations.

Of course it is related to the new system and all the changes that have been mismanaged.

Can someone tell me the likely effect on my state pension of correcting the five figure number back to the approximate £1,000 it should have been, please? I am guessing actually that it was my salary figure (or that part of it that was subject to NI contributions that got recorded for all time as part of my NICO file. I hasten to add, that is an HMRC error still persisting in their records. Do I think it's the only error in their records? No I do not. I think their records are riddled with errors and that they still haven't properly calculated the proper mixed effects of contracted out DB schemes and SERPs DC plans, even for 55 year olds and up. Why would anyone put blind trust in such an obviously badly run government office? Just 5 short years ago, HMRC "lost" 20 million of our records on a CD resulting in a warning flag being put on the front screen of 20 million bank customers accounts (is it still there - no-one knew what to do about it and hoped it would go away - maybe it did), and that's just one memorable incident. Another was the complete c¤ck up they made of correct tax codes for people with a second source of income or just the chance of it (on a self-employed basis I think) two or three years ago. 2012 I think it was, but I read that even now in 2015, they are still chasing people down incorrectly over it. Retired servicemen and women to boot!

Why are we even quoting as gospel any newly data-processed numbers cooked up by the government via this discredited office in such a conspicuously unholy haste on our files in time for soliciting votes for a General Election, but actually as flakey as hell for any forecasting purpose?

If HMRC can't send a detailed breakdown of the calculation for every individual, line by line, year by year, then anyone accepting the number blindly is a fool unless it is a higher than expected number, and then I say good luck to them. Meantime I shall continue to question mine, and suggest that everyone else questions theirs.

Prime Minister Cameron said just three short months ago:

[SIZE=-2]We’re saying that whoever you are…
…provided you’ve put into the system, you will get out…
…you will get a decent, Single Tier Pension.
Instead of a pension at £115.95 plus Pension Credit, you will get at least £151.25.[/SIZE]

The single-tier reforms were apparently to restructure current expenditure on the state pension into a simple flat-rate amount, to provide clarity and confidence to better support saving for retirement.

Is the amount a flat rate? Gadgetmind has read the white paper including presumably point 13 on page 8 in the Executive Summary, and point 29. on page 26, and says no, its a single tier. Is the amount simple - I think this and the tens of other MSE threads and other media articles on the subject confirm it is not. Does it provide clarity and confidence ? Absolutely not. It provides the opposite.

Does it better support saving for retirement? I don't think it does anything of the sort - how was it ever supposed to ? Oh yes, because it was a flat rate for everybody, so they'd know years in advance what to expect from the state so if they wanted more they'd have to save it themselves - simples! Er ... but then it transpired that they get widely different amounts because actually it's single tier - whatever that means - hasn't everyone read the white paper so they know the difference? :rotfl:

Actually, it is no laughing matter, is it ? Lies, errors, smoke and mirrors rarely are :mad:

jem16

greenglide wrote: »

We do know that the state scheme will pay nothing to inflation proof the GMP for anyone with an SPa date after 5/4/2016.

Yes I read that.

There was a comment made ages ago that public sector schemes "would be expected" to meet this but whether this will happen in practice is anyone's guess!

I have an interest in this as a have a LGPS pension with a GMP (both pre and post 88 I think) so it will be "interesting "!

That's why I'm interested as I have a public sector pension too as well as a private pension.

gadgetmind

agarnett wrote: »

Does it better support saving for retirement? I don't think it does anything of the sort - how was it ever supposed to ? Oh yes, because it was a flat rate for everybody, so they'd know years in advance what to expect from the state so if they wanted more they'd have to save it themselves - simples!

Yes, that's the way it will be. But 1) people who have already earned more get to keep it, 2) those who've channelled NI funds away from the government and into other vehicles won't benefit twice.

then it transpired that they get widely different amounts because actually it's single tier - whatever that means - hasn't everyone read the white paper so they know the difference?

Would you have done things differently? Would you have taken S2P away from those who'd already earned it, and would you have given those who'd contracted out "double bubble" by pretending that they hadn't for SP purposes? Really?

BTW, did you suggest this in your response to the green paper?