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

wotsthat

okydoky wrote: »

Well, got my State Pension Statement this morning.

It states that it is based on the rules of the new State Pension that starts on 6 April, 2016. It also states that the figure is based on my NI contribution record up to tax year 2013/14 which shows I have 41 qualifying years.

That's interesting. Anyone who applies for a statement born after 1960 only gets an estimate under the old rules.

When can I get an estimate worked out using the new scheme rules? You will be able to get a state pension estimate worked out under the new rules after the new state pension starts on 6 April 2016.

agarnett

okydoky wrote: »

It further states that the amount I will receive in 2022 when I retire may be higher than the amount quoted. It says on page 2 that a deduction has been made as I was contracted out of the State Pension at some time.
The amount is £190.17 a week.
I must admit I am somewhat relieved - I was fearful that the figures forecast earlier might be further decimated by more contracted out deductions, thankfully this is not the case.
Hope this helps to put other minds at rest that may also have been worrying about this.
Thanks

Your's takes the biscuit I think, okydoky! Pleased for you though. I am not sure what the rest of us can take from it though, because as it says on this particular can - The Real Truth of new 'flat rate' pension ({is} where everybody gets different amounts) ... higher even if you were contracted out at some point and lower even if you were not :rotfl:

gadgetmind

Did you read the white paper? Okydoky will be getting a higher amount than the single tier rate because the foundation amount is based on highest of pension under old rules and single tier.

Yes, there is a transition period, and lots of "grandfathering", but eventually everyone will get a percentage of the single tier rate based only on their number of qualifying years. No extra for high earners, no contracting out, none of the massive complications this transition is having to cater for, just the single tier.

agarnett

gadgetmind wrote: »

Did you read the white paper? Okydoky will be getting a higher amount than the single tier rate because the foundation amount is based on highest of pension under old rules and single tier.

Never mind the white paper which no doubt everyone with an agenda can bend to fit their's, did you absorb what David Cameron told the nation about the new flat rate pension? Just 73 days before the General election he announced:

[SIZE=-1]For years the system was basically saying to people “don’t bother putting something aside for the future – because we’ll look after you if you don’t, and penalise you if you do”.
We’re putting this big wrong right.
From April 2016 we’re bringing in a Single Tier Pension.
This will effectively abolish means-testing the pensions of people who have contributed all their lives.
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]

No way can you say that what he said could be such worlds apart as okydoky's £190 pw and my rock bottom £115 per week based on a similar full contribution record.
Cameron lied to the electorate.

Yes, there is a transition period, and lots of "grandfathering", but eventually everyone will get a percentage of the single tier rate based only on their number of qualifying years. No extra for high earners, no contracting out, none of the massive complications this transition is having to cater for, just the single tier.

(Yawn) ... now c'mon, gadgetmind. Who are you trying to kid? Not me I hope, because I quite definitely am being penalised for having once had a great pension scheme which the reforms have already now undermined by snatching back the contracted out "benefits" in a way which has given my old pension schemes the green light to say "Sorry, not us guv" the government ain't going to revalue your GMP in retirement and we sure as hell ain't, either.

bowlhead99

agarnett wrote: »

Your's takes the biscuit I think, okydoky! Pleased for you though. I am not sure what the rest of us can take from it though, because as it says on this particular can - The Real Truth of new 'flat rate' pension ({is} where everybody gets different amounts) ... higher even if you were contracted out at some point and lower even if you were not :rotfl:

I don't see what is "taking the biscuit" here.

For people who have built up entitlements to additional state pension on top of the ~£115 basic state pension, it's quite possible that when the calculation is performed to see whether those entitlements are greater than what would have been earned if they'd been under the new state pension all their working life, they will be. So, they will get to keep them. They just won't get to earn more at the "old" extra pension accrual rate as they go forward.

You know this perfectly well.

We all know the transitional arrangements will result in people getting paid different amounts of money under the single tier system and the differences between people will take years to work through the system.

The Real Truth, of which you're fully aware, is that it is *not* a system where every pensioner is going to get the same number when they draw their pension alongside okydoky in 2022, though nobody - except certain bad journalists or people who haven't taken the slightest interest in it and are just reiterating what they heard down the pub - have portrayed it that way.

You say you're not sure what the rest of us should take from it... Perhaps they should just take from it that the system is probably working as intended, and it's perfectly possible to preserve a decent amount of pension after the rule change, so there's no need to worry that everyone's going to get screwed over. There's also no need to start cackling about how "it's not a flat rate at all" every time someone posts a different number from what the last person posted, because there will clearly be disparities depending on personal circumstances.

Personally I expect to "lose out", because even though I am likely to keep paying high amounts of national insurance as we go forward, I won't be able to build up an additional pension to the level that I previously could perhaps have done. Still, redistributing money is part of what employment taxes are about, so I suppose I'm ok with that really.

gadgetmind

agarnett wrote: »

Never mind the white paper

So, you still haven't bothered to read it?

For years the system was basically saying to people “don’t bother putting something aside for the future – because we’ll look after you if you don’t, and penalise you if you do”.

Yes, that was the means testing to bring people up to the same level.

No way can you say that what he said could be such worlds apart as okydoky's £190 pw and my rock bottom £115 per week based on a similar full contribution record.

That £190 is under the *old* system but is being honoured. Your £115 per week is because of being contracted out under the *old* system and therefore not getting to eat your cake and have it.

For those working entirely (or even just mostly) under the *new* system, yes, they'd get the same amount.

Why not read the green paper and then the white paper and tell us how you'd have managed the transition?

jem16

gadgetmind wrote: »

Your £115 per week is because of being contracted out under the *old* system and therefore not getting to eat your cake and have it.

Yep just like mine - full contribution of more than 35 years but all contracted out. Old rules about £115 as I have absolutely no SERPS/S2P and about 42p Graduated Retirement, new rules about £73.

I didn't expect anything different having bothered to read the white and green papers.

jamesd

agarnett wrote: »

No way can you say that what he said could be such worlds apart as okydoky's £190 pw and my rock bottom £115 per week based on a similar full contribution record.

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.

£190 is about what a low paid person with a full working life would get under the current/old system. It's also what a higher earner with a limited time in a contracted out scheme might have after the contracted out deduction. While a person with much more time contracted out could have a contracted out deduction that takes away all of their additional state pension from the contracted in years because the deduction isn't capped at just the amount for the contracted out years.

Nothing of what I've described in this post is new or due to the flat rate system. It's all using the current/old rules as they have been operated normally for years.

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.

Martin51

jem16
You're like me: no extras, but presumably a GMP? Will your GMP be inflation protected?

jem16

Martin51 wrote: »

jem16
You're like me: no extras, but presumably a GMP?

Yes.

Will your GMP be inflation protected?

At the moment, some by the scheme and some through the state pension. There's also pre 1988 and post 1988 service being treated differently.

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