New (2016) State Pension - BEWARE!!!

dave23

Yes I am one of the lucky ones, at 54 I have enough years left to cancel out my contracted out years from a defered final salary scheme. My wife though is even luckier, she is 56 but never worked full time but already has 35 years NI thanks to child benefit credits and earning just enough from part time hours to pay NI even if only a few pounds a month.

hyubh

Grumpy_Old_Duffer wrote: »

Who, I wonder, benefits from the 'excess' years of NI Pension payments?

It's the same old story ... those that scrimp & save for a better retirement, get penalised the most :o:o

You and your employer paid a lower rate of NI for being contracted out and you benefited from a good occupational scheme. The proper point of comparison is someone on the same headline salary who was contracted in: it would be very unfair if you were able to 'double dib' while your counterpart would not. In a nutshell, people like you are greedy, wanting to leach off of the contributions (taxes) of others.

bowlhead99

Grumpy_Old_Duffer wrote: »

Missing the point ..... if I had only paid 35 years NI then fair enough ... but 48 years!!!

I can't quite remember my figures but have about 21/22 years contributions on my record which includes a decent amount of s2p/serps. At the moment ignoring the current tax year which doesn't show on my online projection, I'm about 80% of the way to the £155 level. So over the next 6 or 7 years getting 1/35th of £155 a year, I'll max out at that £155 figure under the new single tier system.

But I'll have another 20 years or more to go after that before I reach my state pension age, and if I'm fortunate enough to continue to earn half what I do now in real terms I'll be paying more national insurance than the median for all of those 20 years, without seeing an extra penny of state pension extra for it.

I could create an account called Grumpy_youngish_duffer to moan about it, or I could just accept that paying social security contributions is just something that people in developed countries do when they are employed, and be happy that I have both a state pension and a modest private pension to look forward to.

Grumpy_Old_Duffer wrote: »

Who, I wonder, benefits from the 'excess' years of NI Pension payments?

Presumably, those that need it more than you and I do.

It's the same old story ... those that scrimp & save for a better retirement, get penalised the most :o:o

I expect we are both happy to have been in a position to be able to do that rather than to rely on bare minimum state handouts, eh?

I expect there are people earning millions who are getting 'penalised the most' and paying more tax than both of us put together while not likely to draw more state pension than both of us put together. You would probably call them fat cats. But compared to some people, you are a fat cat, as you have been gainfully employed for 48 years and have a private pension as well as a state pension; many are not so fortunate.

xylophone

Like many people I was under the impression that if I had 35 qualifying years I would get the 'new' State Pension rate of £155.65.

See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

Keep_pedalling

dunstonh wrote: »

Your generation will probably go down as one of the wealthiest and the ones that had to contribute the least for what they have.

I am of that generation, and know damn well how lucky we are. My fellow boomers, who cherry pick facts to show how badly done by they are are frankly an embarisment.

saver861

hyubh wrote: »

. In a nutshell, people like you are greedy, wanting to leach off of the contributions (taxes) of others.

That's a bit of a generalisation!! I don't think it is true for the masses.

The issue is that people have been mislead into thinking they will qualify for the full state pension if they have 35 years NI's. I was one of them when the news came out first. Ironically, I found out the correct version when I was on the phone to someone from the DWP about a different matter. She explained the issue of contracting out and why I would not get the full new pension.

Here's the thing. The lady I was talking to, who was an employee of the DWP thought as I did at first, that she would get the full state pension!!! So, if employees of the DWP were under the false impression then what chance for the regular joe and jane.

Most people fell for the spin ...and dear ole, soon to be unemployed, Ros Altmann said herself that the new pension was mis-sold. There are rules against second hand car salesmen and double glazing glazing salesmen from doing the same thing! Apparently nothing similar in place for Government ministers wanting to look good on TV.

No doubt some will harp on about how they should keep up to date and read the green papers etc. etc. Yeah ....

dumpyboy

dave23 wrote: »

Yes I am one of the lucky ones, at 54 I have enough years left to cancel out my contracted out years from a defered final salary scheme. My wife though is even luckier, she is 56 but never worked full time but already has 35 years NI thanks to child benefit credits and earning just enough from part time hours to pay NI even if only a few pounds a month.

So do the clock re set from April 2016 and 1/35 added to your pension , I e 48 to 68 = 20 years 20/35 and you then need 15 non opt d years from before ,or do you get the 20/35 of the new pension

p00hsticks

dumpyboy wrote: »

So do the clock re set from April 2016 and 1/35 added to your pension , I e 48 to 68 = 20 years 20/35 and you then need 15 non opt d years from before ,or do you get the 20/35 of the new pension

I can't quite work out what you are trying to say with those figures but...

The Pension service are going to work out everyone's pensions entitlement as at April 2016 under both the current rules and the new ones. The higher of these two amounts will become a persons 'foundation' (or 'starting') amount.

The amount under the current rules will give a basic amount of £119.30 for 30+ years NI plus any extra amount earned from SERPS/S2P while 'contracted in'. The amount under the new rules gives an amount of £155.65 for 35+ years NI with deductions made for contracted out years.

If the foundation amount is greater than the new £155.65 amount you'll get - it can't be increased further.

If the foundation amount is under the new £155.65 maximum, then every extra NI year after April 2016 will increase the amount by 1/35th of £155.65 (around £4.35) unitl the maximum is reached (or the person reaches state pension age, whichever comes first).

kidmugsy

tempus_fugit wrote: »

It would not be fair for those of us what benefited from cheaper payments into the state pension to get the same as those who didn't.

My dear sir, what a welcome display of cool logic. Do you ever feel that you are living in the wrong age?

hyubh

saver861 wrote: »

That's a bit of a generalisation!!

People like the OP (and yourself?) are extremely put out that they won't be getting a benefit that they were never due to get in the first place.

I was one of them when the news came out first. Ironically, I found out the correct version when I was on the phone to someone from the DWP about a different matter. She explained the issue of contracting out and why I would not get the full new pension.

You're early retired on an unreduced council pension! Seems you're disappointed that your ability to extract money from the public purse is restricted...?

Most people fell for the spin ...and dear ole, soon to be unemployed, Ros Altmann said herself that the new pension was mis-sold. There are rules against second hand car salesmen and double glazing glazing salesmen from doing the same thing! Apparently nothing similar in place for Government ministers wanting to look good on TV.

If at one point a person thinks their state pension will suddenly shoot up, then at a later date realise they will, in fact, only be getting what they were always going to get, the appropriate response is not to whine and moan about the new state pension being 'mis-sold'.