New State Pension Guide

bigfreddiel

I don't understand why no one understands that they aren't losing out.

In fact it's a better deal, as of 5 Apr 16, everyone gets the bigger of two pension offers. And you get the larger amount. So you are in a win-win situation. No one is losing out. What is it that people don't understand?

If nothing had changed and would people be complaining?

Cheers fj

greenglide

If you had spent more time contracted out you would have accrued more occupational pension which would have made you better off.

You would still have got the same State Pension - the period of contracting out would not reduce the calculation under the old rules.

And if you had a complete NI contributions record you have have got more as well.

molerat

Some people will benefit immediately. Those with no contracted out period and little or no additional pension - such as self employed, those mainly built up of credits or purchased years and part time workers - will have a starting amount based on the new pension. MrsM had £107.63 but her new entitlement is £120.07.

Mizban

You are all knowledgable and brilliantly explained all bits and buts and ifs which is really better than what is read and shown online by the pension service ,well better. My expectation of getting a higher state pension under the new rules was just a myth, by me, after all. I rest my case now: THANK YOU

stinabean

So confusing for younger people!

I'm 29 and struggle with this state pension.

I know I'm likely to be well into my 70s before I'm able to retire and claim my pension which I'm unhappy about - but I genuinely don't understand all this.

I assume I'll have made the necessary NI payments by then as I've worked full time since 19 anyway but am I right where the "flat rate" would stay the same and I could potentially end up with an extra bit due to extra NI Payments?

Will there even be a pension in 45 yeas?

p00hsticks

stinabean wrote: »

but am I right where the "flat rate" would stay the same and I could potentially end up with an extra bit due to extra NI Payments?

No, you won't get anything extra by paying extra NI - the new State Pension simplified matters by doing away with different rates of NI.

You're young enough to be able to say pretty confidently that -assuming you get 35 years of NI contributions - you'll get the maximum pension (currently £155.65 but it will increase each year to take acconut of inflation etc).

If you want extra or want to retire earlier than state pension age, you need to look to a private/ employers pension or other form of savings

badmemory

The way I see it is, preparation for retirement is a 4 pronged attack with the final stage being the state pension (say at 70). Then you have your employment pensions which may cut in at 65 to 67 depending on when started. Then a pension that you pay into yourself that you do on draw down from currrently 55 but expected to increase to 10 years under state pension age so say at 60. Then savings to get you to 60.

You have no idea how much I wish I'd known that 40 years ago but you can be sure my son does!

gadgetmind

stinabean wrote: »

So confusing for younger people!

It's actually massively simpler for everyone moving forwards. The transition is a little messy (hence this thread) but to trying not to take anything away from anyone, or give anyone a massive gift, but the outcome is very simple.

am I right where the "flat rate" would stay the same and I could potentially end up with an extra bit due to extra NI Payments?

It's not "flat rate" but "single tier". This means that everyone earns exactly the same for each qualifying year.

Will there even be a pension in 45 yeas?

Will everyone travel on moving walkways and will sex be obsolete? We simply don't know.

GunJack

gadgetmind wrote: »

will sex be obsolete?

It better not be, it's an integral part of mine & Mrs.G-J's plan to take advantage of increased life expectancy and growing old disgracefully together..even if we will be in our 90's in 45 years' time :rotfl:

jamesd

stinabean wrote: »

I'm 29 and struggle with this state pension. ... am I right where the "flat rate" would stay the same and I could potentially end up with an extra bit due to extra NI Payments?

You would have been right if your future earnings were done under the state pension system as it existed before 6 April 2016. Under that system there were two parts:

1. The basic state pension, 1/30th of this accrued for each year of paying NI or getting credits, say if signing on while unemployed or receiving child benefit n your name and not working. No more of this accrues after 30 years.
2. The earnings-related additional state pension accrued via S2P, formerly SERPS. This increases for each year working and paying in with no cap at 30 years, just until you reach state pension age.

Under this system a low earner with full working life would end up with a state pension of about £190 a week as of a few years ago and average earners more like £230 a week.

Instead, you are now under the flat rate system which has a cap of £155 a week. The money you would have gotten for working longer has been taken away from you and will instead be used to help those without such a good earnings record, say someone on the dole or siring a child once every 15 years for their whole adult life and getting child benefit.

You were accruing at the higher rate until 6 April 2016. As of that date you get a foundation amount that is the higher of your old and new rules calculation and future years get you 1/35th of the flat rate state pension for each year working or getting credits, stopping when you get to the £155 cap level, regardless of how many years it takes you to get there. If the higher amount is already over £155 it just stops increasing and the excess doesn't get the triple lock, just CPI, so it gradually becomes less valuable than the rest.

For a person only working under the flat rate system it'd take 35 years of earning or receiving credits to get to the cap level.