Old State Pension

MSE_Helen_S

Hi!

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Old State Pension guide.

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Thanks folks,

LXdaddy

The state pension is being overhauled - and a brand new £155 flat-rate ushered in on 6 April. But not everybody will benefit, including millions of older men and women who have already retired.

See I told you... it's a flat-rate - Martin said so!


Oh no it's a single-tier system

LXdaddy

More "opportunities for improvement" in the guide...

The second element is known as the Additional state pension.
This [strike]extra[/strike] additional payout is called either Serps (state earnings-related pension scheme), S2P or the State Second Pension.
Like the basic state pension element, it is based on your NI contributions.
How much you get largely depends on what your salary was throughout your career and, to a lesser extent, whether you’ve claimed certain benefits such as child benefit or carer's credit.

And possibly most significantly on whether or not you contracted out of Serps/S2P

Defer taking your state pension
...for every five weeks you delayed claiming, your future weekly allowance was increased by 1%. So delay for a year and you'd have got the full pension plus 10.4% extra.

The calculation is 1% for every five weeks, it is actually 0.2% increase for every week deferred, provided you defer for at least 5 weeks. The tense is also wrong the benefit of deferral still exists at this rate for those eligible for the "old" state pension.

Here's an example: Jimmuy would get a £120-a-week state pension if he claimed it [strike]as[/strike] at his state pension age. This is worth £6,240 a year.
But he decides he can manage without it for 12 months, and puts off claiming.
A year later, he qualifies for an extra [strike]£360.55[/strike] a year. If he lived for another 15 years, that's at least an extra [strike]£5,400[/strike] in pension payouts.

Jummuy is a misquote of the Ann example in the official description document. If Jummuy defers for a year he gets 10.4% extra pension on the pension he will have at the date he starts taking the pension, not the date he qualified - so this will be at least 2.5% higher than the £120 he could have taken at his State Pension Age.
The £360.55 extra is based on the "new" pension calculation - in the "old" pension guide you need to add 10.4% not 5.9% so £648.96/year extra pension if his pension payable on the date he starts drawing it is £120/week. If he draws his pension for 10 years that's at least £6,480 in extra pension payout.

jamesd

This is wrong:

"The second element is known as the Additional state pension.

This extra payout is called either Serps (state earnings-related pension scheme), S2P or the State Second Pension."

It's not called Serps, SERPS or S2P. It's called Additional State Pension. It was accumulated via contributions to the SERPS or S2P National Insurance or earlier Graduated Retirement Benefit systems or by deferring a state pension or by inheriting some from a spouse but that doesn't make it any of those things.

As is this: "The maximum you could get in 2015/16 is £160 a week" since "The maximum additional State Pension between 6 April 2015 and 5 April 2016 is £164.36 each week" but neither of these includes deferral or inherited portions that can go above that.

This is incomplete but perhaps too hard to make complete:

"I don't have enough qualifying years, what will I get? ...
You will need to have at least 10 qualifying years to get anything, but this will only entitle you to £41 per week. If you have between 10 and 35 qualifying years, you'll get a pro-rata rate - so if you've 25 years, you'd get £111 (25/35ths of the FULL flat rate pension of £155).

If you haven't got any other income or savings, this doesn't mean you won't get any more from the state. The pension credit benefit guarantees a minimum income for those with little earnings."

DWP has estimated that about half of all of those without the ten year requirement will be eligible for Pension Credit.

The whole section "How much state pension will I get?" is wrong because it's discussing only the Basic state pension but doesn't say that. This can be fixed by changing the title to "How much Basic state pension will I get?". The section also assumes that a person is entitled to the full Basic State Pension but doesn't say it's making that assumption.

This is misleading:

"The NI years needed for a full basic state pension are: ...
Reached state pension age on or after 6 April 2016 35 35"

It's only 35 years for a full working life in the new system. Anyone retiring in the next few decades will need more or less than that depending on how much Additional State Pension they have accrued on 6 April 2016 and whether they were contracted out. It's likely to be significantly less for those never contracted out and significantly more for those with extensive contracting out into a work scheme.

This is wrong:

"If you have contributed toward the second state pension, your spouse or civil partner can inherit some of this"

It is not only the S2P that can be inherited, any Additional State Pension can be inherited, whether it was from SERPS, S2P GRB or deferral.

All those points aside, there's a lot of excellent material gathered there!