Are pensions worth it?

greenglide

I thought Pension Credit was being abolished (once everyone is on the new SP)

Pension Credit still exists although the savings credit is no longer applicable for people with an SPa date after 5/4/2016.

The idea is that the standard rate of nSP is above the single person guarantee so that, in time, it will be less and less relevant but it still exists as a means tested back stop.

atush

I said Was being, not has been. Because not everyone is on the new SP yet.

In time that will happen though.

hugheskevi

I said Was being, not has been. Because not everyone is on the new SP yet.

In time that will happen though.

Even once every single person is in the new State Pension there will still be those not entitled to the full rate, so the guarantee component of Pension Credit (or similar) will continue to exist, just at a lower amount than the headline new State Pension rate. DWP modelling (page 5) shows that:

Means testing: Currently 35% of pensioner households are estimated to be eligible for Pension Credit. By 2020 eligibility among new pensioners is halved compared to the current system, and falls to below 5% by the 2060s.

Presumably it will be similar to the 1980s and 1990s with regard to the relationship between income support for pensioners and State Pension, prior to the Guarantee Credit being put in place after Labour won power in 1997, which then led to the Savings Credit and Pension Credit.

vacheron

Notfarfromtheborder wrote: »

Employer NI contributions @ 13.8% refunded by adding to pension pot. At £2500 pcm sacrifice it adds up
40% tax relief
NI relief
Child benefit refunded
11% employers contribution


Feel like I'm playing with someone else's money.


What's not to like?

I completely agree.

Similar situation to yours (salary sacrifice, 100% employer NI returned on all AVCs) but but currently putting in just £900 pcm

I sacrifice £580 from my net pay each month and instead get £1350 paid into my pension and get to keep all my child allowance, married couples allowance and £1k tax free interest.

By the time I retire the personal allowance will probably be closer to £25k p.a. too.

... Or maybe I'm just not seeing the big picture?