Will new S Pension cause resentment?

xylophone

As I read it the up to 276 a week was meaning just the limit, not the actual amount due to the individual.

But she can hardly have plucked that figure out of the air?

bowlhead99

xylophone wrote: »

jamesd wrote: »

As I read it the up to 276 a week was meaning just the limit, not the actual amount due to the individual.

But she can hardly have plucked that figure out of the air?

The quote was: "i won't receive the additional pension i was hoping for (i.e. up to £276 per week?)"

The number was not plucked out of the air as a specific known amount that he/she was definitely going to get, it was plucked out of the air as the maximum aspirational amount they were going to get once they had finished their long career on high pay.

It's the same situation as me in post #41: I was "hoping for" the ability to get some figure of £200+ (which could not be £400 or £500 but only be "up to" £276 or whatever the top level is). The £276 is reportedly the figure that's the most you could get under old rules, so is the aspiration.

However as I did not already get as far as £276 based on contributions banked to date, before April this year, I will just have to put up with stopping at whatever sub-£276 number I had actually reached as of April (although if that number is below the £155 level I can keep on going until I hit £155).

People in the situation where they were 'hoping' to get 'up to' £276 but get stuck on a lower number between £155 and £276 as a result of the new rules, have of course lost out in the sense of not getting what they were hoping they would get (perhaps a 40%+ pay cut costing them £150k+ over the course of retirement), BUT they haven't actually had anything literally taken off them because you keep what you earned up until now, it's just that you lose the ability to get more pension above the single tier level for your future contributions.

I think that is understood by most on this board as it has come up so many times. Nobody is saying they had already banked the £276 worth of historic contributions and are now going to lose them. They were just on target for some nice big number 'up to' £276 which they can no longer get, so they will have lots of years of contributions that don't buy them pension (20+ in my case, if I were to work 'til state pension age).

hyubh

bowlhead99 wrote: »

The number was not plucked out of the air as a specific known amount that he/she was definitely going to get, it was plucked out of the air as the maximum aspirational amount they were going to get once they had finished their long career on high pay.

Doesn't still quite make sense to me, given her implied age - if she's already 60 and (being female) had originally expected to be drawing her state pension by now, how could she at the same time have banked on x more years state pension accrual? Or indeed, how would 5 more years have made the difference between 155 and 276 in the first place...?

However as I did not already get as far as £276 based on contributions banked to date, before April this year, I will just have to put up with stopping at whatever sub-£276 number I had actually reached as of April (although if that number is below the £155 level I can keep on going until I hit £155).

Yes, I don't think anyone's denying that. We're just a bit confused by what the other poster is saying.

jamesd

hyubh wrote: »

Doesn't still quite make sense to me, given her implied age - if she's already 60 and (being female) had originally expected to be drawing her state pension by now, how could she at the same time have banked on x more years state pension accrual? Or indeed, how would 5 more years have made the difference between 155 and 276 in the first place...?

She doesn't yet know what she's entitled to under the old rules calculation, just that it can be as much as that for a lifetime high earner. It's not what difference the five years might make, it's not even knowing what she's entitled to today as her foundation amount.

Given her work history I'm expecting her to find out that her foundation amount is more than the flat rate level and if it is, she'll keep the extra.

xylophone

Given her work history I'm expecting her to find out that her foundation amount is more than the flat rate level and if it is, she'll keep the extra.

This point was made in several of the previous posts.

I think that I have now "seen the light" with regard to the £276 - see post 17.

The "Which" Guide mentioned a "maximum" ASP of £160 a week but pointed out that this was based on earnings over a working life.

The OP has jumped to the conclusion that she would be entitled to the maximum because she had never contracted out of SERPS/S2P.

I would love to be in receipt of my state pension which would have been around the £276 a week stated.

This is despite the fact that her attention was drawn (post 19) to the transitional examples here https://www.prospect.org.uk/at-work/pensions-retirement/statepensions/howmuch

one of which ("Dani") seems close to what one might have expected for the OP considering the information she gave of a 45 year contracted in working life.

Examples of Transitional Arrangements
Dani (born 1955) has been contracted in for her whole working life from 1976. She reaches state pension age in 2021. From her 40 years of NI contributions up to 2016, she has built up entitlement to a full Basic State Pension and £95pw[1] in Additional State Pensions. Her Starting Amount is therefore the better of:

£210.95 (in full Basic State Pension + Additional State Pension)
£155.65 (in full Single Tier pension from 40 years NI)
which gives £210.95. As this exceeds the maximum Single Tier Pension, it is retained for Dani as a Protected Payment of £59.70 above the full Single Tier. Dani will pay National Insurance between 2016 and 2021 but will not see her pension entitlement increase correspondingly.


The OP then says

I was a bit of a workaholic, (although i was never a "high" earner,) I'm known as a grafter, you can't change the person you are. I paid higher rates of NI thinking it would benefit my state pension.

This is confusing - if she had been a low earner she wouldn't have paid "higher rates of NI".

if she had been a very low earner then her ASP accrual may well have been such that her old rules calculation was less than NSP in which case in getting full NSP she gains.

If her old rules calculation was the same as NSP then she hasn't lost except to the extent that she can accrue no more but as it appears that she is no longer working this may be irrelevant.

All in all, misunderstandings seem to abound....

jamesd

Yes, that may well be what she thought.

While you know it, a lifetime low earner under the old S2P system might expect about £190 total state pension a week. The SERPS system was less generous than S2P for low earners but I still think that she'll end up with more than the flat rate. And you know it also but to get the 276 would take something like being a higher rate tax payer for every year of a 45 year working life.

Still, hopefully she will say what her forecast says and we can try to explain the reasons for it if it's less than she was expecting.

boingsaidzebedee

Sorry if this is a silly question but regarding resentment because of the new state pension.
I already receive SP with a couple of pounds of Guaranteed Pension Credit.
The GPC element provides me with 100% Council Tax Rebate,free Dental Care,£140 a year toward my electric bill,cold weather payments etc.
For someone receiving only the new State Pension they would get a few pence more than me

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but no direct access to these other benefits I currently receive which are worth £30.00+ a week to me.
So if I receive additional help on say £155.00 per week will someone on SP of £155.30 just have to be resentful of me.
I'm simply curious about this seeming anomaly.

bigfreddiel

boingsaidzebedee wrote: »

Sorry if this is a silly question but regarding resentment because of the new state pension.
I already receive SP with a couple of pounds of Guaranteed Pension Credit.
The GPC element provides me with 100% Council Tax Rebate,free Dental Care,£140 a year toward my electric bill,cold weather payments etc.
For someone receiving only the new State Pension they would get a few pence more than me

---

but no direct access to these other benefits I currently receive which are worth £30.00+ a week to me.
So if I receive additional help on say £155.00 per week will someone on SP of £155.30 just have to be resentful of me.
I'm simply curious about this seeming anomaly.

Good point!

boingsaidzebedee

Sorry,I mean the New State Pension of £155.65 but you obviously understood my meaning.
I worked all my life but spent the last 25 years self employed and had to raise my children as a single parent and pay my mortgage so nothing left for a private pension.
Hence the Guaranteed Pension Credit I receive.I was a high earner when younger so it is just a couple of pounds but makes a substantial difference because of the automatic other benefit entitlements.

greenglide

This has always been the case but in future this could well be addressed by changing the qualifying conditions, making it a ramp rather a cliff edge.

They could also increase the pension credit limit at a different rate to the state pension making it harder to qualify for this.