State Pension Inequality?

colsten

shropshirelady wrote: »

Is it fair that the 2016 equal pension payments aren't equal for older pensioners? I worked full time (on unequal pay) for just over 50 years and paid NIS for 45 years, yet my full state pension is is under £130 per week and someone with 35 years NIC now gets £168.60 per week. Doesn't sound very fair to me.

Being a natural pedant, I should point out that the max new state pension for 2018-19 is £164.35. It only goes to max £168.60 for 2019-20, after April 6, when all state pensioners living in the UK, i.e. incl yourself, get their annual Triple Lock increase.

I can assure you that for the foreseeable future most people don't get the max new state pension because most of us were contracted out for most of our working life and therefore have COPE deductions. I am going to get mine from this July onwards, when I am 65 and 5 months, with 47 NIC years. The amount I get until the end of the current tax year is £144.48/week.

I could argue that you had a much better deal than me as you got your SP at 60, over 5 years earlier than me. But then I don't argue because I understand why I get my state pension later than you did, and why it is impossible to make progress if everybody gets the same forever.

greenglide

most people don't get the max new state pension because most of us were contracted out for most of our working life

I doubt if "most" people were contracted out for most of their working life. "Many" would seem more appropriate?

colsten

greenglide wrote: »

I doubt if "most" people were contracted out for most of their working life. "Many" would seem more appropriate?

All the Public Sector workers were - teachers, nurses, doctors, civil servants etc etc, plus all the workers in large private sector firms. It's easily "most" of those who had a works pension scheme

EDIT: Straight from the horse's mouth:

Most people reaching State Pension age in the first couple of decades of the new State Pension, which starts on 6 April 2016, will have been contracted-out of the additional State Pension (SERPS, state earnings related pension scheme or S2P, state second pension) at some point.

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

shropshirelady

dunstonh wrote: »

Is it fair that you got yours at 60 whilst those retiring under the new scheme got it at 66 rising to 68 (and even 70 potentially).

Is it fair that you spent most of your working life in a lower taxation environment?

Is it fair that you had the choice to contract out whilst those today do not? So, miss out on the opportunity to get lump sums or potentially better pensions?

Is it fair that you get £130 pw from the state despite 30 odd years of contracting out?

I started work 6 weeks after I was 15. Did you? And too right I didn't have a gap year. Tax years ago was 41% (tax and NIC meant I was only picking up 51% of my salary) Is that what you call low tax? Mortgage interest in the 80's was up to 17%. I said I was contracted IN for 30 odd years. And it did me no harm working until I was over 65. Just remembered why I rarely post on here!

westv

What's the relevance of starting work at 15? I suspect there are a few of us on here who started work at 15 or 16.

lisyloo

westv wrote: »

What's the relevance of starting work at 15? I suspect there are a few of us on here who started work at 15 or 16.

For 50% of the population these days it’s 22 (50% now go to university).
The relevance is the number of years worked.

So someone older working 15-60 has as many years working as someone younger doing 22-67 today.

Nothing wrong with that really as people are living longer.
It’s just not necessarily true to think those who retire at 60 have had an easier time of it.

FWIW - my SPA has gone from 60-67 in my working life but I’m ok with that

hyubh

colsten wrote: »

All the Public Sector workers were - teachers, nurses, doctors, civil servants etc etc, plus all the workers in large private sector firms.

As a caveat though, a notable number of people retiring now having been contracted out for a decent amount of time isn't the same thing as most people having been contracted out for most of their working life. Part timers were discriminated against by pretty much all final salary schemes until it was outlawed in the early 90s, and discrimination against manual workers in a mixed workforce was common into the 80s.

Mnd

Is it fair that your pension was paid at 60, yet a man born on the same day would have had to wait 5 years, pay 5 more years into the system and statistically die before you? No it's not so the rules have changed for the better in my opinion

colsten

shropshirelady wrote: »

I started work 6 weeks after I was 15. Did you? And too right I didn't have a gap year. Tax years ago was 41% (tax and NIC meant I was only picking up 51% of my salary) Is that what you call low tax? Mortgage interest in the 80's was up to 17%. I said I was contracted IN for 30 odd years. And it did me no harm working until I was over 65. Just remembered why I rarely post on here!

You are a great example of a glass-half-full person. You only remember things that used to be worse in the past, not those that worked in your favour. For example, there was free education for your (and my) generation. With the high mortgage interest rates came high savings interest rates, and tremendous rises in house prices. The increase in house prices are the main contributor to us being the wealthiest cohort that ever lived. Many of the younger people, who don't see a state pension until they are 67 or 68, can only dream of having a mortgage, and there's no such thing as MIRAS for them, either. If you were contracted in for 30 years, you must have accumulated quite a bit of SERPS/S2P. You had the opportunity to defer your state pension at a whopping 10.4% interest, and to get a lump sum payment when commencing your deferred state pension. In the 80s and 90s, it took about 4 workers to pay the state pension of one pensioner. Now it's down to almost 2, because we have fewer people of working age and an explosion of people of state pension age. And you still qualified for your state pension at 60, 5 years before a man your age, and up to 8 years before many of those who are paying your state pension,

These are just examples off the top of my head of the advantages we had, and which people younger than us don't have. It's not all better for them. It is important to look at all the pros and cons to arrive at a balanced view.

dunstonh

I started work 6 weeks after I was 15. Did you?

I dont see what your choice and my choice has to do with fairness.

Tax years ago was 41% (tax and NIC meant I was only picking up 51% of my salary) Is that what you call low tax?

Yet today, the tax burden is highest it has been for multiple generations. Income tax and NIC were the main taxes in the past but no longer the case. These have been lowered to pile on elsewhere.

Mortgage interest in the 80's was up to 17%.

You mean 90s. However, the houses you had the mortgage on were more affordable.

Just remembered why I rarely post on here!

Yes. Probably a good idea if you don't wish to be picked up on biased inaccurate information.

It’s just not necessarily true to think those who retire at 60 have had an easier time of it.

Very true. However, it is also wrong to think that those getting the new state pension have it easier. In reality, every generation has things that are better or worse than other generations.