National Insurance con

hyubh

Tom99 wrote: »

Why stop there, allow everyone entitled to less than £164.35pw to top up to that level at c£760 per £4.69pw.

It's as if you didn't quite get my point ;-)

The single tier pension is about saving money, providing a reduced state pension for those who would have been contracted-in anyway (e.g., the vast majority of private sector workers under 40 for whom DB pensions are unknown). The fact some individuals who had contracted out (in the main, exactly those with much better pension provision than others in the first place) are able to now accrue more state pension than they were originally supposed to is a transitionary measure to simplify getting nSP going.

BobQ

michaels wrote: »

The con was that those who didn't contract out and had in theory built up some s2p were left in their mid 40s still paying NI but not accruing any more pension for the next 20 years whereas those who had contracted out get to keep the contracted out pot and will still get the same state pension at 67 based on their current contributions.

But those contracted out still paid less NI and so got less benefit and had no choice about the matter. If they had had the choice they may well of chose not to contract out. Those working beyond 2016 should be treated the same and it would be unfair to say they should pay the same NI but get less benefit from it.

BobQ

hyubh wrote: »

It's as if you didn't quite get my point ;-)

The single tier pension is about saving money, providing a reduced state pension for those who would have been contracted-in anyway (e.g., the vast majority of private sector workers under 40 for whom DB pensions are unknown). The fact some individuals who had contracted out (in the main, exactly those with much better pension provision than others in the first place) are able to now accrue more state pension than they were originally supposed to is a transitionary measure to simplify getting nSP going.

Not only them, those who never even bothered to accrue a pension who were self employed also benefit.

But you are right that this is a transitory measure for which you need to ensure that there are no losers even if some benefit in the short term, provided that in the long term all are treated equally. No system is perfect but at least this one looks after those who could not contribute due to caring responsibilities.

hyubh

BobQ wrote: »

But those contracted out still paid less NI and so got less benefit and had no choice about the matter. If they had had the choice they may well of chose not to contract out.

Possibly so, but that wouldn't have made it fairer or more sustainable.

Those working beyond 2016 should be treated the same and it would be unfair to say they should pay the same NI but get less benefit from it.

Hmm, but that's exactly what has happened (or will happen) to people who were contracted-in, likely to earn a full SERPS/S2P pension if the previous system continued, but too young to have maxed out their possible SERPS/S2P accrual when nSP came in.

The primary benefit of enabling people with sizeable contracted-out years to earn nSP at the standard rate is that it has allowed the government to fudge the issue of GMP increases.

planteria

GMP increases?

hyubh

planteria wrote: »

GMP increases?

It's complicated, but under the old system, part of the cost of living increases applied to a person's final salary pension, if it was earned on service between 1978 and 1997, may (in effect) be paid with their state pension. The new state pension did away with the mechanism by which this was done. While many people would have been unaffected anyway, at least until some years after retiring - as I said, the situation is complicated - allowing previously contracted-out people to earn nSP in the same way as anyone else counteracts even this loss.

That said, there will still be a minority of previously contracted-out people who do lose out. However, it won't be because they will 'only' accrue nSP on the same basis as someone their age who never contracted out, since that, in itself, is only a positive for them.

planteria

thank you.. but what does GMP stand for?

GibbsRule_No3

planteria wrote: »

thank you.. but what does GMP stand for?

The Guaranteed Minimum Pension (GMP) is the minimum pension which a United Kingdom occupational pension scheme has to provide for those employees who were contracted out of the State Earnings-Related Pension Scheme (SERPS) between 6 April 1978 and 5 April 1997. The amount is said to be 'broadly equivalent' to the amount the member would have received had they not been contracted out.

John_G_Jones

misuel1955 wrote: »

Many NHS staff attended pre retirement workshops and at no time was the fact that our NIC would not entitle us to the full State Pension. Surely this should have been a valid topic for discussion so staff could be given the opportunity to pay a shortfall if they wanted to

It is no-one’s fault but your own if you did not research for yourself how this worked. You can not delegate responsibility for your pension to someone who happened to speak at a “workshop” many years ago.

The fact is you have not missed out, you bought something else, the only confusion is that you thought that you could pay less in than others and still get the same out.

molerat

Glad I reach state pension age whilst the government are still kicking the public service pension GMP can down the road