Actuarial reduced state pension

markinsouthsea

Having taken my two occupational pensions early it got me thinking why can’t we do the same with the state pension?

By taking early I took a cut in the benefits for early payment wouldn’t it be nice if we could do that with the state pension!

Pipe dreaming whilst sat in a coffee shop !

lisyloo

I don’t think that works.
If you don’t have enough to live on (many women are short of a full state pension) the government guarantees a min income £167.25 which is topped up with pension credit.

If you take yours early then it could cost more to taxpayers if/when you need topping up.
Even if you have a decent private pension income it still might not be enough for residential care, so you would need to be topped up.

So nice maybe, but an extra cost to the taxpayer, which is why minimum ages have risen even for taking private funds (from 50 to 55 and in future 57).

atush

It does work with an American SS pension, you can take it early at a reduced rate. I think you can take it at 62

Silvertabby

lisyloo is right - I believe this was discussed, but discounted due to the minimum income guarantee at SPA.

I think the reasoning was that whilst people who had enough private/occupational pension income not to need a means tested uplift at SPA could take a reduced State pension pre SPA, someone who would need the top up couldn't. Cue screams of 'one rule for the rich, another for the poor'.

lisyloo

But none of us know (unless we’re rich) whether we’d need a top up.
How many people have private pension income high enough to pay residential care fees? Not Many at all.
Only the genuinely rich (not the comfortably off) could claim to have enough to guarantee not need topping up.
It’s a minority who need residential care but it Could be any of us.

westv

I think you are far better off using part of a DC pot or other savings to fill the gap before SPA then you would be taking it early if you ever could.

Silvertabby

lisyloo wrote: »

But none of us know (unless we’re rich) whether we’d need a top up.
How many people have private pension income high enough to pay residential care fees? Not Many at all.
Only the genuinely rich (not the comfortably off) could claim to have enough to guarantee not need topping up.
It’s a minority who need residential care but it Could be any of us.

Care fees didn't come into it. It was just pension income. A person with no other income other than the State pension may be entitled to a means tested top up to £165 per week at SPA - so if that person had taken a reduced pension from, say 62, then they would have received 4 years of payments for 'free' as they would still get the £165 from SPA that they would have received without the early payment.

In my own case, my occupational pensions alone are above the means test limit - so, in theory, it would be cost neutral to pay me a permanently reduced pension from 62.

drumtochty

Silvertabby wrote: »

Care fees didn't come into it. It was just pension income. A person with no other income other than the State pension may be entitled to a means tested top up to £165 per week at SPA - so if that person had taken a reduced pension from, say 62, then they would have received 4 years of payments for 'free' as they would still get the £165 from SPA that they would have received without the early payment.

In my own case, my occupational pensions alone are above the means test limit - so, in theory, it would be cost neutral to pay me a permanently reduced pension from 62.

Therefore the comments page posters on the Daily Mail would say it was OK for Silvertabby to get the State Pension at 62. While the rest of us have to work to 66 to get ours because we do not have a large occupational pension that she has.


It would run and run for ages.

Silvertabby

drumtochty wrote: »

Therefore the comments page posters on the Daily Mail would say it was OK for Silvertabby to get the State Pension at 62. While the rest of us have to work to 66 to get ours because we do not have a large occupational pension that she has.

It would run and run for ages.

Exactly why this proposal appears to have been rejected - it couldn't be offered universally.

P.S. I said that my occupational pension was over the means test limit, not that it was large !

xylophone

P.S. I said that my occupational pension was over the means test limit, not that it was large !

After years in the Armed Services and then local government I'd have hoped it wasn't small!:)

Silvertabby

xylophone wrote: »

After years in the Armed Services and then local government I'd have hoped it wasn't small!:)

It isn't - the two together (plus Mr S's Armed Forces and CS pensions) are more than enough for us to have retired very comfortably at 60. However, some people on these boards have personal/occupational pensions of over £30K each!