Once you've "won the game"

Thrugelmir

MK62 said:

bostonerimus said:

For most people the SP is very important. While I like the egalitarian move to the new flat rate pension, for a lot of people the removal of some earnings related component has reduced the amount of SP they will get. I would be more sanguine about the new pension if it was larger. We've been asking what it means to have won this retirement thing and it's most basically in some sense having enough money to live happily until you die and SP, annuities and drawdown need to be arranged to do that best. Commercial annuities aren't very popular right now because of the low payout rates and people don't like giving up control of their pot. The best way to ensure you get a little more income in old age is to defer SP, but I wonder if we could also allow people to "buy" more SP rather than buying a commercial annuity. It could be an option offered in pension plans.

Your idea about state run annuities might have some social merit (within limits)- it would remove the profit slice taken from payouts, but I very much doubt the pension industry would be keen on this, not only would it take some/much of their remaining annuity business, it might (if not limited) also start to compete with other pension offerings, and like it or not, the pension industry does employ a lot of people and generates a lot of taxable profits......

Public sector organisations are notoriously cost inefficiently run. Likewise to start from ground zero , with no capital reserves. You'd be asking future taxpayers to underwrite any shortfalls in the medium term.  Recent profits are as much as about investment performance as margin on the product itself. Insurance companies do make losses as well if they make the wrong calls. 

MK62

Thrugelmir said:

MK62 said:

bostonerimus said:

For most people the SP is very important. While I like the egalitarian move to the new flat rate pension, for a lot of people the removal of some earnings related component has reduced the amount of SP they will get. I would be more sanguine about the new pension if it was larger. We've been asking what it means to have won this retirement thing and it's most basically in some sense having enough money to live happily until you die and SP, annuities and drawdown need to be arranged to do that best. Commercial annuities aren't very popular right now because of the low payout rates and people don't like giving up control of their pot. The best way to ensure you get a little more income in old age is to defer SP, but I wonder if we could also allow people to "buy" more SP rather than buying a commercial annuity. It could be an option offered in pension plans.

Your idea about state run annuities might have some social merit (within limits)- it would remove the profit slice taken from payouts, but I very much doubt the pension industry would be keen on this, not only would it take some/much of their remaining annuity business, it might (if not limited) also start to compete with other pension offerings, and like it or not, the pension industry does employ a lot of people and generates a lot of taxable profits......

Public sector organisations are notoriously cost inefficiently run. Likewise to start from ground zero , with no capital reserves. You'd be asking future taxpayers to underwrite any shortfalls in the medium term.  Recent profits are as much as about investment performance as margin on the product itself. Insurance companies do make losses as well if they make the wrong calls. 

That's why I said social merit......in practice it would be difficult to implement for a variety of reasons.

MK62

GunJack said:

Interesting thread, but does seem biased towards the wealthier end of folks who seem to think their "pot" is there to provide inheritance....

With respect, my "pot" is there for whatever I decide it's there for (and the "pot", in total, isn't just sat within pensions).

GunJack said:

 surely you've more than "won" if you've got £several tens of k's left by the time you both (assuming a couple) die?? 

Yes, but sat here today, I have no real idea whether that will happen or not.......it will if all goes to plan though, so what could possibly go wrong?......

GunJack said:

The other thing that comes out is that having DBs probably mean that you've "won" - however this goes against the view of leaving inheritance as when both of you die so do the DBs with no further inheritance..... you can't have it both ways, surely???

Well, that would depend on the DB pension as to whether you've "won".....in terms of pension provision alone, having a DB pension which pays enough income would be the ideal, and like you say, it would die with the last surviving partner.......but how many people's entire wealth after retirement is just their DB pension(s)......I'm sure there are some, but I suspect the majority will have other assets

GunJack said:

So, as I've got one deferred and one current DB (both CPI-linked), plus full SP entitlement, Mrs. G-J will have full SP with 50% spouse provision on my DBs with in all likelyhood ongoing Attendance Allowance, does this mean we've "won", or not as the inheritance we leave will probably only be in the £10s or just over k's?????

...or does it depend on who you ask?? 

That does depend on who you ask......Mrs G-J will have half your joint income......and if that's enough to maintain her lifestyle after you've checked out that's good.......in our case it wouldn't be enough, we reckon it needs to be closer to 2/3rds.

As for leaving just £10s, that's entirely up to you......like I said earlier, a personal choice.

Sea_Shell

Surely, as life can throw us major curve balls at any time (even if you've secured an annuity), you'll only ever know if you've actually "won the game" in hindsight, after you've shuffled off this mortal coil.

We can only ever be confident of "being in the lead... for now"!!

bostonerimus

MK62 said:

bostonerimus said:

For most people the SP is very important. While I like the egalitarian move to the new flat rate pension, for a lot of people the removal of some earnings related component has reduced the amount of SP they will get. I would be more sanguine about the new pension if it was larger. We've been asking what it means to have won this retirement thing and it's most basically in some sense having enough money to live happily until you die and SP, annuities and drawdown need to be arranged to do that best. Commercial annuities aren't very popular right now because of the low payout rates and people don't like giving up control of their pot. The best way to ensure you get a little more income in old age is to defer SP, but I wonder if we could also allow people to "buy" more SP rather than buying a commercial annuity. It could be an option offered in pension plans.

We tried the "more" SP thing with SERPS and then S2P.......for a variety of reasons they didn't really work, and were finally abandoned some years ago now.

More "base" SP would probably be a good idea imho, but worthwhile amounts would have to be paid for by large increases in NI, and politically, in the UK, that's a hard sell to the electorate at the moment (and tbh, the forseeable future imo). There has been some suggestions by various commentators in the press about making the state pension means tested at some point in the future, and while it might happen (you just never know), I think that would be a big mistake......more likely I think is the gradual push higher on state pension age, though even with that, there comes a point where it'd be counter productive to push it any higher (not that this would necessarily prevent a future govt from doing it).

Your idea about state run annuities might have some social merit (within limits)- it would remove the profit slice taken from payouts, but I very much doubt the pension industry would be keen on this, not only would it take some/much of their remaining annuity business, it might (if not limited) also start to compete with other pension offerings, and like it or not, the pension industry does employ a lot of people and generates a lot of taxable profits......

Recent UK SP reforms were about saving the Government money and sold as "simplifying" the system. Removal of SERPS, S2P etc means many people will get a far lower SP on the new system than the old and even people on old basic SP for who the new rate pension is larger lost out because other top up benefits disappeared. I'm one of the few who won from the reforms: being an expat I would have got just old basic SP and the new flat rate is quite a bit more.

I'm against means testing of SP as such "reforms" are often a prelude to the destruction of the benefit as the rich and powerful argue that they should not pay NIC etc if they get no benefit.

bostonerimus

OldScientist said:

bostonerimus said:

j

My DB plan was great value, but my UK SP has been ridiculously good value: I got 3 free years while at college and have 32 years of voluntary Class 2 NICs. I estimate the total cost in contributions to be 6k GBP (not a typo) and using 9% annual return maybe those would be worth 40k GBP right now...anyway compare 40k GBP to buy a 9k index linked annuity starting a 67 with the ~230k GBP you'd have to stump up to a UK insurance company to buy the same thing today. FYI it's not just me that gets this deal, it's all the self employed. It's far too cheap IMO.

Without wanting to derail the thread, you certainly got a good deal compared to me - with 9% growth my NI contributions would be worth just over 300k (I'm also rather glad/relieved that it is not just me that calculates these sorts of things!).

Well I'm an old scientist too...

MK62

bostonerimus said:

MK62 said:

bostonerimus said:

For most people the SP is very important. While I like the egalitarian move to the new flat rate pension, for a lot of people the removal of some earnings related component has reduced the amount of SP they will get. I would be more sanguine about the new pension if it was larger. We've been asking what it means to have won this retirement thing and it's most basically in some sense having enough money to live happily until you die and SP, annuities and drawdown need to be arranged to do that best. Commercial annuities aren't very popular right now because of the low payout rates and people don't like giving up control of their pot. The best way to ensure you get a little more income in old age is to defer SP, but I wonder if we could also allow people to "buy" more SP rather than buying a commercial annuity. It could be an option offered in pension plans.

We tried the "more" SP thing with SERPS and then S2P.......for a variety of reasons they didn't really work, and were finally abandoned some years ago now.

More "base" SP would probably be a good idea imho, but worthwhile amounts would have to be paid for by large increases in NI, and politically, in the UK, that's a hard sell to the electorate at the moment (and tbh, the forseeable future imo). There has been some suggestions by various commentators in the press about making the state pension means tested at some point in the future, and while it might happen (you just never know), I think that would be a big mistake......more likely I think is the gradual push higher on state pension age, though even with that, there comes a point where it'd be counter productive to push it any higher (not that this would necessarily prevent a future govt from doing it).

Your idea about state run annuities might have some social merit (within limits)- it would remove the profit slice taken from payouts, but I very much doubt the pension industry would be keen on this, not only would it take some/much of their remaining annuity business, it might (if not limited) also start to compete with other pension offerings, and like it or not, the pension industry does employ a lot of people and generates a lot of taxable profits......

Recent UK SP reforms were about saving the Government money and sold as "simplifying" the system. Removal of SERPS, S2P etc means many people will get a far lower SP on the new system than the old and even people on old basic SP for who the new rate pension is larger lost out because other top up benefits disappeared. I'm one of the few who won from the reforms: being an expat I would have got just old basic SP and the new flat rate is quite a bit more.

I'm against means testing of SP as such "reforms" are often a prelude to the destruction of the benefit as the rich and powerful argue that they should not pay NIC etc if they get no benefit.

Under the transitional rules, your SP entitlement is calculated against both the old and new state pensions' entitlement systems....and you get the higher of the two results.......at least that's what we are being told....,..it's hard to check as the calculations appear to be shrouded in secrecy.......to be fair though, that might simply be because they are complex and hard to understand for Mr or Mrs Average, and they don't want to expend a lot of resource answering the myriad of queries they would undoubtedly get.

In my case, I appear to be on the old system, as my state pension will be quite a bit higher than the New SP of £9340.......but I don't really know if the calculation of that is accurate or not (and not having seen it, I can't say whether I'd understand it either). The bottom line is that the govt have stated that nobody should lose out either way.

As for means testing....good point, and another reason why I think introducing that would be a big mistake......too tempting for successive govts to tinker too.

bostonerimus

MK62 said:

bostonerimus said:

MK62 said:

bostonerimus said:

For most people the SP is very important. While I like the egalitarian move to the new flat rate pension, for a lot of people the removal of some earnings related component has reduced the amount of SP they will get. I would be more sanguine about the new pension if it was larger. We've been asking what it means to have won this retirement thing and it's most basically in some sense having enough money to live happily until you die and SP, annuities and drawdown need to be arranged to do that best. Commercial annuities aren't very popular right now because of the low payout rates and people don't like giving up control of their pot. The best way to ensure you get a little more income in old age is to defer SP, but I wonder if we could also allow people to "buy" more SP rather than buying a commercial annuity. It could be an option offered in pension plans.

We tried the "more" SP thing with SERPS and then S2P.......for a variety of reasons they didn't really work, and were finally abandoned some years ago now.

More "base" SP would probably be a good idea imho, but worthwhile amounts would have to be paid for by large increases in NI, and politically, in the UK, that's a hard sell to the electorate at the moment (and tbh, the forseeable future imo). There has been some suggestions by various commentators in the press about making the state pension means tested at some point in the future, and while it might happen (you just never know), I think that would be a big mistake......more likely I think is the gradual push higher on state pension age, though even with that, there comes a point where it'd be counter productive to push it any higher (not that this would necessarily prevent a future govt from doing it).

Your idea about state run annuities might have some social merit (within limits)- it would remove the profit slice taken from payouts, but I very much doubt the pension industry would be keen on this, not only would it take some/much of their remaining annuity business, it might (if not limited) also start to compete with other pension offerings, and like it or not, the pension industry does employ a lot of people and generates a lot of taxable profits......

Recent UK SP reforms were about saving the Government money and sold as "simplifying" the system. Removal of SERPS, S2P etc means many people will get a far lower SP on the new system than the old and even people on old basic SP for who the new rate pension is larger lost out because other top up benefits disappeared. I'm one of the few who won from the reforms: being an expat I would have got just old basic SP and the new flat rate is quite a bit more.

I'm against means testing of SP as such "reforms" are often a prelude to the destruction of the benefit as the rich and powerful argue that they should not pay NIC etc if they get no benefit.

Under the transitional rules, your SP entitlement is calculated against both the old and new state pensions' entitlement systems....and you get the higher of the two results.......at least that's what we are being told....,..it's hard to check as the calculations appear to be shrouded in secrecy.......to be fair though, that might simply be because they are complex and hard to understand for Mr or Mrs Average, and they don't want to expend a lot of resource answering the myriad of queries they would undoubtedly get.

In my case, I appear to be on the old system, as my state pension will be quite a bit higher than the New SP of £9340.......but I don't really know if the calculation of that is accurate or not (and not having seen it, I can't say whether I'd understand it either). The bottom line is that the govt have stated that nobody should lose out either way.

As for means testing....good point, and another reason why I think introducing that would be a big mistake......too tempting for successive govts to tinker too.

They are phasing in the new SP over time and people with NICs before April 2016 will get part of the pension calculated under the old rules and if the result is bigger than the flat rate pension they get the larger amount. Many people contracted out so that is factored in as well. I've mostly paid Class 2 NICs so even though most of my payments are before 2016 I will get just the flat rate pension.

What this thread has emphasized to me is the importance of a guaranteed income floor which makes SP even more important because it will be the only index linked lifetime income most people will have.

zagfles

MK62 said:

bostonerimus said:

MK62 said:

bostonerimus said:

For most people the SP is very important. While I like the egalitarian move to the new flat rate pension, for a lot of people the removal of some earnings related component has reduced the amount of SP they will get. I would be more sanguine about the new pension if it was larger. We've been asking what it means to have won this retirement thing and it's most basically in some sense having enough money to live happily until you die and SP, annuities and drawdown need to be arranged to do that best. Commercial annuities aren't very popular right now because of the low payout rates and people don't like giving up control of their pot. The best way to ensure you get a little more income in old age is to defer SP, but I wonder if we could also allow people to "buy" more SP rather than buying a commercial annuity. It could be an option offered in pension plans.

We tried the "more" SP thing with SERPS and then S2P.......for a variety of reasons they didn't really work, and were finally abandoned some years ago now.

More "base" SP would probably be a good idea imho, but worthwhile amounts would have to be paid for by large increases in NI, and politically, in the UK, that's a hard sell to the electorate at the moment (and tbh, the forseeable future imo). There has been some suggestions by various commentators in the press about making the state pension means tested at some point in the future, and while it might happen (you just never know), I think that would be a big mistake......more likely I think is the gradual push higher on state pension age, though even with that, there comes a point where it'd be counter productive to push it any higher (not that this would necessarily prevent a future govt from doing it).

Your idea about state run annuities might have some social merit (within limits)- it would remove the profit slice taken from payouts, but I very much doubt the pension industry would be keen on this, not only would it take some/much of their remaining annuity business, it might (if not limited) also start to compete with other pension offerings, and like it or not, the pension industry does employ a lot of people and generates a lot of taxable profits......

Recent UK SP reforms were about saving the Government money and sold as "simplifying" the system. Removal of SERPS, S2P etc means many people will get a far lower SP on the new system than the old and even people on old basic SP for who the new rate pension is larger lost out because other top up benefits disappeared. I'm one of the few who won from the reforms: being an expat I would have got just old basic SP and the new flat rate is quite a bit more.

I'm against means testing of SP as such "reforms" are often a prelude to the destruction of the benefit as the rich and powerful argue that they should not pay NIC etc if they get no benefit.

Under the transitional rules, your SP entitlement is calculated against both the old and new state pensions' entitlement systems....and you get the higher of the two results.......at least that's what we are being told....,..it's hard to check as the calculations appear to be shrouded in secrecy.......to be fair though, that might simply be because they are complex and hard to understand for Mr or Mrs Average, and they don't want to expend a lot of resource answering the myriad of queries they would undoubtedly get.

In my case, I appear to be on the old system, as my state pension will be quite a bit higher than the New SP of £9340.......but I don't really know if the calculation of that is accurate or not (and not having seen it, I can't say whether I'd understand it either). The bottom line is that the govt have stated that nobody should lose out either way.

As for means testing....good point, and another reason why I think introducing that would be a big mistake......too tempting for successive govts to tinker too.

It's not secret but it is quite complicated, there've been loads of long threads here discussing it in great detail.

MK62

zagfles said:

MK62 said:

bostonerimus said:

MK62 said:

bostonerimus said:

For most people the SP is very important. While I like the egalitarian move to the new flat rate pension, for a lot of people the removal of some earnings related component has reduced the amount of SP they will get. I would be more sanguine about the new pension if it was larger. We've been asking what it means to have won this retirement thing and it's most basically in some sense having enough money to live happily until you die and SP, annuities and drawdown need to be arranged to do that best. Commercial annuities aren't very popular right now because of the low payout rates and people don't like giving up control of their pot. The best way to ensure you get a little more income in old age is to defer SP, but I wonder if we could also allow people to "buy" more SP rather than buying a commercial annuity. It could be an option offered in pension plans.

We tried the "more" SP thing with SERPS and then S2P.......for a variety of reasons they didn't really work, and were finally abandoned some years ago now.

More "base" SP would probably be a good idea imho, but worthwhile amounts would have to be paid for by large increases in NI, and politically, in the UK, that's a hard sell to the electorate at the moment (and tbh, the forseeable future imo). There has been some suggestions by various commentators in the press about making the state pension means tested at some point in the future, and while it might happen (you just never know), I think that would be a big mistake......more likely I think is the gradual push higher on state pension age, though even with that, there comes a point where it'd be counter productive to push it any higher (not that this would necessarily prevent a future govt from doing it).

Your idea about state run annuities might have some social merit (within limits)- it would remove the profit slice taken from payouts, but I very much doubt the pension industry would be keen on this, not only would it take some/much of their remaining annuity business, it might (if not limited) also start to compete with other pension offerings, and like it or not, the pension industry does employ a lot of people and generates a lot of taxable profits......

Recent UK SP reforms were about saving the Government money and sold as "simplifying" the system. Removal of SERPS, S2P etc means many people will get a far lower SP on the new system than the old and even people on old basic SP for who the new rate pension is larger lost out because other top up benefits disappeared. I'm one of the few who won from the reforms: being an expat I would have got just old basic SP and the new flat rate is quite a bit more.

I'm against means testing of SP as such "reforms" are often a prelude to the destruction of the benefit as the rich and powerful argue that they should not pay NIC etc if they get no benefit.

Under the transitional rules, your SP entitlement is calculated against both the old and new state pensions' entitlement systems....and you get the higher of the two results.......at least that's what we are being told....,..it's hard to check as the calculations appear to be shrouded in secrecy.......to be fair though, that might simply be because they are complex and hard to understand for Mr or Mrs Average, and they don't want to expend a lot of resource answering the myriad of queries they would undoubtedly get.

In my case, I appear to be on the old system, as my state pension will be quite a bit higher than the New SP of £9340.......but I don't really know if the calculation of that is accurate or not (and not having seen it, I can't say whether I'd understand it either). The bottom line is that the govt have stated that nobody should lose out either way.

As for means testing....good point, and another reason why I think introducing that would be a big mistake......too tempting for successive govts to tinker too.

It's not secret but it is quite complicated, there've been loads of long threads here discussing it in great detail.

Must have missed those.....I'll have a search when I get the time (and if I feel the urge.... )