Old v New state pension

xylophone

I was on a (initially) non-contributory final salary pension scheme in the private sector, and took little notice of such details at the time.  It became contributory a few years before I took very early retirement at 50 on voluntary redundancy 

From what you have said, I gather that you are in receipt of old state pension.

Assuming that you were a member of the scheme between 1978 and 2016, I would be very surprised if you had not been contracted out.

Does your annual State Pension Increase letter show a COD?

german_keeper

Bogof_OAP said:

Can't speak for Mick, but I freely admit I don't understand any of the intricacies of pensions...  I wonder how many everyday people actually do...

"Genuine question mick, do you understand exactly how the old system and the new system work? Do you understand contracting out in the old system, how that affected the level of NI contributions, and in particular what the benefits were of being in a position where you were contracted out? Do you understand what SERPS and S2P were?"

Sorry Bogof I really don't want to be argumentative but you admit to not understanding something but are happy enough in an earlier post to say you are "definitely in the worst of all worlds group."

You quote your position in comparison to your sister's but based on the information you have given, particularly your 30 years in a non contributory or small contribution occupational pension, then you have probably fared rather better than your sister. In short it isn't just about comparing state pension it is about comparing the whole picture regards state and occupational pension.   

p00hsticks

militarymick said:

Yes it's a complex system but rest assured those on the old pension inclusive of Serps etc.etc. do not, on average receive a payment approaching the new Pension.    

Can you please provide a link to support that statement ? As others have said, the thinking behind the introduction of the new state pension was partly to simplify the system but also to put a cap on the overall state pension that could be achieved, as under the old system it could be considerably higher.

And (playing devils advocate) do you propose that any campaign such as you envisage would also address the fact that people on the old scheme received theirs at an earlier age than those under the new, and (if reaching state pension age after 2010) required less NI years to obtain the full amount ?.

MX5huggy

LHW99 said:

The main bone of contention is % rises ever increase the chasm between the two pensioner groups.Our costs and expenses are indentical, so in fairness the two groups should receive an increase in £s rather than % which leads to such an ever increasing divide IMO

And that's what happens with wages too. The gap between the managers and the bottom end keeps getting bigger, except that the percentage divide remains (largely) the same

Local government in Wales (I think in England as well). Have just settled for a flat £1925 pay rise for everyone from April 2022. More than 10% for a pool life guard, 4% an Environmental Heath Officer and less than 2% for the CEO. 

Silvertabby

p00hsticks said:

militarymick said:

Yes it's a complex system but rest assured those on the old pension inclusive of Serps etc.etc. do not, on average receive a payment approaching the new Pension.    

Can you please provide a link to support that statement ? As others have said, the thinking behind the introduction of the new state pension was partly to simplify the system but also to put a cap on the overall state pension that could be achieved, as under the old system it could be considerably higher.

And (playing devils advocate) do you propose that any campaign such as you envisage would also address the fact that people on the old scheme received theirs at an earlier age than those under the new, and (if reaching state pension age after 2010) required less NI years to obtain the full amount ?.

Exactly.  SPA for me was 66.  I do get the full £185.15 per week, but needed 48 years of NI contributions (44 from work, 4 from paying voluntary Class 3s)  to get there.

Not complaining, just saying.  

 

najan49

Bogof_OAP said:

I understand and agree with the OP, being in the same position.  Even more so as I reached SPA at a couple of weeks short of  age 62 (I'm female) so missed out on both aspects of the calculations.  I now receive about £25 a week less than my sister who is less than two years younger than me, although granted she had to wait until she was 65 for hers.

I'm philosophical about it in that I did have an extra three years of claiming, and the break even point will come if I live to claim for about 17 years, which I hope to do!  My S2P amount is in the region of 75p a week, which hasn't changed for the past several years, so I am definitely in the worst of all worlds group.  But hey that's life.

In the absence of any other information it sounds very much like you paid less NI than your sister, and get a lower pension. Doesn’t seem unfair on face value.

militarymick

Interesting commentary folks, cheers!
    This only reinforces the fact that the whole UK tax/pension system is an overcomplex ill thought through jungle.The point of any legislation is for it to be simple fair and transparent to 'the man in the street'.
   The bottom line from my perspective is( a) I've worked all my life on median wages ....contracted out.......and am on basic SP.Whereas (b) my neighbour who has precisely the same record receives £ X, more newSP with an ever increasing + disparity with each % increase
 Now ,I might be simple minded,but I do not see any fairness ?.

Silvertabby

One of the aims of the new State pension (the main one being to save money !) is to simplify the system.

The transitional protections were done as fairly as possible, in that as at April 2016 no-one would receive less than they would receive under the old scheme.  

Had the scheme not changed, you would still be getting the same amount you are getting now.  Your neighbour may be getting a little more, but he will have paid full rate NI since April 2016, when contracting out NI rebates ceased.  

Linton

militarymick said:

Interesting commentary folks, cheers!
    This only reinforces the fact that the whole UK tax/pension system is an overcomplex ill thought through jungle.The point of any legislation is for it to be simple fair and transparent to 'the man in the street'.
   The bottom line from my perspective is( a) I've worked all my life on median wages ....contracted out.......and am on basic SP.Whereas (b) my neighbour who has precisely the same record receives £ X, more newSP with an ever increasing + disparity with each % increase
 Now ,I might be simple minded,but I do not see any fairness ?.

Perhaps your neighbour did not have the benefit of a contracted out DB pension and hence paid more NI than you.

LHW99

militarymick said:

Interesting commentary folks, cheers!
    This only reinforces the fact that the whole UK tax/pension system is an overcomplex ill thought through jungle.The point of any legislation is for it to be simple fair and transparent to 'the man in the street'.
   The bottom line from my perspective is( a) I've worked all my life on median wages ....contracted out.......and am on basic SP.Whereas (b) my neighbour who has precisely the same record receives £ X, more newSP with an ever increasing + disparity with each % increase
 Now ,I might be simple minded,but I do not see any fairness ?.

As I understand it those on the old SP can defer at a much better rate than those on the new SP