State pension set to rise by up to £460 a year

MarzipanCrumble

I deferred my SP (old) for about 5 years and worked during that time.  Quite deliberate, knew I would get a SP of about 20k, wanted to in order not to get stressed by having to budget/worry about money.  

So am a 'wealthy' pensioner with other pensions too.  I don't need that WFA.  I wish that the Gov could find a way to give the WFA to those pensioners with income up to around £25k but I think they can't. 

Martin's suggestion of giving it to those who live in Council tax bands A-D also would be unfair - what about those that live in Council Tax E or above (maybe very few but who knows?)  And those like me who have downsized to that Band?
 
Child Allowance for those earning over a certain income seems to be taxed in a graduated way but may involve submitting a form to HMRC.  Probably a step too far for some pensioners.....

BUT in principle I agree with what the Labour Gov has done.

Hoenir

Bostonerimus1 said:

The UK SP is one of the worst values for money state pensions in the developed world. In the US I pay half the tax rate compared to NI into the Federal Social Security system and I will get 2.5 times as much as the UK flat rate SP at age 67.

Simplistic generic statements add little value. The ever growing US fiscal deficit appears to be a problem that no current political leader wishes to address. 

Bostonerimus1

Hoenir said:

Bostonerimus1 said:

The UK SP is one of the worst values for money state pensions in the developed world. In the US I pay half the tax rate compared to NI into the Federal Social Security system and I will get 2.5 times as much as the UK flat rate SP at age 67.

Simplistic generic statements add little value. The ever growing US fiscal deficit appears to be a problem that no current political leader wishes to address. 

Sustainability is important.

I make a pretty broad assertion about the UK state pension relative to it's US equivalent and then go onto figures for my particular case and the earnings related component of the US Social Security pension means that it will be far more than my flat rate UK state pension. In general the US retiree receives more than their UK counterpart with the average US SS payment being $23k/year or about £17k/year. Of course where you live in the US is also a factor which affects living costs and the level of other benefits available as different states have different policies.

westv

Bostonerimus1 said:

Hoenir said:

Bostonerimus1 said:

The UK SP is one of the worst values for money state pensions in the developed world. In the US I pay half the tax rate compared to NI into the Federal Social Security system and I will get 2.5 times as much as the UK flat rate SP at age 67.

Simplistic generic statements add little value. The ever growing US fiscal deficit appears to be a problem that no current political leader wishes to address. 

Sustainability is important.

I make a pretty broad assertion about the UK state pension relative to it's US equivalent and then go onto figures for my particular case and the earnings related component of the US Social Security pension means that it will be far more than my flat rate UK state pension. In general the US retiree receives more than their UK counterpart with the average US SS payment being $23k/year or about £17k/year. Of course where you live in the US is also a factor which affects living costs and the level of other benefits available as different states have different policies.

I am imagine health care can be quite expensive.

Bostonerimus1

westv said:

Bostonerimus1 said:

Hoenir said:

Bostonerimus1 said:

The UK SP is one of the worst values for money state pensions in the developed world. In the US I pay half the tax rate compared to NI into the Federal Social Security system and I will get 2.5 times as much as the UK flat rate SP at age 67.

Simplistic generic statements add little value. The ever growing US fiscal deficit appears to be a problem that no current political leader wishes to address. 

Sustainability is important.

I make a pretty broad assertion about the UK state pension relative to it's US equivalent and then go onto figures for my particular case and the earnings related component of the US Social Security pension means that it will be far more than my flat rate UK state pension. In general the US retiree receives more than their UK counterpart with the average US SS payment being $23k/year or about £17k/year. Of course where you live in the US is also a factor which affects living costs and the level of other benefits available as different states have different policies.

I am imagine health care can be quite expensive.

Definitely! US people over 65 have Federally mandated care that generally costs $200/month , but only gives basic and short term care. People then buy supplemental insurance policies and they will still have out of pocket costs. I'm lucky as I get State Retiree insurance and will pay $300/month for very comprehensive care and have minimal extra costs. But that just goes to show the issue with US healthcare...I'm one of the lucky ones at $300/month. The UK has a great thing in the NHS and needs to save it from creeping US approaches and private insurance. If private healthcare becomes the norm in the UK, the triple lock and winter fuel allowances will be the least of people's concerns when budgeting in retirement.

Sarahspangles

MarzipanCrumble said:

Martin's suggestion of giving it to those who live in Council tax bands A-D also would be unfair - what about those that live in Council Tax E or above (maybe very few but who knows?)  And those like me who have downsized to that Band?

I haven’t read Martin's reasoning but assumed this was based on an assumption that pensioners who live in lower CT band houses are less well off. I don’t think it’s that simple, CT doesn’t even align that well to house prices in my experience.

Housing is relevant to this issue. Lots of people of pensionable age live in houses that are expensive to heat by choice i.e. they have chosen not to downsize or their families don’t want them to. In this area there’s been a campaign to encourage people going into ‘later life’ to consider right sizing their house to their needs. The time to make that move is not when your pension is insufficient to heat more than one room, not when you’re in a hospital bed after a fall and you can’t be discharged home because you need to be on one level and have a walk in shower.

hyubh

Bostonerimus1 said:

Also for many contracting out has been a disaster

Completely false and frankly the opposite of the actual situation in a large part.

Personally I was happy the see the new flat rate SP adopted as I pay voluntary NI and all I would have qualified for under the old system was the Basic SP (~£120/wk in 2014 ) and the new flat rate SP immediately increased that to £168/wk.

Outrageous, one might argue, if it weren't that winners in the changeover from old to new systems are ten a penny...

Grumpy_chap

Bostonerimus1 said:

The UK SP is one of the worst values for money state pensions in the developed world.

Personally I was happy the see the new flat rate SP adopted as I pay voluntary NI 

That seems to be a contradiction.

Why would you make voluntary NI contributions to such a poor value state pension?

I am also not sure that using only your figures as an example / case study reference group of one is a good basis for determining that the UK SP is poor value.
Surely, the value varies greatly across income groups (by design).  It is quite possible to reach SP age, have full entitlement to SP, but only ever have received NI credits but not actually paid NI.  That is an amazing return on investment so must be excellent value for those individuals...

I am also unsure how you assess the "value" of NI for the SP.  NI, in theory, funds SP, social security and NHS.  How do you allocate the proportions of NI contributions to the SP versus other components?

Bostonerimus1

Grumpy_chap said:

Bostonerimus1 said:

The UK SP is one of the worst values for money state pensions in the developed world.

Personally I was happy the see the new flat rate SP adopted as I pay voluntary NI 

That seems to be a contradiction.

Why would you make voluntary NI contributions to such a poor value state pension?

I am also not sure that using only your figures as an example / case study reference group of one is a good basis for determining that the UK SP is poor value.
Surely, the value varies greatly across income groups (by design).  It is quite possible to reach SP age, have full entitlement to SP, but only ever have received NI credits but not actually paid NI.  That is an amazing return on investment so must be excellent value for those individuals...

I am also unsure how you assess the "value" of NI for the SP.  NI, in theory, funds SP, social security and NHS.  How do you allocate the proportions of NI contributions to the SP versus other components?

Comparisons across borders are indeed very difficult so I won't argue my points strongly as there's a "but what about" for everything.

UK NI is a good thing to have for anyone in retirement in the UK, but it replaces a far smaller proportion of wages than  most equivalent schemes in OECD countries. But UK people make up for that a bit by putting more into private pensions. Still SP's guaranteed, inflation linked retirement income is a vital for the vast majority of OAPs. I chose to make voluntary Class 2 NI over 30 years ago because the ridiculously low Class 2 NI rate makes UK NI the best investment I've ever made. I'm one of the individuals who's paid in very little and will get an income far in excess of what my contributions could ever buy elsewhere.

brewerdave

The noises that are coming from various local Councils re 25-6 budgets ,suggests to me that the post tax value of the £460 will mostly be swallowed up by Council Tax increases !!