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    • MSE Guy
    • By MSE Guy 8th Mar 11, 9:40 AM
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    MSE Guy
    MSE News: 140-a-week state pensions on the cards
    • #1
    • 8th Mar 11, 9:40 AM
    MSE News: 140-a-week state pensions on the cards 8th Mar 11 at 9:40 AM
    This is the discussion thread for the following MSE News Story:

    Read the full story:
    State pension reform unveiled but no 140-a-week payout confirmed

    and the earlier version before Iain Duncan Smith's speech today:


    140-a-week state pensions on the cards


    Last edited by MSE Guy; 08-03-2011 at 4:05 PM.
Page 1
    • dunstonh
    • By dunstonh 8th Mar 11, 10:13 AM
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    dunstonh
    • #2
    • 8th Mar 11, 10:13 AM
    • #2
    • 8th Mar 11, 10:13 AM
    Some also qualify for a second state pension, usually a much lower sum than the basic pension.
    it may be worth changing that from "a second state pension" to "additional state pensions" as its not just the state second pension but also SERPS and Graduated Pension that people get (depending on age). The State second pension is a relatively new thing. SERPS is more widely known by people (even if its only knowing it exists rather than what it is).

    Someone getting full qualification on S2P now can get around 3500 a year. However, those coming up to retirement can actually get more than double their basic state pension as the terms were more favourable in the past.

    We still do no know if the proposals will claw back graduated, SERPS and S2P from people who contracted out. Or if those that have built up an entitlement greater than 140 pw will get to keep it.

    The state pension age is already set to be increased in response to people living longer, and the default retirement age of 65 is to be abolished in October, so employers can no longer sack staff who reach that threshold.
    The state pension increases are not set to be increased. That happened back in 1995 with the female state pension age increase and then increased to 68 back in 2006. There are currently no new proposals to increase the state pension age further (although wouldnt be surprised to see another 2 years added on two new 10 year tiers in the future).
    Last edited by dunstonh; 08-03-2011 at 10:15 AM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • StevieJ
    • By StevieJ 8th Mar 11, 10:28 AM
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    StevieJ
    • #3
    • 8th Mar 11, 10:28 AM
    • #3
    • 8th Mar 11, 10:28 AM
    I can't quite get my head around this, it seems as though people who contracted out because they had good company pensions will be the big gainers, is that correct? Is this a firming of the green paper that was promised a couple of months ago? could be a bit vote winner at the next election. I still don't see how it helps people with small pensions as presumably they will still lose the benefits of rent and rates taken care of if they have extra cash coming in.
    • gadgetmind
    • By gadgetmind 8th Mar 11, 10:29 AM
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    gadgetmind
    • #4
    • 8th Mar 11, 10:29 AM
    • #4
    • 8th Mar 11, 10:29 AM
    I project that a full claw-back of our Protected Rights would cost me and my wife 90 a week at age 60. I wonder what HMG will give us in return? I guess at absolutely nothing.

    Oh, and we can start drawing on PR at age 55 whereas the mirage that is the state pension is hovering off at age 65 but receding as fast as we approach it.
    Last edited by gadgetmind; 08-03-2011 at 10:35 AM.
  • walkerscott
    • #5
    • 8th Mar 11, 10:53 AM
    I wonder
    • #5
    • 8th Mar 11, 10:53 AM
    if that would mean that the current minimum weekly existence rate will stay the same ... and if it does, all the top-ups will disappear along with the associated benefits like council tax exemption etc?
    Just a thought ... If it does pan out like this then the Government will be saving a great deal and so will the Local Authorities!
    • Just landed
    • By Just landed 8th Mar 11, 11:03 AM
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    Just landed
    • #6
    • 8th Mar 11, 11:03 AM
    • #6
    • 8th Mar 11, 11:03 AM
    The issue I have with all this is :-

    Cons put a fairer system together then comes along people like Tony Brown and robs your Pension fund, I wonder if there is a way the new system can be etched in stone then we won't be robbed again.
    • dunstonh
    • By dunstonh 8th Mar 11, 11:10 AM
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    dunstonh
    • #7
    • 8th Mar 11, 11:10 AM
    • #7
    • 8th Mar 11, 11:10 AM
    My protected rights pension pot projects to a weekly income of 157. That is significantly higher than the 140 proposed pension. So, any potential clawback concerns me. As long as the clawback doesnt erode more than the basic state pension element I will not be too upset with that as that would make me no worse or better off. I would hate to see me lose 157 to gain just over 40

    Until gadgetmind mentioned his figure I wasnt actually aware of mine as I have always bundled it in with the bottom line. I was surprised to see it that high but not complaining The SERPS years clearly made the difference whilst S2P could never get that high.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • strawberrylane
    • By strawberrylane 8th Mar 11, 12:00 PM
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    strawberrylane
    • #8
    • 8th Mar 11, 12:00 PM
    • #8
    • 8th Mar 11, 12:00 PM
    I would be very surprised if the proposal for people that have built up protected rights was to claw back more than the "additional" element of the flat-rate state pension. The question is how will they calculate how much to reduce that additional element by for people with protected rights. A simplified scheme might see, for example, an additional element of 40pw (say) being reduced by 1pw for each year that someone has been contracted out (stopping at zero of course). But its all just guesswork at the moment and is likely to remain so for a while yet I suspect.
  • bendix
    • #9
    • 8th Mar 11, 12:03 PM
    • #9
    • 8th Mar 11, 12:03 PM
    You know, we could of course wait to see what's in the proposals before forming our opinions on them.

    Just a thought . .
    • strawberrylane
    • By strawberrylane 8th Mar 11, 12:05 PM
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    strawberrylane
    Yep, but don't expect anything concrete any time soon.
    • Moneyer
    • By Moneyer 8th Mar 11, 12:35 PM
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    Moneyer
    Purchased NI contributions
    What is the now the position of those who (with government encouragement) have voluntarily paid lump sums to buy "missing" years of NI contributions? Will they derive no benefit from these payments, and if so will they be refunded?
    • bilbo51
    • By bilbo51 8th Mar 11, 12:41 PM
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    bilbo51
    What is the now the position of those who (with government encouragement) have voluntarily paid lump sums to buy "missing" years of NI contributions? Will they derive no benefit from these payments, and if so will they be refunded?
    Originally posted by Moneyer
    It's a good wheeze isn't it? But I think the real answer is that we don't know. And probably won't know the details even after the Budget later this month...
  • bendix
    What is the now the position of those who (with government encouragement) have voluntarily paid lump sums to buy "missing" years of NI contributions? Will they derive no benefit from these payments, and if so will they be refunded?
    Originally posted by Moneyer

    As has been pointed out a million times on this forum, NI contributions pay for a range of services and entitlements, not just the state pension.
    • Moneyer
    • By Moneyer 8th Mar 11, 1:20 PM
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    Moneyer
    As has been pointed out a million times on this forum, NI contributions pay for a range of services and entitlements, not just the state pension.
    Originally posted by bendix
    I take this point, but to the best of my knowledge all the other "services and entitlements" accrue within a fairly limited time after the payment. If one pays a lump sum to "purchase" missing NI contributions from years previously, then is it not too late to benefit in other way other than pension entitlement? (One does not, for example, get paid in arrears any contribution-based JSA which one would have been able to claim had the contributions been made at the time.....)
    • avaface
    • By avaface 8th Mar 11, 1:25 PM
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    avaface
    How will this affect people already retired? I think my dad would be very interested in this,he gets less state pension because he also saved for a private pension all of his working life. Any bit extra that can make your life abit more comfortable,is a good thing i think. But we shall see.
    • dunstonh
    • By dunstonh 8th Mar 11, 2:08 PM
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    dunstonh
    How will this affect people already retired?
    If they are past state pension age then it wont.

    he gets less state pension because he also saved for a private pension all of his working life.
    The state pension is not affected by personal pension provision. The only thing that is potentially affected is pension credits. However,if he saved in a personal pension all his working life, it would be doubtful that he would qualify for those anyway. pension credits are for low earners who havent made any or much provision.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • ArKay
    • By ArKay 8th Mar 11, 3:14 PM
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    ArKay
    Do I need to keep paying Class 2?
    So I am semi retired working self employed for only a day a week. I still pay my Class 2 contributions each week because I assumed if I did not it could affect my state pension. Is that no longer the case and do you think it will matter if I stop paying soon?
    • gadgetmind
    • By gadgetmind 8th Mar 11, 3:16 PM
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    gadgetmind
    Until gadgetmind mentioned his figure I wasnt actually aware of mine as I have always bundled it in with the bottom line.
    Originally posted by dunstonh
    I only split mine out because the rules regards lump sums and drawdown of PR aren't always in line with everything else. However, if they decide to steal my Protected Rights, I guess it will make it easier to delete those rows.

    Anyway, fingers crossed. It's not as if HMG have treated Private Pensions as their own piggy banks ever before, oh no!
    • gadgetmind
    • By gadgetmind 8th Mar 11, 3:17 PM
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    gadgetmind
    Yep, but don't expect anything concrete any time soon.
    Originally posted by strawberrylane
    Quite so. It's not as if there is any rush as people don't really need to be doing pensions planning based on solid information, or anything like that.
    • MSE Guy
    • By MSE Guy 8th Mar 11, 4:05 PM
    • 1,628 Posts
    • 1,255 Thanks
    MSE Guy
    See an updated story, following Iain Duncan Smith's speech:
    State pension reform unveiled but no 140-a-week payout confirmed

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