The New State Pension System
The New State Pension System
Whilst we're talking about idiots who can't do maths what about the many people who completely neglected to plan for retirement? It's not like they couldn't have seen it coming. We all get 65 years warning. Something for nothing again in my opinion.
Before I get flamed for daring to have an opinion let me add that I understand genuine cases of low paid workers who were unable to save more. However, I am getting sick and tired of being called rich and seeing money that millions before me have collected being slowly eroded.
Standing by to be accused of being a fascist.
BV
Before I get flamed for daring to have an opinion let me add that I understand genuine cases of low paid workers who were unable to save more. However, I am getting sick and tired of being called rich and seeing money that millions before me have collected being slowly eroded.
Standing by to be accused of being a fascist.
BV
BZ BV!
Definitely not a fascist, possibly just brought up, as I was, to believe if you want something you work / save for it and once it's gone it's gone. I too find it incredibly frustrating to be told by out of touch and seemingly untouchable politicians that because I had the temerity to work hard at school, get some qualifications and get a decent job at which I work hard, I am must be privileged, rich and ripe for mugging at every turn.
You are not a fascist, just echoing the voice of the silent majority who are being done over from both ends simultaneously and getting royally sick of being told we've all got to 'do our bit'.
Definitely not a fascist, possibly just brought up, as I was, to believe if you want something you work / save for it and once it's gone it's gone. I too find it incredibly frustrating to be told by out of touch and seemingly untouchable politicians that because I had the temerity to work hard at school, get some qualifications and get a decent job at which I work hard, I am must be privileged, rich and ripe for mugging at every turn.
You are not a fascist, just echoing the voice of the silent majority who are being done over from both ends simultaneously and getting royally sick of being told we've all got to 'do our bit'.
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There is a solution. No operations or life prolonging treatment on the NHS past pensionable age. "Rationed treatment" in other words.
Harsh but would save the state a fortune. The NHS operates far in excess of its original remit and is the single biggest state expenditure,
Harsh but would save the state a fortune. The NHS operates far in excess of its original remit and is the single biggest state expenditure,
Last edited by VinRouge; 16th Jan 2013 at 01:17.
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Just as an aside, I've often wondered whether the pensions crisis may be a blip. The people who are elderley now, say anyone 75 years and older are probably the healthiest generation we've ever had; IE they were brought up during the war years on rationing. How many of todays 30 to 50 years olds will be alive in 30 years time? Not so many I would imagine.
I'm not a medical person but looking at the state of some young people today and they way they live makes me wonder if they'll even reach pension age.
I'm not a medical person but looking at the state of some young people today and they way they live makes me wonder if they'll even reach pension age.
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Soldiers to pay more tax in pension reform
A private soldier earning £17,000 a year will have to pay an extra £162 in National Insurance contributions, while a sergeant on £30,000 will have to pay £341 more a year, research by the House of Commons library has found.
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I am planning on getting no state pension whatsoever.
A developed country like ours, could not remove the state pension scheme, without total economic and social disorder. The macro economic consequences would wipeout our service economy and thow millions into the social care system which is vastly more expensive anyway.
Not saying there is not a tiny wee chance such a fate awaits us, but if does, then your savings plan, a, b & c will be **** all use, because the economy and civil society will all have gone west and all our prosperity with it.
In fact, if you believe this is at all likely, you should be saving bugger all. You should be out drinking and whoring yourself to death.
Last edited by The Old Fat One; 23rd Jan 2013 at 21:12.
.....or buying a cabin up in the hills, lots of tins of beans, goats and chickens, start a vegetable plot, maybe a small windmill turbine for power, etc, etc...
Thing,
As an aside, I think it is now a stated fact that the current generation (what exactly is the "current generation, kids born today? Kids under 16? Everyone under 30?) for the first time ever actually has a lower life expectancy than the generation that proceeded it - thanks largely to the increase in obesity and type 2 diabetes!
Thing,
As an aside, I think it is now a stated fact that the current generation (what exactly is the "current generation, kids born today? Kids under 16? Everyone under 30?) for the first time ever actually has a lower life expectancy than the generation that proceeded it - thanks largely to the increase in obesity and type 2 diabetes!
Last edited by Biggus; 24th Jan 2013 at 11:15.
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SERPS OPT OUT
Some assumptions here on a complex subject
I retired last year after working from 1964 ie 46 years but I do not get a full state pension because the RAF was opted out of SERPS and thus I am docked £96 per week.
There is iniquity here, the figures assumed the RAF service was pensionable but of course officer service prior to age 21 does not count for pension.
It is often stated that there was an opportunity to make extra payments this is not the case for serviceman
I retired last year after working from 1964 ie 46 years but I do not get a full state pension because the RAF was opted out of SERPS and thus I am docked £96 per week.
There is iniquity here, the figures assumed the RAF service was pensionable but of course officer service prior to age 21 does not count for pension.
It is often stated that there was an opportunity to make extra payments this is not the case for serviceman
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Tinribs
I am not sure what you mean when you say you are not getting a full state pension After 40+ years of RAF service. Surely you should be getting the basic state pension in full - £107 per week plus possibly a little bit of SERPS/S2P?
The contracted in/out scam starts after the single tier pension is introduced in 2017. For service personnel after 2017, if they have been contracted out all their working career, and have paid NI for 35 years, they will get £144 minus a "rebate derived amount" = £107. For every full year of NI after 2017, they will get an extra £4.11.
Al R. Please correct me if I am wrong.
I am not sure what you mean when you say you are not getting a full state pension After 40+ years of RAF service. Surely you should be getting the basic state pension in full - £107 per week plus possibly a little bit of SERPS/S2P?
The contracted in/out scam starts after the single tier pension is introduced in 2017. For service personnel after 2017, if they have been contracted out all their working career, and have paid NI for 35 years, they will get £144 minus a "rebate derived amount" = £107. For every full year of NI after 2017, they will get an extra £4.11.
Al R. Please correct me if I am wrong.
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DWP determined the level of rebates for contracted-out pension schemes as 4.8% (made up as 3.4% for employers and 1.4% for employees). Before April 12, it was 5.3% (3.7% for employers and 1.6% for employees). Broadly, the new system is good. We don’t know what or how the rebate derived amount is going to be calculated yet, but if, and as you say, an extra year of NIC under the new state pension is going to be £4.11 a week we cansafely assume that the deduction will be the same.
Let us assume that you have served 28 years contracted out with AFPS and have one year’s pre mil service in a contracted in scheme somewhere. In 2017, when you may have survived 33 years and are on the cusp of retirement with 2 years left to push for the new full state pension, you will be awarded a foundation amount which could loosely be calculated as follows: (33/35 x 144) minus that rebate.
So, your foundation amount will be (the estimated) £135.77 minus £115.08 (i.e. 28 x £4.11) = £20.69. But, to make sure you won’t be worse off under the new system there is also a safety net. So, if you had 30 years NIC at the time of the change, your old pension is going to be £107.45 (the current basic state pension). So this becomes your 'foundation amount'. If you have also been contracted out for 28 years, you have SERPS/S2P equivalent embedded in your final salary AFPS benefits, worth say £100 or so per week.
No real unfairness in that, really. Where the problem arises is if you want to work for BAe or an airline which has a defined contribution scheme and youare then allowed to build up another £37 of state pension at a rate of £4.11 for every extra year of NI credit after 2017 – it will take you under ten years to achieve that, which, at 55, many people can easily do. Being objective, the unfairness then arises for the younger servicemen who will never be contracted out. They get £144 or so and won’t be able to build up any more state pension.
Can't sleep? Here.. try this.
http://www.gad.gov.uk/Documents/Pens..._2012-2017.pdf
Let us assume that you have served 28 years contracted out with AFPS and have one year’s pre mil service in a contracted in scheme somewhere. In 2017, when you may have survived 33 years and are on the cusp of retirement with 2 years left to push for the new full state pension, you will be awarded a foundation amount which could loosely be calculated as follows: (33/35 x 144) minus that rebate.
So, your foundation amount will be (the estimated) £135.77 minus £115.08 (i.e. 28 x £4.11) = £20.69. But, to make sure you won’t be worse off under the new system there is also a safety net. So, if you had 30 years NIC at the time of the change, your old pension is going to be £107.45 (the current basic state pension). So this becomes your 'foundation amount'. If you have also been contracted out for 28 years, you have SERPS/S2P equivalent embedded in your final salary AFPS benefits, worth say £100 or so per week.
No real unfairness in that, really. Where the problem arises is if you want to work for BAe or an airline which has a defined contribution scheme and youare then allowed to build up another £37 of state pension at a rate of £4.11 for every extra year of NI credit after 2017 – it will take you under ten years to achieve that, which, at 55, many people can easily do. Being objective, the unfairness then arises for the younger servicemen who will never be contracted out. They get £144 or so and won’t be able to build up any more state pension.
Can't sleep? Here.. try this.
http://www.gad.gov.uk/Documents/Pens..._2012-2017.pdf
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We don’t know what or how the rebate derived amount is going to be calculated yet, but if, and as you say, an extra year of NIC under the new state pension is going to be £4.11 a week we cansafely assume that the deduction will be the same.
On the other hand, I am wondering why a precise calculation of the 'rebate derived amount' isn't in the White Paper. Hmmmmm.....
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From HMRC website:
So if you've been contracted out for all 35 qualifying years, you will have contributed in full for the equivalent of (35 x 10.6 / 12) = 30.92 years, giving you a single tier pension of (144 x 30.92 / 35) = £127.20.
Presumably, if you are instead contracted out for (35 x 144 / 127.20) = 39.62 years, you will arrive back at the single-tier maximum of £144.
If you contract out and pay into an occupational pension scheme
If you contract out because you're a member of your employer's occupational pension scheme:
* you and your employer will pay reduced National Insurance contributions
* your employer will pay at least the amount saved in contributions into the scheme
* HM Revenue & Customs (HMRC) will pay an additional rebate into the scheme based on your age and your earnings if your scheme is a 'contracted-out money purchase scheme'
A contracted-out money purchase scheme is one where your pension depends on how much has been paid in and on the value of your fund when you retire.
You'll pay a reduced National Insurance contributions rate on your earnings up to the 'upper accrual point'. This is 10.6 per cent instead of the standard rate of 12 per cent (2012-13 tax year rates).
If you contract out because you're a member of your employer's occupational pension scheme:
* you and your employer will pay reduced National Insurance contributions
* your employer will pay at least the amount saved in contributions into the scheme
* HM Revenue & Customs (HMRC) will pay an additional rebate into the scheme based on your age and your earnings if your scheme is a 'contracted-out money purchase scheme'
A contracted-out money purchase scheme is one where your pension depends on how much has been paid in and on the value of your fund when you retire.
You'll pay a reduced National Insurance contributions rate on your earnings up to the 'upper accrual point'. This is 10.6 per cent instead of the standard rate of 12 per cent (2012-13 tax year rates).
Presumably, if you are instead contracted out for (35 x 144 / 127.20) = 39.62 years, you will arrive back at the single-tier maximum of £144.
Being that time of the year I have representative numbers to hand.
My 'contracted out' NI contributions for the year are roughly:
Pers NI = £4.5k
Employers NI = £9k
Total = £13.5k
For someone on £30k, but not contracted out:
Pers NI = £2.7k
Employers NI = £3.1k
Total = £5.8k
Is it really the case that person with the lower personal and employers NI contributions will receive more state pension?
My 'contracted out' NI contributions for the year are roughly:
Pers NI = £4.5k
Employers NI = £9k
Total = £13.5k
For someone on £30k, but not contracted out:
Pers NI = £2.7k
Employers NI = £3.1k
Total = £5.8k
Is it really the case that person with the lower personal and employers NI contributions will receive more state pension?
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Because the new flat rate pension was supposed to help those who traditionally didn’t have independent pension savings, such as (invariably) wives and the self employed.
Interestingly, just the other day, the Work and Pension Committee urged the government not to cut the link between spouses' state pensions and to allow women who are 15 years away from retirement to continue linking their state pension to their husband’s National Insurance Contributions (NICs) when the new scheme starts. Previously, wives relied on a husband’s income, and until 1977 married women who were employed paid reduced NIC (‘married women’s stamp’).
In order to get round having a reduced state pension, women were also entitled to use their husband’s NICs instead of their own. However, the option for a woman to align her pension to a husband’s NICs will be lost and she will now once again, receive the reduced version. There are only around 30,000 women who will be adversely affected by this change but this is the committee statement that I question; ‘Some women did not build up their own NI record because they had an expectation that they would be able to rely on their husband’s contributions to give them entitlement to a basic state pension’.
If the Work and Pension Committee is to successfully dodge the accusation that it is cherry picking the juiciest bits of gender equality, it needs to remember that hundreds of thousands of people in various public sector schemes also ‘had an expectation’. On another note, if you have been affected by the legislation which sees you losing child benefit because you earn too much, it might be worth reading this if you decide to turn down NIC instead of not paying a tax bill.
http://www.hmrc.gov.uk/childbenefit/start/claiming/protect-pension.htm
Interestingly, just the other day, the Work and Pension Committee urged the government not to cut the link between spouses' state pensions and to allow women who are 15 years away from retirement to continue linking their state pension to their husband’s National Insurance Contributions (NICs) when the new scheme starts. Previously, wives relied on a husband’s income, and until 1977 married women who were employed paid reduced NIC (‘married women’s stamp’).
In order to get round having a reduced state pension, women were also entitled to use their husband’s NICs instead of their own. However, the option for a woman to align her pension to a husband’s NICs will be lost and she will now once again, receive the reduced version. There are only around 30,000 women who will be adversely affected by this change but this is the committee statement that I question; ‘Some women did not build up their own NI record because they had an expectation that they would be able to rely on their husband’s contributions to give them entitlement to a basic state pension’.
If the Work and Pension Committee is to successfully dodge the accusation that it is cherry picking the juiciest bits of gender equality, it needs to remember that hundreds of thousands of people in various public sector schemes also ‘had an expectation’. On another note, if you have been affected by the legislation which sees you losing child benefit because you earn too much, it might be worth reading this if you decide to turn down NIC instead of not paying a tax bill.
http://www.hmrc.gov.uk/childbenefit/start/claiming/protect-pension.htm
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For those who were interested, there is recent briefing note on the DWP website http://www.dwp.gov.uk/docs/single-ti...nical-note.pdf
This explains how the single tier pension will be calculated with particular reference to how the entlement will be reduced by a "rebate derived amount" for those public sector workers who were contracted out of NI. The way I read it, some of the previous posters seem to be very optimistic and I interpret the rules in such a manner that if you have been contracted out for all your career of 35+years, you will only get £110. (was £107 prior to inflation uplist this month) - no matter how much NI you have paid.
Be warned, you need a degree in gobledygook to be able to understand the technical note on the DWP website.
This explains how the single tier pension will be calculated with particular reference to how the entlement will be reduced by a "rebate derived amount" for those public sector workers who were contracted out of NI. The way I read it, some of the previous posters seem to be very optimistic and I interpret the rules in such a manner that if you have been contracted out for all your career of 35+years, you will only get £110. (was £107 prior to inflation uplist this month) - no matter how much NI you have paid.
Be warned, you need a degree in gobledygook to be able to understand the technical note on the DWP website.
The New State Pension System
Al R.
That link you have posted confirmed what I suspected. I opted to remain in the child benefit scheme despite being above the threshold because I had heard about the link to state pension contributions. Does this mean that vast swathes of society have been conned into giving up an entitlement to theirs?
BV
That link you have posted confirmed what I suspected. I opted to remain in the child benefit scheme despite being above the threshold because I had heard about the link to state pension contributions. Does this mean that vast swathes of society have been conned into giving up an entitlement to theirs?
BV
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Hi Bob, I hope you're doing well. It sure wasn't widely promulgated..! As much as anything also of course, it gets more and more people onto a self assessment based tax scheme which is what HMRC wants.
I've mentioned it to all my clients this year who I thought may have opted out, and it cropped up in conversation last week. So, I thought it might be useful passing the info on. I don't know how to go back onto the system if you've opted out because I haven't yet looked into it, but if you have opted out, it certainly makes sense to take advice on opting back in.
I've mentioned it to all my clients this year who I thought may have opted out, and it cropped up in conversation last week. So, I thought it might be useful passing the info on. I don't know how to go back onto the system if you've opted out because I haven't yet looked into it, but if you have opted out, it certainly makes sense to take advice on opting back in.
Last edited by Al R; 15th Apr 2013 at 15:04.