Citywire for Financial Professionals
Share this page:
Stay connected:

Citywire printed articles sponsored by:


View the article online at http://citywire.co.uk/money/article/a650620

£144-a-week state pension is a 'con', says pensioners' group

The government will outline its plan for a £144-a-week state pension in a white paper today.

 

by Michelle McGagh on Jan 14, 2013 at 09:26

£144-a-week state pension is a 'con', says pensioners' group

The introduction of a flat-rate state pension, slated for 2017, has been slammed as a ‘con trick’ by a pensioners’ group.

The government is expected to announce its plans for the universal pension in a white paper today. The Department for Work and Pensions (DWP) will commit to introducing a flat-rate pension of £144 from April 2017.

It is also expected to increase the number of years of national insurance contributions required to qualify for the full state pension from 30 years contributions to 35 years. A minimum level of 10 years of contributions will be needed to qualify for any state pension.

The paper is believed to contain more detail about linking the state pension age to longevity and recommend that the age be reviewed at least once during the life of each parliament and provide a minimum of 10 years’ notice before any change.

Although the government has promoted the flat-rate state pension as a boost for pensioners, the National Pensioners’ Convention (NPC) has called it a ‘con trick’ for future generations.

It said the government is asking taxpayers to pay more and work longer but offering them less in state pension than they would get now.

The current rules allow men and women to pay 30 years’ worth of NI contributions in order to get the full basic and second state pension of around £150 a week but the white paper will offer £144 a week for 35 NI contributions.

It also criticised the fact that the change in the state pension excludes existing pensioners and leaves five million pensioners on pensions that are lower than the proposed £144 a week.

The NPC pointed out that existing pensioners ‘will be left to struggle on with a low state pension and a complicated means-test pension credit which 1.8 million older people still don’t claim despite being eligible’.

The NPC is also against linking pensions to longevity as it would disadvantage the poorest in society.

‘There is considerable evidence to show that life expectancy is closely associated with income, profession and geography. Any suggestion that the state pension age should rise automatically in line with life expectancy will therefore disadvantage the poorest in society; in low paid, manual jobs and those living in deprived areas,’ it said.

Dot Gibson, NPC general secretary, said existing pensioners would lose out but ‘the outlook for future generations is even worse’.

‘What the government is trying to sell is a plan for people to pay in for 35 years, get £144 a week and have to wait at least until 68 before they can collect it. No-one should be taken in by what is little more than a con trick.’

119 comments so far. Why not have your say?

gk1

Jan 14, 2013 at 10:53

When will people realise that current pension entitlements cannot be funded with increasing life expectancy without damaging other areas of need in the future. At least the UK is tackling the problem, something the US seems very reluctant to confront.

report this

Ian Grumpy

Jan 14, 2013 at 11:04

NPC is basically the Labour Party with grey hair.

report this

Clive B

Jan 14, 2013 at 11:47

Do the NPC provide a costed, affordable alternative, or are they just having a whinge ?

report this

Dave Lawrence

Jan 14, 2013 at 13:19

I am 59 and spent 7 years at university and quite a few years starting up businesses where I had no income. These were not reckonable years and of late I felt I was due for a full pension as provided I pay NI until I am 65 I would have 30 / 30 reckonable years. It now appears this will change to 35 years leaving me short and unable to 'buy back' years as I can only go back 6 years.

Is this fair ?

I am hoping the government will change the rules on 'buying back years'.

report this

Kenneth

Jan 14, 2013 at 13:32

I think the £144 is not as generous as people think as by April 2017 not many people will not be receiving a pension of £144 as it will be made up of basic state pension,state second pension and any contracted out pension.

Most women who have been staying at home to look after children have been receiving a automatic credit for about 30 years so assuming they were at work before, and after they looked after children they should have enough contributions to receive a full pension.in addition for about the last 10 years they have also being receiving a credit towards there state second pension.

If these women had ever been contracted out of state second pension then if their pension was less than £144 the new pension would be reduced by the whole or part of their contracted out pension.

Neither the government or journalists seem to be mentioning this point. I doubt if more than 25% of people retiring in 2017 will be receiving a pension less than £144 pw when it starts.

Their are going to be many disappointed people when the details are released later this afternoon.

Another thing not mentioned is that if a person does not have 35 years worth off national insurance payments or credits for bringing up children the pension of £144 will be reduced.

At the moment a person only has to have one year of NI to receive 1/30 of the state pension. When the new pension starts I believe a person will have to pay a minimum of ten years to be able to qualify for a reduced state pension.

report this

Anonymous 1 needed this 'off the record'

Jan 14, 2013 at 16:26

If say a person retires in 2017 having been contracted out for say 30 years by how much will their £144 pw be reduced?

I'm confused I thought that when you contracted out you no longer participated in SERPs/SP2 but still received the full state basic pension subject to full NI history.

This new system seems to be reducing the state basic pension for those who were contracted out.

Am I right or have I missed somrthing?

report this

Kenneth

Jan 14, 2013 at 17:38

Hi Anonymous,

My understanding of the new state pension of £144 in 2017 is the following without reading te white paper that has come out to-day.

1) If they had not been contracted out and had a state basic pension of £110 and state second pension of £10 the pension would be made up to £144.

2)If they had been contracted out and had a contracted out pension of £30, a basic pension of £110 and state second pensionon of £10 then the pension would not be increased to £144 as the DWP would assume £24 was being paid by the occupational pension scheme.

3)If they had been contracted out and had a contracted out pension of £10 ,basic pension of £110, state second pension of £10 then they would receive a pension of £134 as the DWP would assume the other £10 was being paid by the occupational pension scheme.

report this

CynicAli

Jan 14, 2013 at 17:54

Would postcode State pension ages placate those fixated on 'fairness'? So 47 in the rougher parts of Glasow and 85 in Knightsbridge?

report this

peterj

Jan 14, 2013 at 18:10

So the NPC are complaining that the changes will make pensioners worse off but also complaining that existing pensioners will be excluded from the changes! They can't have it both ways; they lack all credibility.

Kenneth, my understanding that the £144 pw will be index linked to this year so it will probably be more like £160 pw when it starts. I don't know whether that changes your calculations.

report this

Kenneth

Jan 14, 2013 at 18:29

Hi peterji.

Even if the new pension becomes say £160 then so will also the basic pension and contracted pension go up in same proportion as will the contracted out pension so I think the examples I used would still hold good.

I don't think many existing pensioners would be worse of if you worked out their pensions by adding together basic pension,state second pension and contracted out pension.

report this

Nigel Russell

Jan 14, 2013 at 18:31

Kenneth suspect you have made a few assumptions to support your point. Married woman who chose to stay at home to mind their children, in the 70's, were not automatically credited with "years" towards their pension. I know a number of my wife's friends who have a pension "in their own right" of less than £10 p w. Even with a claim against their husbands contribution gives them a weekly pension of less than £75. The changes under discussion would give all these " housewives" the full pension.

report this

Clive B

Jan 14, 2013 at 18:41

@ Kenneth

re "I don't think many existing pensioners would be worse..."

The IFS says "the main effect in the long run will be to reduce pensions for the vast majority of people.."

see http://www.ifs.org.uk/publications/6547

report this

Alasdair Lawrance

Jan 14, 2013 at 18:44

I am really saddened to say that with anything this Tory-led coalition proposes my default response is that I will be worse off , whatever it is. All these things are affordable if the tax regime is enforced, especially on the multi-nationals. In any case, who wants a 69 year old primary school teacher? It's an attempt to abolish the state pension altogether by forcing people into the borderline fraudulent private pension system.

report this

MORGAN PIPE

Jan 14, 2013 at 18:51

I know a few women who went out to work in the 70s and my own mother had to work to support us in the 40s, 50s and 60s. It is expensive for childcare but some women would rather stay at home-even when their children are at school than go out to work. Why should they benefit from the same state pension when they could have worked?

report this

stormdog

Jan 14, 2013 at 19:02

One tiny piece of good news might come should the Scots decide to break from the Union,

In such a circumstance it would be up to Scotland to pay their pensions, or not, since Scotland would then be a Foreign Government.

Once the Scots twig this possibility, Mr Salmond, bless him, will have a major problem with his electorate, at the same time England, Ireland and Wales will be in much better shape in this pensions matter.

Time to call Salmond's bluff methinks.

report this

George Morley

Jan 14, 2013 at 19:19

The state pension has been a con for years ! Everyone while working had to pay into the National Insurance Fund along with their employers and all expected to draw their pensions under the same terms as everyone else !

But that is not the case for 1 in 25 pensioners who retired abroad. 24 get the uprated pension and the odd man out does not, because it is frozen by some misconceived lottery that is used depending on the country of residence which is irrelevant in respect of the pension. So the pensioner is left with a pension that effectively decreases over the years and poverty is inevitable without outside help from family or the host country. I go so far as suggest that all pensioners resident in the UK from other countries with similar pension schemes receive their full uprated pension. So why is the UK government so out of step ? This is fraud. I am surprised that the employers do not question this freezing policy because 4% of the payments that have been made by them are being misused and maybe the unions should be asking questions about it. Lack of information and misinformation have all played a part although the DWP deny that and apathy on behalf of the MP's must also be a reason why this discrimination has not been dealt with and abolished. Your representatives in the government have a lot to answer for ! Deaf ears are waiting in parliament !

report this

Tortoise

Jan 14, 2013 at 19:20

Ian Grumpy is right. This NPC is just a pro union anti tory branch of the Labour party. If you doubt it, go on their website and see who is guest speaker at their forthcoming AGM.

One thing that does worry me about this pension proposal. If it means that people who have paid NI at the level which entitles them to the S2P for many years, then this should still be honoured. If George Os does not honour this, he is no better than Gordon Brown and should be removed from office.

report this

Cley123

Jan 14, 2013 at 19:35

i think you are all missing one big point. When those who have already retired after paying Graduated Pension, Serps and SSP for there working life realize that those who retire a year later are going to get more in pension than they do will lead to the Conservative Party going out of office next election. Frankly I do not believe this pension change will happen in its present form.

report this

Kenneth

Jan 14, 2013 at 19:44

Hi Nigel Russell,

If a woman was at home looking after children after April 1978 they should have received something called Home Responsibility Protection (HRP) assuming the had not elected to pay the Reduce NI for married women as these women knew that they coud receive a pension based on their husbands contribution records. In 2002 this also became available to carers provided they claime it within 3 years. I know a great deal about the subject as when my wife qualified for her state pension in 2003 I thougt the Pension quote was a bit low and so I told my wife to write to the DWP and ask them if they at included HRP. They said they had missed it and that she woud receive anothe nine years to base her pension on. I did contact them to see if they had missed it out on any other women as I did not think my wife could be the only person they missed on HRP protection. They said they did not think there were any other peopl they had missed. They were not telling the truth as a couple of years ago Steved Webb rraised the matter of missing HRPin Parliament and was told there were over a hundred thousand people where they had missed HRP protection and they hat to interogate their computer systems to trace the people not receiving HRP.

A couple of years ago my wife was talking to some of her friends and mentioned HRP and told them to ask DWP if their pension had included HRP. After a couple of months two of them told her that the DWP had missed HRP and sent them cheques for several thousand pounds for the missed HRP. If your wife or friends are in the same situation then tell them to write to DWP to see if any HRP they were due was included.

report this

SanW

Jan 14, 2013 at 19:57

Both my husband and will have paid in 49/50 years of NI when we reach pension age at 65/66, plus my husband just misses out on the right to higher pension as he will be 65 in 2016. Seems very unfair that access to a more generious SP provision will on much lower year (although you might have to hang around to actually collect it). And yes, currently women can have any paid NI years enhanced by credits if they are carers. The proposed changes are both overly generous and unfair.

report this

Dennis .

Jan 14, 2013 at 20:25

We all seem to have forgotten that up until a couple of years ago you needed to work for 44 years (man) and 39 for a woman.

The lesson is make your own provision and don't trust any government. The current scheme of Serps was set up by Barbara Castle in 1978 to be fair and equitable to the working man. No sooner had it been set up and the tinkering started. What makes us think that the new scheme is impervious to future changes?

I have private sector pensions and regard the state pension as jam on the top.

report this

Franco

Jan 14, 2013 at 21:30

It is strange that in spite of the huge increases in output and GDP per person over the years, we can afford less and less and credulous idiots swallow everything the top i% tell them. How is it we can afford to play the big shots in the world?

report this

Alan Morrice

Jan 14, 2013 at 23:40

Stop whingeing you misearable *******ers. I'd stop your bus passes tomorrow!

report this

Alan Morrice

Jan 14, 2013 at 23:44

In 30 or 35 years time when demographics really start to bite many pensioners may be lucky to get anthing at all.

I'm a pensioner , albeit an unusual case. A realistic, non-greedy one!

report this

stormdog

Jan 15, 2013 at 00:56

It seems that the people who appear on television programmes such as Newsnight and chat away about 'rights' of pensioners are far too young to speak for anyone other than their own age group.

It would be far better if existing pensioners also had a proper say.

We are for ever being told how valuable pensioners are and how much we have to contribute, blah, blah, blah.

If this is the case this measured 'wisdom' needs to be tapped into.

Many of today's pensioners were born in and around WW2, we have been through it all - bombs, austerity and every form of rationing, we are a much tougher and more realistic bunch than the majority of the people who are in charge today.

Time to hear from some of the existing pensioners themselves not just from their children.

report this

Ian Lees

Jan 15, 2013 at 07:20

Interestingly, I was aware of a lack of pensions savings when I started work as a self employed tied agent with Hambro Life - and did not contribute any serious contributions - to a Retirement Annuity Pension> I joined Scottish Widows and joined the final salary scheme - and made maximum contributions - to help me catch up with my financial planning for retirement income. When I left scottish widows the Trustees - were negligent and stole part of my pension - as a result of their lack of management, - and when they were picked up for their fraud - collectively the Trustees of Scottish widows and Scottish Equitable - acted cleectively - to deprove me of my full cash equivalent. According to Sandy Hogg at the time " scottish widows trustees can do anything they want with my pension fund ", - and that remains the case today.

Clearly with Trustees of any pension scheme - they need to act in the beneficiaries best interests - except when you are a Trustee of Scottish widows ", and the orphan benenficiaries can have no trust in this insurance company. Now that scottish widows are no longer registered with the FSA, but are introducers to Clerical Medical - scottish widows employees continue to advise accountants and other professionals - whilst not qualified or authorised - to give any advice themselves, under the FSA.

However, given the increased number of changes to Pensions and " Forced auto enrolment " ( which I understand cost some £ 3bn less deductions for dragons and apprentices ) - and is now forced upon employers and employees - without any controls, such as costs or CONTRIBUTIONS for employees or employers - and with an ever increasing pension age - Financial Plannning is unwieldy, and near impossible .

So with pension funds being asset stripped away by trustees - for their own use and manipulation e.g Mike DRoss walked away with some £ 4 M of a pension pot for his part in the fraud ( at least he didn't get a job offer from Barclays - or a knighthood ? ? ? but perhaps some work for edinburgh bank TSB )

Now that the FSA has fined the banks - destroyed the IFA sector - and offering forced pensions savings through . . . banks and insurance comapnies - the general public can see how their savings have been destroyed by banks and insurance companies - they are now forced to save through insurance caompanies and banks - well done hector - you HAVE EARNED YOUR SALARY AND PART TIME JOB at Barclays - along with Diamaond Bob - and your knighthood is the bankers "bonus ".

report this

Fred

Jan 15, 2013 at 08:46

Greedy and selfish old devils commenting on here about how they will be robbed. As some of the replies rightly point out, this is a can that has been kicked down the road for years. The minute anyone starts to discuss these issues, the same old rhetoric about WW2 and how my granny's chip shop was bombed is wheeled out. Then of course it is few greedy bankers that caused all the problems.Perhaps we should blame it all on the Normans in 1066 and send the French the bill?

Let me tell you, we are from the golden generation and have never had it so good. What do you think it is going to be like for the youngsters today who face a massive debt from going to University and little chance of a job or a mortgage as a result? Is that fair? Is that right? Do you not watch the news and see that the world is changing. You allowed your politicians to stop making things. You sat back and demanded ever higher wages and better welfare facilities. You even had the chance to vote whether we enter Europe or not.

You same moaners have voted your politicians in over the decades and now, just because you are not getting it all your own way, you are moaning again. Remember, you wanted equality, well now you have it. You wanted the option to work later in life, well now you have it. You have had the option every time there was an election to make a difference and raise the issues that mattered by lobbying your politicians.

I remember Frank Field was charged by the Labour party to come up with a solution years ago. When he submitted his report, the cabinet didn't like what they read and promptly banished him to the back benches. At last, someone is having the mettle to sort some of these problems out. Unfortunately it is too little and probably too late. Until society changes from the greed and "what's in it for me" selfishness, then there is little hope for this country. It is the one Achilles heal of democracy that we vote our politicians in according to our greed, rather than for what is actually good for the country

report this

stormdog

Jan 15, 2013 at 09:20

Fred, I have to say that I much enjoyed reading your little nose-bleed, thanks.

Now that you have got it out of your system please could you say what Frank Field actually said in his unacceptable report, presumably you must be one of the few people who actually was able to read it.

All the best.

report this

Brian Pearson

Jan 15, 2013 at 09:27

I totally agree with the comment made by Dennis. You cannot trust any government regarding pensions and all their words come across as political rhetoric. Get the message across to the younger generation that in future, they will have to take care of themselves as the state will not support them. The government wants to reduce the cost of state support and tinkering with pensions (it being a big cost on their shouders) is an on-going thing. This has been happening for years and that crook Gordon Brown, probably now living on a very handsome public sector pension, should, along with other governments, be totally open with their objectives. oooops! sorry! if they did that, they would be voted out and not have a job or public sector pension.. Wake up everyone and understand that you will have to start to support your OWN future. Oh my! what a moaner I am...

report this

Fred

Jan 15, 2013 at 09:41

Hi Stormdog. Firstly, with thanks to Wikipedia: "Following the 1997 election, with Labour in power, Field joined the government of Tony Blair as the Minister of Welfare Reform at the Department of Social Security with the rank of Minister of State. He was also made a member of the Privy Council. Field viewed his task as "thinking the unthinkable" in terms of social security reform, but others report that Prime Minister Blair wanted some simpler vote-winning policy ideas. Blair writes that: "the problem was not so much that his thoughts were unthinkable as unfathomable". There were clashes with the Chancellor of the Exchequer, Gordon Brown, and the Secretary of State for Social Security, Harriet Harman. Field resigned his ministerial position in 1998 rather than accept a move away from the Department of Social Security offered by Blair in a reshuffle. It was reported that Field had argued for Blair to promote him to Secretary of State for Social Security."

Can I also point you to: http://www.frankfield.com/about-frank.aspx

I also include this, thanks to the "Gruniad" http://www.guardian.co.uk/society/2006/jul/02/publicservices.theobserver :

" It was because of these maverick ideas that he was invited, when New Labour was elected in 1997, to serve under Harriet Harman at the Department of Social Security to plan reform of the benefits system. Or, at least, that was why he thought he had been asked to do the job. The green paper he produced was certainly radical: he wanted more people to take out private pensions rather than depend on the state. He wanted an attack on benefit fraud and tighter controls on incapacity benefit as a way of getting more people back to work. He wanted the right to payments from the state to be matched with responsibilities by those receiving the cash. He made it clear that he detested means-testing, regarding it as demeaning and wanted, instead, flat-rate benefits.

In time, much of his thinking would move to the mainstream of New Labour policy. But at the time, it was reform too far. The Prime Minister's office saw it all as unworkable. He clashed with both Harriet Harman and Gordon Brown, who said it was unaffordable. When Tony Blair attempted to move him to a new position in government, he resigned.

'Frank Field thought he really had been asked to go away and think the unthinkable,' says Martin Sixsmith, who was Harriet Harman's director of communications. 'But, actually, what Tony Blair wanted was some policy ideas that would win a few votes.' At the time, Field was not shy in expressing his bemusement and frustration at his own downfall. But since then, it seems that, while he has given up the title - Minister for Welfare Reform - he has not given up the job. Barely a week goes by without him offering some piece of blue-sky thinking on benefits, pensions or civil responsibility, much of which still seems to march ahead of policy at Downing Street."

I am sorry this is a rather expansive reply, but there is plenty out there for those who are interested and the details of the Green Paper are probably also available from the Labour Party archives. Incidentally, he is still acting as an advisor to the present government which isn't surprising really as Cameron-Blair, Blair-Cameron - difficult to see many differences!

report this

Dennis .

Jan 15, 2013 at 09:48

As someone in a good final salary private sector scheme I count myself as fortunate to have made the right choices purely by accident. In the late 80's I worked for the large IT company ICL and it was taken over by STC. Subsequently part of ICL was sold to Fujitsu and the rest of the STC part eventually became Marconi. Had I been part of the transfer to Marconi my pension would have been decimated in the dot com crash when Marconi went bust.

This is something that the public sector just cannot comprehend, those of us in the private sector with good pensions were just lucky to survive.

report this

Ian Lees

Jan 15, 2013 at 10:03

@Dennis, as omeone who has seen the changes in corporate ownership - and changes in Trustees - the claims of acting " with due skill and diligence in the interests of the beneficiaries - are often open to " discretion", rather than protection of pension funds per employee. I have bleeted on about the way Trustees are allowed to swindle pension beneficiaries - with regard to scottish widows ( for which some people are geting right fed up - but this is the result of fras and corruption to the benenfit of an employer - who sponsors the Trustees and can use the Rules to " their advantage".

For example many bank managers expelled or dumped or made redundant by Orinary Fred whilst he controlled RBS ( often referred to as the Robbing Bankof Scotland ) - when RBS purchased Natwest ( under Labour ), and purged the Natwest of managers who had served their employer for many decades. Some decided to become " Consutlants " advising their ex companies - on how they could reduce their banking charges. Obviously ordinary Fred - did not like this and apparently " threatened to stop their pensions ". WHils tit might seem immorla or illegal - Sandy Hogg at scottish widows can tell you how Trustees have FULL CONTROL OF THE PENSION FUNDS - and can play with them Willy Nilly . This is the most frightening thisng about pension savings - and David Cameron is hellbent on introducing this fascist element of forced pension contributions by Employers and Employees - " Forced Enrolment".

report this

stormdog

Jan 15, 2013 at 10:31

Thanks Fred,

I always felt that Frank Field is a person who cares about people and the country and not just about himself. Today he is possibly unique.

Nowadays bearers of truth are considered lower than bearers of bad news.

The upside is that you say that Field is still hanging in there and pitching away - brilliant!

If it were up to me I would offer him a Knighthood.

So much better that this sort of person be recognised and publicly thanked than some elderly multi-millionaire pop-star, or even your granny of the bombed-out fish and chip shop fame who survived to start up a Government subsidised 'chips on wheels' service for the elderly. Now clutching her M.B.E. to her bosom she most likely lives in a care home on West Palm Beach.

All the best.

report this

Fred

Jan 15, 2013 at 10:42

Hi Stormdog. What I like about the man is that he says it how it is. The best leader the country never had in my opinion.

report this

Bob McGill via mobile

Jan 15, 2013 at 10:57

It doesn't do anything for me. I have a state pension of £133. I also have a Contracted Out contribution . This contribution makes up the means tested shortfall but it is a pension that ended up as part of the Pension Protection Fund meaning I never got the full pension because the company went bust but the payments from the fund are not a pension, but compensation, and do not increase with inflation.

report this

Cley123

Jan 15, 2013 at 10:59

I detest means testing as those who are doing all the paying never get any benefit from the system they are paying for. The end result is that they get pissed off with doing the paying and the system collapses. You are now seeing this starting to happen with child allowances and all the anger against OAP bus passes etc.

report this

Observer

Jan 15, 2013 at 11:05

I guess the reason pensioners living abroad to not get any upward revision to their pension, is their pension money is not spent in the UK.

Every pound spent in the UK, circulates in the economy and a fair chunk of it will return to HMG in the form of tax, VAT, what ever.

However, pensioners who live abroad will visit the UK, and this spending adds to the UK economy and the amount of tax that returns to HMG.

report this

roger elliott

Jan 15, 2013 at 11:44

Has anybody got a clue how far £50 million a day (that's eighteen billion two hundred fifty million per year ) would go towards the pension furore, because that's what we (the tax payer) kiss off to the incompetents in the EEC (who as yet haven't presented audited accounts) I'm given to believe.??????

report this

Anonymous 2 needed this 'off the record'

Jan 15, 2013 at 12:41

I am a 53 year old woman who has only been working for the last 24 years. Prior to that I was at home having my children and looking after them. It would seem that because I had my family before starting a career I will be penalised as no one will recognise the years at home as there was no employment prior to that. How is that fair to me as now I will need to work for a further 11 years to make my 35 years to qualify. Obviously this could become more if each government then reviews and extends this!

report this

stormdog

Jan 15, 2013 at 13:04

Fred,

Couldn't agree more that he is a very good man, interestingly whenever his name comes up my first thought is not that he is some dull Labour politician.

His difficulty might be that is too 'straight' to lead a country, a PM often has to be very economical with the truth just to keep the show on the road.

I think that Milliband might have a touch of this also, his brother appears to be somewhat more worldly.

Surprisingly I even quite liked Harold Wilson, his 'schtick' was that of an almost loveable old rogue who always did his best under particularly difficult circumstances.

Wilson's 'pound in the pocket' quote was brilliant, even if totally untrue.

Our 'Gracious Sovereign Lady' also liked him, she gave him the Garter.

Thinking on about F.F., some of his ideas would today be embraced by the U.S. Republicans, makes you think!

All the best.

report this

Dennis .

Jan 15, 2013 at 13:12

@anonymous 2

Have you asked for a pension forecast? My wife was in a similar position taking a career break staying at home bringing up children and was given 13 years of home responsibilities allowance (without asking for it).

www.thisismoney.co.uk/money/pensions/article-1616017/Womens-pensions-Home-Responsibilities-Protection.html

report this

George Morley

Jan 15, 2013 at 13:34

Well,Fred, A lot of what you said makes sense and is true but throughout the years the frozen pensioner has been ignored and lied to. They paid off the loans to the USA and Canada from WWII through their taxes which were only cleared in 2006. They paid into the NI fund on the same terms as everyone else and are deprived of the annual increase that the96% of pensioners get and with no justification for it given by the government . They will have paid for the 44 yrs that was required as Dennis said. There have been lies like the need for a reciprocal agreement but that is hogwash and totally untrue. The government could stop it today given the will of parliament. The frozen pensioner is fighting discrimination by successive governments who refuse to address this problem which affects mainly the Commonwealth countries plus others like Thailand even the the Falkland Islands would you believe. The surplus in the NI fund has been enlarged by the theft from these pensioners

report this

James O'Connell

Jan 15, 2013 at 18:57

Fred

The only 'greedy old devils' are people like the far right wing loonies who inhabit this blog.

Does anyone really think that this government will give anything away to pensioners?

That is why this proposal is a con.

George Morley is right. It is pensioners who have created the wealth of this country and it is the greedy young devils who are reaping the rewards.

I am going to repeat that:

IT IS PENSIONERS WHO HAVE CREATED THE WEALTH OF THIS COUNTRY.

report this

George Morley

Jan 15, 2013 at 20:04

Thank you James, Like me you are not afraid to put your name to your comment especially when it's true. There are many people who comment who do so without knowing the facts. It's just a shame that we cannot get politicians who have honesty and integrity to represent us all. Young and old alike. All current political parties are responsible and maybe it's time for change but who ? All parties fail us it seems.

report this

Ian Lees

Jan 15, 2013 at 20:12

As a 53 year old woman you can look forward to " added years " of working that is , not pensin funds . . . .as the Government continue fiddling with your state pension age. Forced enrolment is unlikely to benefit you - but will act like a further tax on your income.

report this

DayTrader

Jan 15, 2013 at 21:25

For those women who were expecting to receive their pension at 60 but fall in to the current period of graduated increase in age to 65, it seems that those who are worst hit by the changes in age (those born in 1953 I think) who will not receive their pension until they are almost 65 will also just start to receive their pension at the old lower rate just before the new flat rate higher pension comes into being.

So, it seems to me that not only are they missing out on up to 5 years of pension they were hoping for, they will be getting less than those retiring after the new flat rate comes into force.

Dennis is right - if you can - make your own provision and don't expect anything from the state. However you'll still have to pay into NI.

I used to think we were in the squeezed middle but it seems we are being pushed back down into the squashed bottom.

report this

Dennis .

Jan 15, 2013 at 22:14

A few years ago I was made redundant at 55 from a very well paid job. I had never been out f work before. I went to the job centre and signed on in order to get my NI contributions paid. I was told that I couldn't get any job seekers allowance as I now had a company pension and too much in savings/investments. I said "wasn't there was something wrong with a scheme that you are forced to pay into all of your working life but denied the opportunity to benefit from when you need it?". They agreed.

report this

DayTrader

Jan 16, 2013 at 00:13

So we should just accept that NI is tax and if we happen to receive any state pension consider it a bonus?

report this

Alan Morrice

Jan 16, 2013 at 01:09

Day Trader, Hurrah, at last someone's got it! NI is just a tax and has been since about 18 months after the Welfare State was established. State pensions and/or benefits are not 'funded', the government of the day pays them out of current revenue from taxation (of which NI forms a part) and/or borrowing.

As for claiming old codgers have somehow 'earned' their pensions because of war-time service or hardship. To have served in the war an individual nowadays must be at least 86 years old. Those retiring this year at age 65 will have been born in 1948, 3 years after the war finished.

Get real folks. Admit it, you're poor in your old age because you trusted the State and didn't save enough while you could. How does the old saying go? 'Put not your trust in princes', ie don't trust the state. If you do you'll be shafted.

report this

George Morley

Jan 16, 2013 at 05:32

But Day Trader and Alan Morrice,you are both wrong. You see, the National Insurance fund is ring fenced and is in surplus. This surplus is lookedafter by the Debt Management Office and the government are allowed to borrow from it. Having said that, the government have to pay back interest into the fund which last year was about 1.3 billion GBP if I remember correctly. The pensions are are contract with the government and the payments that we made were mandatory and as such should get the uprated pension without question irrespective of where they choose to live in retirement.

What the government are doing is abusing the fund and spending money that they don't have -like you using your creditcard and you have to pay back and so do they, but it should not be at the expense of a pensioner - ever !

report this

Fred

Jan 16, 2013 at 08:54

Hi James. As an ex miner, I am hardly in the far right loonie club. What I see here is a selfish "what's in it for me attitude" that is bleating on about how unfair it is that the someone might get something that someone else can't. Next time you travel, perhaps you should stand up in the aircraft or train,and see who pays what for their ticket, and then berate the guard for all the people who have paid less than you. I would not be surprised if we start to get people on here saying that people on very basic wages or an interrupted working pattern should get less state pension than those who enjoyed higher paid jobs.

I would remind you that no one has yet suggested that people who were lucky enough to receive free university or college education that most adults had the opportunity to take advantage of, should now have to pay for it, just because the current poor devils have to. Neither is anyone giving people a hard time just because they might have had free eye tests in the past. I maintain that we have had a lifetime of privileged state subsidies that have been paid for by the state living on borrowed money. It is unsustainable and it needs to be addressed. If you don't like it, perhaps you should have thought about the implications of all the promises made by the politicians over the years and considered whether they were indeed sustainable. The whole idea of the welfare state is to try and give to those less fortunate, a reasonable standard of living paid for by those who are more fortunate. It is never going to be a perfect system and there will always be winners and losers.

report this

Ian Lees

Jan 16, 2013 at 10:01

From Graduated pensions to State Earnings Related pensions ( SERPS ), stakeholher and State Second Pension ( S2P ) - it is not only the womens pensions schemes which have been reduced dramatically ( e.g number of years service, number of years contributions ) to the new "Forced enrolment", tax . . . for all. Is it any wonder that pensions which have been eroded by High Charges and Poor Returns - through pension misselling - negligence of a rubbish regulator - to their retirement savings reduced and state benenfoits means tested or withdrawn.

report this

Cley123

Jan 16, 2013 at 17:12

Allen Morrice

If you had been born in 1948 who would you have trusted? We cant trust the state or the pension companies. we cant trust the banks as they are all twisters with derisory interest rate. So what should we have done to provide for retirement, stuck it under a loose floor board to see it decimated by inflation.

report this

Cley123

Jan 16, 2013 at 17:17

Fred

I have been paying for others all my working life. Yet when I come for retirement none of the youngsters want to pay for me (or so it seems). Why was it OK for me to pay for 45 years yet a no-no for them?

report this

Alan Morrice

Jan 16, 2013 at 18:20

Cley,

When you were young the proportion of young taxpayers to retired old codgers was much higher, thus the payment of pensions was not such a burden on the economically active. Nowadays and increasingly into the future the percentage of pensioners to tax payers will just grow and grow. The increasing numbers of pensioners will be voting for pensions to be increased, the economically active taxpayers will rebel and demand an end to tax rises.

You may have a clue how it will all pan out - most governments in Europe sure as hell haven't. When push comes to shove many pensioners may have to look for support from their families or go hungry, as per the 'old days'. Before you laugh, take a look at Greece, the most extreme case of an indebted European government which can no longer afford its traditional vote-buying welfare system.

report this

Cley123

Jan 16, 2013 at 21:08

Alan

Though I agree with your theory regarding those doing the paying getting fed up with constantly shelling out, I think you should give consideration to the following facts,

1 We paid extra graduated pension, said at the time to be a replacement for a private pension. 2 We paid SERPS. 3 We paid SSP. These they took by law.

It now seems that all this money has been forgotten, and after 2017 people with 35 years contribution will receive the same or more money than those of us who have contributed and paid extra for 49 years . This is why we are moaning about the injustice of it all. Frankly I get the feeling that no one in government gives toss about our feelings on this matter. Please remember its now to late for us to do anything extra to boost our incomes. Its now down to the state pension, our private pension plus savings. These will have to last for the rest of our lives.

report this

Ian Lees

Jan 17, 2013 at 07:31

@Cley123, You have clearly been misled ( or as we the voting public call it " been lied to " ) by MP's - twisting the facts to suit their current sales pitch. Pensions have been destrioyed repeatedly by Governemments of all persuasions, thorugh the decades - reducing their quality, and their content ( i.e annuity, pension income ), as a result of the loss of Trust, in product provider i.e insurance companies, products from RAP's, EPP's, Graduated pensions, AVC's, FSAVC's , State pensions, SSAS's, Sipp's, personal pensions, stakeholder's, S2P, nest pensions, auto enrolment etc., etc., All this after spurios claims of MP's and HMRC of . . . " Pension Simplification ". Whilst MP's - have destroyed the many busineses of IFA's - and their employees - they have increased the pension age especially segregating women - and forcing people - into working longer - and worse forcin people to purchase the Governements " Failed Pension Schemes". The governemtn does not listen to advice - preferring addirtional extravagant claims on their manipulated expenses - to listening to the facts . The incompetence of successive governements - who have forced the elderly to find work at homebase - or sainsbury's - or dare I say it selling the horse burgers of Tesco demonstrates the negligence of government and their failure to address the pensions problems since Barbara Castle highlighted it in the last century ( under Labour ) . they have labouerd with iit ever since - lacking leadership. This is becasue under the MP's charter - they do not need to be competent or have any common sense - just a desire for recognition - or to be flown out to Australia - to take part in the jungle - eating bugs. They couls have stayed in the UK and sent out for a tesco burger. I went into the tesco Kaf the other day and asked for a cup of coffee and a tesco burger. The nice lady asked if " I wanted anything on it ? " . . . I said £ 5-00 each way !

report this

Fred

Jan 17, 2013 at 08:43

Hi Cley. I think you will find that todays young, if they can actually find a job, pay a higher proportion of their salary in NI than you did and you were not expected to pay for your education at College and University. Further, for many years you had the opportunity to benefit from pensions contributions being invested in equities that were not taxed on the dividend income unlike today. enjoyed the opportunity. You are also living in an age where we have ridiculously low interest rates on mortgages offered to wealthy middle aged people already on the property ladder, yet witness the youngsters of today struggling to find enough to pay high rents to live away from home, never mind buy their own home.

Fact is, as Ian correctly states, governments of all persuasions have repeatedly tinkered with the system in order to win votes, safe in the knowledge that by the time the electorate wake up to the fact that they were false due to a lack of proper funding, they the politicians, would be safely picking up their own ring fenced parliamentary pensions and enjoying free heating in the House of Lords. All through this debate, it has been repeatedly mentioned that it is up to the individual to fund their retirement effectively and that the state pension is just a bit of cream on the top. That there is a section of the community that either couldn't or wouldn't do this is probably largely the issue here and had realistic funding strategy been in place, then the likely hood is that there would not be such a major problem.

report this

Brian Pearson

Jan 17, 2013 at 09:05

Why should anyone think this government or in fact any other, be interested in our feelings on this matter. Lets be honest. Most politicians only want your vote so they can continue to have a job and so use political rhetoric to tell you what you WANT to hear. Money is involved here and when it comes to that, feelings get pushed back behind job protection, money, oh! and of course greed. Am I cynical? I would love to be proved wrong, but I have a feeling that both our generation and in fact all to come, will just have to take more care of themselves and not rely on the state to help. Tell you what! why not privatise the NHS or parts of it and insiste that we all have private medical insurance... why not reduce the support the state gives on bus passes, fuel allowance etc. well, they wont until after the next election, ensuring that they still have their jobs. oh by the way! I dont trust any of them, so I am teaching my kids to save for their own future and not rely on anyone. They know whats coming!

report this

Brian Pearson

Jan 17, 2013 at 09:10

I agree with Ian. oh! and I love the joke. hahahah! By the way! dd it win??

report this

Dennis .

Jan 17, 2013 at 09:26

And don't forget that we should be hearing about Equitable Life compensation soon.............

report this

Dennis .

Jan 17, 2013 at 09:29

People might find this useful

www.hl.co.uk/news/articles/new-flat-rate-state-pension-winners-and-losers

report this

Alan Morrice

Jan 17, 2013 at 12:20

Brian Pearson'

You say,

' I dont trust any of them, so I am teaching my kids to save for their own future and not rely on anyone. They know whats coming!'

Wise words. To rely on politicians to look after us is most unwise. 'Put not your trust in Princes'.

Have any of the contributors calculated what their position will be when inflation hits at least 7 or 8% or upwards sometime in the next two or three years? The government of the day aided and abetted by the B of E will connive to bring this about, basically a 'soft default', to rescue the national finances from the present, rapidly increasing, debt burden. Inflation is coming, we can be sure of that. It's the standard fall-back tactic all governments resort to in order to reduce the burden of their debts.

report this

Cley123

Jan 17, 2013 at 17:37

Allan Morrice

If inflation gets to 8% as it did in the early seventies, for most pensioners there is no solution. Interest rates never keep up. The annuity rate with inflation proofing is around 3.5%. Even the final salary schemes such as Unilever ( I have a deferred pension with them) only increase with inflation to 5%. This problem happened in the past to retired people and they decided into genteel poverty.

report this

Cley123

Jan 17, 2013 at 18:00

Dear All

If you want to know where we are on pensions take a look at this.

http://www.telegraph.co.uk/finance/personalfinance/pensions/9806087/A-living-wage-pension-Itll-cost-you-500000.html

report this

Alan Morrice

Jan 17, 2013 at 20:30

Cley123,

Right on, man. The last time inflation reached a high level I remember reading that pensioners who are destroyed by inflation can't do anything about it beyond voting once every five years. They just get older and poorer and more bewildered about how life in retirement has turned out for them until eventually the grim reaper sorts the problem out.

Those in work generally receive pay rises in line with inflation and younger people reap the benefit by seeing their debts, eg mortgages, rapidly whittled away in real terms. Inflation robs the old to make life easy for the young who can look forward once again to living in a land which has purged itself of high national indebtedness. By that time a large part of the old, impoverished generation have shuffled on to the everlasting Saga cruise in the sky. Unfortunately its the same every time. I'm a pensioner. I know what's in store for me and don't fancy the prospect but what can i do? Go on strike in protest?

report this

Brian Pearson

Jan 18, 2013 at 09:25

Hi Cley. I looked at that article and it states.

To achieve an income of £16,400 a year, which is the amount the Joseph Rowntree Foundation says is needed for a minimum standard of living, you would need £270,000 in pension savings to supplement the new "single-tier" state pension of £144 a week.

This lump sum would buy you an index-linked annuity income of £8,912

This shows the terrible state of our annuity industry, when a pot of £270K will only give you £8.9K per year income. having said that, how many people in this country will have a pot of that size? I suspect that maybe a few % and no more. You can understand why so many people are looking at income drawdown and the potential (if the Gov bring back the 120% you can take per 100K from your pot) of getting a better income that way.

report this

Ian Lees

Jan 18, 2013 at 10:14

Joseph Rowntree - was he not a painter ? of art not a decorator ? - worked in pastilles as I recall. I can rememebr inflation and interest rates much higher than 8% - when banks were almost solvent - continually ripping off their customers - but the Directors looked after their shareholders - by paying a dividend - no longer sadly. The banks have been quantitive sleazing for decades - printing paper - which has no relation to money, or assets - and is unnacountable in society. Such quantitive sleaxinz - has no value, is worthless - and it is interesting that banks and some supermarkets ( currently selling horsemeat - with out their customers knowledge - and apparently their meatballs are " the dogs bollocks". However, they refuse to accept a cheque - which is " a promise to pay the bearer ", without the excessive charges applied and the fanatical controls by VISA or ACCESS - who wish to have world domination and control over our finances. Put simply see how difficult it is to pirchase a product - like a TV Licence without the use of a computer, a credit card. There is no facility now to purchase a tv licence - without access to the internet a computer and a credit card . Try telephoning them when you eventuially get through - find out exactly how difficult a simple transaction becomes as a result of total relaince on Visa and banks - who operate through call centres and abysmal banking service. All banks are the same - tiresome and unhelpful - except towards themselves - where they help themselves to commissions, bonuses from these robbing institutions - at least Dick Turpin wore a mask !

report this

Cley123

Jan 18, 2013 at 10:23

Brian

As I understand it.

The trouble with income draw-down is that they are paying you out of your own pension pot. If the fund that is supporting that pot fails to perform ( as they do) you find that the income collapses after a period of time, leaving you with a greatly reduced pension pot. This when inflation has degraded the purchasing power. Its a risky product unless you are sure you are going to fall off the perch early.

report this

Cley123

Jan 18, 2013 at 10:46

And completely off subject.

Guy buys a burger at Tesco cafe and asked, do you want anything on that? Yea he said, £5 each way.

report this

Brian Pearson

Jan 18, 2013 at 10:48

I dont believe its a risky product and far better have control over your own money, than leave it when you die to the insurance company, with none left for your dependants. Lets look at some figures. If I had £100K in a SIPP and drew down £5K from it as income, then if the remaining invested pot went up by only 3% after charges, then this would make your pension £2850. so taking out £5K and making £2850, means that your pot would only go down by £2150. so unless you have a pot which constantly goes down, then you should have a pot which last's longer than you think. Also, if your pot was invested wisely and went up by 6% after charges, then your £95K would increase by £5700. More than you took out, so in fact, your pension pot grows. Couple this with the fact that you can leave the remaining pot to your dependants (albeit after a hefty tak) and to me, income drawdown makes sense. Of course, its down to personal circumstances and choices, but I hope these figures open a few peoples eyes.

report this

Ian Lees

Jan 18, 2013 at 11:01

It is the same at Sham Tan Der ( Santander - ex Abbey ) - they are on BBC rogue traders - for losing clients money - when cusomer / client bank accounts CANNOT BE FOUND . Must be held on a computer and assists the insolvency of santander - as a result of extraordinarily poor record keeping. If you now anyone who has money in a bank account of any description - write to santander and ensure they are aware, of your name account number and address ( having taken over many B/socs ) and the branch is unaware, the head office is unaware, the FOS is unaware, the FSA and soon the FCA is unaware, the Bank of England is unaware , the Government is unaware so . . . - who oversees such a shocking, bloody mess ?

report this

clarkkent

Jan 20, 2013 at 09:45

I refused to buy an annuity on the grounds that it was legalized robbery. You are paid a pittance while your provider makes a fortune with the money you have given it.

I know that it's not for everyone, but I have learned how to invest in the stock market so my draw down sipp is a share dealing one.

My potted history goes like this:- made a lot of money, got cocky and careless and lost a lot of money, learned a huge lesson, now recovering very well.

There is a wealth of information out there to help you, but best of all, it's an enthralling hobby that can change your life.

With out a doubt, the best book to read is the Naked Trader by Robbie Burns, it's a fun book, but really down to earth and it will give you the best basic start available.

And don't be scared to try it, but do be careful.

report this

JohnnyM

Jan 20, 2013 at 10:29

Yes, this definitely has Steve Webb's fingerprints all over it. The best pension miss-selling pensions politician for years. Everything this man has done since being in charge of pensions has destroyed the living standards of 58 Million pensioners, present and future. And this is the latest weaze. How is it that the rest of Europe and the likes of Australia are not doing things like this in such a dramatic and destructive way?

Changes in life expectancy are very long term things, and although 25% of babies being born today might reach 100, most of the current 60 million people in this country won't. These predictions also ignore probable future events - like another pandemic flu or other virus outbreak killing 15% of the population or the (increasingly likely) wars, both economic and military, brewing up over east versus west wealth, and religious government versus democracy.

And this will still leave a 2-tier pensions system; those of us who retire before 2017 will get £107.45, those after 2017 £144. Eugh!

report this

Kenneth

Jan 20, 2013 at 11:10

To Johhhy M

If you retire before 2017 I doubt if you will be worse off than somone retiring after April 2017 if you have the full basic pension as I epect you either have a state second pension greater than £37 which when added to basic state pension of £107 will be the same or higher .

The trouble is that none of the newspaper articles are mentioning that the flat rate pension includes state second pension and shoud not state It is only going up from the basic state pension of £107. They should be comparing like with like..

There is another problem if a person has been contracted out before the new scheme starts. Say a person has a Basic state second pension of £107 ,State second pension of £20 and contracted out pension of £30 under the new scheme of £144 the Government will only pay £127 as they will assume the balance of £17 will be paid by the contracted out scheme .

This is not being mentioned by the press so only about 40% of future pensioner in 2017 will receive the pension of £144. Under the current pension rules a persons state second pension entitlement is reduced by any contracted pension so will be no different when the new schem starts.

This is fairly difficult to explain to somone who does not understand how a contract out pension effects the pension they get from the Government when they reach state pension age.

report this

JohnnyM

Jan 20, 2013 at 11:57

Kenneth, Interesting - it just gets worse! Since my second state pension will probably be worth 10p/week, when I retire in 2015 I will get about 107.55 (corrected for CPI - not RPI - inflation, as opposed to £144 a week corrected for CPI. Since I have an occupational (contracted out) pension, I won't qualify for any benefits, but that's not the point. To say it's going to be simpler is absurd.

report this

Dennis .

Jan 20, 2013 at 12:10

@Kenneth what exactly is a "contracted out" pension?

report this

Kenneth

Jan 20, 2013 at 13:23

Dennis.

A contracted out pension is a occupational or personal pension where a occupational scheme they pay a reduced National Insurance stamp and take on the liability of the state second pension within their scheme. The same for a personal pension that contracts out that has a national Insurance rebate paid into the scheme.to also take on the liability of the state second pension.

Contracting out ceased forr personal pension schemes an money purchase schemes in April last year.

report this

Kenneth

Jan 20, 2013 at 13:50

To Johnny M.

The only way you can have a small state second pension if you were contracted out of State second pension all your working life or were self employeed.

I will explain what happened to me when I reached state retirement age in 2005. I was contracted out of State Second pension all my working life in a final salary scheme and because of this I and my employer received NI rebates. Even thouh I had been contracted out of state second pension all my working life I still received a small state second pension of about £8 pw. My contracted out pension was about £70 pw and was paid as part of my final Salary pension.

If I was retiring in April 2017 with the same pensions and the state basic pension was £107 pw Iand state second pension of £8 pw and new flat rate pension was £144 pw all I would receive from the Government scheme would be £115 pw as they would assume the balance of £29 pw was being paid by my contracted out occupational pension scheme.

In my case I would be no worse off than someone retiring in April 2017.

Do you have a pension forcast showing what they expect your basic and state second pension to be in 2015? Also can you tell me if you were in a contracted out occupational or personal pension during your working life.

report this

George Morley

Jan 20, 2013 at 14:15

Johnny M, Kenneth et al, It is good to read your comments about other aspects of the confusing and complicated pension mess. I , along with others have tried to enlighten everyone about the true situation in respect of the frozen pensioner.. Thanks for your input guys. We are all a lot wiser even if we are not financially richer.

report this

Dennis .

Jan 20, 2013 at 14:16

Kenneth I understand this but what confuses me is that I am currently in receipt of a company DB pension (which was contracted out since 1988) and went into payment nearly 10 years ago when I was 55 and made redundant. In June this year I will get my state pension when I am 65 and my current state pension forecast says that I will receive Basic Pension of £107 plus "additional pension" £74 and graduated Pension £3.63. ie £185

Do you think I will receive the £185 or am I in for a surprise?

report this

JohnnyM

Jan 20, 2013 at 15:25

Kenneth,

Most of my working life has been in a contracted out Occupational pension, so I think I might get about 10p/week in graduated pension, plus the £107. That's it. If I were to have retired in 2017, I would have got £144. No, I haven't got a state pension forecast, apart from confirming I've met the 30 year threshold.

report this

Kenneth

Jan 20, 2013 at 15:33

Hi Dennis,

A your Basic state Pension will be £107 and additional is £74 and Graduated pension of £3.63 you should receive a pension of £185 unless there is a deduction for any contracted out pension. The DWP would be able to tell you this

report this

Kenneth

Jan 20, 2013 at 15:47

Hi Johnny M.

You must obtain a pension forcastbefore you reach state pension age., Even if you were contracted out all your working life I would expect you to have a small state second pension like me or perhaps slightly larger because of the years you were not contracted out.

As you have mostly contracted out pension instead of state second pension I would expect you to receive the same pension if you retired before or after April 2017.

report this

Kenneth

Jan 20, 2013 at 16:03

Hi George Morley,

AS it happens I do know about people having their pensions frozen in certain countries. Can you tell me if your frozen pension also includes any state second pension and if it does can you tell me when you left the country before or after your pension started as I do no a way to possibly get a increase on part of your contracted out pension where it is the responsibility of the DWP to pay it.. This is a fairly complicated subject as I did it for my wife when she marrid me and was in receipt of a widows contracted out pension where it was the responsibility of the DWP to pay cost of living increase on part of it but ceased paying it when she married me.

I undertand these subjects because I used to work for an insurance company dealing with pensions and know the rules about who and when is responsible for paying the cost of living increases and also about how contracting out effects state second pension..

report this

Dennis .

Jan 20, 2013 at 16:21

Kenneth Thanks for the feedback I guess the crux of the issue is to what extent is the pension forecast accurate given that I retire in June this year? ie is all of my history (contracted in and out) already factored in? I guess I will be contacted in the next month or two by the DWP and don't want to ask any questions that might backfire on me.

What is the experience of others on the forum, was your forecast accurate?

report this

Kenneth

Jan 20, 2013 at 16:42

Hi Dennis,

You can't come to any harm by just asking for a forecast . You won't be asking any questions. When I received my forecast before I reached state pension age in 2005 it was accurate. I think you can now ask for a forecast through the internet..

report this

Dennis .

Jan 20, 2013 at 17:12

Kenneth Interestingly I have just run a pension forecast, the last time I did it was May 2012 and although todays numbers are roughly the same (presumably inflation adjusted) a lot of the wording has changed. In particular " The amount of your state pension could be lower than the estimate especially if you were contracted out between 6th Apr 78 and 5th Apr 1997" and "we will only be able to tell you how much you will get when you claim your pension". Previous wording was a lot more definitive.

report this

JohnnyM

Jan 20, 2013 at 17:16

Kenneth,

Thanks for your time and trouble on this forum - it's what makes Citywire forums some of the best around.

As for me, having about 2 years contracted-in, I still reckon I'll get £108 + CPI compared to £144 + CPI, but hey, what can I do about it? I'm fortunate to have a decent occupational pension so I guess I'm better off than many people - not the bankers and financial community, of course, but one musn't be too greedy!

report this

Jonathan

Jan 20, 2013 at 18:47

The £144 pw pension is a zero cost policy. That means it adds no additional costs to the current pension scheme. This also means that some will win but some will also lose.

report this

Kenneth

Jan 20, 2013 at 19:52

Hi Dennis,

You mentioned them changing the wording, I think the reason for this is that in a pension forecast they might be showing your basic state pension and a notional state second pension based on the assumption you were never contracted out and they say what they said because they then have to deduct any contracted out pension from the notional state pension to arrive at any state second pension they will pay. They can't work out the exact contracted out pension until after your state pension age. Do you know if they also showed your contracted out pension on the estimate as well?

You can also find out from your occupational scheme what your contracted out pension is to see if the two figures agree. Your occupational scheme has to have this figure because they only pay part of the increase on your contracted out benefit and it is the responsibility of DWP to pay it on the remainder, a complicated subject to explain. If you can get hold of a DWP booklet NP46, it explains how contacted out pensions effect state second pension and how increases are worked out. The latest version is only available on the webb but has been taken off . I have earlier copies of NP 46 from earlier editions back to the late 1990's.

report this

Kenneth

Jan 20, 2013 at 20:36

Jonathan .

I think the new scheme will save rather than just no additional cost for the following reasons.

1) They will save 1.4 %and 3.4% ee and er's N I rebate on 6 to 7 million people.

2) The maximum pension at the moment is if you have the full basic pension of £107 and state second pension is about £160 where for people joining after 2017 it will be £144 a difference of £123.

3) At the moment a person requires 30 years NI for a full pension. From 2007 a person will require 35 years NI also at the moment a person only requires 1 year NI to get a reduced pension, in future if they don't pay between 7 to 10 years they won't get any thing.

4)When the new scheme starts a person wont be able to receive more than one persons pension. At the moment they can also inherit between 50 to 100% of a spouse/partners state second pension. I believe there will be a l period for people who are covered by this rule.

5) If a person wants to defer their pension they earn 10.4 % which will be reduced to 5.2% in 2017.

6)A women can receive a married women's pension based on her husband contribution record which won't be able for people joining after 2017.

7) A woman can inherit her husband basic state pension if it is higher than there own .

8) One of the things where it might cost the government more is allowing self employed to join who might be the main gainers of the change . There is mention in the press that the self employed might have to pay higher tax or NI so it may not cost anything.

9) A few women and carers may gain from the change , but not as many as people think as they have been receiving a automatic credit called (HRP) for over 30 years toward Basic state pension and 11 years towards state second which when added to any years worked would most probably give them 35 to get all or most of the new flat rate pension, of £144 pw .

report this

Dennis .

Jan 20, 2013 at 20:49

Kenneth OK thanks, For what it's worth I have just found that the DWP changed its Forecasting service to a Statement service in Oct 2012. It now tells you less. My pension statement just shows a single figure for the second pension "based on your national insurance contributions" with no contracted out element. I found a copy of NP46 and in it the Byzantine calculations that go into working out your entitlement. I think that during my working life of 40 years I was contracted out for about 15 but I can see from the algorithms that it's much more complex than a simple reduction of 15/40. I guess I will have to wait and see when they contact me in the next month or two..

One thing for sure, it would be nigh on impossible to dispute their figures. I doubt if anyone still working understands the existing computer system that works it out.

report this

Kenneth

Jan 20, 2013 at 23:22

Dennis ,

If I were you I would insist that the DWP tell you what your notional state second pension is inclusive of your state second pension and also ask your occupational pension scheme what your contracted out pension is.It should be roughly the difference of the notional state second pension less the actual state second pension.

report this

George Morley

Jan 20, 2013 at 23:23

In all of this information given out by Steve Webb there has been no mention about whether the new pension will be available worldwide without any deductions or other regulations. Having promised what they have will it be frozen if you emigrate to the wrong country ?

report this

James O'Connell

Jan 20, 2013 at 23:38

All these blogs add up to one thing and one thing only.

Yep, it's a con. but a very complicated one.

Cameron isn't very clever but by God he's devious.

There's only one saving grace. It's highly unlikely that he'll be in power long enough to implement it.

What arrogance to talk about what will happen in 2017!!!!!!!!

report this

Ian Lees

Jan 21, 2013 at 08:37

Well of course it is a CON ! Stevey webb is the man who put the " Con " in CON servative !?! Decades of decay by dozy MP's on pensions by Mp's who have no qualifications - and less common sense, corrupted by expenses fiddling , opportunites in the jungle ( of Australia - not England ) and self certification mortgages - towing the line of of a leaderless governemtn by Cameron - who does not listen to the voting public - and willing to break his promisies to the Nation regulalry prior to the election. TO what can only be described as being Liars - and the question are they competent to be MP's. This would require integrity. Deciet by MP's - who are obliged under Law - to answer truthfully, who have no interest in looking after the UK long term - or in many cases in the short term. Like education, and the NHS - the Government has reduced the quality of living, and the quality of the UK - to that of Woolworths, HMV Comet and Edinburgh - dirty and Bankrupt. Interesting that the strategies employed by insurance companies on pensions - was faulty flawed and incorrect " investment Returns " - to seduce the population of the uK into purchasing their high priced dodgy endownments - no executive has been imprisoned for this as it is part of the CII culture. Interestingly the insolvency of pensions has not been identified - and the insurance companies has failed to bring this most important information - to the attention of the beneficiaries - the policyholders and annuitants. No executive has been imprisoned for thsi as part of the CII culture. Libor fiddling by Barclays and the Robbing Banks of Scotland - meant a £ 229 Million pound fine. No evidence of this payment has been made to the Government purse. Clealry by operating in a monopoly with banks and insurance companies - it is easy to scam the public - by claiming large fines - which are paid to Stevey Webb and his colleagues in Parliament ( sypphon off a bit for expenses - give hector of the sants a hood of knighth s - put him in line with a radio DJ a cyclist a song and dance man - and Sir Tom Mc Nad - known as the quick shit fitter for his involv,ment in selling dodgy brakes on cars - at low cost obviously and making his board memebrship of the robbing bank of scotland . Is he one of edinburgh's four fathers ?

All this with a background of forced enrolment into insolvent insurance companies with insolvent pensions - ring fenced ? " my posterior ".

report this

Ian Grumpy

Jan 21, 2013 at 09:18

sorry to prick your ranting bubble Ian Lees but Steve Webb is a Liberal Democrat not a Conservative.

report this

Fred

Jan 21, 2013 at 10:28

Ian's made a valid point. This discussion has become a mad rant which is all about the self interest of the individual. Perhaps those who are the most worried about missing out, should consider that they should have made the appropriate provisions rather than assuming that the state was going to cosset them into their old age. As far as I am concerned, this is the result of nearly a century of the something for nothing welfare state that has reduced the population into a nest of dependants, expecting to be able to live the life of riley as a right.

Having lived and worked overseas for a greater part of my life, I can only repeat that virtually no other country in the world has the depth of welfare available to their populations and that most of these countries expect the individual to make their own provisions, with just the most basic of safety nets to assist the most vulnerable. Perhaps if the state was less in worried about other countries and concentrated the diminishing resources we have on those that most need it in this country, then the situation would marginally improve.

Unfortunately for us, we are no longer a global super power, nor do we make enough to sustain our voracious welfare state, so you had all better get used to it. Blaming the politicians that we put in power in the first place is not going to alter the situation. The electorate need to get real and realise that the current way we fund pensions is unsustainable. Believe me, our children and their children have even less to look forward to!

report this

Ian Lees

Jan 21, 2013 at 10:38

Apologies for my " boil being prick'd ", for and on behalf of Ian Grumpy, but I was under the impression that we have a " Co - alition Government ? " This is where two parties conduct themselvs as one - in this instance for the Liberals and democrats - to assist an unelected " con . . . servative", government - to carry out their trades of broken promises to the electorate. What ever form stevey Webb takes - it is clear he is not listening to those who have much mor eknowledge and competence in pensions - and their funding. Still if Stevey Webb and his ad men . . . Filo Packet eetis . . . . confirm " I' m in " - although we do not yet know the price of advistiseing paid to the flaggin' dragin' by stevey webb and his colleagues in " forced enrolment ". All these changes after billions spent on , " pensions simplification", - turning six schemes into eight making it more complex and unecessarily complicated - and which still does not work ( much like an M P ? - the muppet policticians ). How many times can MP's get it SO . . . . wrong ? and, bearing in mind they are USING taxpayers money - to fund their expenses fiddling as well as the pension fiasco. When the gold has been sold - and the squandering conservatives - claim they are imposing " austerity ", in the broken down United Kingdom ( including currently scotland ). To disect the propaganda and to understand reality - you need to take an " overall view " ( no pun intended on those who wear overalls often referred to as the Phlebs by conservatives - and their liberal colleagues) .

report this

Alasdair Lawrance

Jan 21, 2013 at 10:39

To Ian Grumpy re. Steve Webb - your point being?

report this

Jonathan

Jan 21, 2013 at 11:27

Kenneth

re "I think the new scheme will save rather than just no additional cost for the following reasons..."

Clearly someone who is taking retirement in 2017 and has enough private pension to prevent them getting other benefits will be better off. So it's just a matter of how many people are worse off and how many are better off and by how much, which if I was to just arrive at the answer without all the facts would be just a guess. But, the government has already calculated the overall cost of this policy change and it is zero!

report this

Cley123

Jan 21, 2013 at 11:30

Fred

Alas in this world the individual is encouraged to be self interested. Over the years I have learnt that no-one else gives a toss about you. Surely we are in this mess because people failed to show self interest in their future during retirement, feeling that society via the state would provide for them.

report this

Kenneth

Jan 21, 2013 at 11:51

Jonathan

Do you believe the government figures that they are no additional cost? I don't.

report this

Jonathan

Jan 21, 2013 at 12:02

Kenneth

I can see that it's a Tory policy designed to help the better off. But where someone gains someone else will lose as the overall cost is zero. The actual figures for the costs will have been worked out by civil servants who aren't assigned to any political party. I doubt they will have deliberately cheated in their calculations.

report this

Ian Lees

Jan 21, 2013 at 12:35

@Alistair - my point being - Pensions are so complicated, with such high charges and the contracts which have been tinkered with so much - by insurance companies, MP's and the DWP - that they are not worth the paper upon which they are contracted. Pensions are so open to tampering - they cannot be relied upon. The great pension scam - tied in for life - confusion - obsification - and there are other products which are so much more simple and easy to control - unlike pensions where the Trustees have FULL CONTROL - " to do with as they please", ( quote : Sandy Hogg, Head of Customer services, Scottish Widows 1993 ).

It is interesting that two stalwarts of Aegon ( Dr thingy ? ? ) and LloydsTSB woman employee engaged in and attempting to come up with an insurance based product - to replace the current crop of failures in endowments and pensions - for whatever reason. Had insurance cpmpanies acted with the TRUST they claimed consumers would not be faced with further unecessary corrupt products.

report this

Cley123

Jan 21, 2013 at 14:10

Having taken the wife shopping to Tesco this morning I think the bigest problem will be inflation. It seems that food prices are not going up by 3% but more like 10% in some cases. I also bought a small pot of polish for my hiking boots from a shop nearby. £4.00 a year ago, now £4.50. same pot of polish, same shop. If they are going to fiddle the government inflation figures, pensioners will be in serious trouble.

report this

Kenneth

Jan 21, 2013 at 16:11

Jonathan

The well off will be the bigest loosers from the change to flat rate pension of £144 because at the moment they can accumelate up to about £160 state second pension which gives them a total pension of £267 a future loss of about £123.

You go on to state that they are worked out by civil servants which I agree with but I sometimes think when they make thye rules they sometimes think about how it will effect them, here nare a few examples.

1)When public service pension schemes had to change their indexing to CPI from RPI I think somehow certain civil service schemes were able to retain RPI even though most public service schemes had to change to CPI.

2) When they recently chaanged public service schemes somehow the government and Treasur agreed that there would be no further major changes to public service schemes for 25 years. What non public service organisation would ever agree to this?

Because of this, when the flat rate pension of £144 introduced the public service pension schemes will will loose their NI rebate of 3.4% but will not be able to increase the employees contribution rate or reduce the pension because of the no change rules to the scheme for 25 years.

People seem to think that most non public serfice schemes will close down their final salary scheme or have to charge the employees more because of the loss off their NI rebate of 3.4%

3) The government has changed the rules so that people will only be allowed to have a pension fund o £1.250,000 in future and that the maximum contribution rate will be £40,000. Because of this someone in a money purchase scheme (DC) if they had the maimum cash sum of £1,250,000 would only be able to purchase a pension on the open market a pension at age 65 with cost of living increases and pension of 50% continuing to spouse 3 years younger of about £41,000.

Because there is not an individual pool of money for a pension for a person in a final salary pension scheme (DB) they use a factor of 20 to 1 to work out the maximum pension allowed, which allowes a pension of£62,500. To end up with roughly that same pension trhat a (DC) scheme alowes the factor of 20 to 1 should be about 33 to 1 on a (DB) scheme. The factor should be even higher if a person say was only 60. In the example I have quoted a person in a (DB) scheme ihas a pension roughly 50% higher than in a (DC) scheme.

I have seen correspondence about this on the Government Actuary (GAD)Webb site which states that if they had used open market rates in working out the factor to convert pension it would be about 32 to 1.

As there are only about 7 million people in final salary schemes (DB) and of those over 5 million are civil servants.As this would have mainly effected civil servants why do you think they have not increased the conversion factor to 32 to 1 and made it age related,I think there are plenty of civil servants who have a pension entitlemer greater than about £41,000 who would be cought out if they changed it to 32 to 1 and made it age related because so many of them have very generous early retirment terms. ,

report this

Dennis .

Jan 22, 2013 at 15:46

I have just been looking through my pensions file (well it's raining outside) and noticed that I had asked for pension forecasts several times over the last decade. However in 2008 it became possible to do it online rather than get one through the post and I see that there is a difference, the postal ones had details of how much contracted out deduction you would get on the second pension. The online ones omit this figure and just say you will receive £x (which could be adjusted downwards) . Has anyone done a postal forecast recently? Makes you wonder if they are hiding the info for some reason.

report this

Kenneth

Jan 22, 2013 at 20:59

Hi Dennis.

Interesting reading what you said, I can't think of a reason not to show the contracted out deduction unless they want to make it impossible for people to work out inadvance what they will receive from the DWP .I do know that it is not an exact science because even though I was contracted out of S2P/SERPS all my working life I still ended up with about £5 pw contracted pension when I received my state pension in 2005.

I would still get them to tell you what your state second pension and contracted out pension is and also ask your company pension what the contracted out element of your pension is. It is also important to ask the DWP and company pension to split the contracted out pension into pre 6 April 1988 as it is the responsibility of the DWP to pay the increases on it as for most contracted out schemes the company does not pay the increase.. Between 6 April 1888 and 5 April 1997, it is the responsibility of the company pension to pay the increase up to 3% and anything in excess is paid by the DWP. After that it became the responsibility of the occupational scheme to guarantee payment up to a max of 5% on all the scheme which included the contracted out pension.

When you get the split fom the DWP and pension look to make sure they have the same answers. You might not be able to do this till after you have received yor state pension

I am an expert on this subject as I used to work in pensions for a large insurance company. and have various copies of NP46 booklets going back to the late 1990's. They stopped producing printed copies of NP 46 about three years ago and then only produce it on the Net . For some reason they took it off the nett just over two years ago. The net copy was full of errors and missed out the section about how cost of living increases are worked out on contracted out pensions.

When you get your pension statement from the DWP in April each year they include cost of living increases on your contracted out pension as one figure in your S2P/SERPS pension without giving a brake down or mentioning it includes cost of living increase on your contracted out pension.

report this

Dennis .

Jan 22, 2013 at 22:21

Given my earlier comments about the lack of contracted out info in the online pension forecasts I have just sent off for a paper copy. Let's see if it's different.

report this

Ian Lees

Jan 23, 2013 at 10:08

Having been self employed for the first six years with Hambro Life - before joining the scottish mutual scottish widows for widows and orphans ( I had not fully appreciated scottish wiodws employees - " made them widows and orphans ") - and their final salary pension scheme. As a result of fraud and destruction of Trust by these employers e.g forging of my signature on an annual appraisal - which I had not agreed, and cover up by the Fiance Director and M DRoss CEO and chairman and Angela Knight etc., etc., my pension forecast is extremely important. I tried on line - and they have failed to provide details. I found this is an " information gathering service " as opposed to a public information service. I too am waiting for confirmation of my possible pension - unless this gov't changes the Rules and Contract Terms - AGAIN !

report this

Dennis .

Feb 07, 2013 at 14:59

Kenneth, Just received my pension forecast through the post that I requested a couple of weeks ago and it's the same as the online version ie they have stripped out the information about the contracted out element.. Makes me suspicious that they are giving out less information these days.

report this

Cley123

Feb 07, 2013 at 15:59

It seems they only put the contracted out information into the letter in the final years before the state pension is due. I guess they know something that we all don't, like we are going to be shafted !

report this

Kenneth

Feb 07, 2013 at 16:30

Hi Dennis,

Thanks for telling me that they no longer give out information about contracted out pension, Have you thought about asking them why they no longer give out this information. That is what I would do.

If they won't give you the information I would do it under a freedom of information request under a web site " what do they think they know." They have to answer within 20 working days. You must not make it a specific request about yourself but just a general question as to why they are no longer including this information in pension forecast letters.

I have been doing this and am waiting a reply regarding how contracted out pensions effect the new flat rate pension.

To put in a request you have to put in a department and in this case just put in DWP which will send it to the correct office.

report this

Ian Lees

Feb 08, 2013 at 08:09

A possible £ 144 per week pension for those who survive the NHS Trusts ( or as they are known - NHS Trust -Death camps ! ). Introduced by Labour the NHS Trusts introduced the negligent and incompetent - to attend to the incontinent - or as they are better known Chief Executives Chairmen and Directors. Like Hector Sants - they are rewared for failure - and in this case by the governemtn for removing sectors of the population - who might wish to claim their pensions.

Like the Labour government who set up these NHS Trusts - no one is responsible as a result of the clones in Government - and the rewards MP's may obtain form their companies to either their party for sponsorship - or on a more personal level.

With more NHS Trusts ready to be identified and to be announced the real results will have an impact on reducing the pension burden - for which Cameron and Clegg can claim responsibility - toward their final solution for the elderly - whilst war monger tony blair also gains award for introducing immigration for the thousands of eastern europeans into UK Plc. Personally I find them most useful - my car has never been cleaner.

report this

Ian Lees

Feb 08, 2013 at 08:09

A possible £ 144 per week pension for those who survive the NHS Trusts ( or as they are known - NHS Trust -Death camps ! ). Introduced by Labour the NHS Trusts introduced the negligent and incompetent - to attend to the incontinent - or as they are better known Chief Executives Chairmen and Directors. Like Hector Sants - they are rewared for failure - and in this case by the governemtn for removing sectors of the population - who might wish to claim their pensions.

Like the Labour government who set up these NHS Trusts - no one is responsible as a result of the clones in Government - and the rewards MP's may obtain form their companies to either their party for sponsorship - or on a more personal level.

With more NHS Trusts ready to be identified and to be announced the real results will have an impact on reducing the pension burden - for which Cameron and Clegg can claim responsibility - toward their final solution for the elderly - whilst war monger tony blair also gains award for introducing immigration for the thousands of eastern europeans into UK Plc. Personally I find them most useful - my car has never been cleaner.

report this

Wendy via mobile

Mar 07, 2013 at 10:10

O.K. after browsing most of the comments re the pension system what I want to know is this.....I am retired 66yr widow who because of life I have no private pensions and my state pension is topped up by pension credit...thank you Government...to a liveable amount. This in itself leads to other benefits....are there going to be changes to this or is it only new claimants that will be affected.....any thoughts would be appreciated for this scrounger !!!!!!!!!!!!

report this

Jonathan

Mar 07, 2013 at 13:03

Wendy,

It will on;y affect people who are retiring after the new legislation comes in (in 2015). So if you have already retired you won;t be affected by it.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

Sponsored By:

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Latest from Investment Basics

Read more...

Fidelity China trust turns it round in turbulent year

by James Carthew on Dec 22, 2014 at 10:50

Sorry, this link is not
quite ready yet