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Q&A: state pension reform explained

The government has announced the introduction of a flat-rate state pension, here's what it means for you.

 

by Michelle McGagh on Jan 15, 2013 at 11:29

Q&A: state pension reform explained

The government has announced plans for a new flat-rate state pension that removes means-testing and which it hopes will provide clarity for everyone saving for their retirement.

Since the Beveridge Report set out the plan for the welfare state 70 years ago, Britain’s demographics have changed dramatically. In the 1940s a minority of men could expect to live to 65 whereas 36% of people born in 2013 are expected to live to 100, according to the Office for National Statistics.

Improving life expectancy has put a strain on the UK state pension system that successive governments have tried to ease with reams of legislation, leading to a complex, means-tested pension system.

Now the coalition has published its white paper, 'The single-tier pension: a simple foundation for saving', which it hopes will make the system fairer and easier to understand.

What changes are coming in?

The single-tier pension will be implemented in April 2017 ‘at the earliest’. It will see pensioners who qualify receive a £144-a-week state pension.

This is an increase from the £142.70 basic level of means-tested pension currently available for a single pensioner.

The means-testing element of the state pension will be removed completely, instead national insurance contributions (NICs) will be calculated to determine whether you qualify for the £144 pension.

How do I know if I qualify?

Anyone who has 35 years of qualifying NICs or credits for the full amount will receive the £144-a-week state pension. This means that anyone who works for 35 years will qualify.

There will be a minimum qualifying period of between seven and 10 years to receive anything from the state. Those with fewer than 35 years but more than 10 will receive a smaller single-tier amount.

Will it always be £144-a-week?

No, the state pension keeps increasing as the cost of living keeps increasing. In 2011 the government introduced the ‘triple lock’ guarantee for pensions which ensures the state pension will increase at the highest of either growth in prices, average earnings or 2.5%. The paper has confirmed that the triple lock will stay in place.

Whatever the rate of state pension on offer you will still need to have 35 years qualifying NICs in order to receive the full amount.

When will I get my pension?

The state pension age is on the rise. It is set to increase a year to 66 by October 2020, and to 67 between 2026 and 2028.

The equalisation in state pension age between men and women will also be complete in November 2018 to bring women’s retirement in line with men’s.

However, the state pension age is likely to rise again as the government has said it will link it to longevity. We are all living longer which has led to predictions that future generations won’t receive their state pension until age 70.  

In the paper the government said it will carry out a review of the state pension age every five years ‘based around the principle that people should maintain a specific proportion of adult life receiving the state pension’. The first review of the state pension age will take place in the next Parliament.

What if I am contracted out?

Contracting out is a tricky business. The current state pension is made up of several parts; although the main components are the basic state pension and the additional state pension, also known as the second state pension (S2P).

The amount you get from the additional state pension, or S2P, depends on the contributions you make into it through your NICs. Employees were given the option of ‘contracting out’ of S2P and redirecting the money into a private or workplace pension.

By contracting out, employees and the employer paid a reduced NI rate because the employee would not benefit from S2P. Instead they benefited from extra money in their private or workplace pension to replace the money lost from not contributing to S2P; this money is known as protected rights.

Under the new rules S2P will be abolished after the implementation of the single-tier pension as contracting out was already abolished in April 2012.

Around 80% of people have contracted out of the S2P at some point in their careers but they will be brought fully back into the state system and will begin paying full NICs – which is the increase equivalent to 1.4% of relevant earnings. 

Although many people who are contracted out will begrudge the government increasing their NI, they will recoup the extra payments they make. The government said ‘the vast majority of those who pay a higher rate of NI as a result of the ending of contracting out will be able to get extra state pension for years worked or credited after the single-tier pension is implemented’.

So there will still be different levels of pension?

Just because there is a flat rate of £144-a-week it doesn’t mean that everyone will get that.

Most people of working age will have made NICs before the implementation of the single-tier pension so the government has had to put a transition process in place.

Everyone who has worked will have a ‘foundation amount’ – basically an amount calculated on what NICs you have paid to date. The entitlement to the state pension will be built up from this foundation amount, adding £4.11 to the pension for every year worked after implementation until it reaches £144.

However, some people who have already accumulated a ‘foundation amount’ of over £144 will be entitled to a higher state pension.

People will fall into four groups when implementation happens:

1. Those with a foundation amount equal to £144, who have paid in for 35 years and not been contracted out.

2. Those with less than the full level of the single-tier pension, such as young people with few qualifying working years or older people who have spent years contracted out. These people are able to amass an extra £4.11 to foundation amount for each year worked until they hit £144.

3. Those with more than £144, likely to be older people with many working years behind them who did not contract out of S2P. They will receive the difference between the foundation amount and £144 as an extra weekly payment.

4. Those with no NI record like those who have not started working yet. They will benefit from going straight into the new system.

What if I am self-employed?

The self-employed benefit from the pension reform. Previously, NICs paid by the self-employed didn’t count towards the state pension, meaning they received a lower state pension in retirement. However, under the new rules all NICs will be treated equally in the calculation of the single-tier pensions.

Are the changes good?

Yes, broadly. The government hopes to encourage people to save for their own retirement by setting out just what they will get from the state. By providing a solid base pension that will not be swayed by means-testing it is hoped that people will be encouraged to plan for their old age.

Pensions minister Steve Webb said: ‘The current state pension system is too complicated and leaves millions of people needing means-tested top-ups. We can do better.

‘Our simple, single tier pension will provide a decent, solid foundation for new pensioners in an otherwise less certain world, ensuring it pays to save.’

It is also good news for women who have tended to miss out on a full state pension because they work less hours or took employment breaks and were not contributing as much.

Secretary of state for work and pensions Iain Duncan Smith said: ‘This reform is good news for women who for too long have been effectively punished by the current system. The single tier will mean that more women can get a full state pension in their own right and stop this shameful situation where they are let down by the system when it comes to retirement because they have taken time out to care for their family.’

Who doesn’t benefit?

Not everyone has welcomed the single-tier state pension. The National Pensioners’ Convention yesterday labelled it a ‘con trick’ for future generations who will be asked to contribute more for longer and receive less.

Under the current rules you can pay 30 years NICs and get the full basic and S2P of around £150 a week but under the new rules you work for 35 years and receive £144 a week.

It has also complained that existing pensioners are not included in the reforms. They are left with the complicated old means-tested pension credit system.

At the moment pensioners can get £107-a-week minus means-testing, which increases to £142.70 with a means-tested pension credit. Unfortunately not all pensioners apply for the pension credit, there are 1.8 million people who are eligible who don’t receive it.

Wealthy people are also disadvantaged by the system. A higher earner at the moment can get a S2P worth up to £150-a-week on top of the state pension but that will be scrapped and they will no longer have the chance to build up this additional amount.

32 comments so far. Why not have your say?

Rose G

Jan 15, 2013 at 12:18

More bullshite explanations of how to renege on our pension contracts.

While I understand that the bill for pensions is enormous, I have not one ounce of belief in this or any other government. I understand the current conlib coalition is the worst in making promises they cannot keep.

If young people contribute to pension plans, they will realise further down the line it is no use in doing so because as long as we have liars & cheats in government, you have no way of relying on what they say today, let alone what they plan for us in future.

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Anonymous 1 needed this 'off the record'

Jan 15, 2013 at 12:26

What about unemployed people that no longer qualify for any benefits, but were told by the Job Centres that they no longer needed to sign on, if they already had 30 years of NI. Now they will need 35 years for a full pension!!!!

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Clive B

Jan 15, 2013 at 12:38

I've never understood why people expect the government to provide them with things (e.g. pensions) that, for a large number of them, they're perfectly able to arrange for themselves.

If people want (say) to retire in their 50s with a good pension, fine, go and set it up.

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Rose G

Jan 15, 2013 at 15:01

Bascially, national insurance contributions should be abolished because it does not actually fit the bill; individuals can make their own plans for retirement but then the treasury will not be able to get their hands on money taken under false pretence.

i have no problems in making my own arrangements but I do have a problem making compulsory contributions taken during my employment, and then having goverment renege on their promises.

I am not relying on my state pension, but do feel that as I have contributed NI; I should get back something - basically, the advice given to my children is not to enrol on any pension scheme dreamt up by those who have their trust fund to rely on, which is as changeable as the waters in the English Channe!

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Roger Bailey

Jan 15, 2013 at 16:31

The Universal Pension should not be based on NIC's just years of Residence. In New Zealand, where they have had such a Pension in place for 73 years you need to have been resident for only 10 years since the age of 20 of whch 5 must be when over 50 years of age. Too short a period for UK, but think 35 years is reasonable.

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nickle

Jan 15, 2013 at 16:42

http://www.ons.gov.uk/ons/dcp171766_263808.pdf

The debt, 2 years ago, before they increased the payout was 5,010 bn. It's about 5,300 bn now.

I estimate a 40% increase on the state pension has added another 1,500 bn to the total.

Then the treasury says its going to be better off by 9 billion a year, because of increased payments in.

So more debt. More taxes. We aren't going to be better off.

That's just lies.

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Roger Bailey

Jan 15, 2013 at 16:50

The amount of NIC's payable by each individual varies greatly as it is based on earnings, whether you are employed or self employed or signed on the dole etc. It is really just another tax and should be treated as such. , The system is also very complicated and costs a lot to administer.The government should just increase income tax rates and abolish it.

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Clive B

Jan 15, 2013 at 16:58

Roger Bailey

I assume this NZ scheme is funded out of general taxation ? Can't see that makes much difference - tell people you're raising their NI contributions (already seen as a tax) or tell them you're raising tax.

Point remains the same, people want to pay little, retire early, live a long time on a good pension. Numbers don't stack up currently.

Question of whether the state or the individual should provide is (imo) one of political philosophy. I think the individual should provide.

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Anonymous 2 needed this 'off the record'

Jan 15, 2013 at 16:59

Rose,

You are showing a bitter and pessimistic view of the governments -

Shame is that it is pretty much on the point.

Clive,

The reason I expect the government to provide a pension is that's what they took money from me, under the assurance that that is what they would do.

Then they sugested that I put more money away in a 'personal' pension fund to make life easier than just living on the 'state' pension that was aimed at being the minimum needed to 'live' on.

-------------------

Then we get to the post from Anonymous 1,

Yes there seems to be a lot of smoke and mirrors.

Add the new 'production' to the no benefits if you don't try for work - delayed pension start and reduced employability age - You'll find the 'Employment Office' have a special - not going to bother pushing it' attitude fo those over 45, let alone over 65's

Now, near retirement age myself it's a major consideration - not work, or do physically demanding work, and, after injury, go on the 'sick'.

Wouldn't be a difficult decision, except that I'll be taking the aftereffects, or ongoing problems of the injury into that retirement, and will consequently be more likely to need further assistance and reinbursement of care costs.

So - we have:

An underfunded NHS - note the recent 'bankrupcy' and castigation for low staffing levels in hospitals, and as outreach nursing staff.

An reduction in available assistance, an compensation levels for those workers unfairly treated by management

A government 'employment' attitude that is basically -

Reduce the taxation on higher paid.

Tax banks for paying the bonus's, so less dividend goes into the pension funds that own the shares.

Move employees from low paid jobs onto the unemployment, and then require them, or others without the skills, and long term experience of that work to do it as unpaid volunteers.

A pensions system where the money extracted for pensions has not been kept and invested to provide pensions for those the money was extracted from

Personal pensions that are restricted to less than 10 years ago, and are subject to more taxes than even under the recent Labor government.

And for this level of management, we should, I understand be paying MP's more.

I suppose it's lucky that the Senior Civil Servants pay isn't linked to that of MP's.

Just consider how much more the MOD staff would cost.

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Clive B

Jan 15, 2013 at 17:27

Anon 2

"The reason I expect the government to provide a pension is that's what they took money from me, under the assurance that that is what they would do"

I've got no problem with people already in the system getting a pension. I should have made my point more clearly. Government (imo) should say that anybody who reaches 16 on/after 2015 should provide for themselves.

Because UK pensions have always been based on the current generation funds the pensions of the generation that went before it, because of this "from now on you fund yourlsef" change, they'd have to make up the shortfall from general taxation.

We badly need to shrink the size of the state

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Roger Bailey

Jan 15, 2013 at 17:47

Clive B

Welcome to the New Zealand Superannuation Fund

The New Zealand Superannuation Fund invests money, on behalf of the Government, to help pay for the increased cost of superannuation entitlements in the future.

By doing this the Fund adds to Crown wealth, improves the ability of future Governments to pay for National Superannuation, and ultimately reduces the tax burden on future New Zealanders of the cost of superannuation.

A long-term, growth-oriented investor, the Fund has $20 billion in assets, including around $3.5 billion* invested in New Zealand.

The Fund is managed by a Crown Entity, the Guardians of New Zealand Superannuation.

Would you entrust your pension savings with Equitable Life or have this sort of arrangement/? I know what I would choose.

It is about Philosophy but prefer the NZ philosophy also. This is as follows:

The role of the state in pensions consistent with the NZS-style Citizen’s Pension

is described as follows3:

…the ability to retire in a degree of personal comfort, without worry and

with dignity, is the least that citizens can expect in a modern, developed

economy…..it is also most they can expect. They cannot expect the state

to maintain in retirement the incomes people became accustomed to

during their working lives.

Problem with the UK is that most of our taxes end up funding the Public sectors second Pensions and the remainder are left with a pittance. It needs to change.

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PHMH

Jan 15, 2013 at 17:56

Does anyone know how someone (myself) who is eligible for the full pittance of the SRP (excluding the S2P bit as I contracted out), currently 70 years old, haven't started receiving the SRP yet as still working but intend signing on for whatever SRP amount it might turn out to be when (OR IF!) I get to 75 years of age in August 2017. Under current rules, with a yearly 10.4% uplift for each year's delay, I should get just over double the basic, but will I? I have no idea; any knowledgeable experts out there who might have the answer???

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Roger Bailey

Jan 15, 2013 at 18:21

PHMH

I believe you still keep current entitlements with the 10.4% p.a. uplift . If your other income is very low when you eventually retire you can opt for a lump sum with past years pension entitlements accruing with an interest rate of 2% above base rate applied. This could mean that when you withdraw the lump sum you could reclaim the basic rate tax if you you do not otherwise pay basic rate tax in the year you take the lump sum, so you could consider taking it near the end of the tax year. Rules might change though, so keep a lookout.

This website explainss more fully.

http://www.pensionsadvisoryservice.org.uk/state-pensions/deferring

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PHMH

Jan 15, 2013 at 19:02

Thanks Roger for this, but the Pensions Advisory site doesn't advance my knowledge on what I might get after deferring for 10 years. The site just tells me 204% of the SRP at the time (2017). Perhaps it will be 204% of the 2017 equivalent of the flat rate per yesterday's revelations, or not, I just don't know. One thing I can say for sure, is that taking the lump sum option rather than an increased pension is not a good choice from the point of view of eventual total pension receipts (provided I live long enough of course!)

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Kenneth

Jan 15, 2013 at 19:13

I notice that Michael McGagh states that that contracting out was abolished in April 2012, this was only for personal and defined contribution schemes, that is why contracting out rebates cease when the new flat rate scheme starts.

He also saids employees were given the option of contracting out of S2P, only partial true as if the did want to remain in S2P they wern't allowed to join the occupational scheme, not much of a choice to give up company pension.. The only people who had a choice were people who took out a personal pension policies and this option was cancelled in April 2012.

The article should give examples of what a person is likely to receive if they have been contracted out. I think people who have been contracted out for most of their working life are in for a shock as many of them will receive a pension less than the pension of £144 pw.

Example someone with a S2P/SERPS of say £15 and basic pension of £115 who has a contracted out pension of over say £50 will only receive £130 from the DWP as the DWP will assume the other £14 will come from their occupational or personal pension.

A person who has been contracted out will only receive the full pension of £144 if they have a basic pension of £115 and a S2P/SERPS pension of £29 or more.

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Roger Bailey

Jan 15, 2013 at 19:52

PHMH

I don't think the govenment know yet either but my understanding at the moment is that it will be the pension at your normal state retirement age plus the uplift to 204% of this., adjusted for inflation. You will not get the new Universal Pension unless they change their minds in the meantime. Introduction has been delayed for one year because they haven't sorted out everything yet.The thing to watch is that if you do not have a wife or civil partner and die before you start drawing the pension mostly it will be lost.(except for three months pension, I believe). It will not go into your Estate .If you have kids that could inherit a lump sum then it is a difficult decision.

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Anonymous 2 needed this 'off the record'

Jan 15, 2013 at 19:52

PHMH

Yes, I get the impression that the flat rate will be applied to new pensioners, and those with current pensions arranged/agreed will have those current values used.

If not, then there are going to be many who have paid SERPS, or deferred the standard OAP who will lose out.

But that's just me hoping for some appropriate consideration for those currently over the pensionable age!

Re enhancement and lump sums for not taking the weekly pension each month.

I did some basic calculations assuming that inflation would equal the interest I cound get (in a tax-free ISA), and came to the conclusion that for a 5 year deferrment at 10% uplift compounded I'd have to live about another 8 years, and for 10 years deferred, another 6 years, to benefit from the increased pension as opposed to putting each years money in an ISA.

Now - assuming you get interest on a cash ISA equivalent to inflation of the pension, ignoring both in calculations, it seems that saving the pension in an ISA for 5, or 10 years, and then taking it from the accumulated ISa to increase the income to match the alternative 10.4% inflated pension, yoy run out of the capital in the same 8, or 6 years - but that would be tax-free on the extra

You should consider your health, and expected needs before going for the increased pension, or the lump sum. going to live more than another 16? years - and it may be worth the deferment, if not, then I'd say not!

(Interesting that the site still uses 4.5% as the 'Base rate' for their example, and we've been at 0.5% for how long!)

Then, consider the effect of, instead of getting £7K, you were getting £14K pa,

on income-tax, and any other benefits it may be appropriate for you to claim when you are 75, and older.

OR -

the effect of having that 10 years income as capital in a savings account.

With the current 0.5% Base rate and inflation at 2.7%, it's not such a good idea to take the money as a lump sum, taxed at income-tax rates.

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Roger Bailey

Jan 15, 2013 at 20:28

PENSIONS REFORM

The role of the state in pensions consistent with the NZS-style Citizen’s Pension

is described as follows3:

…the ability to retire in a degree of personal comfort, without worry and

with dignity, is the least that citizens can expect in a modern, developed

economy…..it is also most they can expect. They cannot expect the state

to maintain in retirement the incomes people became accustomed to

during their working lives.

The above statement was copied from a Pensions Policy Institute discussion paper dated 2004 titled “Citizens Pension: Lessons from New Zealand”, and believe the UK should adopt the same attitude.

The UK is proposing to introduce a Universal Pension in 2017 whereas NZ introduced theirs some 73 years ago.

It is scandalous that Ministers made a pact to protect Public Sector Pensions for the next 25 years when already these Public Sector workers have a comparably higher wage than those n the Private Sector and the Private Sector will need to continue subsidising these pensions and not receive similar pensions themselves.

It is time to call a halt to further contributions to these pensions whilst still paying out as promised based on past contributions ( this includes the recently introduced auto- enrolled pensions which are now being phased in). Current Employer Contributions should be simply added to the employee’s salary and taxed in the normal way and let market forces determine eventual salary levels.

In FY 2011, the cost of tax relief on occupational pension contributions was £39.6 billion and this will increase further due to auto-enrolment contributions At the same time the National Debt was £910 billion. This equates to 23 years of this tax relief and is the main cause of this huge National Debt.

The fact that the new Universal Pension does not allow for Housing and Council Tax costs means that means testing of pensioners will still be required. This is abhorrent but can be avoided by turning the concept of means testing on its head e.g. by giving all pensioners an LHA and Council Tax allowance capped at say £600 per month per pensioner household and then withholding some of this from pensioners in receipt of an Occupational Pension. My very rough estimate of the cost of the giving this LHA /Council Tax allowance to all pensioners is 12 million x £400 per month x 12 = £57billio per annum. The Universal Pension, in today’s money will cost 12 million x £144 x 52 = 90 billion app., so a total of £147 billion (about the same as the current cost of pensions) and approximately10% of GDP.

Bearing in mind that the current costs of State Pensions and Housing Benefits is 5.5% of GDP, Occupational Pensions a further 3.7 % and tax relief on contributions 2.7%, this totals 11.9% of GDP. 20/25 years down the line then, when Occupational Pensions will be almost extinct there will be a huge reduction in pension expense. In the interim, the extra expense of LHA/Council Tax allowance can be more than offset by the savings attributable to pensions contributions tax relief and withholding some of these allowances from current recipients of Occupational Pensions.

To sum up then, the above proposals would provide the following benefits.

1. Payments for all pensioners which are sufficient to provide all living costs at a basic level and enables tax relief and employer contributions in the past to be more fairly re- distributed..

2. No need for means testing of pensioners.

3. More disposable income for those who are currently contributing to Occupational Pension schemes..

4. No more government involvement with second pensions. It is not necessary.

5. Give everybody who has income in excess of their normal expenditure the freedom to save it or spend it in whichever way they want and when they want.

6. Encourage savings. Current Housing Benefit arrangements only discourage savings. There is simply no point for those with a modest income to save when they can spend their money and then get LHA/Council Tax Benefits paid by their Local Council.

7. Give those who have bought their own house more disposable income. Under the current system they are severely disadvantaged by the fact that they cannot claim LHA etc even if they do not have much income in retirement. It costs money to maintain your own home whereas somebody renting has maintenance costs paid by the landlord.

8. Encourage more people to use their savings to buy their own home and by so doing, reduce the demand for rental property, driving down rents and therefore the cost of LHA’s.Current housing costs are disproportionately high when compared to current average incomes.

9. It enables pensioners who do not claim for Housing Benefits that they are entitled to, to actually receive them without the need for means testing.

I also have some views on current perks to pensioners.

Winter Fuel Allowance- scrap this, but make sure the Universal Pension is sufficient to cover annual fuel costs. It is only an unnecessary administrative expense..

Free bus passes – keep these as it will enable the bus companies to keep overall ticket prices down for everybody. There is no point in having buses running half empty.

TV licences.- These should be abolished for everybody. A TV is nowadays one of life’s necessities. It is unfair that a pensioner or even a University Student for that matter should pay the same as a family with perhaps half a dozen TV’s. The cost of 4 billion mainly goes to the BBC. Perhaps the BBC should either be privatised or at least, considering their excesses, have their income drastically reduced.

I intend sending this document to the main political parties/newspapers and private organisations in the hope that someone will see some merit in my proposals. I hope you do.

Yours Sincerely

R.M.Bailey

Anybody got any views on the ideas above???

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Linda Green

Jan 15, 2013 at 21:07

I do not fully understand how this will effect me. I am due to get my state pension in 2019. I have been told that I fully qualify for a full state pension. However I think I probably have about 34 years [i.e. one short under new rules]. I don't know if I paid national insurance when I was on maternity leave [I did pay my occupational pension contributions]. I am now 'early retired' and living on an occupational pension. I will not be upset if I don't get the full £144, but I would be if I don't get the equivalent of the full current rate.

I don't suppose anyone will know the answer, as not enough details seem to be in the press. I hope they will publish more details soon.

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Anonymous 2 needed this 'off the record'

Jan 15, 2013 at 21:22

Linda,

AFAIK, you have until the final year before official retirement to pay a lump sum for another years 'contributions' .

Probably better to wait a month to allow someone to pass a document detailing what's what from the new proposals down to the people answering the pensions help line.

Then, you should get enough detail to decide if it may be worth 'buying' that extra 'contribution year'

Then again, by the time we get to 2018 the government will probably have changed the rules again, and possibly (probably?) been replaced by a Labor one!

Add to that the possibility that inflation and BoE base rate could be in the teens, it may be worth just ignoring the current situation until 2018

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GQ

Jan 15, 2013 at 21:54

I have a question, because this whole thing confuses me. I'm 42. I contracted out about 15 years ago but haven't received any benefits from this into my private pension ever since I went self-employed 10 years ago. Since then I've just been paying the 10 pounds or so a month NI contributions (can't think this contributes at all to a meaningful pension?) - I will easily have done 35 years of work by the time I retire but am I likely to get the new flat rate pension in full or just a small portion of it? There seem to be some brilliant knowledgeable people on here so perhaps someone can explain it to me?!

BW

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Linda Green

Jan 15, 2013 at 23:14

You are probably right.

Here is a link to the white paper: http://www.dwp.gov.uk/docs/single-tier-pension.pdf

The examples in it are clear as mud, and say little about the effects of being contracted out etc

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Anonymous 3 needed this 'off the record'

Jan 16, 2013 at 06:27

What happens to pensioners llike me who already have a higher sstate pension?

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Anonymous 4 needed this 'off the record'

Jan 16, 2013 at 16:36

There is now only a small class of persons who are being robbed blind by auto-enrolment. The government had to get rid of means testing, since otherwise almost every auto-enrolled employee would be the victim of this grand larceny. That would have killed off auto-enrolment as soon as the twig had dropped.

Only people who are auto-enrolled and reach state retirement age before April 2017 (or whenever)will now so suffer. Unfortunately, the maximum age for auto-enrolment IS the state retirement age, so the first of these poor souls is already so robbed. They, and hundreds more after them, will simply have thrown money down the drain; every penny they have saved is of no use at all to them, because the Pension Credit will give them exactly the same as if they had not saved a bean.

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Graham Barlow

Jan 17, 2013 at 09:48

It has never been any different when it comes to Pensions. Over 30 years ago when a trustee of our Pension fund, investment was crucial. Included in this examination was constant monitoring of the State Pension rules. You will recall that Barbara Castle had introduced SERPS ,which at the time 1983 we had opted out of. When Major introduced a scheme to encourage people to leave SERPS ,we investigated the benefits and costs like any other investment for a Pension fund. We found that SERPS provided benefits for all our members on top of their existing benefits pensions which would have cost 3 times the price of contracting back in the whole fund. The bargain of the century, which all our members have and will go on enjoying to this day. There is no substitute for eternal vigilance at the hands of Civil Servants(Govt actuaries) and Politicians. You have to get up early in the morning to make the right moves to out wit them The trigger that set off the investigation was Major's Nat Insce rebate to come out! Why we all asked? Then we found we could still contract back in!

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Jonathan

Jan 21, 2013 at 17:23

About 20 years a go I had a few years where I paid a private pension, the pension fund went bust and the administrators bought me extra state pension with what was left from the fund. How will this affect my state pension when I retire after 2017?

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Anonymous 2 needed this 'off the record'

Jan 21, 2013 at 17:38

You would need to speak to an 'advisor' from the government pensions agency.

They will need details of the actual 'purchase' deal - conditions, amount, date, and what options apply to that purchase.

They will probably need a summary of your other pension entitlements - if government ones then they should be able to access that using your NI code.

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Bernice

Feb 25, 2013 at 11:16

When pension reform is introduced will women be allowed more than 22 years caring responsibility. Also people in late 50's at introduction time who have not accumulated 35 years N.I. contributions will any provision be made for them to gradually scale in the alteration from 30 to 35 years because a lot of these women's pension age was altered from 60 to 66 and the number of qualifying years altered from 30 to 35 so they have had a double alteration to deal with.

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Barney51

Mar 08, 2013 at 10:55

I am due due to receive my state pension in september 2016, it is at present forecast to be £121.00, if I postpone for a year will I then qualifiy for the increased amount of £144.00, and can it be backdated?

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Jonathan

Mar 08, 2013 at 13:36

Barney51

It won't make any difference if you postpone your pension. The rules apply by the date you reach pensionable age not the age you choose to receive your pension.

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Barney51

Mar 08, 2013 at 13:55

So that means that allthough I have worked all my life, and because I become of pensionable age a year prior to the changes , it is possible that someone who has not worked for a long time or even maybe never worked will have a greater pension tha myself, this really is the welfare state gone mad

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Jonathan

Mar 08, 2013 at 15:25

Barney51

You might be able to delay taking your pension by 1 year and get a 10% increase in it. After the new flat rate pension comes in you will only get a 5% increase for each year that you postpone payments.

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