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State pension ranges from £7 to £230, DWP reveals

Government urged to introduce flat-rate state pension quickly to stop huge variations in state pension payouts.


by Michelle McGagh on Aug 21, 2012 at 16:31

State pension ranges from £7 to £230, DWP reveals

The Department for Work and Pensions (DWP) has released figures that reveal just how messy the state pension system has become, with payouts ranging from £7 to £230 a week.

Research shows state pension benefit can vary by as much as £200 a week, or £10,000 a year, because of variations in basic and additional state pension payments.

Around 13,000 receive £7 or less a week, and the same number receive £230 a week or more.

The pensions maze

The complexity of the UK pension system and the regulation surrounding it means people have no way of working out what they should receive each week and cannot budget for their needs.

The government plans to replace the archaic system of a basic state pension plus addition entitlements with a £140-per-week flat-rate pension for new pensioners. However, plans to introduce the flat rate have been delayed until later in the year because the government is struggling with the complex pension rules.

‘The range of state pension payouts at the moment is simply staggering. The current system is so complex and would baffle even Einstein,’ said pensions minister Steve Webb.

‘Worse, if people have no idea what they will get, they can’t make sure they have enough savings for their retirement. We can’t go on playing roulette with pensions. A flat-rate single-tier state pensions will restore simplicity and give people certainty instead of chance. And it will provide a sure foundation for further saving.’

Pensions expert Ros Altmann agreed with Webb that the state pension system is too complex and relies too much on means-testing, which ‘penalises those who tried to save for their retirement’ and leaves women worse off than men.

‘The reality is that it is predominantly higher earning men that get the highest state pensions, while low-earning women get the lowest. This clear unfairness is a legacy of the past piecemeal patchwork of pension changes, and radical reform is long overdue,’ she said.

Time for reform

Altmann urged the government to introduce the flat-rate state pension as soon as possible: ‘The DWP promises to unveil a new system soon, with a flat-rate state payment for future pensioners. We welcome the prospect of an adequate state pension that would lift most people above means-testing.

'The new pension system should be fairer and simpler and no longer treat women as second class citizens but we still need to see the details of the new framework and how the government plans to implement it in order to ensure fairness.

‘We also need to see what will happen to current pensioners who are in the existing unfair system and whether any plans will be unveiled to help them.’

40 comments so far. Why not have your say?

derek farman

Aug 21, 2012 at 17:20

Who on this earth are the Goons who devised this unfair and mega complicated system.

It is totally obvious that the state pension should be equal for everybody. Also It beggars belief that handouts for immigrants and asylum seekers can far exceed the pittance we expect our old folk to live on.

Nobody would want to come here if we gave the latter group no more than what most of our pensioners receive. Bah humbug!

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Aug 21, 2012 at 17:40

I would have got my pension at 60, but they put it back to 63, (2015).

I did not have 30 yrs of contributions, so I bought back (at the governments suggestion) at a cost of about three grand.

I still only qualify for 26/30ths, about £86.

And now they are talking about a contribution free pension of £140 a month.

Will I qualify? will I just get £86? Will I get my £3k back?

I have asked these questions of the pension minister and HM Pensions, but they don't seem to have much idea either.

Never mind I have still got the pension I have saved for all of my working life, a pot of £55k, which will give me £48 a week.

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Aug 21, 2012 at 17:42

Derek, you are absolutely right in stating that immigrants and asylum seekers are given free handouts straight off the plane, while those who have worked all their lives in, and in many cases fought for this Country, are forced to live on far less at a time when they should be enjoying their retirement.

How can that be right?

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clive radley

Aug 21, 2012 at 17:47

Surely variations in state pension will still exist under a flat rate system as 30 years of NI contributions will be required to get the full pension as is required now.

This seem to be a non story.

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Matthew Wie

Aug 21, 2012 at 17:54

Immigrants and asylum seekers are given more money that pensioners if they have children. The idea is that all children should have a decent standard of care this means giving the parents the money. Pensioners don't support children and the government really does not want to spend a lot of money supporting people who won't be paying future taxes. This is the harsh reality and I don't personally like it.

Parents whether they are immigrants or British folk should NOT be paid to have children, it beggers belief that high costs of childcare makes it too expensive for working people to have children, yet for people who don't work, having children actually bolsters their income. The result is that more children are born into unproductive families than to families that contribute to society. Result, negative evolution.

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Matthew Wie

Aug 21, 2012 at 17:56

Apologies for my terrible autocorrect grammar.

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Keith Cobby

Aug 21, 2012 at 18:25

Who will receive this flat rate pension?

Apparently not existing pensioners

People with less than 30 years contributions

People who have contracted-out of SERPS etc

People who have remained contracted-in will receive more

This system which sounds so simple is in fact very complicated - my guess is it will be kicked further into the long grass!

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raymond cave

Aug 21, 2012 at 19:14

Paid in to the government pension plan for 49 years to get a full pension ,when overnight the government states that you only need to pay in to the scheme for 30 years to get a full pension.Ispoke to somebody at the pension dept since after 40 years your contributions stop

But I was still paying the same national insurence contributions, Only to be told that my contributions "go somewhere else".I wonder where?

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Aug 21, 2012 at 20:22

State pensions should be removed from political influence and put it the hands of industry experts, who know what they are doing.

Heaven only knows where all the money we have paid in over the years has gone. The government are borrowing to pay out current pensions.

If this where a company the management would all be in jail by now.

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John Carroll

Aug 21, 2012 at 21:07

I've never trusted 'pensions' and have never paid a penny into any pension pot, governmental or private.

Pension providers seem like a bunch of crooks to me and at 66 years of age I hope I've made enough provision for my retirement.

If however they offer me £7K a year it might present me with a moral dilemma as to whether I should refuse or accept it. I'd probably accept it rather than let it get soaked up going nowhere. A needy charity maybe my first choice for distribution.

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Brian Kneller

Aug 21, 2012 at 22:08

Raz, your wrong in a way, they should be in jail, but like the bankers they would probably still be free.

I am due to draw my pension next year and am due to get above the projected £140 ..... the details seem to be sketchy but I have this awful feeling that I am to be ripped off yet again with my pension provisions

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Aug 21, 2012 at 22:10

'Our' existing pension system is in reality not based on you get out what you have paid in. In reality you pay in what the Gov thinks it wants for whatever. That, plus taxes, is spent on what the Govt this it should be spent. I do not think that anything is 'ring fenced'. Sadly John Carroll, if you have paid your stamps (which the law says you should have done) then you entitled to a pension from about now-use it wisely!!

Apart from the Govts ability to give and take ad nausium, my big grouse lies

in the whole attitude and way in which the Government and hence society is forced to behave towards immigrants; particularly Muslims whose belief in non integration leaves me totally bemused. It is high time that we (the indigenous population who have lived, worked and paid for society) stopped subsidising those who wish to have lots of wives (sorry women) and children. While claiming the maximum benefits which include special grants to improve houses, then buy up house on street corners and use them for unlicensed taxi businesses. The house can also be let to more 'relatives' at rents which are reclaimed from the local authority. These houses can then be used as a base to buy up adjacent houses, which drives down prices and so on. In the process I have seen the few remaining long term locals driven out by abuse. The result is effective gettos of foreigners who speak a foreign language, refuse to mix, hide their faces, all at our expense It is high time that we recognised that Integration does not work when sub sects are allowed to be completely seperate. We should be looking at the model now going through the Dutch Parliament -look on Google etc.

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Aug 21, 2012 at 22:35

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Hilary hames

Aug 22, 2012 at 00:55

Well, its bound to vary isnt it becuase some people, like me, have paid the 'second' pension. Also, I have not yet drawn my pension although I am 66 in Sept and could have taken it at 60. So mine is now about £210 a week - it will be more when I take it next April when I finally retire.

But if I hadnt paid the second pension plus saved the pension I would be on the standard pension - its probably a bit misleading giving the range they have quoted as there arecertainly good reasons for the higher rate.

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Jacqueline McCabe via mobile

Aug 22, 2012 at 08:25

There is no mention of how expats will be treated, particularly those who have contributed to HMRC throughout their working lives and continue to do so even though they have left 'the old country' having tired of the 'welfare state benevolence' to those who, at best, have contributed very little and yet their uk state pensions are not index linked because the country they have chosen to live in (which offers no welfare or NHS safety net) has no 'reciprocal arrangement' with the uk concerning pensions.

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derek farman

Aug 22, 2012 at 09:11

One last thought with regard to immigration. If we thought of it like a bird table.....put lots of food out and the little darlings flock to your table . Stop feeding them and 'hey' where did they all go !!!!

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Poor pensioner

Aug 22, 2012 at 09:21

Like NormaDear I too have paid extra thousands of pounds to bring my pension up because I did not work when my children were young and only part-time when they were teenagers, having paid the full stamp, not the tiny "married woman's reduced stamp" all the time, then had parents/parents in law to care for. Now the years of contribution have been reduced, the time spent bringing up a family and caring are counted as contributions and I get less than £100 per week pension while others who've paid in nothing will get £240. If my husband hadn't grafted in a boring job for 40+ years for a reasonable pension, or if he'd cleared off, my current position would be dire. It's the unfairness of it all which grates and disillusions. Of course I'm glad my daughter will get a better deal, I just hope her health is better in her sixties than mine was so she can keep working for the extra years.

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clive radley

Aug 22, 2012 at 11:01

People who have paid in nothing won't get £240 a week. 30 years of NI contributions will still be required and the flat rate max is about £140.

£240 state pension is possible under the present system with SERPS and is carrying on for current pensioners.

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Aug 22, 2012 at 13:29

Lots of complaints, not many positive suggestions. What would you do if you were in charge? If anyone puts forward some improvements I bet I can pick holes in it! One rather obvious point that needs making is if you change a long existing system for the better there are bound to be winners and losers. The winners will say nothing, and the losers will shout loudly that they have been paying, planning etc for forty years and now their expectations have been reduced. They will have a point but it is difficult to only have winners and change is often needed.

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Brian Kneller

Aug 22, 2012 at 13:49

ICD, you have hit the nub of the problem related to anything longterm as pensions as those that are about to draw have no opportunity to recover from the loss, if that is what they incur. The only way is to "give notice of change" but over what period of time? You mention winners and losers in the context of pensioners but I expect HMG will also be a few quids in.

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Aug 24, 2012 at 14:02

The Minister, Steve Webb, said the current pension system was so complex that it would have baffled Einstein...but don't worry our Steve knows better than Einstein...or so he would have you believe it seems.

Th biggest scandal of all, however, is that the current frozen pensions policy will not be resolved by these new proposals - the present two tier (non frozen and frozen) will become four tier; the current two plus "new system unfrozen' and "new system frozen".

This affects 4% of the total UK pensioner population world wide. If you are in a frozen country like Canada, Australia, the Falkland Islands or British Virgin Islands your pension does not increase annually - it stays at rate first payable in the host country. Of course if you reside in th UK, the EEA or Turkey or even the United States Virgin Islands you do get the uprate. Quite without any logic.

There is no legal, moral, financial or administrative justification for this discrimination and neither IDS or Webb or their minions at DWP can give any justification whatsoever for the government's policy.

The NI Fund is ring fenced and currently carries a surplus of £38 BILLION

Webb retains his hypocritical posture having, prior to the election championed the abolition of freezing and tabling an Early Day Motion calling for it to be so....just look at him now!

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Jane Davies

Aug 25, 2012 at 06:10

The lies and deception coming from the DWP about the frozen pension scandal is appalling. They try to justify this theft of pensioners money and Steve Webb, who vowed to end it if he ever became Pensions Minister, hides behind their lies and has let down those seniors who are living in poverty because of this disgraceful theft of their pension increases. To uprate the 4% who suffer this injustice will cost less than 1% of the NI surplus of £38 billion and will not cost the government a single penny because the money in the NI fund belongs to the pensioners who have paid into the fund all their working lives with part of their wages. It is not the government's money to withhold and to do so is, sorry to keep on repeating myself but there is no other word for it, THEFT. What part of the word THEFT do you not understand Mr Webb?

Do right by these seniors and do it now.

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Poor pensioner

Aug 25, 2012 at 09:45

Actually, Jane Davies, the money we paid in all our lives has been used to pay the pensions of previous generations of pensioners as the state pension is a ponzi scheme set up with no initial capital. Current pensions are being paid from contributions of people now in work and their pensions will in turn be paid from the contributions of their children and their peers. There is no fund accruing interest or invested and gaining income. The arbitrary way pensioners who emigrate have their pensions index-linked in some countries and not in others is, of course a manifest injustice. All should be treated the same then people could make their decision about leaving Britain knowing the consequences.

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Aug 25, 2012 at 12:52

While the concept of the NI Scheme was 'pay as you go' I think that most people realise that, as an arguement for pension freezing, it is a total red herring. Certainly when working and paying our mandatory contributions it was one side of a contract; the other side being that in retirement a state pension would have been earned and paid. Of course this government, as with previous ones, does not honour their side of the contract in respect of some who are retired abraod. As there is a surplus of some £38 Billion in the ring fenced NI Fund most would recognise this as "theft' from the frozen 4% of the total retired UK citizens world wide.

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Jane Davies

Aug 25, 2012 at 16:27

The only consequences one should consider when choosing to retire abroad is the impact the exchange rate would have on ones pension. There is an NI fund and it has the surplus I mentioned. You can check it on Google.

Where one chooses to live in retirement is irrelevent as far as getting what one has paid for as far as pensions are concerned, a private pension provider cannot decide to not pay yearly increases just because of ones address, yet a government can steal and discriminate with inpunity.

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clive radley

Aug 25, 2012 at 17:30

There is a NI fund but it is not invested as per pension funds. In principle, the National Insurance Fund operates on a pay-as-you-go basis, the contributions received in each year being used to pay pensions and other benefits in the same year. In this respect it differs fundamentally from private pension funds, which need to build up reserves to cover their future liabilities.

The Government Actuary, who reports on the state of the Fund each year, also recommends that the Fund should also keep a balance to cover any unexpected short-fall in income of not less than two months’ benefit expenditure.

The fund is currently has a large surplus, it was £54 billion in 2010.

Public spending on pensions and welfare is projected to be £242 billion in 2012 of which £127 billion was for pensions.

So a sixth spending is about £40 billion.

So this surplus is not theft as Robthefox states but a necessary contingency, albeit higher at present than necessary.

However, if only 4% of UK pensioners live abroad and we assume a 4% rise in the state pension then the saving through not indexing for those abroad is £200million. As there indexing in some countries so the actual figure will be lower.

From these figures it appears the UK could easily afford indexing all UK state pensions abroad but for some reason chooses not to.

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Jane Davies

Aug 25, 2012 at 17:56

Clive I will just point out that the 4% who suffer this injustice are a small number of expats in this freezing lottery. In total over 600,000 expats enjoy their rights of annual cost of living increases but 500,000 expats are suffering, through no fault of their own, a frozen pension. It just depends where one retires and for years this grubby little secret was never mentioned. To uprate the state pension of expats who live in the USA and to freeze the pension of expats who live in Canada is the lottery I mentioned. It is illogical to freeze some countries and not others, not to mention immorall. All have paid into the NI fund all are entitled to be treated the same.

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Aug 25, 2012 at 18:35

Clive, your description of the NI Fund not being invested as per pension funds reads as if taken straight from a DWP electronically generated bog standard reply! Well aware that the pay as you go system does not include investing but as I said that situation has nothing to do with pension freezing - a red herring.

I am not sure from where you obtain your figures but I would point out that the surplus as at 31 July 2012 was £38 Billion and this was after a balance was set aside as cover for up to eight week's claims.

I see that Jane Davies has put you wise as to the number of overseas pensioners who do get the annual increase and the number who, because of freezing, do not. The cost of uprating (not including any arrears) for the current year would, according to Pensions Minister Webb would be about £650 million or an average of about £1,100 per pensioner per year.

My view remains the same...if one has contributed to the NI scheme on the same terms and conditions when working as everyone one should be able to withdraw from the NI Fund on the same terms and conditions as everyone else. As those living in say the USA or Turkey or the Phillipines get the increases not to pay similarly to those in Canada, Australia or Thailand in an unjust and unfair polic - hence the use of inverted commas when describing it as "theft". What would you call it?

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Ian Lewthwaite

Jan 02, 2013 at 17:09

HI robertthefOX

Being one of the Frozen pensions when we retired to Aus on a retirement Visa at age 67 and 65, in 2003 having paid UK taxes and NHI all my life including up to 12 eployees,

there was no provision for us NOT to pay the UK Govt,

so why the hell did they not honour their obligation to me and all those others ex pats -

I wouldn't trust a Politician or Civil servant if I had my foot on his throat, all they do is feather their own nest while sh****** on the UK taxpayers and indiginous citizen.

Time we had a French style revolution and real clear out of the rottenness at the top of UK society, before we finally go tits up

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michael coxson

Jan 03, 2013 at 17:51

Its probably done because they had the cheek to live in another country, and as a result dont contribute enough tax to pay for politician s pensions. Pull the skin off MOST of them and you will find a lizard lurking,,, you would never believe it to look at them though.

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Ian Lewthwaite

Jan 03, 2013 at 22:26

Hi Micheal, That is precisely the point I waspaying UK tax on all my income before it was remitted to Australia, and yet on the Carson case the lying bastards called UK advisors to the EU court used this as the reason for not upgrading the UK State pension to us

My father always said that you can catch a their, but a bloody liar there is nothing you can do with them

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Jan 04, 2013 at 06:59

I know how you feel Ian (Lewthwaite). I worked in the UK for the full 44 years qualifying period for my State Retirement Pension only to be advised officially for the one and only time with the notification of my entitlement that as I lived in a frozen country I would not be eligible for the annual upgrading.

All UK citizens are liable for Income Tax Assessment irrespective of their country of residence...but after a short period abroad you are deemed to be a non resident but, as I have to, you may still be paying taxation...and with a frozen pension. But as recently as last April the UK Foreign Secretary Hague met with his Australian counterpart, Carr. A foreign Office spokesman for Hague said afterwards that "The current system is seen to be the fairest; after all they don't pay any tax" This is the sort of ignorance we a forced to battle against in our fight for Fairness, Justice and Equality in the treatment of part of the most vulnerable sections of our society.

This is what I and, of course, others are campaigning about. We want this discrimination ended.

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Ian Lewthwaite

Jan 04, 2013 at 10:44

1984 and Orwells, some pigs are more equal than others, but as you should know, there is no known cure for STUPID especially in politiciansand ( UN) civil servantswho have no mind or conscience of their own- only their own pockets

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P A Williams

Jan 14, 2013 at 10:08

Pensions in this country are a complete sham and nothing more than a political football that stupid and incompetent, here today gone tommorow, politicans can fiddle with at their convenience. NI is nothing more than a tax - none of these contributions are ringfenced to pay future pensions it ALL goes into one tax pot that is distributed according to the whim of the political elite.

If people woke up they would demand that our so called rulers set the monies destined to pay pensions aside into a national state pension fund - run by an independent elected body - and kept totally outside the control and grasp of incompenent politicians. After all other countries can manage this and its what

the political classess bang on about when they critisise the private sector pensions industry and what is left of company pension schemes. Its called setting aside funds against future liabilities - not rocket science - but politicians don't want to do this because it dimishes their power to meddle and fiddle e.g messers Brown and Blair - two archetypal political hypocrics. Pl excuse the spell check.

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clive radley

Jan 14, 2013 at 12:40

Putting money into a fund is in theory a good idea but would result in a large increase in public spending whilst the fund was being set up as current pensions and contributions into the fund would have to be funded at the same time.. So this is unlikely ever to happen. Also if the fund was to operate like an annuity it would have to have assets about 20 times the annual pensions bill. That would be many times our GDP and is not a practical proposition in the short /medium term.

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P A Williams

Jan 14, 2013 at 13:51

The concept of a seperate fund would differ from privately owned funds in that there would be no need to build up mutiples of assetts to cover liabilities because the Government would be the paymaster of last resort. In other words providing receipts were ringfenced and equaled payments - which would start progressively at some future date there would be no need to run surpluses. In fact accurred ringfenced NI contributions could be invested in Gilts (as required now for private schemes) or loaned to fund Goverment infrastructure projects which would create a surplus and financial buffer over time - thereby allowing pension payments to rise without all the political fuss and fanfare associated with the way politicians

like to announce a miniscule 1p increase in state pension as now.

We have plenty of Civil servants who could run this sort of scheme with the advantages of; transparency, independency and integrity wholly divorced from political meddling by incompetent, here today and gone tomorrow, politicians.

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Ian Lewthwaite

Jan 14, 2013 at 16:01

but successive UK Govts have stolen from every so called "fund" set up for a specific purpose whether it was the road fund, NHI, income tax, pension funds and this deliberate latest jokes like - the Green tax, airplane tax.

who in their right mind is going to put any money into anything in the UK, when the custodians are nothing but robbers, and amend any rule without regard to MORALITY or EQUITY like it was their own slush fund -

eg LOTTERY monies, who selects and appoints the administrators of that fund? and does anybody know who they are?, their upbringing?, their qualifications? or how it works?, and where that money usually taken from the poor is spent?- I certainly don't know anyone on the panel

The younger generation are far from stupid and will NOT save anything, Govt may make it compulsory, but some bright spark will find a way round it

Govts have lost and credibility with the taxpayers ( not the beneficiaries of that tax monies - as turkeys will never vote for Xmas)

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Jane Davies

Jan 14, 2013 at 16:49

P A Williams the NI fund IS ring fenced and the government is allowed to borrow from the surplus which stands at around £30 billion, but they must pay back with interest. To unfreeze the 4% of those who are robbed of their annual cost of living increases will cost less than I% of the interest payable. To freeze the pensions of just 4% just because of where they live is not just illogical but also discrimination all have paid their NI contributions all are entitled to annual uprating, where one lives in retirement is irrelevant.

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Ian Lewthwaite

Jan 14, 2013 at 17:22

Hi Jane

small word MUST but another regulation to be broken - who knows how much actually exists in that NHI fund?

Can you trust even PWC etc or any accountant, I can say I have £10m in the bank, but those who really know me will know that I lie or ask for a certified bank chit ( and can you trust a bank?)

The point is the money is alleged to be there, and increments paid to ALL who have contributed over their lifetime regardless of where they live.

I PAID IN - I WANTED TO BE PAID OUT -however little is left - not my concern when I am doubtless paying a load of people to watch that FUND for solvency

We went to Aus, because we had one in Aus and one in NZ with grandchildren and as a woman you will probably understand the bond between mother-daughter/son- grandchildren.

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Jan 15, 2013 at 00:34

I understand that the International Consortium of British Pensioners received written confirmation under Freedom of Information that the NI Fund is ring-fenced. The problem is that successive governments have declared the excess to be surplus BEFORE meeting the legitimate claims of the frozen pensioners and this has been deposited with the Debt Management Office.

Government is able to borrow from the DMO and the interest payable on borrowing becomes the "property" of the NI Fund...and is sufficient to finance the £655 million required to uprate twice over.

I think the 1% to which Jane refers is actually the percentage of the total amount required to fund all UK State Retirement Pensions per annum.

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