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Is this really fair

Community Veteran
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Is this really fair

http://www.telegraph.co.uk/finance/personalfinance/pensions/12023209/The-gap-between-the-new-and-old...
Quote
Malcolm McLean, a former head of the Pensions Advisory Service, said pensioners were waking up to the fact that only those who reached state pension age after the introduction of the flat rate in 2016 would receive it. Anyone who reaches retirement age before then will receive the existing state pension for the rest of their life.
I mention it because we found out in the Autumn Statement exactly what the difference between the two pensions would be.
The Chancellor announced that the basic state pension paid to current pensioners would rise by £3.35 to £119.30 a week in April. The “single-tier” pension paid to those who retire after that date will be £155.65 a week, he said.
So the difference between the amounts paid by the two systems will be £36.35 a week, or just under £1,900 a year.
30 REPLIES
itsme
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Re: Is this really fair

How many pensioners only get the basic rate? Pensions are enhanced by Graduated pension, SERPS and SERP2 taking them above the new flat rate. The new system pensioners will only get the flat rate and no enhancements
Community Veteran
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Re: Is this really fair

Fair point
I didn't think of that because I was always contracted out of it
So if you were contracted out and retire before the new one comes in you are worse off but if you were contracted out and after the new one comes in you are better off.
Conversely if you weren't contracted out but with a full contribution history you will be worse off under the new scheme
itsme
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Re: Is this really fair

Short answer no. If you were contracted out you lose qualifying years and will get less than the flat (only) rate. Being contracted out is not an option with the new system so don't know how this will affect company schemes.
The new system is to save money on state pensions not to increase the cost
Community Veteran
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Re: Is this really fair

Do both pensions go up by the same % every year?
Community Veteran
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Re: Is this really fair

Hang about... so if i'm reading this right you'll now get MORE of a state pension than before?
Whats fair about that? - Especially to the young?
So while the young are having benefits slashed all over the place (and there are fewer of them) the older folk (again typical tory voters) are getting an increase when there are MORE of them and we can't afford it?
Why are the young at fault here?
I'll agree it's also not fair to divide up the pensioners like this - that sucks but why are the young being sacrified AGAIN?
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Community Veteran
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Re: Is this really fair

Actually we are wrong - it is being reduced in effect as itsme pointed out
Note that also there is no longer a married woman's pension as they can't piggyback on their husbands contributions
Community Veteran
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Re: Is this really fair

And remember that in general we have paid in all our working lives so we are simply getting back what we have contributed.
itsme
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Re: Is this really fair

The current system which you reckon you paid in to is unsustainable which is why the state pension is being reduced for the next generation and they will pay into a private pension to make up the shortfall.
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Re: Is this really fair

The retirement age will also be raised to keep the new pension on track. It will be adjusted to reflect life expectancy. 
itsme
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Re: Is this really fair

So then next generation will work longer pay more in for a pension and draw out for fewer years than the current pensioners.
Community Veteran
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Re: Is this really fair

No because they are expected to live longer. Male life expectancy in the UK is 81 years. 25 years ago it was less than 70. I know there are many factors that can affect these figures. They are average figures.
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Re: Is this really fair

Quote from: artmo
And remember that in general we have paid in all our working lives so we are simply getting back what we have contributed.

I agree with what you're saying.. but it wasn't the younger generations that allowed such a screwed up system to develop in the first place.
Quote from: artmo
The retirement age will also be raised to keep the new pension on track. It will be adjusted to reflect life expectancy. 

But with more people now being forced into poverty their life spans will not be long enough to see the fruit of their labour anyway so it doesn't really reflect life expectancy does it. It's a known fact, people from poorer backrounds tend to have lower standards of living, poorer health and earlier deaths. This cannot be denied so I have to wonder which deviant little **** in Westminster dreamed up this idea.. because they knew exactly what they were doing. The smartly educated always know how to stiff the poor.
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itsme
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Re: Is this really fair

Quote from: artmo
No because they are expected to live longer. Male life expectancy in the UK is 81 years. 25 years ago it was less than 70. I know there are many factors that can affect these figures. They are average figures.

So what you saying is current pensioners only paid for 5 years of pensions but drawing  for 16 years.
Infinity
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Re: Is this really fair

Quote from: Oldjim
Fair point
I didn't think of that because I was always contracted out of it
So if you were contracted out and retire before the new one comes in you are worse off but if you were contracted out and after the new one comes in you are better off.
Conversely if you weren't contracted out but with a full contribution history you will be worse off under the new scheme

Quote from: itsme
If you were contracted out you lose qualifying years and will get less than the flat (only) rate.

I ask for an updated Pension Forecast every year, in fact I received my latest one just a few weeks ago.
Whilst I have a while before reaching State Pensionable age, I like to keep tabs on what is forecast.
This last State Pension Statement was far clearer than before, it used to run into several pages, now it comes as a one page summary.
(Figures not showing my exact amounts, but to give an overall view...)

From the Statement...
Your State Pension Estimate: £140 a week. You have full qualifying years to date.
Because you were Contracted out for a while.....
Contracted Out Pension Equivalent (COPE), this will be paid by your personal pension schemes.....
We estimate that your COPE amount will be £80 per week.
If you add your State Pension and COPE amount together, the total is £220 a week,.
As the total of £220 is greater than the minimum £155 ish, you will only receive a State Pension of £140 a week
The COPE amount is paid as part of your Personal Pension, not by the Government

To clarify, I rang the DWP, who also passed me on to HMRC, who told me which of my Personal Pensions and the respective COPE amounts were assigned to.

In my case the COPE expected to be received is greater than the Contracted amount weekly equivalent.
All these amounts are expected to increase as I near State Pension Retirement age.
Now of course, all this only relates to the State Pension.
So yes, I will receive less than the £155 a week from the State, but topped up by my COPE personal Pensions.
I have other, none COPE Personal Pensions too.

I received very good Financial Advice at a time when I was receiving quite a high salary employed in TV, and those Personal Pensions will increase the weekly amount expected.