Got my state pension rise details today

MatBin said:
Certain people will get nothing, that is those that have only paid in for a small number of year, something like 7 years ( I think) counts for nothing. And some will pay in for more than the maximum qualifying but get no extra payments.
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Yes 48 years of continuous contributions in my case.
So 13 years I donated to the government.
 
MatBin said:
Only until the new one kicks in, existing pensioners wont be affected.
Unlike state pension though I would imagine it will be means tested, so if you have savings etc over a certain limit you'll get nothing until they are reduced to the threshold I guess
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It’ll be interesting to see how that works. It doesn’t really encourage people to save, or indeed pay into a private pension if that’s the case.
 
rick448 said:
It’ll be interesting to see how that works. It doesn’t really encourage people to save, or indeed pay into a private pension if that’s the case.
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I agree, there is no incentive to save for your retirement because you will penalised by either tax or reduced government pension which you paid into for 40 years.
 
Norkie said:
I agree, there is no incentive to save for your retirement because you will penalised by either tax or reduced government pension which you paid into for 40 years.
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That's the situation at present, if you get the state pension and another form of income be it private pension or work related you are taxed at the appropriate rate, so in a way you are discouraged from saving for a private pension given it will be taxable, unless you take the view that the savings were tax deductible so you will just be paying the due tax at a later date when hopefully it will be at basic rate rather than perhaps at 40% it may have attracted when you saved it.
 
rick448 said:
It’ll be interesting to see how that works. It doesn’t really encourage people to save, or indeed pay into a private pension if that’s the case.
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That has always been the case, the incentive is to give yourself a better standard of living in old age over and above either a basic state pension or means tested benefits, neither of which would be large enough to enjoy retirement.
 
tijuana taxi said:
This years allowance is £11,850 and I think the amount of qualifying years for state pension is 10 years.
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That is for a partial pension not a full one, I think you need 35 years of full contributions to get a full pension. Any years you were contracted out don't count, any serps paid are also "lost" I believe, and quite a few people were encouraged by the Govt to contract out, some not realising what effect it would have on their state pension as the number of years to qualify have been increased. The new flat rate pension is very different from what the old state pension was which had serps, savings credits and some other top-ups. Remember too if you got pension credits that had other fringe benefits such as reduced council tax etc, it looks like all of that will be going too.
 
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MatBin said:
That is for a partial pension not a full one, I think you need 35 years of full contributions to get a full pension. Any years you were contracted out don't count, any serps paid are also "lost" I believe, and quite a few people were encouraged by the Govt to contract out, some not realising what effect it would have on their state pension as the number of years to qualify have been increased. The new flat rate pension is very different from what the old state pension was which had serps, savings credits and some other top-ups. Remember too if you got pension credits that had other fringe benefits such as reduced council tax etc, it looks like all of that will be going too.
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From my experience contracted out years only lose you your serps benefit your basic pension contributions are ok,the tax situation is one reason i took a large lump sum ( tax free) and a slghtly reduced company pension.
 
Norkie said:
... there is no incentive to save for your retirement because you will penalised by either tax or reduced government pension which you paid into for 40 years.
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MatBin said:
... unless you take the view that the savings were tax deductible so you will just be paying the due tax at a later date when hopefully it will be at basic rate rather than perhaps at 40% it may have attracted when you saved it.
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@MatBin has it exactly right. You only pay the income tax once. For most people their tax rates will be lower in retirement so there is an incentive to save.
 
MatBin said:
That has always been the case, the incentive is to give yourself a better standard of living in old age over and above either a basic state pension or means tested benefits, neither of which would be large enough to enjoy retirement.
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My point is, what is the point in saving to better your standard of living in retirement, if the fact you have savings, or a private pension reduces the amount you will receive from the state?

I've seen this type of thing in other situations, for example, my grandfather was in a nursing home and his house had to be sold to pay for him being there, rather than my mother receiving the intended inheritance. Whilst the person in the next room had not worked, or saved anything, and there fees were paid in benefits. I realise there is no easy way around this, but my concern is that if you save money for retirement, and pay into a private pension to add to your state pension, that you will be penalised.

I agree that people should be encouraged to pay into a private pension, but how does it work if they choose to opt out? I'm guessing the whole point of private pensions is to reduce the burden on the taxpayer paying state pensions, and there is likely to be an opportunity to reduce this over time. But that only works if people know they need to have something in place. If you give people the choice, some with undoubtedly opt out and let the state look after them in old age. Whilst others will opt in and prepare themselves, only to be potentially penalised for doing so. I don't know enough about the potential of means testing, or indeed what the outcome of such testing is likely to be; I just think it is unfair for those who have potentially paid the most into the system to be penalised when they reach their standard retirement age.
 
MatBin said:
That's the situation at present, if you get the state pension and another form of income be it private pension or work related you are taxed at the appropriate rate, so in a way you are discouraged from saving for a private pension given it will be taxable, unless you take the view that the savings were tax deductible so you will just be paying the due tax at a later date when hopefully it will be at basic rate rather than perhaps at 40% it may have attracted when you saved it.
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I'm happy to pay tax on any pension which is over and above the personal allowance, that is only fair, as it is income however you think about it. I currently pay tax on my work pension and 40% tax on all of my earning in my current job. They are the rules and I'm fine with that.
 
rick448 said:
My point is, what is the point in saving to better your standard of living in retirement, if the fact you have savings, or a private pension reduces the amount you will receive from the state?

I've seen this type of thing in other situations, for example, my grandfather was in a nursing home and his house had to be sold to pay for him being there, rather than my mother receiving the intended inheritance. Whilst the person in the next room had not worked, or saved anything, and there fees were paid in benefits. I realise there is no easy way around this, but my concern is that if you save money for retirement, and pay into a private pension to add to your state pension, that you will be penalised.

I agree that people should be encouraged to pay into a private pension, but how does it work if they choose to opt out? I'm guessing the whole point of private pensions is to reduce the burden on the taxpayer paying state pensions, and there is likely to be an opportunity to reduce this over time. But that only works if people know they need to have something in place. If you give people the choice, some with undoubtedly opt out and let the state look after them in old age. Whilst others will opt in and prepare themselves, only to be potentially penalised for doing so. I don't know enough about the potential of means testing, or indeed what the outcome of such testing is likely to be; I just think it is unfair for those who have potentially paid the most into the system to be penalised when they reach their standard retirement age.
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I don't see why you are being penalised. There are tax advantages for putting money into a company/private pension scheme so why shouldn't you pay tax on the money when you draw it out? I do sort of agree with you about savings in "old" age though. When mum went into care we had to sell the house to pay for her care. But the other side is of course where do you draw the line? £50000, £250000, £500000, no limit.
 
the black fox said:
about the same here £3 a month or less ,BUT our local council has decided to place a garden rubbish charge of £30 p.a so I guess that equals roughly - £3 p.m if we pay it .having three large gardens (corner plot) I dont see how to get away with it a compost heap is a fine idea but could be hard work
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Our's is £50 a year, collected every two weeks, when they remember, then you have to log a call for missed collection....
I try to make sure I fill it everytime.
 
rick448 said:
My point is, what is the point in saving to better your standard of living in retirement, if the fact you have savings, or a private pension reduces the amount you will receive from the state?

I've seen this type of thing in other situations, for example, my grandfather was in a nursing home and his house had to be sold to pay for him being there, rather than my mother receiving the intended inheritance. Whilst the person in the next room had not worked, or saved anything, and there fees were paid in benefits. I realise there is no easy way around this, but my concern is that if you save money for retirement, and pay into a private pension to add to your state pension, that you will be penalised.
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Whats the alternative to this though? If it was free to everyone then the council bills would be huge. Whilst it may be the intention to leave an inheritance, its still capital that can be released to pay for care. I'm happy for my relations to have a good standard of life in their final years rather than expecting any inheritance. It wasn't mine in the first place.

My mother in law is in a home, not nursing care, and it's £675 a week. We have to pay all my mother in laws pension, less the £24.10 they leave her for expenses, the council pay the rest, after all her savings had reduced below £16,000. My father in law is still living in their home so they couldn't touch that but we have the house ownership now in thirds between him and his two daughters

Same with pensions? Why should you get the extra £75 a week if you've got a huge amount of money coming in from a private pension? Same with the heating allowance. You'd be the first to complain some retired millionaire was getting all these payments.

There's a huge strain on public finances, especially as the population gets older,more NHS visits etc. There has to be some limits.
 
Byker28i said:
Whats the alternative to this though? If it was free to everyone then the council bills would be huge. Whilst it may be the intention to leave an inheritance, its still capital that can be released to pay for care. I'm happy for my relations to have a good standard of life in their final years rather than expecting any inheritance. It wasn't mine in the first place.

My mother in law is in a home, not nursing care, and it's £675 a week. We have to pay all my mother in laws pension, less the £24.10 they leave her for expenses, the council pay the rest, after all her savings had reduced below £16,000. My father in law is still living in their home so they couldn't touch that but we have the house ownership now in thirds between him and his two daughters

Same with pensions? Why should you get the extra £75 a week if you've got a huge amount of money coming in from a private pension? Same with the heating allowance. You'd be the first to complain some retired millionaire was getting all these payments.

There's a huge strain on public finances, especially as the population gets older,more NHS visits etc. There has to be some limits.
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Byker28i said:
Whats the alternative to this though? If it was free to everyone then the council bills would be huge. Whilst it may be the intention to leave an inheritance, its still capital that can be released to pay for care. I'm happy for my relations to have a good standard of life in their final years rather than expecting any inheritance. It wasn't mine in the first place.

My mother in law is in a home, not nursing care, and it's £675 a week. We have to pay all my mother in laws pension, less the £24.10 they leave her for expenses, the council pay the rest, after all her savings had reduced below £16,000. My father in law is still living in their home so they couldn't touch that but we have the house ownership now in thirds between him and his two daughters

Same with pensions? Why should you get the extra £75 a week if you've got a huge amount of money coming in from a private pension? Same with the heating allowance. You'd be the first to complain some retired millionaire was getting all these payments.

There's a huge strain on public finances, especially as the population gets older,more NHS visits etc. There has to be some limits.
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Why shouldn't I get the extra £75 a week when I have paid for it? My private pension wasn't free so why should I be penalised for having one? I certainly wouldn't complain if a millionaire was getting benefits, why would I? They may choose not to accept them, but why shouldn't they be entitled if they have paid into the system.

If everyone decided that they weren't going to pay into the system, how do you think the country would survive? At the rate we are going the gap between those contributing and those not will become small enough to not bother working.

At the end of the day it is a personal opinion, and will always polarise opinion, clearly mine and yours differ. I'm fine with that.
 
munch said:
I don't see why you are being penalised. There are tax advantages for putting money into a company/private pension scheme so why shouldn't you pay tax on the money when you draw it out? I do sort of agree with you about savings in "old" age though. When mum went into care we had to sell the house to pay for her care. But the other side is of course where do you draw the line? £50000, £250000, £500000, no limit.
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Where did I say I wasn't happy about paying tax when I draw m pension? I've paid my taxes all my working life, as well as into private pensions ( I have a separate one in my new job too) The penalisation is in potentially not being entitled to a state pension due to having paid into private pensions (as well as into the state pension pot)
 
rick448 said:
Why shouldn't I get the extra £75 a week when I have paid for it? .
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You haven't specifically paid for it though. Show me where it says your NI payment is ringfenced for your pension.

You NI payments go into providing a whole range of state benefits, such as the health service, unemployment benefits, disability allowance as well as pensions. It's like insurance, there for when you need it, you don't necessarily expect to get everything out of it that you've paid into it. There are however rules that are applied to all these benefits that are well publicised.


https://publications.parliament.uk/pa/cm199900/cmselect/cmsocsec/56/5605.htm
 
Byker28i said:
You haven't specifically paid for it though. Show me where it says your NI payment is ringfenced for your pension.

You NI payments go into providing a whole range of state benefits, such as the health service, unemployment benefits, disability allowance as well as pensions. It's like insurance, there for when you need it, you don't necessarily expect to get everything out of it that you've paid into it. There are however rules that are applied to all these benefits that are well publicised.


https://publications.parliament.uk/pa/cm199900/cmselect/cmsocsec/56/5605.htm
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I'm not going to argue about this. My opinion is, I have paid my taxes and NI, and however you want to look at it, I have paid the same (or more) than others who are entitled to a state pension. If in the future the state pension is means tested, and in my position I am not entitled to it due to me paying into a private pension then I think that is unfair. I have no doubt those who choose not to pay into their own private pension will be quite happy to say I shouldn't get the state pension so that they can receive more benefit for themselves. I just don't think that is fair. But what one person thinks is fair may seem unfair to another. Anyway I'll leave it now as clearly some people think I am wrong in wanting to better myself to look after my family in the future.
 
rick448 said:
Where did I say I wasn't happy about paying tax when I draw m pension? I've paid my taxes all my working life, as well as into private pensions ( I have a separate one in my new job too) The penalisation is in potentially not being entitled to a state pension due to having paid into private pensions (as well as into the state pension pot)
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But as things stand you would get a state pension. Assuming you haven't reached retirement age yet and have paid UK taxes.
 
rick448 said:
I'm happy to pay tax on any pension which is over and above the personal allowance, that is only fair, as it is income however you think about it. I currently pay tax on my work pension and 40% tax on all of my earning in my current job. They are the rules and I'm fine with that.
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But once retired, if your pension takes you over the tax allowance, you will be paying tax on it again. Surely it makes sense to make use of the tax break now and just pay a little tax once retired.
 
munch said:
But as things stand you would get a state pension. Assuming you haven't reached retirement age yet and have paid UK taxes.
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Yes, as things stand. I said "potentially" if the state pension is means tested I may not receive it.
 
Pension is still classed as income so it is taxed,

Best thing about paying into a private pension is you can take it at 55 so if you want to cut back on work you can top up with pension.

or like me I plan to retire at 55 on my private pension and go and live in Crete and when I get to 67 I will get more money from my state pension so that is what I am investing in those years.

people get excited about private pensions but that is because a lot of folk are not paying enough into them earlier to maximise how they work ie retiring early.

If you simply bank on private and state at say 67 then yeah its a big hit.
 
rick448 said:
I'm not going to argue about this. My opinion is, I have paid my taxes and NI, and however you want to look at it, I have paid the same (or more) than others who are entitled to a state pension. If in the future the state pension is means tested, and in my position I am not entitled to it due to me paying into a private pension then I think that is unfair. I have no doubt those who choose not to pay into their own private pension will be quite happy to say I shouldn't get the state pension so that they can receive more benefit for themselves. I just don't think that is fair. But what one person thinks is fair may seem unfair to another. Anyway I'll leave it now as clearly some people think I am wrong in wanting to better myself to look after my family in the future.
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NI IS NOT A SAVINGS PLAN! It's like an insurance policy.

You want a better future for your family you put your money into a private pension fund, which if you do salary sacrifice, you get significant tax relief on. The state pension is just another benefit there to ensure we don't have people left vulnerable.
 
Byker28i said:
NI IS NOT A SAVINGS PLAN! It's like an insurance policy.

You want a better future for your family you put your money into a private pension fund, which if you do salary sacrifice, you get significant tax relief on. The state pension is just another benefit there to ensure we don't have people left vulnerable.
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absolutely right it is a safety net to give a minimum standard of living in retirement.
 
Mr Bump said:
or like me I plan to retire at 55 on my private pension and go and live in Crete and when I get to 67 I will get more money from my state pension so that is what I am investing in those years.
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When you start getting your state pension, will you get any increases?
I know someone who emigrated to Canada several years ago and his state pension was frozen when he left the country and hasn't received any increases since.
 
Mr Bump said:
absolutely right it is a safety net to give a minimum standard of living in retirement.
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But then surely everyone should be paying in the same amount, not more as you earn more.
 
nilagin said:
But then surely everyone should be paying in the same amount, not more as you earn more.
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that's is because you are linking NI to Pension and it is not it provides more services as has been stated a lot already.

earn more and pay more just like tax
 
Mr Bump said:
absolutely right it is a safety net to give a minimum standard of living in retirement.
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A safety net is fine, but it's hardly a safety net if people choose not to invest in a private pension and choose to spend it on other things during their working life. The problem with the whole benefits system is that it is no longer a safety net. We have people leaving our place of work as they are better off on benefits. How can that be right? In fact don't answer that.
 
nilagin said:
When you start getting your state pension, will you get any increases?
I know someone who emigrated to Canada several years ago and his state pension was frozen when he left the country and hasn't received any increases since.
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Who said I was going to emigrate? Are you stuck in the 1980s.

I will just be a UK citizen who has a house in Greece and lives there most of the time.
I also will apply for an EU citizenship passport or whatever is around in 6 years.
 
nilagin said:
But then surely everyone should be paying in the same amount, not more as you earn more.
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Don't come here with your common sense answers! If you earn more of course you have to pay more, that's only fair!! :confused:
 
rick448 said:
My point is, what is the point in saving to better your standard of living in retirement, if the fact you have savings, or a private pension reduces the amount you will receive from the state?
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You’re missing the point.
We all pay contributions towards a state pension. If you pay into a contracted out scheme you paid less into the general pot.
Ergo you may get less pension because the govt supported your other pension instead.

You are better off because you saved, you can’t have it both ways.
 
Phil V said:
You’re missing the point.
We all pay contributions towards a state pension. If you pay into a contracted out scheme you paid less into the general pot.
Ergo you may get less pension because the govt supported your other pension instead.

You are better off because you saved, you can’t have it both ways.
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I didn't pay into a contracted out scheme. I am clearly missing the point though. Nevermind :)
 
I don't think you can "contract out" any more can you?

I remember this from yars ago and my provider contracted me back in years ago.
 
mikew said:
From my experience contracted out years only lose you your serps benefit your basic pension contributions are ok,the tax situation is one reason i took a large lump sum ( tax free) and a slghtly reduced company pension.
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Not as far as I can see in my case. I'm 63 worked since I was 16 so potentially 47 years worth of NI contributions, may not have paid full year every year when un-employed (although I thought you sort of got credited for those situations if you registered un-employed) so at worst I would have paid in 40/43 by my reckoning so far for a full pension but according to my statement from HMRC I still need 2 more years to get the full amount. Their website shows I have all the years I need including some where I know I was contracted out, so no idea why I havent already hit the magic milestone unless it's the contracted out years. Any years that have mysteriously been lost of course are now so far back they wont allow me to investigate
 
Mr Bump said:
I don't think you can "contract out" any more can you?

I remember this from yars ago and my provider contracted me back in years ago.
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true
 
nilagin said:
When you start getting your state pension, will you get any increases?
I know someone who emigrated to Canada several years ago and his state pension was frozen when he left the country and hasn't received any increases since.
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There’s different rules for EU and other countries.
Currently in the EU he would get the increases.
Obviously that could change.
 
rick448 said:
I didn't pay into a contracted out scheme. I am clearly missing the point though. Nevermind :)
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Then you’ll get a full pension.
Unfortunately a full pension isn’t enough to live on, so some people who for whatever reason might not have an additional pension might get some means tested benefit to help them not starve.
That’s not really you ‘missing out’ unless you have a very odd view of a safety net.
 
Phil V said:
Then you’ll get a full pension.
Unfortunately a full pension isn’t enough to live on, so some people who for whatever reason might not have an additional pension might get some means tested benefit to help them not starve.
That’s not really you ‘missing out’ unless you have a very odd view of a safety net.
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Phil have you seen that documented anywhere as I thought the whole idea of the new flat rate pension was to simplify the "benefits" regime thereby doing away with other "benefits".

Thought it's not flat rate because unless you have paid enough years NI you wont get the full amount and of course it isnt a case of "paying in" because the NI/Tax we pay now pays for our current pensioners state pension and mine in years to come will be paid for by the then current workforce, who if shrinking in numbers will be paying a greater percentage than perhaps I paid as there will be more of us living longer (or so we're told) Sorry I am going to be a burden on you lot :)
 
My private pension matures in June this year, i'm not sure if i should just take the monthly payments, or take the option of a full cash payout and go on a world cruise.
 
Phil V said:
Then you’ll get a full pension.
Unfortunately a full pension isn’t enough to live on, so some people who for whatever reason might not have an additional pension might get some means tested benefit to help them not starve.
That’s not really you ‘missing out’ unless you have a very odd view of a safety net.
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Full pension is £159.55 a week or just under £8300 a year. If you don't get the full state pension then there are pension credits to top it up.
I can't have a decent standard of living on that which is why I've been putting cash into private pensions for years
 
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