State Pension Payments

JohnC6 said:
I was going to post about a couple of pension-related issues and wondered where but here's fine.

First off at present 60 year olds can claim free prescriptions. The government are considering raising that to 66....pension age. https://healthwatchreading.co.uk/news/2021-07-22/free-nhs-prescription-age-could-go-66

It does look like the pension triple lock will go ....just for this year says The Chancellor but if it is amended, which is more likely than being abolished..eg a double-lock, it won't, I'm sure,as the Chancellor says revert to the triple lock next year. I was about to say "remember this ?" There are some 'very senior' members on here on here but.....:D Income Tax was first introduced in 1799 by Prime Minister William Pitt the Younger, as a temporary measure to cover the cost of the Napoleonic Wars.

As most will know the triple lock guarantees that every year the state pension rises by the highest figure for inflation, wage growth or 2.5pc. Wage growth average was at 8% in July .In April it was 5.6% The figures for the annual pension increase are taken from what they were the previous September and enacted in the following April so it seems that the Chancellor is concerned that by this September wages could be up by more than 8% when the figure will be taken to be paid in April next year. If that was the case then it would cost the Treasury..at 8%..an extra £3bn. The guaranteed increase applies to both the old.. ie. up to 2016 and the new state pension. So..ignoring the wages aspect that leaves inflation or 2.5% whichever is the higher. There's some concern that the inflation rate will be somewhere around 5% over the coming months and I can believe it too judging by how much everything has gone up..most noticeable for shoppers in supermarkets. My haircut is £13 now..from £11. I was shocked to see petrol at 138p.99....(that small lettering 99p top right corner of the price boards at garages.....crafty sods) because Brent oil prices (bench mark) have dramatically increased over the past year from a low of $50/barrel to $73 as economies got back to work as a result of vaccines and Covid receding but lately it's slipped to $63 as the Delta variant (worldwide) is 'on the march' and that could cause a slowdown in worldwide economies and consequently less demand but that apart, there's a suspicion that inflation potential is being underestimated or at least seen to be temporary when it does spike. The building trade is struggling to get supplies because of a lack of transport drivers so supply/demand kicks in and up go prices. If the basic materials go up so does the cost of new-build and major renovation etc..Wages are high because employers ..including manufacturers and warehouse operatives can't get recruits..worst labour shortage since the late 1990's..and as mentioned...mainly drivers who, I read, were being offered 'golden hellos' of thousands of pounds and in the Hospitality industry. Both affected by the so-called pingdemic' too. I'm sure one problem for the latter industry is because so many EU citizens that were working here in hospitality had to return to their respective countries post the Brexit deadline and also when businesses had to close down and furlough staff.A big loss were the fruit/veg pickers too. Those that could come back here now are thwarted by Covid travel/entry restrictions.

So, To be fair that spike in average wages has been a distorting factor .I did hear someone on the Radio say there was talk of using, not the average wage but the underlying wage. Be sure...they'll find a way to not pay an increase linked to that current 8%. Rishi Sunak had to persuade the PM that this needed to be done because one of their manifesto pledges was to keep the triple-lock for the whole of the now fixed term 5 year Parliament. Understandably, young people see the triple-lock in these tough times ,for them in particular, as being very unfair. They have a point.
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Don't forget that even if the SP increase was 8% you would only get that on your base amount, the top up section of your SP is paid at a far lower % increase.
 
boogie man said:
It’s completely dependent on how much you’ve contributed in NI payments over your working life, plus if your employer ever contracted you out…. a lot of big organisations did. Despite paying 42 years worth of NI I don’t get anything like the amount you do.
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Suvv said:
I had 41 years NI and get nearer £600 every 4 weeks, taxable!
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When I was made redundant in 2016 I checked the .gov system to see how much SP I was eligible for and I was still a little short of a 'full pension' entitlement' so worked another 2years. That meant I had paid my NI for 47 & a bit years.
 
Bobsyeruncle said:
It is actually taxable, but paid without tax deducted as if it's your only income you will be below the tax threshold.
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Obviously (y)
But as the discussion was pension, and not plus other earnings, I didn't think it was worth mentioning.
But now you have made me mention it
:p
 
I'd be rather tee'd off if I suddenly had to start paying prescription charges now after having them free for the last nearly 5 years!
It seems I'm going to get the maximum state pension £179.60/week, it would have been nice to see that uplifted by 8% but even 4-5% will be reasonable. I'm still paying in so that apparently won't increase, which is a bit of a swizzle when you think about it - allegedly because "it still goes towards other benefits" - well, I'm not unemployed or disabled, I don't have kids, so I very much doubt between now and 13 months time I shall be able to claim any other benefits. Mind you, if I do become unemployed I shall be down the job centre and claiming - I've paid them so much I'd like to live long and get my money's worth!
 
Cobra said:
Obviously (y)
But as the discussion was pension, and not plus other earnings, I didn't think it was worth mentioning.
But now you have made me mention it
:p
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It really bugs me paying tax on my private pension.
 
I stopped work at the age of 54 due to stress (IT manager) and never claimed any benefits. We were able to live off my wife's income. I had started work at 16, and for some of that time I was contracted out. Now my state pension is £846.76, paid 4-weekly. Because I also have a pension from my last employer (smallish as I also took a decent lump sum) I pay some income tax.
 
Box Brownie said:
When I was made redundant in 2016 I checked the .gov system to see how much SP I was eligible for and I was still a little short of a 'full pension' entitlement' so worked another 2years. That meant I had paid my NI for 47 & a bit years.
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There must have been other things in play then because you should be eligible for a full state pension after 35 years of NI contributions, according to the government website. In my case my company contracted me out (you pay less NI in your salary in exchange for a lower pension).

Any overpayment of NI after the 35 years, assuming that amount qualifies you for full pension, just goes to the government.
 
lindsay56 said:
I'd be rather tee'd off if I suddenly had to start paying prescription charges now after having them free for the last nearly 5 years!
It seems I'm going to get the maximum state pension £179.60/week, it would have been nice to see that uplifted by 8% but even 4-5% will be reasonable. I'm still paying in so that apparently won't increase, which is a bit of a swizzle when you think about it - allegedly because "it still goes towards other benefits" - well, I'm not unemployed or disabled, I don't have kids, so I very much doubt between now and 13 months time I shall be able to claim any other benefits. Mind you, if I do become unemployed I shall be down the job centre and claiming - I've paid them so much I'd like to live long and get my money's worth!
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What about the 250,000 pa you get from here? :D ;)
 
boogie man said:
There must have been other things in play then because you should be eligible for a full state pension after 35 years of NI contributions, according to the government website. In my case my company contracted me out (you pay less NI in your salary in exchange for a lower pension).

Any overpayment of NI after the 35 years, assuming that amount qualifies you for full pension, just goes to the government.
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Ah yes! I was contacted out for a few years until that finished and 'back in' plus I cannot recall whether I "signed on" when I was made redundant in 1991 and it took 6months to find another job........compared to 6 weeks in 2016 where I was registered for JSA and the gov paid the NI. So yes, the 47 odd required years would been influenced by my full working history from age 16'ish :thinking:
 
Cockney said:
What about the 250,000 pa you get from here? :D ;)
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I'm processing that through an offshore trust that David Cameron and JRM put me onto, so that we should get it topped up with a tax rebate as well. Trouble is, it's in the name of my cat and he's given power of attorney to the dog...
 
Norkie said:
I understand that the payment date changes each month, 13 x 4 weekly payments.

So if you qualify for the maximum pension, £718.40 13 times a year ;)
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My state pension is 4 weekly ( £735) my Army pension monthly ( 12 times a year) and my personal pension ( Scottish Widows) monthly 12 times a year too

Its all go :)

Les
 
Cockney said:
It really bugs me paying tax on my private pension.
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Cobra said:
That p***es me off too!
it was taxed before going in, and taxed again coming out :(
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:thinking: firstly I agree that I wished pension payments were not taxed.

But depending on the type of pension the tax you paid on your pension contributions was paid back to you, either claimed by the pension savings company or by the individual if it was an old style "Retirement Annuity Contract". So the gov tax the pension income resulting from your gross untaxed payments.

But yes taxing pension income does sort of stick in the craw!
 
I don't have a problem in principle with paying tax on private pensions, as BoxBrownie says, the contributions were tax deductible, but I firmly believe that state and military/police pensions should be tax free. Where people have put their lives on the line whilst being paid pretty average/below average wages, they should get not just a good pension but tax free too, as a thank you.
 
Box Brownie said:
But depending on the type of pension the tax you paid on your pension contributions was paid back to you, either claimed by the pension savings company or by the individual if it was an old style "Retirement Annuity Contract"
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TBH that's the first I've heard of that.
I certainly don't remember any mention of it.
Maybe it happened, as you suggest automatically I've no idea TBH..
 
It wasn't "paid back" as such, it was added to your pension pool.
e.g. if you currently want to add to you existing private pension pot the actual amount you pay in (subject to limits) will be automatically topped up by your pension provider.
Pay £3k and your pension fund will increase by £3750 because of tax relief. (assumes standard rate taxpayer).
It is only fair that as the government has given you tax relief when paid in that it is taxed when paid out.
 
Peter123 said:
It is only fair that as the government has given you tax relief when paid in that it is taxed when paid out.
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So the Lord Government giveth and the Lord Government taketh away?
 
Peter123 said:
It wasn't "paid back" as such, it was added to your pension pool.
e.g. if you currently want to add to you existing private pension pot the actual amount you pay in (subject to limits) will be automatically topped up by your pension provider.
Pay £3k and your pension fund will increase by £3750 because of tax relief. (assumes standard rate taxpayer).
It is only fair that as the government has given you tax relief when paid in that it is taxed when paid out.
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And, if you're a higher rate tax payer you get additional tax relief, but you don't get it automatically, you have to claim it....
 
What is also frustrating is the personal allowance of £12570, it only increased by £70 for this year.
 
They are going to have to be very careful how they manage the proposed increase due to the false wage inflation figure.
Maybe something like a 2 year average for this one.
Playing with the triple lock would be suicidal at the polls.
 
Yes, agreed.
 
Cockney said:
They are going to have to be very careful how they manage the proposed increase due to the false wage inflation figure.
Maybe something like a 2 year average for this one.
Playing with the triple lock would be suicidal at the polls.
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I am very cynical of any manifesto promises by any party.
 
Cobra said:
That p***es me off too!
it was taxed before going in, and taxed again coming out :(


That's a debit not a credit :p
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The money that you pay into a private pension is not taxed. It is deducted from your wages before tax is collected if a company pension and tax already paid on contributions to a personal pension are reclaimed from the Treasury by the pension company.
 
UK pensions have been a nightmare tangle of politics and greed since the Liberals pushed through the 1908 act ( https://en.wikipedia.org/wiki/Old-Age_Pensions_Act_1908 )

That was so hedged about with rules that it needed a whole new class of specialists, to work out who was entitled and who was not. After that, things just went downhill. :(
 
Plus, for us to live a little more comfortably in our dotage, we are considering equity release.

The kids have gone and are very comfortable, they won’t need anything of ours thankfully. We should be able to realise £200k.
 
The biggest scandal is what they have done to the women.
My wife (8 years my junior) planned everything to retire at 60. They pulled the rug and made it 66. I'm still not sure how the bastards got away with it.
 
You cradle snatcher! :)
My wife also, worked for the NHS until this year, got caught out by just a few months.
 
Cockney said:
The biggest scandal is what they have done to the women.
My wife (8 years my junior) planned everything to retire at 60. They pulled the rug and made it 66. I'm still not sure how the bastards got away with it.
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A constant cause of complaint from the missus who was born in 1954. Totally wrong.
 
Given that the current working population provides the funds for the current state pensions and we have an increasingly aging population is it time to change the way the state pension is funded?

I think it should be more like private pensions - during the working life everyone pays towards their own state pension.

It would take many years to accomplish and I can see private pension companies doing some lobbying of government.

It might be financially unachievable but without some change we are looking at an ever increasing population.

Dave
 
The UK's real problem with pensions and the rest of the welfare state is the fundamental selfishness of too many citizens. They want the benefits of a modern social capitalist economy but always feel that "someone else" should pay for it.

The Boulting Brothers satirised this well in their 1959 film "I'm All Right Jack" and it's only got worse over the following sixty years.

:tumbleweed:
 
Cockney said:
The biggest scandal is what they have done to the women.
My wife (8 years my junior) planned everything to retire at 60. They pulled the rug and made it 66. I'm still not sure how the bastards got away with it.
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And there was no official notification, meaning many women only discovered it when they came to 60 and expected to start claiming. This had some devastating effects on some women.

My wife knew as she is into these things listens every week to Money Box and subscribes to a money management magazine, but she is unaware of it being raised in any official way.

What my wife didn't pick up on was that the promise of no one would being worse off from the new state pension scheme wasn't true.

I should have been due an additional pension payment, because of how much NI I had paid in, which would have taken me well above the level of the new state pension amount.

However, it only applies to people born before 1951. If you are born after 1951 (as I am), none of your additional NI payments count towards your pension. You only get the new base rate pension. It looks like I will be about £80 a month worse off when it comes to claiming my state pension next year.
 
Yep after 48 years of paying NI, I get the same pension as someone paying in paying in 35 years.
 
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Peter123 said:
A constant cause of complaint from the missus who was born in 1954. Totally wrong.
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For anyone reading this who isn't aware of the issue.

Around 300,000 women born between December 1953 and October 1954 and who were getting close to their State pension age were made to wait an extra 18 months. But others who weren't aware of the 1995 changes had to wait years longer.


They got away with that because.......... the Parliamentary and Health Service Ombudsman (PHSO) ruled that the DWP failed to communicate the changes with enough urgency.

Without enough urgency ? Being a cynic I'd say they deliberately tried to avoid what would certainly have been a campaign against it which might have succeeded .Have a read of the first few paragraphs here of a summary of the preliminary findings of an inquiry by the Parliamentary and Health Service Ombudsman in July this year..so, just last month.

www.ombudsman.org.uk

Women’s State Pension age: our findings on the Department for Work and Pensions’ communication of changes | Parliamentary and Health Service Ombudsman (PHSO)

Our report highlights failings in the way the Department for Work and Pensions (DWP) communicated changes to women’s State Pension age. You can read the full report here or download a PDF (1MB).
www.ombudsman.org.uk www.ombudsman.org.uk

Dated July 21st : https://www.dailyrecord.co.uk/lifestyle/money/state-pension-age-change-ruling-24581225

Amanda Amroliwala, Parliamentary and Health Service Ombudsman CEO, said: "After a detailed investigation, we have found that the DWP failed to act quickly enough once it knew a significant proportion of women were not aware of changes to their State Pension age. It should have written to the women affected at least 28 months earlier than it did.

"We will now consider the impact of these failings, and what action should be taken to address them."

However, in reality the Ombudsman has no power to direct the DWP to reimburse the lost pension and more to the point as stated in the article.. "Given the parlous state of UK finances, calls in some quarters to compensate women affected in full - which could amount to six years of State Pension payments - are likely to fall on deaf ears."
 
Cobra said:
That p***es me off too!
it was taxed before going in, and taxed again coming out :(
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it was never taxed before going in. The advantage of pensions is that the contribution Attracts full tax relief at your marginal rate. If you are a higher rate tax payer that is 40%. Many pensioners have tax relief at 40% and then only get taxed at 20% when it is paid out.
 
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Craig1912 said:
it was never taxed before going in. The advantage of pensions is that the contribution Attracts full tax relief at your marginal rate. If you are a higher rate tax payer that is 40%. May pensioners have tax relief at 40% and then only get taxed at 20% when it is paid out.
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If they were indeed higher earners who were paying in to their pension, that for some will be into a sizeable pension pot.

Therefore if they draw from their pension and with their state pension their 'income' is above the 40% tax threshold....... don't they then pay the higher tax rate?
 
Box Brownie said:
If they were indeed higher earners who were paying in to their pension, that for some will be into a sizeable pension pot.

Therefore if they draw from their pension and with their state pension their 'income' is above the 40% tax threshold....... don't they then pay the higher tax rate?
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Yep and also likely to have had tax relief at 40% when paying contributions. The tax treatment of pension funds is also favourable in that the don’t pay CGT.
 
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one of the things i cottoned on to over a decade ago, all you need to do to get you max state pension was to pay yourself minimum wage of about £8600 a year, everything else in private pension and up to the recent changes in tax, everything else in dividends, i think you only have to pay in for 35 qualifying years for full state pension.
 
Mr Bump said:
one of the things i cottoned on to over a decade ago, all you need to do to get you max state pension was to pay yourself minimum wage of about £8600 a year, everything else in private pension and up to the recent changes in tax, everything else in dividends, i think you only have to pay in for 35 qualifying years for full state pension.
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That didn't work so well for people needing financial assistance during the pandemic.
 
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