General Chat

George Osborne said the flat-tier pension, worth around £144 a week, would now start in (April) 2016.

BUT - for new pensioners, the second state pension will be abolished.

http://www.bbc.co.uk/news/uk-politics-21820719

Worth double checking your retirement date

https://www.gov.uk/calculate-state-pension

Not so much good news if you have a second state pension, Some of those 2nd pensions
realise a tidy amount so some may lose out but others will gain.

I have a current flat rate pension and husband's second pension the total of which is greater than £144.

Vera

I'll lose because I retire this year but have a second state pension the total of both are about £134 a week.

Hubby will lose out hugely because because he gets his SP in 2015 and it's a lot less than mine! Luckily he has 2 private pensions but it's one of those arbitrary dates that will disadvantage many. I don't understand why we both don't qualify for the £144 each. I assume it's because we will be subsidising those retiring after 2016.

I read that some widows could be worse of by £107.00 per week in the Guardian.

It is swings and roundabouts isn’t it and difficult for those who retire after 2016 to work out if they are winners or losers – all part of the Benefits reform. It must reduce the total pay out or else they wouldn’t have introduced it.

I would only have got the basic pension – enough credited years, but on a low wage and no company pension. It’s better for me. We aren’t sure about OH – we think he ‘opted out’ at one stage and does have a healthy pension pot, but we haven’t been able to get a forecast from the DWP for at least the last 2 to 3 years.

And those of us on the old pension rate will stay on it so you have two tier pensioners then.

I think it is all extremely confusing.

True - but, as I understand it, current pensioners can still claim pension credits which are being abolished for those retiring post April 2016. Of course, there are always those who are on the 'cusp' of being able to claim additional benefits since they've retired.

Everyone working at the moment now has to pay into a pension scheme, or else opt out every month. This may go someway to making up the difference lost with the scrapping of the 2SP.

The intention is that all will have the opportunity to pay into a pension scheme but it has only just started for the larger employers. It does not come into force for small employers for quite some time yet and there's no doubt that many of them will find ways of persuading their staff not to take advantge of this option

I just think it is all a bit messy and there are going to be those who just don't qualify for pension credits (we don't but we do have a company pension) and who will slip through the net.

i am waiting to see what happens if you contracted out of serps
i am due to reyire in jan 2016 so will have to defer my pension for a few months

Wonder when they are going to repay all the Billions the Goverment under Gordon Brown stole from private pensions? Won,t hold my breath on that one.**M**. :-|

I have a second state pension and and claimed my state pension when I reached the age of 65 in 2008, so the new flat rate pension should not affect me, well for the time being anyway, but I am mindful that nothing is sacrosanct with any government in this day and age.

The Chancellor announced yesterday ahead of the budget, why no one really knows, that he is bringing forward this new flat rate pension and the cap on care costs.

The budget is this week, maybe I am being my usual cynical self, but why does the phrase "the one hand giveth and the other hand taketh away" keep crossing my mind. No dount all will be revealed in the small print after the budget speech on Wednesday ;-)

Some of the people who will gain by this new flat rate pension are those who would have normally had to claim pension credit. That I feel is a good thing because of the lengthy form filling and low take up on this extra benefit.

If you opted out of the second pension and put your money elsewhere those people too would gain in comparison to today.

It seems a bit unfair to me to take away the secondary pension as it was paid for by higher national insurance contrbutions and could be (as in my case) be passed onto a spouse.

.

I think it is disgraceful treatment of those who are already in receipt of state pension. They will have to remain on approx £107 per week despite having paid in for more years (as a woman) a minimum of 39 years of contributions to qualify for 100%, (as a man 44 years of contributions) whereas people will now get £37 per week extra (£144) for paying in only 30 years of contributions!! In my case, any SERPS I get is deducted from my private pension anyway.

You are right AnninG, it will be messy and will most likely need an increase in civil servants to deal with the transition.

@ terryj

My understanding is that if you contracted out of serps, your flat rate pension will be adjusted downwards to reflect this.

"I contracted out of the earnings-related pension. How will I be affected?
Pensions savers who contracted out of S2P or SERPS (State Earnings-Related Pension Scheme) - to have more control over their investments or to take their pension earlier - will have a deduction made to their £144 a week pension.
The finer details aren't available yet, but this deduction is unlikely to reduce their pension entitlement below the current basic state pension of £107.45 per week."

http://www.moneywise.co.uk/pensions/managing-your-pension/state-pension-changes-how-will-the-new-rules-affect-you

There is a discussion on Motley Fool and further links here

http://boards.fool.co.uk/state-pension-20156-12769255.aspx?sort=whole#12769255

No one really seems to know what will happen to those with SERPS.

OH had just shrugged his shoulders and said 'What will be, will be'.

However it's eventually worked out, you can bet that most people will be losers in some way or other. :-0

looks like i had better not defer my pension then if they are going to reduce to bellow the current level

Once things have become clearer, it might be worth consulting a IFA, terryj.

Although by no means an expert, it would seem to effect those who are *Due* to retire (or be eligible to draw the state OAP) on or after 6 April 2016. So if you are eligible from Jan 2016, you'd be on the current system.

AS far as I can gather, they plan to reduce the flat rate pension for those who contacted out of Serps - presumably they did so to fund a work or private pension elsewhere.

See page 47 of the White Paper for the proposed formula regarding those who opted out of serps.

Chapeter 4 of the White paper deals with the transition period.

http://www.dwp.gov.uk/docs/single-tier-pension.pdf

I wondered at the time why the Chancellor was bringing forward the new Flat Rate Pension, now I know, so it seems I was not being cynical when I said earlier that "the one hand giveth and the other hand taketh away" ;-)

The reason he did this was that by bringing forward the new Flat Rate Pension by one year, he will have a windfall of around £5.5 billion, as "Contracting Out" will end when the new Flat Rate Pension begins. It was done so he could massage the figures on the deficit - nice one Mr Osborne :-|

I wonder if he will feed this £5.5 billion into any claim he makes today that he has reduced the deficit, just as he did last year when he included the sale of the 4G Mobile Phone licences in his figures, or will it be hidden away in the small print of the budget red book (FSBR) ;-)

"Contracting Out" is when employees has opted out of contributing to the Additional State Pension, currently the State Second Pension, it used to be called SERPS.