Is The New State Pension Affordable?

[pdq1]

http://www.bbc.co.uk/news/business-20989050

In just 4 years time in 2017 the state pension will rise from £107.45 to £144 per week. Obviously the boffins who work out these sums must have confidence in the figures. But such a huge jump seems incredible. Does it mean many will fail to qualify and in fact especially those who haven't paid their NI contributions and is this fair?

[craft1948]

The Tories have lost my vote over this. As an existing pensioner I won't qualify for the new super pension (despite 39 years contributions) and this year when I was due to get the increased tax allowance at 65 they've scrapped that if you are 65 after April, so I lose out by 4 sodding months.

[pdq1]

Sorry to hear that craft. The only current pensioners to receive the new £144 pension will be those that get the pension credit now not those like you who have paid stamps for 35 years and NOT claimed the pension credit because you have saved for your old age.

[New Judge]

Nobody (at least not on here as far as I can see) is suggesting that people who have made insufficient contributions (whether by accident or design) should be paid nothing. But the issue for me is the complete lack of relationship between money paid in and that drawn out. (In fact there is a relationship, but it is inverse).

People who have made no contribution by choice should not be entitled to a "pension" at all. They should be entitled to a very bare minimum benefit. By contrast those who have made huge NI payments throughout their life (often making additional payments) should receive huge State pensions. But they don't and under this new scheme they never will.

The State pension scheme is completely unfair and this scheme (which seems those taking their pension before 2017) it will be even more unfair. I was listening to Mr Cameron this morning and when challenged about this he kept harping back to the "Pension Credits" which pensioners get that take them up to £167pw. But the majority of people who have made full NI contributions are not eligible for those payments.

[LoftyLottie]

With Craft on this, and New Judge I am one of those that has paid full NI contributions and have a Second State Pension and Serps payments. No point at all in doing so. If I hadn't I could now perhaps be applying for Pension Credits to top up my pension and other benefits!!! And now it seems I am to be poorer for it when I reach 70 in four years time. It seriously makes me depressed!!

[Canary42]

But for those with SERPS and other enhancements (which under the new rules will no longer be payable although the recipients made years of contributions) it will mean a reduction, so the difference will perhaps balance out (or more likely overbalance, creating more for Osborne's kitty to dish out to his rich cronies).

[LoftyLottie]

Four years to go, and I envisage a lot of changes before then. I am all for a simpler state pension for all, but it has to be fair and not just for those qualifying in 2017. Why are current pensioners not included. Obviously for financial reasons. We are not daft Mr Cameron and your cronies!!

[dotty.]

I'm always confused by pensions anyway, after accumulating well over the required years i still don't know if i will get the state pension as well as my occupational ones from work. it's confusing.

[LoftyLottie]

It'll end up being more complicated and more expensive to run than the current system in my opinion.

[jno]

should do, dotty, unless they change the rules to make genealogists ineligible (and I wouldn't put it past them)

[Canary42]

Axccording to the IFS most people will be worse off. That doesn't include Tory Toffs of course.

http://uk.finance.yahoo.com/news/state-pension-changes-leave-most-152808106.html

[dotty.]

so what will happen tax wise, they'll probably end up taxing people who have bothered to pay into a pension.

[LoftyLottie]

What I am interested in is what happens to people who haven't put the qualifying time in for the new style pensions. Will they get benefits? If so what is the whole point of the exercise which is meant to simplify the system. It will all end up with another lot of benefits with different names!!

[dotty.]

also then, if someone is due to retire in 2017 and they haven't paid in enough, can they opt out of paying national insurance for the remaining 4 years of not qualifying?

[LoftyLottie]

Wouldn't think so Dotty. At present you can make up your contributions in order to get a full pension, but when the new system comes in then this will surely make this impossible? I really am muddled.

[baza]

I am paying tax on my pension already, in march I get the old fa9ts handout, tax free but the tax on the other pension goes up, no benefits for me, just a decline in my standard of living.

[LoftyLottie]

Well Baza. Some of us ol' farts have to manage on that basic ol'farts pension alone, so the fact that you have to pay some tax because you get two pensions shouldn't exactly be too hard to cope with ;o).

[baza]

I do not begrudge any person their entitlement, just stating that the tax increase will take a big chunk out of my pension yet, they make a big show out of your old age pension being tax free.

[LoftyLottie]

True Baza. I was only having a laugh.

[baza]

it would be nice if the politicians lived in the real world, imo they rob (tax) peter of £1 to pay fred and charlie 50p then waste 75p (borrowed 25p) to start a war or send out in aid to a country that does not need it.

[LoftyLottie]

And this doesn't take into account the costs of administering such things Baza!!