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?

[jno]

I presume some savings will come in administration of pension credits and second pensions; they'll need fewer people with abacuses to work out entitlements. Also, four years' inflation will account for a bit of it

[sunny-dave]

It will be paid for (in theory) by sweeping away a whole raft of means-tested pension benefits and replacing them with a (much cheaper to administer) flat-rate pension.

The qualification via NI contributions (or credits) will be easier than at present.

"I hae mi doots ... "

[douglas9401]

Can 'top-ups' be far behind this stunner from some of the best brains we can muster as a country?

[buildersmate]

Those who haven't paid NI contributions (or got credits - women looking after children) shouldn't have an expectation of a pension. Why should they?

The thing is stated as cash neutral, but only because those drawing out of the system are paid for by those paying-in and yet to draw their own pension.

The extra funding from 2017 to pay for it appears to be extracted from those currently contracted out of the State scheme, who currently pay a reduced NI rate. That won't happen after 2017 and those working people will pay more in NI.

[aelmpvw]

many pensioners get top ups to the £107.45, the present system is ridiculously complicated

[buildersmate]

Yes, they do, but the point is that those who do NOT currently get means-tested top-ups will ALSO be entitled to the £144. So that means everyone who at least made the effort to fend for themselves in retirement.

[Old_Geezer]

Whilst I don't have the detailed information my natural cynicism has, in the past, served very well. when I'm told the flat rate will reduce the cost to the government I see that as an intent to give out to those who have earned it less pension on average than was previously the case. If some get more that is going to mean others don't get what they had expected and planned for. Guess who I expect to lose out until proven otherwise. Meanwhile the move to allow all citizens a adequate (flat amount) income in retirement sounds a good long term aim, just as long as those who can and wish to are encouraged to supplement with pension savings of their own without penalty.

[NOX]

The problem if you don't pay elderly people a pension though is what do you do with a frail, starving person in their 70's whose never for whatever reason paid NI contributions? I'm genuinely interested in the answer to this, and I really do hope I'm not shocked by any of the replies, but I have a feeling I'm going to be.

[LoftyLottie]

Have just read that the £144 is today's rate and that actually any inflation until 2017 will be added to this. So, in fact the basic pension will be considerable higher than for current state pensioners that have earned extra pension from the old style system(s). I fall into this old bracket and do not qualify for any benefit topups.

I know all about cut off points having to be at some point. But I can't see it as fair that those who are younger pensioners than us current oldies will be better off than those who have worked all our lives and paid NI.

Or am I missing the point!!

It will save the Govenment money - good thing, but at the expense of the older pensioners who, in many cases, have no top up pensions, because we were never encouraged to get up top up pensions or had any worries about the state pension scheme.

Oh well ..........................

[LoftyLottie]

Hello Nox. You weren't there when I started my ramble, but we are obviously thinking along the same lines.

I am fed up with people who think all today's pensioners are well off and have top up pensions. The majority of today's pensioners in my age group did not have top up pensions - not our fault. Yes, there are top stream of pensioners that had careers and company pensions, but some younger folks seem to think that this is a majority group.

[youngmafbog]

Well it is effectively linked to a tax rise for most people. So maybe it is at current levels.

However pensions are a ticking time bomb. I am not expecting to receive a penny by the time I retire despite paying thousands in over the years. The figures just don't add up.

[pdq1]

I'm getting confused signals but one report says current pensioners won't benefit but stay on their existing pension and therefore only payable to new pensioners. If you need 10 years of NI contribution surely it will be a good thing that recent immigrants won't qualify and of course the illegals will get nothing. Also what about the 5 million unemployed and then reach retirement age. NOX hit upon the problem...there will be a lot of people falling outside the system who will need to fill the streets with their begging bowls.

Maybe it will become a lot clearer at 4pm on the Parliament Channel this afternoon when its being announced.

[nannybooby]

As I understand it you have to have 30years of contributions now.Well I've only not worked for 6months when my daughter was born and am still paying ni contributions .I left school at 15 so I'd like to see some one tell me I have no entitlement !

[pdq1]

My understanding nannybooby is that to receive the maximum amount the 30 years NI contribution is being increased to 35 years

[shaneystar2]

As I see it ( the jargon is the usual incomprehensible government speak) those who retire in 2017 will get the 144 quid but people like me who are already retired and in spite of paying in for years will stay the same .
Typical Tory two tier system .

[LoftyLottie]

They will just write us off Shaney and send us to the knackers yard. Past our sell by date. We will be in the group most likely to suffer and least likely to cause problems. Typical Tories again!!

[Ann]

//Those who haven't paid NI contributions (or got credits - women looking after children) shouldn't have an expectation of a pension. Why should they? //
Buildersmate - I'm afraid I totally agree! I worked without a career break and got 44 years credits in NI, but my friend decided to "save" money years back and paid only the reduced NI for many years - why should everyone get the same when they haven't paid in?

[LoftyLottie]

Agree Ann.

[NOX]

But again I ask you, as a civilised country what will you do with these people who for whatever reason haven't paid in at all, or sufficiently (let's say they paid for 33 years, quite a bit of money that)- do they get NOTHING? That is not workable. That is not right.

[LoftyLottie]

It's a complete minefield and there will be a lot of things happen before it comes into force!!!