UK State Pension now and possible changes.

[galahad]

Good, interesting stuff Jimmbo.
Can,t ever see it affecting me though as I can,t ever see me living in thailand permanently.Plus seeing a 3 year old through her schooling years i,ll be tied to the Uk for at least the next 15/16 yrs.When shes 18 I.ll be 65...maybes then..if I,m still around!

[jimmbo60]

You sound like you are in the same boat as me, well minus the baby

[jimmbo60]

Now got the information I need

Currently those with 30 years of National Insurance contributions qualify for a full basic state pension of £110.15-a-week.
Which can then be topped up by the Second State Pension (S2P), which replaced the State Earnings-Related Pension scheme (SERPs) in 2002.

Someone who has already built up S2P, therefore entitling them to a state pension income greater than £144-a-week, will be allowed to keep this.
They will not be allowed to build up any extra post-2016. You cannot buy years in S2P like the basic pension.

When the flat-rate pension comes into force, to get the full £144-a-week you will have to have earned above the National Insurance lower earnings threshold (currently £5,564) for 35 years.


HOW THE S2P IS CALCULATED
Anyone entitled to S2P gets at least £1.75-a-week (£91-a-year) for each year spent in the scheme, with this amount rising depending upon how much you earn between £15,000 and £40,000.
So someone who works for 45 years, accruing the minimum £1.75-a-week, would build up an S2P entitlement worth £4,090-a-year, or £78.75-a-week.
This, when added to the basic state pension, would see them receive £188.90-a-week in retirement.

Anyone who earns between the lower National Insurance threshold of £5,568 and £15,000 are treated as if they are earning £15,000 for S2P purposes, thanks to a Labour Government change to ensure the lowest-earners can build up S2P.

Someone who earns £40,000-or-above meanwhile will be able to build up the maximum amount of S2P for those years they are earning at that level.
How much you accrue in S2P is linked to how much you earn and for how many years you have been paying National Insurance.

The amount you get depends where you are on the scale of earnings between £15,000 and £40,000, so someone on a salary of £35,000 would build up more S2P than someone on £20,000.

Unlike the basic state pension, you can't make extra contributions to build up S2P.

So the only way you can earn larger S2P entitlements prior to 2016 would be by getting a pay rise (provided you earn below £40,000, which is when you start accruing the maximum amount of S2P).

The DWP says that currently, the average amount built up in S2P is worth £28-a-week of state pension, so the average state pension would be £138.15-a-week. And all this can have means tested pension credits up to £144

[galahad]

Possibly. I,ve already got 34 yrs in...another 15/16/17 yrs ahead of paying stamp for nothing.Where does the extra contributions go? If I could give it to my wife it wouldn,t be so unfair.

[jimmbo60]

Possibly. I,ve already got 34 yrs in...another 15/16/17 yrs ahead of paying stamp for nothing.Where does the extra contributions go? If I could give it to my wife it wouldn,t be so unfair.

I wonder where they will go as well, I guess they go into the Government coffers.
As I see it for me, should the government plans go ahead, after 2016 no matter how much "stamp" I pay in, my pension will not increase in real terms passed the amount I would get if I retired in 2016.
I will be asking if you can opt out once you have reached the 35 year mark as I would receive the exact same amount if I left the country and contributed nothing further.
You can buy "years" if you are short of the 35 year mark at a cost of £700. 15 years at £700 invested earning some interest would suit me far better (20 would be better) than a pension that returns me nothing extra.
I think the a fair solution would be to allow you to pay that portion(£700?) into the work place pension scheme that is being promoted at the moment. That way the money stays in the government coffers and costs the government nothing extra as the employer pays in.
I admit I am being biased and perhaps selfish in my thinking, but why should I pay more than Joe Bloggs to receive the same payment.

[jimmbo60]

Found this on the Saga website


National Insurance contributions and the state pension

By Paul Lewis , Monday 21 January 2013

You now need to pay National Insurance for just 30 years to qualify for the state pension. So why do you have to carry on paying after you’ve met that target?

When it comes down to it, National Insurance contributions are simply a tax
More and more of us work past 60. So it follows that an increasing number want to know when they can stop paying National Insurance contributions (NICS).

You now need only 30 years of contributions to get a full state pension, so you might wonder why you should continue to pay thereafter.

Unfortunately, it doesn’t work that way. NICS are simply a tax. If you are under state pension age, have a job and earn more than £146 a week, you have to pay the contributions – 12% of earnings between £146 and £817 and 2% of earnings above that amount. For men, the tax stops in the week of their 65th birthday. For women, whose pension age is rising, the date will vary. It is now 61 years 4 months and will be 61 years 10 months by the end of the year.

The rules are similar but slightly different for those who are self-employed.

About three-quarters of the NI fund is used to pay for pensions. Almost a fifth funds the NHS and the rest pays for other contributory benefits and administration. So you still have to pay even when you qualify for a full pension.

[galahad]

Yep ,totally unfair.We are basically subsidising the system much to the benefit of others.Anyway you look at this ..it's just wrong.
16x700=11270 pounds ...surely this has been brought to the gvmts attention?
Time to have a baby boomers campaign for justice!
BTW..never claimed a benefit in my life,apart from wifes claiming child benefit...
Things need to change.

[jimmbo60]

It's a hard one as there were times when we received the benefits of the system without paying in ourselves.
But it is making the idea of opening a small franchise type business in Thailand and working here until the tax threshold is reached and then returning to Thailand each year until retirement.

[colin244]

The NI idea was good when introduced originally with each generation effectively paying for the previous one but with people living longer and the unemployment/benefit culture the system is totally wrong in current times, quite what would replace it? who knows.

I had a discussion about this with mother and brother recently and after reading an article about mothers generation being the best off ever for pensions she agreed but also pointed out that her generation suffered more because of WW2 which I certainly agree with.

colin 244

[Kev62]

Thanks for the thread jimmbo60 . Closer i get to retirement(2028) the state pension seems to get further away.

[Linne]

Thanks for the thread jimmbo60 . Closer i get to retirement(2028) the state pension seems to get further away.

like climbing a greasy pole

Begs the question as to what is NI ??

Anything to do with health care ??

Is there a clue in the letter "I" meaning insurance.
I have certainly had my monies worth from the NHS and more.

I here that medicare will go bust soon