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Business & Finance1 min ago
State Pension Top Up
64 Answers
Out of curiosity, I clicked on to the government advert. that is appearing on my page today, to see what it was about. It seems that in order to increase my pension by £10 a week, I have to send them £8,900 when I'm 65.
So, if I need an extra £10 per week, why would I have £8,900 in the bank?
So, if I need an extra £10 per week, why would I have £8,900 in the bank?
Answers
Lard think you will still get full amount when time comes, just be made up from different benefits if current rules are still in place
23:26 Sat 13th Dec 2014
I don't think Bright Spark is right about that. Continued tinkering at the edges which randomly benefits some but not others is going to occur, but not wholesale means-testing of State Pension. There would be riots in the streets.
To anybody impacted by the changes that occur for those reaching 65 after April 2016, and who is currently close to 60 or over, I can recommend applying to the Pensions wallers in Newcastle for a State Pension quote. You apply by post on a BR19 Form. Google it for the download of the form. It gives you a comparison of State Pension you will get (in today's money) using both the old and the new calculation method. You get the higher of the two figures , but at least it gives one a starting point.
They are inundated with backlog of requests at present - took nine weeks for mine to come back.
To anybody impacted by the changes that occur for those reaching 65 after April 2016, and who is currently close to 60 or over, I can recommend applying to the Pensions wallers in Newcastle for a State Pension quote. You apply by post on a BR19 Form. Google it for the download of the form. It gives you a comparison of State Pension you will get (in today's money) using both the old and the new calculation method. You get the higher of the two figures , but at least it gives one a starting point.
They are inundated with backlog of requests at present - took nine weeks for mine to come back.
BS. People have short memories. The raise to 65 for women was wholly caused by a male who raised a legal equality issue on it, and won (it was either High Court or European Court). Somehow he thought Government would miraculously find billions of money to allow males to retire at 60. What happened, of course was the opposite. Female got raised to 65 - there was about 10 years warning of it, before it happened. Plenty of notice, but plenty of grumbles - including from Mrs Buildersmate, who has been impacted.
We are all living longer. Members of company pension schemes and those taking out private pensions have had to pay much bigger contributions- in many cases up by nearly 50%- in recent years to fund the costs of paying pensions for longer. The money to pay the state pensions has to come from us so unless we are prepared to make bigger contributions via tax/NI or accept lower state pensions then it seems to me that deferring the pension age was the least bad option
^^ You qualify for pension credit on the date a female born on the same day as you qualify's for state pension. In my case this was when I was 60 years and 8 months old. In the case of a couple they can claim pension credit when the oldest of them reaches qualifying age. My wife is 58 and will not get state pension until she is 65.
Pension credit is the most under claimed benefit, 1 in 3 people who ait do not claim it !
Pension credit is the most under claimed benefit, 1 in 3 people who ait do not claim it !
I understood my works pension was linked to inflation. As I got near the time time when I figured I ought to check what I did have, I noticed there was a sneaky clause that said if inflation was over a certain level they capped the increase. So it still can deteriorate over time. I trust this scheme doesn't have the same issue ?
How about interest rate changes, they can't be this low forever surely ? What odds that the government opts not to take that into account ? I suspect they'll suggest that if they take inflation into account that covers it. Makes it more difficult to judge the deal given you are agreeing at this low interest time.
I think I'd prefer not to tie my capital into it.
How about interest rate changes, they can't be this low forever surely ? What odds that the government opts not to take that into account ? I suspect they'll suggest that if they take inflation into account that covers it. Makes it more difficult to judge the deal given you are agreeing at this low interest time.
I think I'd prefer not to tie my capital into it.
Since it was mentioned. Deferring the pension age was not a helpful option at all. To be so it would need to have helped the issue. Folk being forced to remain in employment way past the age when any reasonable person would not ask it of them, simply removes that job opportunity for someone younger and unemployed. If the younger person had the job instead, the contribution to the public kitty from the job position should remain the same.
Regardless whether some accountant has earmarked some budget for this and some for that, the tax/NI isn't changed. What has changed is, if folk are allowed to retire at a reasonable age, then someone who has contributed for years get their well earned break, and someone needing to make their contribution to society gets their chance to.
The only chance is that Welfare no longer needs to support the newly employed younger person, but government can instead use the money to pay pensions.
It is this view that changing the use of public money must not be looked at; that one must insist pensions are different and have to fund themselves in order to get the public to accept it.
And that doesn't work anyway because if the younger person was kept out of a job all their life, the country would end up still having to pay them a pension eventually anyway and they would have directly contributed nothing. Not insufficient, but nothing. it is the strategy of the madhouse and sums up politicians today.
Regardless whether some accountant has earmarked some budget for this and some for that, the tax/NI isn't changed. What has changed is, if folk are allowed to retire at a reasonable age, then someone who has contributed for years get their well earned break, and someone needing to make their contribution to society gets their chance to.
The only chance is that Welfare no longer needs to support the newly employed younger person, but government can instead use the money to pay pensions.
It is this view that changing the use of public money must not be looked at; that one must insist pensions are different and have to fund themselves in order to get the public to accept it.
And that doesn't work anyway because if the younger person was kept out of a job all their life, the country would end up still having to pay them a pension eventually anyway and they would have directly contributed nothing. Not insufficient, but nothing. it is the strategy of the madhouse and sums up politicians today.
That's all very rational, OG, but the trouble is that stats are telling us that people are living longer so the (State) pension has to keeping drip-feeding each person on average longer. Now I am sure you will know that the state pension is a dynamic system - the budget is balanced annually - it is not as if the NI contributions one makes today gets stashed away in one's own pot until the retirement date is reached. It is all being funded by today's contributors into NI. So its no good saying, I've been putting into this for x years, I want my pot to dole back out. Because the 'pot' will on average run out before death. This issue is at a national 'pot' level, not individual, simply because individual pots don't exist in the state pension.
They do of course exist in the PRIVATE sector, where those close to retiring now find their enhanced life expectancy has reduced what they can get back out via Annuity returns.
Which is why a Government - any flavour of Government - wants to push back the start gate, however uncomfortable it is.
The alternative is cut back the amount paid out - but that merely pushes more at the bottom into the zone regarded as living at below the accepted breadline - so top-up social payments come into play anyway.
Not saying I have a silver bullet.
They do of course exist in the PRIVATE sector, where those close to retiring now find their enhanced life expectancy has reduced what they can get back out via Annuity returns.
Which is why a Government - any flavour of Government - wants to push back the start gate, however uncomfortable it is.
The alternative is cut back the amount paid out - but that merely pushes more at the bottom into the zone regarded as living at below the accepted breadline - so top-up social payments come into play anyway.
Not saying I have a silver bullet.
"Members of company pension schemes and those taking out private pensions have had to pay much bigger contributions- in many cases up by nearly 50%- in recent years to fund the costs of paying pensions for longer."
Only partly true. Another significant reason was that in 1997 Gordon Brown (as one of his first measure as Chancellor of the Exchequer) made changes to taxation arrangements of private pension funds. This has been estimated to have taken somewhere between £100bn and £150bn from the assets of those schemes. This has led, as warned by many people including senior civil servants of the time, to widespread closure of many "final salary" schemes and a hefty reduction in benefits paid to those using "money purchase" options. (And note this pre-dates the "financial crisis" of 2007-08 so cannot be blamed on greedy and unscrupulous bankers. That crisis simply exacerbated the decline of those schemes which might otherwise have survived the crisis).
Back to the question, with your £8,900 in the bank you may not "need" £10 more per week, lardhelmet. But you will be paid back £520 of your £8.9k per annum which is 5.84%. Of course this is not the same as receiving interest as your £8.9k is effectively lost but it may suit some people who (a) do not need the capital sum but prefer income and (b) hope they are going to live more than 17.1 years (after which they are in profit). One thing I have not checked out is whether this sum (which is paid from your £8.9k which was taxed) forms part of your "taxable income" (which the normal State pension does). If it does this means that if you are in receipt of other income to take you over the tax-free allowance your £10 per week will be taxed again.
The State pension scheme is not worthy of the name. There is no proper relationship between contributions made and benefits paid out to individuals. (In fact if anything an inverse relationship exists - the less you pay in the more you get out). The most useful thing the government could do is to wind it up by closing it to new entrants (i.e. those starting work now will not receive a State pension) and let people make their own arrangements by reducing taxes and NI. Benefits can be made available for those who for whatever reason did not make provision for themselves, with those who genuinely could not (because of illness or other genuine reasons) being paid a much higher rate than those who sat on their ar5es for forty years.
Only partly true. Another significant reason was that in 1997 Gordon Brown (as one of his first measure as Chancellor of the Exchequer) made changes to taxation arrangements of private pension funds. This has been estimated to have taken somewhere between £100bn and £150bn from the assets of those schemes. This has led, as warned by many people including senior civil servants of the time, to widespread closure of many "final salary" schemes and a hefty reduction in benefits paid to those using "money purchase" options. (And note this pre-dates the "financial crisis" of 2007-08 so cannot be blamed on greedy and unscrupulous bankers. That crisis simply exacerbated the decline of those schemes which might otherwise have survived the crisis).
Back to the question, with your £8,900 in the bank you may not "need" £10 more per week, lardhelmet. But you will be paid back £520 of your £8.9k per annum which is 5.84%. Of course this is not the same as receiving interest as your £8.9k is effectively lost but it may suit some people who (a) do not need the capital sum but prefer income and (b) hope they are going to live more than 17.1 years (after which they are in profit). One thing I have not checked out is whether this sum (which is paid from your £8.9k which was taxed) forms part of your "taxable income" (which the normal State pension does). If it does this means that if you are in receipt of other income to take you over the tax-free allowance your £10 per week will be taxed again.
The State pension scheme is not worthy of the name. There is no proper relationship between contributions made and benefits paid out to individuals. (In fact if anything an inverse relationship exists - the less you pay in the more you get out). The most useful thing the government could do is to wind it up by closing it to new entrants (i.e. those starting work now will not receive a State pension) and let people make their own arrangements by reducing taxes and NI. Benefits can be made available for those who for whatever reason did not make provision for themselves, with those who genuinely could not (because of illness or other genuine reasons) being paid a much higher rate than those who sat on their ar5es for forty years.
But I do not agree this is so. Money that eventually gets allocated to pensions need not be stashed away until it is used by the person that has contributed. I believe that is a red herring.
The government has a pot of public money: it is how it describes it that is the issue rather than reality. It makes little odds that it considers that one income pays for something and another income pays for something else, it is just accountancy pigeonholes they use to help them get to grips with the financial issues. And of course to justify bad decisions.
Because it is a single pot of public money it isn't the same tragedy as a private con would be. Ultimately the government has to collect enough to pay the bills, and it doesn't matter for the sake of this discussion how it gets the income. If money was instead collected then invested on, say, a stock market, perhaps because folk were concerned that it was being spend as son as it was collected, then there is the risk of losing it. It makes more sense to pay today's bills with the money one collects today; just as long as there is enough in the coffers collected during good times to cover costs in bad times.
Therefore there is no real pot per individual to run out, there is but one large pot per nation that is then divvied as as needed.
So there can be no justification for pushing back the start date. it doesn't help. The costs are the same no matter who is employed and who not. Consequently nor is there any justification for cutting back on pensions or anything else. The only aim the government needs to ensure is that all the costs of running a society is covered by the tax income (whatever form) regardless as to how the budget is split.
The government has a pot of public money: it is how it describes it that is the issue rather than reality. It makes little odds that it considers that one income pays for something and another income pays for something else, it is just accountancy pigeonholes they use to help them get to grips with the financial issues. And of course to justify bad decisions.
Because it is a single pot of public money it isn't the same tragedy as a private con would be. Ultimately the government has to collect enough to pay the bills, and it doesn't matter for the sake of this discussion how it gets the income. If money was instead collected then invested on, say, a stock market, perhaps because folk were concerned that it was being spend as son as it was collected, then there is the risk of losing it. It makes more sense to pay today's bills with the money one collects today; just as long as there is enough in the coffers collected during good times to cover costs in bad times.
Therefore there is no real pot per individual to run out, there is but one large pot per nation that is then divvied as as needed.
So there can be no justification for pushing back the start date. it doesn't help. The costs are the same no matter who is employed and who not. Consequently nor is there any justification for cutting back on pensions or anything else. The only aim the government needs to ensure is that all the costs of running a society is covered by the tax income (whatever form) regardless as to how the budget is split.
"It makes more sense to pay today's bills with the money one collects today;"
Not pensions, it doesn't, OG. The system you describe can be seen as a glorified "Ponzi" scheme and as you can see this model is not very stable:
http://
Pension schemes should be funded by individuals (and their employers if appropriate) and benefits paid out in direct relation to the funds paid in. Those funds should be invested (thus increasing their value) and be used to pay the individuals when the time comes. It is unlikely that current receipts alone will properly fund the benefits (especially if the membership is declining, though this is not the case with the State scheme).
Funding the State scheme suffers from a major drawback: "pensions" are paid to people who have contributed far too little (very often nothing) towards the benefits paid. As such these payments are not pensions at all but simply retirement age benefits. If the State Pension scheme is to be retained the "proper" State pension receipts and payments should be separated from the payments which have not been funded by lifetime payments. These receipts and payments can be properly calculated and payments to individuals properly related to funds paid in. If that is not to be so then the pension scheme should be would up.
Not pensions, it doesn't, OG. The system you describe can be seen as a glorified "Ponzi" scheme and as you can see this model is not very stable:
http://
Pension schemes should be funded by individuals (and their employers if appropriate) and benefits paid out in direct relation to the funds paid in. Those funds should be invested (thus increasing their value) and be used to pay the individuals when the time comes. It is unlikely that current receipts alone will properly fund the benefits (especially if the membership is declining, though this is not the case with the State scheme).
Funding the State scheme suffers from a major drawback: "pensions" are paid to people who have contributed far too little (very often nothing) towards the benefits paid. As such these payments are not pensions at all but simply retirement age benefits. If the State Pension scheme is to be retained the "proper" State pension receipts and payments should be separated from the payments which have not been funded by lifetime payments. These receipts and payments can be properly calculated and payments to individuals properly related to funds paid in. If that is not to be so then the pension scheme should be would up.
It was the oft quoted reference to a Ponzi Scheme is precisely why I mentioned that it was different for governments (who can always raise more money by taxing citizens more (within reason)) compared to a private con scheme, which can more easily find itself out of cash and have no further options but to crash & burn.
Pension schemes could be supplemented by individuals over an agreed minimum needed to live. But government has a duty to the population to ensure no one is forced to work until they drop, but can hand the reins over to the younger generation in later life. The State Pension, as it is called, is this safety net for the older citizens which triggers on age.
However it should not be directly compared to personal supplementary pensions because it is a right: it ought to be considered part of the Welfare budget.
If it were then there would be less fuss regarding what money is allocated from where, and how it is so risky to spend the money the government collects to cover today's bills, today.
For sure it ought not be hypothecated. I think that is what causes most of the problem. Because it is a right, it should be admitted to come from general taxation and none of this 'it has to pay for itself' illusory claim.
Pension schemes could be supplemented by individuals over an agreed minimum needed to live. But government has a duty to the population to ensure no one is forced to work until they drop, but can hand the reins over to the younger generation in later life. The State Pension, as it is called, is this safety net for the older citizens which triggers on age.
However it should not be directly compared to personal supplementary pensions because it is a right: it ought to be considered part of the Welfare budget.
If it were then there would be less fuss regarding what money is allocated from where, and how it is so risky to spend the money the government collects to cover today's bills, today.
For sure it ought not be hypothecated. I think that is what causes most of the problem. Because it is a right, it should be admitted to come from general taxation and none of this 'it has to pay for itself' illusory claim.
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