Flat rate state pension as low as £66 per week

The implications of this for women are staggering:

The State Pension is based on your own contributions and in general you will not be able to claim on your spouse or civil partner’s contributions at retirement or if you are widowed or divorced. However, if you're widowed you may be able to inherit part of your partner’s additional State Pension already built up.

There is also provision under the new system for women who paid the reduced rate ‘married woman’s contributions’ to use these contributions towards the new State Pension.

If you are not on course to receive a full State Pension on your own contributions you may be able to increase your entitlement – for example by paying voluntary NI contributions or if you are eligible for credits. Contact the Pension Service for more information.

from the Age UK site.

So anyone who has 'only' paid married women's contributions, as so many women born in the 1950s and 60s did will be able to use these contributions towards the new State Pension. Ah, so you'll have to get a non-existent job then?

What many people who will be affected won't realise is that whereas 30 years, even all opted out, will get you the full basic state pension under the current system, you need 35 not opted out to get the new basic state pension.

It does affect people who paid into SERPS too Maggiemaybe. As I understand it (and who does?) the amount between the current basic state pension and the new pension will be taken from the SERPS, i.e., the SERPS amount will be added on to the current basic state pension. There seem to be few who will get the £150 just on NI contributions until the SERPS, etc., is out of the system.

As for winners and losers, losing on one front is one thing but you seem to have lost on several. The only real difference is the extra years you have to work and I would be shouting about the fact that these extra years were supposed to pay for the higher amount.

It has now been made crystal clear by a previous article back in June 2014 found by me the other night in The Daily Mail.

www.thisismoney.co.uk/money/pensions/article-2654291/REVEALED-How-6-10-wont-155-week-state-pension.html

CONTRACTING OUT REDUCES BASIC STATE PENSION
What the flat rate does to those with a retirement age on and from 6 April 2016 is this.

For each year you were contracted out of your State Earnings Related Pension Scheme that became the State Second Pension from 2002, you lose one year's National Insurance record.

This is because once contracted out you and your employer were not paying the full standard rate of 12 per cent per year from your wages, but the lower 10.4 per cent of National Insurance contributions.

SERPs MERGED WITH NI BY FLAT RATE PENSION
So if you have the 35 years NI record needed for the flat rate pension, but were opted out for, say, 20 years of that, your NI record is only 15 years.

DOES THIS MEAN NIL FLAT RATE STATE PENSION?
But someone with 30 years, opted out 20 years, you hit just 10 years NI record.

The flat rate pension does not pay any state pension for 10 years and below NI record.

For people with a state pension payout age next year on and from 6 April 2016, you might ask government for your flat rate pension forecast today, to find out what your money is going to be.

If your forecast is below the full flat rate state pension of between £148 - £155, then one reason might be the reductions for each year opted out of SERPs / S2P.

YOU GET FULL STATE PENSION THIS YEAR EVEN IF OPTED OUT SERPs
Right now your basic state pension amount is unaffected by any years contracted out of SERPs, for those getting their state pension payout this year, 2015.

THE LOSS OF STATE PENSION PAYOUT FROM 60
Those women who lost payout at 60 from 2013, have a retirement age from 2019-2020, so cannot get a flat rate pension forecast yet.

It is the men who lost payout at 65 from 2013, raised to 66 - 68 who are directly affected if that is your retirement year is on and from 6 April 2016. And you can get your flat rate pension forecast for your retirement next year.

If as a woman or man with a retirement age of next year, 2016, you get a forecast of below £148 - £155 for 35 years NI record, please sign the petition, so that both the raised retirement age and the losses of the flat rate pension are both debated in parliament the only time MPs ever listen - immediately before asking them to vote for us.

https://you.38degrees.org.uk/petitions/state-pension-at-60-now

Pension60

See my post on your other pension thread. I am intrigued, perhaps unjustly.

Other thread.

(Bumped for Ariadne and Others)

Ana

I am getting confused, was your post to me.

I am referring to Pension 60's post :-

£55 State Pension next year. .

No, I was referring to Ariadne's post on the other thread saying that there was a 'more rounded' discussion on the subject elsewhere!

I'm giving up trying to be helpful on here!

Thank you Madam.

I am beyond worried about the implications of all this and the more I read the more worried and upset I become. Does this mean that my husband who will be 65 in a couple of years will not get any state pension because he worked for a large company and paid the lower national insurance amount for 40 years? We have only just realised this. He took early retirement a couple of years ago ( not really by choice) so receives a small pension. He had no choice in paying slightly lower national insurance, its just what the company did probably for their own benefit. I do not receive my state pension until I am 66, several years from now and have very little pension because, like many women of my generation, I had part time poorly paid jobs to fit round my children. I have and do work full time now but its just not very well paid office work.

I find it appalling that Steve Webb can just say he might be "guilty of oversimplify ing the new flat rate pension" lying in other words, without caring about the impact on people like my husband and me . My husband has sent for a forecast but it will take some time and I'm just so worried. We had assumed we would both receive the new flat rate pension because that's what we were told and planned our retirement accordingly.

I have discovered today that I was contracted out of SERPS from when it began on 6 April, 1978.

You get one year lost to your National Insurance Record from each year you were contracted out from SERPs (State Earnings Related Pension Scheme that continued after 2002 and called the State Second Pension).

The flat rate pension does not pay out any state pension for 10 years or less National Insurance record.

So in my case with 30 years NI record, I get nil state pension in 2020.

But this affects people retiring on and from 6 April 2016, so men and women older than me.

SERPs and S2P are abolished on and after 6 April, 2016, so no further contributions can be made to this additional pension.

The flat rate pension, according to Pensions Minister Mr Steve Webb's confirming this, requires:

- paying the full standard rate of National Insurance of 12 per cent, not the reduced 10.4 per cent by being contracted out, and

- paying the State Earnings Related Pension Scheme for 35 years.

Age UK inform that the National Insurance and SERPs / S2P additional pension are merged by the flat rate pension from 6 April 2016.

The government's own calculations says 2 million workers nearing retirement next year, on and after 6 April 2016 will not get the full flat rate pension, by this little wheeze of merging National Insurance and contracting out.

Today you get the £113.10 basic state pension and the top up from the additional pension, if you were not contracted out.

Pension Credit (savings) is also abolished by the Flat Rate Pension for new claimants on and from 6 April 2016.

My petition is a fight to stop the ABOLITION OF THE STATE PENSION for those retiring on and from 6 April 2016.

https://you.38degrees.org.uk/petitions/state-pension-at-60-now

Because the £113.10 basic state pension is listed internationally as the lowest state pension of all rich nations bar poor Mexico. Now we will not even get £55 per week or even

NOTHING.

The government's changes to the state pension, coming into force in 2016, will include the abolition of the savings credit element of pension credit. The guarantee credit element will continue to provide a safety net to lower income pensioners.

So nobody will be left penniless and destitute, even if they haven't clocked up enough qualifying NI years.

Certainly noone will be left penniless if they have worked throughout their lives, as there are transition arrangements in place to ensure that you will receive either what you have built up in the old system or the new system, whichever is the higher.

As I said earlier, for 41 qualifying years of NI contributions my pension forecast is £115. This is what I have earned under the old system, the one currently in force. Under the new system, the one that will be in force when I hit my retirement age of 66, I would get less, £103. A long way below the £148 per week that a lot of people assume the new "flat rate" system will give them if they have worked for at least 35 years.

But not being left penniless is one thing and not receiving the amount you are expecting and on which you have based your retirement plans is another. Both giving cause for concern.

I hope you are right Maggie may be. The way I was reading the very confusing information was that because my husband was contracted out throughout his long employment this meant he would receive no state pension at all when he is 65 in 3 years time. Surely that can't be the case when he has paid national insura rance even if it is at the lower rate for over 40 years.

By the way, I should say hi to all you lovely gransnetters. I've been 'lurking' for ages but never posted. I was so worried about this pension business I bit the bullet and joined in. I've enjoyed reading your posts for some time now.

I should add that I am a mum, grandma, wife and habitual worrier.

sarah12345 Welcome to GN do stick around and look at a few other threads.

These pension changes sound dreadful never mind having to work longer. Fortunately I date from a few months before the NHS.

This affects me too, so in November I requested a pension forecast, which arrived last week.

Although I have plenty of qualifying years, some of them are "opted out" but my letter says that I will not receive less than the amount I have currently built up i.e. I will receive the higher amount as worked out under either the old or new legislation.

Hope this offers a crumb of comfort. Still feel cross that I can't get my state pension at age 60 though.

Sounds like my sister is lucky, as she gets her state pension in March 2016.
Having worked for the Post Office for over 40 years, she was opted out, but at least her years count.

Today you get the £113.10 basic state pension and the top up from the additional pension, if you were not contracted out.

Some of us had to pay 39 years' contributions (42 years for men) to be able to get that full rate of pension.

I think some of this was discussed and explained on one of the other threads you started on this subject, Pension60. If I was more au fait with the pc I could link it for you if you have forgotten.

indeed rosequartz it was 39 years for women and 44 for men - I know because I retired in 2007 and only had 34 years contributions as home responsibility contribs were not available for those with children before 1978
I did scrape another 3 years from age 65 because I spent 4 years in Canada and benefitted from the reciprocal agreement so I get 37/39ths of the basic state pension. Fortunately I get some SERPs (which was paid for when working at the time) so I manage.
It is annoying when goalposts are moved but such is the manner of relying on anything that is at the behest of any shade of government.

Nice to meet you, sarah12345. I think you'll enjoy Gransnet - I certainly have since I joined a couple of years ago, and the problem is spending too much time on it once you get interested in some of the topics being discussed!

I'm certain that your husband will get at least the current state pension when he retires, because he'll have more than enough contribution years for that. It's becoming clear though that only a minority of people will get this much vaunted new flat rate pension of over £140.

Soupy, I'm with you on being cross about not getting my pension at 60, which is my age now. I have over 40 years of contributions, but some women of my age will have started work at 15 and have worked for 51 years by the time they get their pension at 66.

Thank you maggiemaybe and soupy. I feel more confident that my husband will get something, even if its not the new flat rate. I will have worked for 50 years when I receive my pension in just over 7 years time and who know, the rules may have changed again by then!

Quoting sarah12345 I am beyond worried about the implications of all this and the more I read the more worried and upset I become. Does this mean that my husband who will be 65 in a couple of years will not get any state pension because he worked for a large company and paid the lower national insurance amount for 40 years?

It makes me so cross that people are being frightened like this. Yes it is complex but not as extreme as some are making out. If, Sarah12345, your husband contracted out the money he didn't pay into NI went into his personal pension and he will receive more from that than he would otherwise have done. Nothing has changed there.

Under the current scheme people who have contracted out get less than someone who had not contracted out so nothing has changed there.

So, the theory is, it would be unfair if they got the same pension despite having paid lower NICs for most of their working lives. And in any case they will have their work or personal pension in addition.

As a result, under the new scheme they may only get the same pension as they would have done under the old scheme and that could be as low as just the basic state pension itself - it will not be nothing and the person will still have their increase personal pension!

increased (sorry)