Higher and Lower rate of State Pension,. This really needs changing

Icandoit

I've not had all these posts on this thread however I did find out yesterday from a chat with my friend who was a teacher since aged 21 retired early due to ill health at 57 now 79 and she receives £1000/month as her state pension. I cannot believe she actually gets more that £200/month than me. I am now 70, retired at 2011 at 57, received my pension at 66 after waiting 6 years. Worked with Local Government all my life. Surely this cannot be the case. I find the pensions so complicated. Think when we retire we should get a summarised breakdown of how they achieve the figure we are going to get as a pension each month.

I retired early due to ill health and collected my state pension this year, at the age of 66. My pension is a few pounds short of £1000 every four weeks, because l’m widowed and was entitled to a proportion of my late husbands’ pension, which topped it up from just over £900. Could that be the reason your friend has a higher pension ?

About 700,000 people retire every year apparently, so in the 8 years since 2016, 4.8 million approx will now have reached the new retirement age. There are 11 million pensioners. On that basis the balance to there being more on the new pension than the old will be in 2025.

Grannynannywanny

Excuse me if I’ve got it wrong. Will pensioners whose only income is the old state pension not be entitled to pension credit to top it up to new state pension rate? So they will still be entitled to the winter fuel allowance.

Yes. The minimum pension income guarantee for a single person is £218.15 pw. If your state pension together with any other income falls below this threshold, pension credit will top it up to this level and qualify you for WFA.

It’s also worth remembering that if you have a disability you can claim attendance allowance. If you’re successful this will mean you have a higher minimum pension income guarantee because of a disability. Your income will be topped up to the threshold of £218.15 and you will receive an additional £81.50pw on top of that.

If you are caring for someone who receives attendance allowance, or the care component of PIP, child DLA or the Scottish ADP payment you could receive an extra premium as well as your pension credit top up. This is called an underlying entitlement, currently £45.60 pw. It’s paid because carers allowance stops at state pension age - they’re overlapping benefits, so you’re paid the underlying entitlement instead. Both of these top ups mean you have access to the WFA.

If you claim attendance allowance you may also be entitled to a higher rate of housing or council tax benefit if you qualify for them.

Since the higher rate pension only came in in 2016 it wouldn’t be financially feasible to level the two pensions, I have tried to find out how many are on the old pension without success but it must be a huge number. DH and I are both on the old pension, he gets about £300 more than me every four weeks because I stayed home to care for our sons for nine years but since we both have occupational pensions we are happy with our income and I consider myself fortunate to have been able to retire at 60, DH retired at 63. The only thing that irks me is that politicians claim that pensioners got a rise of £900 last April, they never mention that those on the basic pension got less, both parties are guilty of this. The gap between the two pensions will widen as time goes by of course because increases are given on a percentage basis, that is while the triple lock is in existence, possibly its days are numbered?

I personally do not take the view the system is a complete mess. In parts it may be complicated but not impossible to understand.
People need to take their own responsibility for financial matters as well as their pension provision.
I checked my teacher's pension regularly from a young age. When I got to 50 I did some research on being contracted out and realised I would have to pay NI for longer to get the full new state pension. I paid 47 years in total and made the full pension bar a few pence.
Some people are too quick to blame the system to excuse their own lack judgement or interest in sorting out their future pension income.
With the internet it is very easy to find things out and set things up.
Neither do I accept the fact that older people cannot cope with online activities. What an insult to them. My mother is 85 and mages all finances online as well as clothes shopping , holidays etc... My grandmother who died at the age of 102 also did all her banking online! She also knew what her pensions were worth from a young age.
The state pension is fairly easy to follow in that what you pay in leads to what you can claim! Again full records are online or can be sent to you.
There is no way the people receiving the old pension are going to be levelled up. Quite a large number of people would lose out. Again my mother is under the old system but through some non contracted employment as well as contracted out employment and always paying her own 'full' stamp she receives £196 a week. In addition she has a Civil Service pension of just over £7000 a year, so manages quite well.
I can also imagine the outrage from the very people demanding equalisation when taxes have to rise to pay for it lol!

Allira

^So everyone is different. Comparisons are pointless, except for pointing out that SOME pensioners are very hard up.^

Yes, I agree.

However, comparisons are interesting and just show wat a complete mess the system was.

Guaranteed Minimum Pension anyone?
Who can explain that?
Anyone? No-one?

www.gov.uk/government/publications/new-state-pension-if-youve-been-contracted-out-of-additional-state-pension/guaranteed-minimum-pension-gmp-and-the-effect-of-the-new-state-pension

So everyone is different. Comparisons are pointless, except for pointing out that SOME pensioners are very hard up.

Yes, I agree.

However, comparisons are interesting and just show wat a complete mess the system was.

Guaranteed Minimum Pension anyone?
Who can explain that?
Anyone? No-one?

My income, all pensions, is from so many sources and I certainly don’t understand all the calculations.
State Pension, shortfall in years when I was at home with children before Home Responsibilities Protection came in. Then p/t work, ‘ small stamp’ then f/ t, so basic pension is small, some Graduated pension, some Additional Pension, extra for deferring for 18 months.etc.but a deduction for contracted out….
Teacher’s Pension, plus an annuity bought with AVC fund, tiny French pension, but pro rata it is great to get £30 pm for working abroad for less than a year.
Now since DH died I get half his Teacher’s Pension, and extra on my State Pension, so in total my income is really good. I have no idea whether it is correct or not. DWP sent me a letter suggesting I check, but my NI record seems to be correct.

One good thing I did: having withdrawn my superannuation paid in for two years before I had children, I repaid it for a small sum - the benefit of those two extra years in the teachers’ pension system is huge.

So everyone is different. Comparisons are pointless, except for pointing out that SOME pensioners are very hard up.

This is what I’ve been saying all along . Not everyone on the old pension is disadvantaged. Equalising them would disadvantage those who paid a lot of SERPS and inherited a pension.

Icandoit

Oh dear that's not so good Allira, I sympathise.I hope you get it all sorted out soon. I often wonder if the right hand knows what the left hand is doing in DWP. You may of course be right about my friend getting extra NI's, she didn't mention that and I hadn't thought of it. No point dwelling on it I just found it rather strange. I'm sure if there was a room full of pensioners we would have a story to tell and not one of us would be getting the same amount.

A friend who never worked since having a family, apart from for her husband's firm where she was paid under the amount liable for tax and NI, gets a full old SP. 🤔

I often wonder if the right hand knows what the left hand is doing
As the Taxperson said to my husband once about HMRC!

If they don't know, how is the lay person supposed to fathom it out?

Oh dear that's not so good Allira, I sympathise.I hope you get it all sorted out soon. I often wonder if the right hand knows what the left hand is doing in DWP. You may of course be right about my friend getting extra NI's, she didn't mention that and I hadn't thought of it. No point dwelling on it I just found it rather strange. I'm sure if there was a room full of pensioners we would have a story to tell and not one of us would be getting the same amount.

if she retired on the grounds of ill health surely her NI would have ceased then after her payout from teaching

If she retired on health grounds before 2014, she may have applied for Statutory Sick Pay, it wasn't much but at least her NI stamp would have been paid for those remaining years years so she would have the full 39 years of contributions.

Even different sections of the DWP get confused so no wonder we find to difficult to comprehend! I'm trying to sort out what may be a discrepancy in my calculations and keep being bumped from section to section and being promised yet another set of forms which will arrive in the post (some time over the next few weeks apparently).

I have a print out which I requested showing all my NI years, I always paid the high NI stamp. Unsure about my friends SSP however but if she retired on the grounds of ill health surely her NI would have ceased then after her payout from teaching - unsure about that but that makes sense tbh. Same local authority too. However I still think it would make sense for us all to receive a written summary of how our pension is calculated. . Re-assurance I think as it's all so confusing.

You can look on the Government Gateway site, icandoit, for a breakdown of your NI contributions over your working life.

You may have paid a lower rate of NI than her at some point without realising as you were in a different employer's scheme. It's all very confusing.

If she received statutory sick pay for those final years her NI stamp would have been paid or those years would have been deducted from the years she needed for a full pension.

Btw, if it's any consolation, she receives £400 more per month than me!

I've not had all these posts on this thread however I did find out yesterday from a chat with my friend who was a teacher since aged 21 retired early due to ill health at 57 now 79 and she receives £1000/month as her state pension. I cannot believe she actually gets more that £200/month than me. I am now 70, retired at 2011 at 57, received my pension at 66 after waiting 6 years. Worked with Local Government all my life. Surely this cannot be the case. I find the pensions so complicated. Think when we retire we should get a summarised breakdown of how they achieve the figure we are going to get as a pension each month.

Allira

In mitigation I'd just like to say that yes, I am capable of research but that, quite often, a brick wall can be hit because the answers include ifs, buts and maybes. The advice is for women born before 1951 and men born before 1945 to seek specialist advice when asking for clarification about their pension entitlement.

That's the whole problem. The system is fraught with ifs, buts and maybes, which is kind of my point. People saying that those on one system are disadvantaged are not taking account of those ifs, buts or maybes. Some have less money because they paid less in, some have more because they worked for many more years, and some fall between the two.

There is another group who need specialist advice, and they are widows who have not claimed their husband's pensions. It is not straightforward, so I won't give too much information in case I get it wrong, but women who reached SPA before 2016 need to check to ensure that they have everything they are entitled to. Martin Lewis has information here:
www.moneysavingexpert.com/reclaim/married-women-missing-state-pension-boost/

I am on the old basic state pension, which I have mentioned many times before, but, and it is a big but, I also paid into an occupational scheme (teacher’s pension scheme) and consequently I have a professional pension. It is not particularly big, because I took some years out to raise my children, and I was not allowed to pay into it when I was working irregularly (supply work) and additionally I was paid back what I had paid in when I stopped working to have my first baby. There was no maternity leave then, it was have no children and work, or leave teaching until you were able to return full time. No part time work available in primary education then either. Well it was what it was, and terms and conditions are far superior for teachers now, I’m pleased to say. Obviously I wasn’t allowed to pay SERPS since I paid into the professional scheme once I stopped supply teaching and returned full time. I have ended up with about half of my professional pension, based on what I would have received if I had worked right through and never had any children. Well as I said, it is what it is, and I’m just glad it’s better for young women these days.

With regard to the state pension, I do feel it’s unfair to introduce a new, higher state pension, but continue to pay a reduced pension to other pensioners. It means all pensioners are not treated equally, so for example, under the triple lock, I believe those on the new state pension will receive an increase of approximately £400 this year, whilst those on the old state, basic pension will receive approximately £300. I find this inequality difficult to comprehend, since the fuel bills and grocery bills for all pensioners will rise the same amount. I feel particularly sorry for those pensioners who are not buffered by the addition of either a professional pension, or additional pension in the form of SERPS.

In mitigation I'd just like to say that yes, I am capable of research but that, quite often, a brick wall can be hit because the answers include ifs, buts and maybes. The advice is for women born before 1951 and men born before 1945 to seek specialist advice when asking for clarification about their pension entitlement.

Sorry, you are right, although to be fair as I am also saying that there are people on the old scheme who get more than those on the new, and you didn't make it clear whose words you were quoting it's not a huge leap to assume they were mine.

Please don't twist my words.

As I was not referring to anything you said I'm not sure I was twisting your words in any way at all.

🤔

The post was actually addressed to Brahumbug as I used her quote in my answer.

Allira

^Many in the old pension receive far more.^

How many?
What percentage?

Many probably receive far less of course.

I have no clue what any of my peers receive in their pension.

You have access to the Internet, same as me. If you want to find figures to prove me wrong, you can look them up. I have other things to do just now, as I am still working - I will be on the new pension when it finally kicks in, but it hasn't yet. Of course some will receive far less - I didn't say otherwise. Please don't twist my words. If you've read the thread you will know that I've said that regardless of the age at which people claimed their pensions, the amounts they get now are the important thing, as it is today that bills have to be paid, but don't let that get in the way of a jibe?

The old pension allowed people to contribute to SERPS and for women to inherit their husband's pension, and depending on how much they'd paid in this meant that the old pension could be higher than the new one. It's not just a personal opinion though . My mother gets more pension than I will, as she paid SERPS and inherited my father's pension (he had also paid as much as possible into SERPS as well as into his occupational pension, which she also inherited). The option to increase your pension with SERPS is no longer available, and widows on the new pension don't inherit. Most of her friends are in the same boat.

There is little point in comparing one system against another, as they have their own advantages and disadvantages. I think that women who were told that they would have no advantage by paying the full 'stamp' have a grievance, and should be compensated, although I accept that it would be difficult to prove after all this time, and the option to pay the full stamp was legally available.

There are further anomalies in the way that people (mostly women) on contracts that weren't permanent and full-time (including many in the education sector) were not allowed to join occupational pensions. Mine is drastically reduced for this reason, and of course I was also contracted out of the state scheme for several years, so had to make that up, or both my state and occupational pensions would be short.

The OP is about the differences between the two schemes, it is not yet another about the WFP.

Yes, indeed, Mollygo

Because off the complications of the old system, pre 2016, many older pensioners had no idea that their State Pension was being adjusted in so many ways until they applied for it or asked for a forecast just before they retired.

Thank goodness it has been simplified now.

Allira

^Many in the old pension receive far more.^

How many?
What percentage?

Many probably receive far less of course.

I have no clue what any of my peers receive in their pension.

It’s not the many in the old pension who receive more (if that’s not just a personal opinion) who worry me.

How many?
What percentage?

It’s the many on the old pension who receive less who are cause for concern.

Those receiving £200 less (in terms of a one off fuel payment) as their monthly pension.