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

The annual pension rise under the triple lock is based on a percentage figure, so those on the old state pension fall further behind those on the new state pension every year. The number of people eligible for pension credit will rise every year therefore.

Because it’s a percentage increase.

Because it is a % increase, so 4.5% of, say, £170 produces an increase of less than an increase of 4.5% of £220.

My SP is made up of various components. At the last increase, not all the components were given the % increase. So it is complicated and the blanket % you hear on the news does not apply across the board.

Cabbie21

Because it is a % increase, so 4.5% of, say, £170 produces an increase of less than an increase of 4.5% of £220.

My SP is made up of various components. At the last increase, not all the components were given the % increase. So it is complicated and the blanket % you hear on the news does not apply across the board.

Yes, so the gap widens.

Thanks for the replies, I should have worked that one out! Duh!
The info I read was just blanket amounts for everyone on each system.
I’m not getting excited about it as I’ll just be paying tax, but I’m pleased for those who will benefit. A pity that those on the old rate lose so much.

I’m not getting excited about it as I’ll just be paying tax

The amount of tax I paid last year (although very little I should add) wiped out most of any increase I had anyway.

Yes my tax bill will be increased, I doubt if I’ll see much of the payment.

J52

Yes my tax bill will be increased, I doubt if I’ll see much of the payment.

The amount I received in April went down, not up, then did go up slightly in May.

From what I remember from my time working at DSS if you were on the older state pension you were also entitled to an additional pension allowance based on your NI contributions. You don't get that on the newer state pension.

Grannymel12

From what I remember from my time working at DSS if you were on the older state pension you were also entitled to an additional pension allowance based on your NI contributions. You don't get that on the newer state pension.

Don't think that's correct as I'm on the old pension and do not receive any additional pension and have always paid full NI contributions.

knspol
What Grannymel2 is referring to is SERPS and S2P which is based in earnings and paid on top of the basic pension, so she is correct. Many on the old pension receive far more than the new pension maximum.

J52

Yes my tax bill will be increased, I doubt if I’ll see much of the payment.

You will only lose 20% of the increase, assuming you are a basic tax payer

Allira

Even if you didn't know about the reduced national insurance, the fact remains you and your employer paid less than someone who was not contracted out and thus made a saving.

An interesting thread. My work pension was contracted out, which means that I get just under £2000 pa less than the full state pension. A friend in the same job but who never paid into the pension scheme has retired with the full SP.
Add this to being born in 1953 and waiting until 10 days before my 66th birthday to draw my pension, I feel a little unfairly treated when the same friend received her state pension 16 months earlier than me although only 4 months older.
My husband's occupational pension was also contracted out, he receives even less state pension than me. We had no choice about being contracted out.
As has been said above, the system is too complicated and for many seemingly unfair. We both retired during the introduction of the new SP and like others were given different information and advice by DWP, I'm still not sure we receive our full entitlement!

I too was born in 1953 and was contracted out so I had to wait till November 2017 to claim my SP.
No-one explained at the time what being contacted out meant other than to make it sound good - i.e. you were paying lower NI contributions. No-one explained that this would result in a reduced SP.
If I had known this I would have invested a bit of money into a private pension. The only way for me to increase my SP was to pay for voluntary contributions for years where my NI record was incomplete. That was fortuitous and I will be looking into whether to make more voluntary contributions in the hope that I can increase my SP again.

Brahumbug

knspol
What Grannymel2 is referring to is SERPS and S2P which is based in earnings and paid on top of the basic pension, so she is correct. Many on the old pension receive far more than the new pension maximum.

This is what I was saying upthread. SERPS and widow’s pensions can take the old pension to well above the new.

Doodledog

I have said it earlier in the thread as well!😁

Brahumbug

Doodledog

I have said it earlier in the thread as well!😁

.

kibera10

I think it will mostly be females on the lower pension - because if they worked and paid the 'married woman's rate' of National Insurance this didn't count towards a pension (or to sickness benefit or unemployment benefit). Maybe these should still get the winter fuel allownce.

I was one of those who was advised to opt for the 'married women's rate'. It adds up to very little. Honestly, I looked into the sums and I'd have been better off if I'd never ever worked - I'd have at least got credit for all those child-raising years. I doubt I'll qualify for the winter fuel allowance as my husband is still here and earning but we've had a rocky time recently and we were close to separating last year. If that happens I'll probably be on the streets.

I am asking this in an entirely non-combative way, but what did people think would happen if they paid a lower rate of contributions? Why did they think that married women should pay less than men, (or than unmarried women) if they didn't realise that they would get a lower pension in return? When I got married (1980) I don't think there was an option to pay less, but I can't imagine why anyone would do so and expect to get the same return as if they'd paid in full.

Paperbackwriter I understand why you feel you'd be better off if you hadn't worked. There is little incentive to save or pay in when doing so means that you are not eligible for things that others get given.

Those who paid the full stamp got no credits for child-rearing either, incidentally. Considering that they still ran houses and raised children as well as working, surely they should have been credited too?

I always feel short changed that my child rearing days were not taken into account. I did not receive child benefit until my second child was born. I had my children young. My best friend had her children late and got child benefit for the first as the rules had changed. Any years with child benefit paid count towards the pension years so I have missed out on those first years.

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.

I get the full womens state pension as I paid the full stamp. The thing that is stopping me getting pension credit is that I receive a small private pension from my late husband which takes me just over the threshold for benefits but I still pay income tax on my state pension and husband's private pension. I also get the old type state pension as I retired before the new system came into play.

Nandalot

I always feel short changed that my child rearing days were not taken into account. I did not receive child benefit until my second child was born. I had my children young. My best friend had her children late and got child benefit for the first as the rules had changed. Any years with child benefit paid count towards the pension years so I have missed out on those first years.

I also missed out on extra pension payments as I took 9 years off work to raise my family so I do not get as much as I would have if I had not stopped working.

BigBopper

Nandalot

I always feel short changed that my child rearing days were not taken into account. I did not receive child benefit until my second child was born. I had my children young. My best friend had her children late and got child benefit for the first as the rules had changed. Any years with child benefit paid count towards the pension years so I have missed out on those first years.

I also missed out on extra pension payments as I took 9 years off work to raise my family so I do not get as much as I would have if I had not stopped working.

I took time off too because I thought that was best for my children and for the whole family and childcare was non-existent anyway.

Apparently that is now considered by some to have been self-indulgent.

I think many didn’t fully comprehend the pension consequences of a complicated working life. They didn’t necessarily follow a straightforward career path. That’s not to say they were lazy or feckless