Petition on Why the old state pension is £200 pm less than the new

Therefore it is possible for someone with a full record of NIC, including maximum SERPS and SP2, to have a total old state pension of £360.88 per week.

Under the New State Pension scheme it is no longer possible to build an Additional State Pension. The maximum new state pension is £203.85.

Tin Soldier thank you very much for posting this explanation.
Finally I can see why my Dad (93) receives so much more state pension than I do!
(I get the new pension).

Whatever may be deemed 'fair', we have to remember that people make plans depending on what the system is when they make them.

I think it is fair that pensions should depend on what we have paid in as individuals, but I don't blame people who knew that the system at the time meant that they could claim a widow's pension should they outlive their husband for factoring that into their plans. Taking that away now wouldn't be right.

Similarly, much as I think it is unfair to make contributions on behalf of parents who can afford to stay at home when their children are at school and not to those who work, that was what used to happen, so it would be wrong to recalculate pensions with those contributions removed.

People shouldn't be out of pocket simply for doing what they were asked by governments to do, and they shouldn't be penalised if they act on forecasts and plan accordingly. We might all have made different choices if only we'd had crystal balls, but as few of us can see into the future, all we can do is hope that we won't be penalised by the system if and when it changes, and that there will be some sort of 'sisterhood' that will fight for all of us, rather than resenting the fact that we have been systematically shafted over the years.

Thanks Tinsoldier. It looks complicated but noticed Additional £50 to the old pension. It woukd come in very handy.

I retired at 61 and received my state pension at 60, I felt lucky to be able to retire at that age and accept that my pension payment is lower than those who had to work for longer before being able to claim their pension. I won’t be signing the petition.

TinSoldier

The old state pension has two elements. Basic Pension and Additional State Pension. The new state pension is a fixed amount based only on how many full years of NIC you have.

To receive Additional State Pension you had to pay contributions under SERPS and/or the Second State Pension scheme (SP2) which superceded it. SP2 came to an end on 5 April 2016.

If you were contracted out of SERPS or SP2, you paid reduced NIC. You should have received a workplace pension at least equal to the Additional State Pension you would have received had you not been contracted out. This is known as the Guaranteed Minimum Payment (GMP).

It isn’t that simple because of the many and various changes that were made to SERPS and SP2 while they existed. People may have various compensatory adjustments to their pensions as a result.

This paper from Steve Webb, a former pensions minister under the coalition, instigator of the triple lock and now partner at Lane, Clark Peacock, explains the complexities of contracting out and how it affects state pension entitlement under both the old and the new state pension systems. It is a long and complicated read but I urge people to read it to see how it relates to them:

www.lcp.com/media/1150050/why-is-money-being-deducted-from-my-state-pension.pdf

(The title of the URL is misleading as it also covers cases where money is added to the state pension.)

The maximum Additional State Pension someone can have built is £204.68. That is paid on top of the maximum basic pension of £156.20 (if you have enough contribution years). Therefore it is possible for someone with a full record of NIC, including maximum SERPS and SP2, to have a total old state pension of £360.88 per week.

Under the New State Pension scheme it is no longer possible to build an Additional State Pension. The maximum new state pension is £203.85.

There are transitional arrangements for people whose pensionable age means they receive the new state pension but who paid SERPS and SP2 before 6 April 2016. They should not lose out as a result of the changes. A comparision is made to see whether they would have received more under the old system. If they would have been better off under the old system they receive a Protected Payment on top of the new state pension. Here is a very simple example:

Someone with enough contribution years for a full state pension under either system:

Under basic pension rules £156.20
Additional State Pension say £50.00
Total Pension £206.20

Under new state pension rules £203.85
Protected payment £2.35
Total Pension £206.20

Bear in mind that the new system will eventually comprise only people whose entire NIC history will be post 5 April 2016.

There are still many people who are not part of a workplace pension scheme. According to government figures for 2022, 88% of eligible employees were participating in a workplace pension which means that 12% of people were not. One 2022 survey revealed that more than 1 in 5 people have either opted out or are considering opting out of their pension scheme in response to rising inflation. (The DWP’s own figures were more modest, with opt-out rates increasing 10.4% overall but it's a worrying trend. )

In other words. one could argue that the higher rate of the new state pension is and will be a safety net for those who may not have a workplace pension and can no longer build an Additional State Pension - similar to pension credits being used to boost someone's pension.

I don’t believe the equalisation of pension age introduced in the Pensions Act 1995 is a factor in the rate of the new state pension. Men also come within one or other system but are only affected by the increase in pension age introduced in the Pensions Act 2011.

I do not know what actuarial calculations were made to arrive at the new state pension (other than those described in Webb’s paper) but it’s worth noting that until very recently, the rate at which NIC has been levied has increased year on year. By 2022 it was 13.25%. By comparison, the contracted-in rate in 1978 was only 6.5%. Over time, it more than doubled. As wages have risen so have NIC contributions until very recently. Younger pensioners may have contributed far more in NIC than older pensioners and that may have factored into actuarial calculations.

In summary, we know that state pension is a contributory benefit. Under the old system, people were able to contribute to an Additional State Pension or were contracted out and received an equal or better workplace pension under GMP. That is no longer the case.

It is perfectly possible for someone on the old system to receive £157 per week more than someone on the system.

Thank you for a very concise explanation!

So SERPs did play a role?

My own Dad had additional state pension, under the old scheme and received over £200 per week. When he died n 2016 his addition SP passed to my mother who then received £900 per month.

silverlining48

I have just checked Callistimon. SP for 23/24 is currently £156 for 23/24 do we get a raise to £169 in April. Every little helps.

Yes it’s a mess why am I not surprised. 😳

Yes, that's the starting point, but people who weren't contracted out should receive SERPs/SP2. If they're single and their income is below the amount of the new state pension, they will probably be eligible for pension credit, which is a gateway benefit and opens up some other benefits.

It's really complicated, which is why it's not a simple as saying people should all receive the same pension.

I have just checked Callistimon. SP for 23/24 is currently £156 for 23/24 do we get a raise to £169 in April. Every little helps.

Yes it’s a mess why am I not surprised. 😳

Thanks for that very full explanation TinSoldier. I knew that some people in receipt of the old state pension receive considerably more than the "basic", but I wasn't sure of the details.

TBH the new system is more transparent. The old system was an absolute mess, with some people being topped up by pension credit and added benefits anyway and others being left with a pittance.

We retired at 60 because that was retirement age. For the most part we started full time work at 15 often because of the need to contribute towards the household expenses. There was no question of further or higher education at least not in the area I lived

I was in exactly the same position with unsupportive parents who had no interest in helping me improve my prospects. I had to do it myself by studying part time to achieve professional qualifications.

I retired (from employed work) at 60 and am 80 this year, So I am being screwed over by a rotten system.

Thanks TinSoldier

I will download that and read later, plus your explanatory post.

The old state pension has two elements. Basic Pension and Additional State Pension. The new state pension is a fixed amount based only on how many full years of NIC you have.

To receive Additional State Pension you had to pay contributions under SERPS and/or the Second State Pension scheme (SP2) which superceded it. SP2 came to an end on 5 April 2016.

If you were contracted out of SERPS or SP2, you paid reduced NIC. You should have received a workplace pension at least equal to the Additional State Pension you would have received had you not been contracted out. This is known as the Guaranteed Minimum Payment (GMP).

It isn’t that simple because of the many and various changes that were made to SERPS and SP2 while they existed. People may have various compensatory adjustments to their pensions as a result.

This paper from Steve Webb, a former pensions minister under the coalition, instigator of the triple lock and now partner at Lane, Clark Peacock, explains the complexities of contracting out and how it affects state pension entitlement under both the old and the new state pension systems. It is a long and complicated read but I urge people to read it to see how it relates to them:

www.lcp.com/media/1150050/why-is-money-being-deducted-from-my-state-pension.pdf

(The title of the URL is misleading as it also covers cases where money is added to the state pension.)

The maximum Additional State Pension someone can have built is £204.68. That is paid on top of the maximum basic pension of £156.20 (if you have enough contribution years). Therefore it is possible for someone with a full record of NIC, including maximum SERPS and SP2, to have a total old state pension of £360.88 per week.

Under the New State Pension scheme it is no longer possible to build an Additional State Pension. The maximum new state pension is £203.85.

There are transitional arrangements for people whose pensionable age means they receive the new state pension but who paid SERPS and SP2 before 6 April 2016. They should not lose out as a result of the changes. A comparision is made to see whether they would have received more under the old system. If they would have been better off under the old system they receive a Protected Payment on top of the new state pension. Here is a very simple example:

Someone with enough contribution years for a full state pension under either system:

Under basic pension rules £156.20
Additional State Pension say £50.00
Total Pension £206.20

Under new state pension rules £203.85
Protected payment £2.35
Total Pension £206.20

Bear in mind that the new system will eventually comprise only people whose entire NIC history will be post 5 April 2016.

There are still many people who are not part of a workplace pension scheme. According to government figures for 2022, 88% of eligible employees were participating in a workplace pension which means that 12% of people were not. One 2022 survey revealed that more than 1 in 5 people have either opted out or are considering opting out of their pension scheme in response to rising inflation. (The DWP’s own figures were more modest, with opt-out rates increasing 10.4% overall but it's a worrying trend. )

In other words. one could argue that the higher rate of the new state pension is and will be a safety net for those who may not have a workplace pension and can no longer build an Additional State Pension - similar to pension credits being used to boost someone's pension.

I don’t believe the equalisation of pension age introduced in the Pensions Act 1995 is a factor in the rate of the new state pension. Men also come within one or other system but are only affected by the increase in pension age introduced in the Pensions Act 2011.

I do not know what actuarial calculations were made to arrive at the new state pension (other than those described in Webb’s paper) but it’s worth noting that until very recently, the rate at which NIC has been levied has increased year on year. By 2022 it was 13.25%. By comparison, the contracted-in rate in 1978 was only 6.5%. Over time, it more than doubled. As wages have risen so have NIC contributions until very recently. Younger pensioners may have contributed far more in NIC than older pensioners and that may have factored into actuarial calculations.

In summary, we know that state pension is a contributory benefit. Under the old system, people were able to contribute to an Additional State Pension or were contracted out and received an equal or better workplace pension under GMP. That is no longer the case.

It is perfectly possible for someone on the old system to receive £157 per week more than someone on the system.

karmalady

There is a huge discrepancy for a lifetime, could be over 30 years. Someone said that 76 is the age at which we should all receive the same higher state pension, I agree.

That makes sense. Also under the old system if women decided not to retire at 60 and carried on working I believe they stopped paying NI contributions, those carrying on working through no choice as couldn’t claim til 66 or 67 still carry on paying NI which across 6/7 years amounts to a huge amount for some.

Whoever said pensions are a mess is correct!

nadateturbe

^The women I feel sorry for are those caught in those few years where they had to wait longer to receive their SP but are on the old, much lower rate of pension.^
That's me. My younger sister who paid in much less gets the new one so unfair. We all have the same living costs..

My younger sister who paid in much less gets the new one so unfair.

I'd get a full New State Pension for the number of years contributions I made. Instead, it is only a proportion of the 39 years required.

There is so much unfairness, it's difficult to know where to begin.

nadateturbe

Dinahmo I get nowhere near that and I pay tax. My small civil service pension is worth very little.

We were contracted out too.

I only realised, when growstuff pointed it out, that I was contracted out of the SP for years then received my public service contributions back as "a gift" 🤔 when I left to have a family, so no public service pension from those years.
Double whammy.

Dinahmo I get nowhere near that and I pay tax. My small civil service pension is worth very little.

The women I feel sorry for are those caught in those few years where they had to wait longer to receive their SP but are on the old, much lower rate of pension.
That's me. My younger sister who paid in much less gets the new one so unfair. We all have the same living costs..

Dinahmo

I don't understand this. Surely the SP for everyone has increased each year? I'm 77 so under the "old"scheme and I've just received a coding notice telling me that my weekly pension will £227 for the next tax year.

I have no idea how that is made up, Dinahmo

The Old State Pension for 1923/24 is £169.50

Mine is less than that because, yes, many women were cheated over State Pensions in various ways for many years.

I don't understand this. Surely the SP for everyone has increased each year? I'm 77 so under the "old"scheme and I've just received a coding notice telling me that my weekly pension will £227 for the next tax year.

Just sign the bloomin petition , please 🙏

Thanks for the helpful factsheet V3ra.

I remember hearing about the pension age changes in the 90 s, it was on all media but as has been said a letter to all involved should have been sent. It has obviously been a shock for many.

We retired at 60 because that was retirement age. For the most part we started full time work at 15 often because of the need to contribute towards the household expenses. There was no question of further or higher education at least not in the area I lived.

My life would be much improved by an extra £50 per week SP, but fear we older women will continue to trail behind the rest especially if they stop the triple lock.

I can remember when pensions were so low the media reporting older people were found frozen or starved to death. It was shameful.

I am surprised at the lack of support from some posters, shouldn't women be supporting each other?

nightowl

PuddyCat

You can't have it all ways. Those who had to work until they were 66 had to work for longer than you to receive anything at all so how do you think those people should be compensated? You've enjoyed 6 extra years of retirement, pension and all associated benefits and you now want the extra money too? Give me strength! As if the WASPI women haven't been screwed over enough.

There are a lot of WASPI women on the old pension who have been screwed over in a different way, as I said above. Women really shouldn’t be fighting other women on this.

And as for the suggestion that 76 might be the equalisation age, I think the last of the women who were able to claim their pension at 60 are already approaching or over 76 so we’ve almost reached the point where this could be a good argument.

Women really shouldn’t be fighting other women on this.

I agree.

The women I feel sorry for are those caught in those few years where they had to wait longer to receive their SP but are on the old, much lower rate of pension.

nightowl

The old pension wasn’t only claimed at 60 Doodledog. Because of the gradual raising of the pension age for women, there are many of us who didn’t get the state pension until we were closer to 65 but are stuck on the old pension scheme for the rest of our lives. It means that two women born days apart will have received their pension around the same time but one will be on the significantly lower rate. It has nothing to do with contracting out or SERPS but was just another money saving exercise.

True. That's unfair too. I really think we all need to stick together, as we all paid in as we were asked, so we should all get out as we were (tacitly) promised. It's nobody's 'fault' if the systems weren't up to scratch, the money wasn't ring-fenced or we didn't pay enough. That is the responsibility of the government, and people shouldn't suffer if they (governments) get it wrong. The more different things we ask for, the easier we are to pit against one another, and anyway, there is no reason to begrudge anyone anything. Solidarity and all that!

Chardy

Women born in 1952 lost £20k by having to wait an extra two and a half years to get their state pension, and when they received it, it was at the old rate.

I was born in 1952 and I was just over 64 when I got my pension, so I wasn’t getting my old rate pension 6 years before the others on the new rate.

PuddyCat

You can't have it all ways. Those who had to work until they were 66 had to work for longer than you to receive anything at all so how do you think those people should be compensated? You've enjoyed 6 extra years of retirement, pension and all associated benefits and you now want the extra money too? Give me strength! As if the WASPI women haven't been screwed over enough.

No need to be rude.
Women have always been disadvantaged one way or another.

The then Chancellor announced that women's pension age would be increased to match that of men back in 1993.
I remember the announcement even though it didn't affect me and remember commenting to DH "Why don't they make the pension age 63 for men and women?". Women's longevity is generally greater that of men too.
It was on TV, in the press and all the financial pages.

I don't dispute that everyone should have received a letter about the changes, that was an administrative failure.

As has been pointed out, women over age 76 who retired at 60 on the old pension will now be disadvantaged.

Glorianny for the majority of older women, their SP will not amount to £200. I have some added, some taken away, but it remains well below the new SP.

No, the last of the women able to claim at 60 are not 76.

A friend was 60 in February 2010. She received her SP then, it changed two months later in the April.

She was 74 in February just gone.