Pensions ,Prescriptions & Racheal Reeve’s

Thanks Doodledog I was beginning to wonder if I was going gaga.
I like your illustration of the different presentations of the same cost, really shows the manipulation.

GrannyGravy13

There has been a trend for many, many years to leak proposed budget changes/cuts to get the measure of public response.

Unfortunately the current cohort appear to be exceptionally inept at ^reading the room^

How right you are. I read an article quite sometime ago regarding a Labour adviser telling a shadow minister that old people cost too much. My husband and I worked 90 year’s between us and I always paid full NI not married woman’s allowance as there was back in the day. The Government never tell us how much they get back in pension contributions from people who do not live long enough to get state pension and sadly there are a lot of those.

WelwynWitch3

GrannyGravy13

There has been a trend for many, many years to leak proposed budget changes/cuts to get the measure of public response.

Unfortunately the current cohort appear to be exceptionally inept at ^reading the room^

How right you are. I read an article quite sometime ago regarding a Labour adviser telling a shadow minister that old people cost too much. My husband and I worked 90 year’s between us and I always paid full NI not married woman’s allowance as there was back in the day. The Government never tell us how much they get back in pension contributions from people who do not live long enough to get state pension and sadly there are a lot of those.

The government doesn't get anything back. The current cohort of NI payers pay for current pensioners. Nobody has an individual "pot" which can be reclaimed on death.

I have never accepted that as an argument against the fact that by pension age most people have paid a lot in contributions though. The fact that it has already been spent is irrelevant - they are taken from working people on the understanding that there will be a pension in return.

During the protests by WASPI and other pressure groups about the extension to pension age for women the 'no pot' argument was consistently used by those with a vested interest to imply that protesters didn't understand the system. We did, and do.

We paid in on the understanding that we could take out when the time came, and the fact that the system was flawed/mismanaged/both is not our fault or responsibility to put right - we had no control over any of it. If governments want to rule by consent they have to do so on the basis of trust, and sophistry about how things work financially doesn't alter that principle.

But Doodledog, as you well know, it's not quite that simple. It's like any insurance scheme. You can pay in for years and never claim. You don't have the right after (say) fifty years to ask for your money back. It is true that nobody builds up an individual "pot", as they would with a private pension.

Not only that, but the way state pensions are calculated on years of contributions (with some "years" given as free credits) rather than the amount people have actually contributed means that everybody would be "owed" a different amount, if they were to die before reaching pension age.

Even if it were considered that an individual had a "pot", what would happen to people who live longer than the expected average? Should we then say, sorry, you've outlived the "pot" put aside for you - there's nothing left?

I'm not arguing for a life insurance scheme, but am saying that whenever someone mentions the amount they have paid in they are 'trumped' by someone else pointing out that there is no 'pot', as though that negates the fact that most of us pay a significant amount for decades. IMO that is not the point being made, which is that nobody is told that they have to pay 13.5% (or whatever it is now) of their income to those currently claiming a pension, and it will simply be the luck of the draw as to whether they will get one themselves when the time comes. The implicit deal is that you pay in and you get out. Yes, some choose not to pay in, and others are unable to, but they are separate issues.

I think pensions should die with us, so that, as you say, those who are lucky enough to claim for years because of longevity can do so. It's unfortunate that some don't even live to pension age and others die not long afterwards, so don't claim for long, but there is no other obvious way to do it.

If there is no compulsory scheme such as NI, we would end up with people who had no means of support in old age, and the choice would then be to let them die or take the money from somewhere, which would be Hobson's choice.

Maybe it would be better to have individual pots, but that would bring its own problems, such as the cost of administration, the lack of cover for those unable to contribute, and the problem of what to do with those who don't work and make contributions if they end up destitute. Currently their pensions are paid for by those who do pay in, but individual pots would mean that wouldn't happen.

I don't think I want to contribute much more to the discussion. I've tried for ages to think of a "fair" pension scheme and just end up going round in circles. Once upon a time, I used to be a high earner (certainly above average for a woman), so I've paid in considerably more over my working life than most women, especially as I never took a career break. Nevertheless, I don't receive a full state pension. How fair is that, especially as those who never contributed can receive Pension Credit if necessary? If I were to dwell on it, I could get quite bitter. I've always regarded NI as just another form of tax. I've definitely never thought about having a "pot" with my name on.

I agree with your second paragraph ... "I think pensions should die with us...". As you say, I don't see any other way.

I have also paid more than most, having paid higher rate tax for most of my working life, but think that's ok. I see the state pension as something that should depend on the number of contributions, not the amount paid in, so someone on minimum wage should get the same as someone on significantly more. Higher earners can, and should, pay towards the pensions of lower ones. That's the basis of a welfare state.

It is not fair that pension rates for people who have paid the same number of contributions vary - I agree. I also worked without a break from the age of 16, but will only get a full pension because I bought back the years I was contracted out. I realise that that option is not available to everyone, and that it's not fair that it is possible to get a full pension without paying much in at all.

I don't see that this is a reason for suggesting that the fact that there is no 'pot' means anything though. What would you rather see?

All I can think of other than that the government (of any stripe) keeps the implicit promises that formed the basis of our payments. Not to do so would destabilise society - we have to have trust in 'the system', whoever is in power.

The only other alternative is that our generation gets nothing because older people have spent it all. Would you rather see that? It can't happen, as people would starve, and if the system changed to means-testing those who have paid full contributions and also into an occupational pension there would be widespread resistance. Look what happened when people lost £200 regardless of income. Taking decades of contributions from a whole generation of women (particularly as we have already lost 6 years of retirement) would make that pale into insignificance. Also, what incentive would there be for people to make provision for their own futures if they could get more for not bothering?

Doodledog when you say you only got a full pension as you bought back years, do you mean you only got the new level pension as I think you should have got the full old pension. Of course your personal pension will have benefitted from your contracting out.

I had some years where I opted out of my work based pension as my husband became disabled, we had 4 children and I needed every penny, the result is I could have had the new pension but I actually get the old style pension as with S2P it is actually higher than the new pension.

I suppose it is hard for you to calculate if what you gained in your private pension outweighs what you could have lost in the new state pension.

I would have got the new pension because of my age, but not the full amount because of being contracted out. When I checked a few years before taking early retirement I was around £50 a week short, so I considered it was worth paying for those years. Obviously that was my choice, and I was lucky to be able to afford to do it, although it was tight, as I was already on a reduced occupational pension.

I don't know what S2P is, but I am aware that the old pension is often more than the new one, whatever people on here seem to think.

I wouldn't know where to start calculating what I would have got in my occupational pension if I'd done things differently. TBH there is no point, as there's nothing I can do about it now.

Doodledog

I would have got the new pension because of my age, but not the full amount because of being contracted out. When I checked a few years before taking early retirement I was around £50 a week short, so I considered it was worth paying for those years. Obviously that was my choice, and I was lucky to be able to afford to do it, although it was tight, as I was already on a reduced occupational pension.

I don't know what S2P is, but I am aware that the old pension is often more than the new one, whatever people on here seem to think.

I wouldn't know where to start calculating what I would have got in my occupational pension if I'd done things differently. TBH there is no point, as there's nothing I can do about it now.

S2P, is the state 2nd pension previously SERPs, state earnings related pension I think? Basically when you were contracted out of S2P or SERPs some of your NI money was credited to your private pension so you were earning the basic state pension but nothing more, I wasn't contracted out so the part of my NI that would have gone to a private pension went into S2P. When I hit retirement age I got figures for both schemes and I qualified for a higher pension with the old scheme than with the new scheme.

I think lots of people don't understand how it works and that although they lost out of S2P or the new pension they did benefit (hopefully if their private pension was any good) from their contributions going that way. I know if I could have stayed in my private pension I would have been better off as I know how much my private pension is and it would have been more than double if I could have stayed in it where as my S2P isn't worth as much. I had to survive at the time though so I don't complain about that.

I think it is a shame that there wasn't more publicity about how it works as I know there is upset about people on the old pension getting less than the new pension without knowing that their private pension probably more than makes up for it.

Your decision was probably pretty canny as you have the benefit of the new pension and also the benefit to your private pension if I have understood you.

Your decision was probably pretty canny as you have the benefit of the new pension and also the benefit to your private pension if I have understood you.
Yes, I knew what I was doing, and I will be better off if I live to 72 or 73. If I'm run over by a bus before then, obviously my state pension will die with me, and the extra contributions will have been for nothing.

I still think that physical 'pot' or no 'pot', those who pay in for years should not be told that they are not entitled to a pension because the money was spent as fast as they paid it in. It was paid in good faith in the expectation of getting a pension on retirement, which many of us retiring now thought would be at 60.

It's particularly annoying when 'there is no pot' is used like a trump card, with the implication that the person playing it understands things that others don't. Speaking for myself, I do understand - I just don't agree that it's relevant.