Pension age worries

[Pumba75]

Originally Posted by salmim

I have always thought that (guess the maths wouldn't work though)
I have 46 qualifying years to date so (in my mind) have contributed much more to the SP pot than someone who finishes after 35 and gets the same?

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There is no SP "pot" - you pay your NI contributions but they aren't exclusively funding the SP. Meeting the maximum years requirement for SP simply means you qualify for the maximum benefit as prescribed at the time. But NI contributions are also used to fund other elements of the welfare state which will continue to be the case once you have passed the 35 year point.

[Guest]

Originally Posted by Pumba75

Just for clarity, this is not the case - the reforms changed the schemes from "Final Salary" to a "Career Average" basis, but they are still Defined Benefit schemes.

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Interesting. Thank you for that clarification. I always thought the new scheme was a defined contribution one. I just thought that the contribution was defined on a career average basis.

Didn't know it was a separate thing again. Either way the Alpha schemes are tied to the state pension age unfortunately.

Will amend my post.

[ChoppyGirl]

Originally Posted by FamilyGWales

Interesting. Thank you for that clarification. I always thought the new scheme was a defined contribution one. I just thought that the contribution was defined on a career average basis.

Didn't know it was a separate thing again. Either way the Alpha schemes are tied to the state pension age unfortunately.

Will amend my post.

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The service you would have built up until 01.04.2014 will still have the previous retirement date of 65, it's just service from that point that has the later one. So for example if you have 20 years service in the final salary scheme and 5 years service in the CARE (or whatever your provider calls it - this is for LGPS) , if you retire at 65 there will only be reductions on the 5 years service. There is also an underpin of you were within 10 years of 65 at 01.04.2012.

[DreamDisney]

Originally Posted by FamilyGWales

The public service pension reforms in 2015 switched from a defined benefit to a career average scheme. The normal pension age for the new pensions is linked by law to the state pension age. So you get nothing at all until you are also eligible for your state pension under the new scheme. If the SP age goes up there will be a lot of very unhappy people as a result I think.

It may be related to this.

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Yes I suspect you are right, and it was related to that.

But obviously, the majority of people now will not be part of such schemes and will instead have a money purchase plan where they can set their own retirement date (largely). Which ties back to my original post, on which someone else commented. I know it won't be applicable to some people, as they will still be in defined benefit schemes, but it will be applicable to a lot of people.

Whether or not people's money purchase pension pots would be sufficient to retire before the proposed elevated state pension age is another story entirely.

As with most things government led, it will likely be gradually phased, changed 50 billion times and have a trillion complications added to it. Because, you know, pensions just aren't complicated enough as it is!

[choccielover]

Originally Posted by Moorlandman

Rather than asking the general public to pay slightly more in taxation, the government has decided to raise the pension age and at the same time, reduce the tax rate for those earning above £150k a year.

Other countries pay far higher taxes to fund their pensions. There is no way that will happen under the Tories

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Those same people earning over £150k paid 28/29% of the income tax receipts in the last couple of tax years...keep increasing the tax burden and fiddling with the tax benefits and all that will happen is exactly the same as happened before, they will move abroad or try even harder to avoid paying tax.

I pay my share, and it’s a big old whack but I don’t resent paying it. I do get frustrated about the pension rules that mean I can only pay a very small amount into my pension before I have to pay an amount of tax on top (tapering applies to me for those who know what this is)
In terms of NI, it pays for much more than state pension which is why we will mostly pay in more years than we technically “have to”

Pensions are a minefield, the one truth is that there is a middle ground between living for today and blowing it all and saving like a miser to live your life fully only once you have actually retired.

A penny put away today will be worth much more in the future, so if you are able then saving is undoubtably a good thing, if you are not able, then the state should provide more for you and as someone at the total opposite end of the spectrum, I have no problem contributing to this

[salmim]

Been discussing this last night as we are just doing our planning to put our feet up soon. We have an ok not massive but ok work pension pot. We worked out we will also get around £350k out of the SP over 20 years which to be fair is not too bad?

[MrsBC]

Originally Posted by salmim

Been discussing this last night as we are just doing our planning to put our feet up soon. We have an ok not massive but ok work pension pot. We worked out we will also get around £350k out of the SP over 20 years which to be fair is not too bad?

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We are in exactly the same financial position. Add our (mid range) work pensions which we've taken, to the SP which we'll get in 2 years, and we'll manage perfectly well.
Feel sorry for younger people though, not for the pension amounts but the years to be worked after 60.

[munmun]

Originally Posted by salmim

Been discussing this last night as we are just doing our planning to put our feet up soon. We have an ok not massive but ok work pension pot. We worked out we will also get around £350k out of the SP over 20 years which to be fair is not too bad?

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Interesting stats that got me thinking and calculating. If husband and I continue to receive out state pensions for twenty years (here's hoping) and without any increase for cost of living together we will receive £403K.

That does seem like a lot of money put this way.

[Mumsy554]

So if people are going to have to work until they are 75 are we going to have 75 year old airline pilots ,train drivers ,bus drivers etc,don't people's reaction times decrease as they get older.Also there will surely be less jobs for our younger generation to go into. People are going to have less time to enjoy their "retirement" years. Are we going to work until we die.!

[sam_b]

I am sure pilots will have made sensible provision to get out long before 75 😀
But, I think that this is the point .. we all agree that unless taxation rises, the SP is unsustainable in its current form, so the payment age will have to rise. As has been said, the SP was based on a much shorter period of time between retirement and death than we statistically enjoy currently. If people don’t want to work until the SP kicks in (wherever that may end up), then they need to be planning to fund that gap from the earliest opportunity - and for those who could, but choose not to, then they can’t really complain too hard.
The real concern is how to help those who will be stuck on min wage and very low paid jobs that are often manual... and I think that there will have to be some kind of means tested pre retirement benefit or something. But for the vast majority —- it’s balancing the jam!