/ Money

State pension shake-up: the not-so-golden years?

A gold egg in the grass

Today, the government announced the state pension will be simplified, with retirees from 2017 receiving a flat rate of up to £144 in today’s money. Do you think these proposals could affect your retirement plans?

So what will £144 look like by 2017? With likely inflation taken into account, this should come to around £162 by the time the flat-rate pension is introduced.

At the moment, the full weekly state pension for a single person is £107.45. But this can also be topped up if you factor in pension credits and the state second pension – both of which will be scrapped under the new rules. But if you want to know how to calculate the state pension you’ll receive when you hit retirement age, it’s quite a convoluted process.

The winners and losers

The government’s new proposals will introduce a flat-rate state pension: one amount that’ll apply to everyone who meets the criteria. To receive the full amount after 2017, you will need to have clocked up 35 years of National Insurance contributions – up from 30 years in the current system. The minimum weekly pension, based on 10 years of contributions, will be £41. As it stands, current pensioners will not be affected.

As you’d expect, these proposals will benefit some more than others. In fact, some retirees could end up worse off. However, the pensions system is so complex that simplification is still a worthy aim.

When I think about my own retirement plans, it’s hard to imagine things won’t change again before 2052. We could realistically have eight different governments between now and then: that’s an awful lot of potential tinkering with the system.

The not-so-golden years?

With an ageing population, pensions will increasingly cost more for taxpayers – who’s to say the state pension will be as we know it in 40 years time? For me, the priority is to make a regular contribution to my company pension, in order to supplement whatever I may or may not get from the state when I do retire.

Will the government’s proposals impact your retirement plans? Do you have any alternative plans in place to help you through your golden years?

Comments
Guest
Steamdrivenandy says:
14 January 2013

As it happens I received confirmation of my State pension weekly amount this very morning. £115.42 payable from 11th January. Not sure why the 11th when I turned 65 on the 6th Jan, but doubtless there’s some convoluted bureaucratic reason.

So I get £115.42 index linked to 2017 and someone who retires in 2017 gets £144 index linked from now. That makes a 2017 retiree nearly £1500 a year better off than myself at todays values. That’s almost 25% more for no apparent reason. Gee thanks Mr Cameron. Am I the only one who feels robbed and ignored?

Guest

you are certainly not the only one — see my post.

Guest
David Barnard says:
18 January 2013

To answer your comment regarding the date of payment of your state pension. The ‘Pay Day’ for payment of state pension is determined by the last two numerical digits of your National Insurance Number. 00-19 (Monday) 20-39 (Tuesday) 40-59 (Wednesday) 60-79 (Thursday) and 80-99 (Friday).

Guest
Steamdrivenandy says:
18 January 2013

But why in these days of computer systems do they even have to bother robbing 6 out of 7 pensioners of up to 6 days of their first pension payment? Surely these days they could do it more equitably or are they still on quill pens and ledgers?

Guest
Eileen says:
19 January 2013

Just don’t vote for Cameron next time

Guest
Steamdrivenandy says:
19 January 2013

Not wishing to get into a political debate here Eileen, the principle of simplifying the pension system so that people know exactly what they are getting decades in advance and it doesn’t depend on qualifying years and myriad little other bits and pieces has got to be right. As I said earlier I got my actual pension notification letter just the other day and it’s gobbldygook and trying to understand all the little add on figures is mind numbing.
However I’d like to understand why the £144 is so much more than the standard amount current pensioners are getting and why they are going to be left on smaller existing amounts when the 2017 rates come into force. That’s not been explained at all and seems unfair.
As an aside I’d also like to understand why I lose 5 days of my initial pension payment when another person born on the same day gets payment from their 65th birthday just because their NI number is a few digits different. It’s only £75 or so but it seems like legalised mugging.

Guest
Eileen says:
22 January 2013

Agree with you,so unfair but what do you expect from this government.Just don’t vote for him

Guest
joyce says:
30 November 2014

If under amount it is topped up by pension credit so someone on£114 and someone on £144 will still end up with same amount i get roughly £160 a week at present with pension credit.worked most of my life so 90% of my pension i earnt small pension credif.even if only 50p pension credit it automaticaly entitles you to loads more help.
The only difference is what your pension is if you work you still have this but lose pension credit and it is included in your taxable income.
Forgot to add get housing and council tax benefit as well so dont worry.
What i find stupid is could have paid the 60p a week married persons ins instead paid £1000,s in Ni but still end up with same amount only difference i get to keep it if work but then taxed on it.

Guest

Thank you Joyce, that’s really helpful.