UK pension changes on the way

[whitedesire]

The UK government has published a green paper which paves the way for pension changes in the UK.

 a flat pension of around £140 (current rates) from 2016
 30 years to qualify for a full pension
 existing SERPS and S2P contributed will be preserved

http://www.guardian.co.uk/money/2011/ap ... rement-age

This is the link, it's old news now, and it will probably change by the time it goes through Parliament. It will be interesting to see what the criteria will be to get any type of state pension from the UK.

Once one has paid NI contributions and/or credits for 30 years, they will receive the full pension (as is the case now), but the pension will not be worked out on how much you earn anymore.

[whitedesire]

The UK government will announce on Monday new rules etc for the UK State Pension. From 2017, it will be a flat rate, £144 in today's terms, by 2017, I suspect it will be in the region of £155.

What this means is the basic pension today of £100 odd (if you only receive this amount and many don't), is topped up to £142 if you qualify, i.e. means tested. £142 (or around that figure) and is considered the minimum one can live on (erm!).

So, £144 in today's terms, and 30 years contributions is basically it. And a minimum of 10 years contributions before you receive a share of the state pension, it used to be 1 year.

The question to me and I will check this (for Thailand purposes) will the pension be increased year on year for inflation purposes (today it is not, unless you live in a country with a reciprocal agreement)

[ceejay]

I've read of this too, and there is one big caveat for anyone coming up to retirement age. Contracting out for occupational pension schemes will be abolished. Contracting out is a system where you do not participate in SERPS/SSP and make reduced NI contributions. The employer's share of the reduced contribution is added to your occupational pension contributions.
Anyone who has been in a contracted-out occupational pension scheme will have the new flat rate pension reduced in some way, but I have seen nothing about what calculation will be used.

[whitedesire]

1. Part of this contracting out stopped in April 2012 and payments ceased the relevant scheme. According, to the BBC website, these type of schemes will be ok, individuals will get the full basic pension and a pension from whoever they paid their "contracting out money".

The BBC said:

"At the moment, if you are on a public sector occupational scheme, you are effectively giving up your right to the state second pension. Under this new system, you would get the full flat-rate pension, plus you would continue to get your public sector occupational scheme," he added.

So, I "think" this is where example 1 falls into.

2. However, not all "contracting out" stopped in April 2012. Where the problem lies is the schemes that contracted out into a "company scheme" (final salary etc) whereby part of the NI contributions are reduced and paid into the relevant scheme, NI contributions are still reduced as we speak, the government have to decide whether they will pay a reduced basic pension and increase the reduced NI contributions. Thinking about it, if they do reduce the basic pension, due to these circumstances will be a little discriminatory in that the above example 1. will not be reduced or partly reduced due to the circumstances.

The BBC says:

"The change will bring an end to this system of "contracting out", with two consequences.

The government will have to decide if these individuals should receive the full flat-rate pension, if they first qualify for it after April 2017, despite the fact that they will not have not been making full national insurance contributions for the state second pension in the preceding years.

The government must also decide if these people should start paying higher NI contributions, after that date, while still in work."

I think they have to iron out a few problems and "conflicting" I think.

[whitedesire]

I just rang the NI people here in the UK, they have said once you have your qualifying years "in", that's it, your qualifying years for a basic pension will not change. That's not exactly what these internet sites there are conflicting reports such as the BBC, but in actual fact the basic pension was never really connected to the additional state pension and is separate. I find it hard to believe that if someone has contracted out for 25 years or more that those 25 years will not be counted towards qualifying years for a basic state pension.