Why do new pensioners get more than old ones who paid in for longer? bit.ly/3DBAehX actually some don’t but some do. And some who think they would, in fact wouldn’t. Confused? The unfair and complex rules of state pensions. My latest answer to a reader in @theipaper - ThreadSky

paullewismoney.bsky.social • 60 days ago

Why do new pensioners get more than old ones who paid in for longer? https://bit.ly/3DBAehX actually some don’t but some do. And some who think they would, in fact wouldn’t. Confused? The unfair and complex rules of state pensions. My latest answer to a reader in @theipaper

Comments

jamesdatmse.bsky.social•59 days ago

Bravo! Good job on the key differences, changes and NSP being a cut, at least for those with many worked years.

Paul knows it but for others those in final salary pensions get the earnings part of the old state pension in their work pension instead of state pen & are likely better off as a result.

prospectpension.bsky.social•60 days ago

It would be extremely naive for anyone to think that the reforms to the state pension in 2016 made the system *more* generous overall. It obviously didn't (though within that there were some groups - eg the self-employed - who benefited).

jamesdatmse.bsky.social•59 days ago

Yes. I tend to describe it as less for those with full working lives in the UK to provide more for those who didn't work as much or at all in the UK. Typically less for stereotypical men to pay more to stereotypical women but huge variation.

binreminded.bsky.social•60 days ago

Why were people who contracted out of SERPS almost frogmarched back into the system. Yet those who stayed contracted out were relatively not that much worse off and had the cash for years for emergencies before SPA. Likely we would have been far better off if Abbey Life managed the funds properly.

jamesdatmse.bsky.social•59 days ago

That and the way the earnings-related part is paid as part of defined benefit pensions, allowing double dipping that those not contracted out can't get made it increasingly unfair to allow contracting out, particularly after the 2016 changes.

jamesdatmse.bsky.social•59 days ago

Almost everyone who contracted out ended up better off, particularly if into a workplace defined benefit pension, a situation enhanced by the 2016 changes that raised years count from 30 for old basic state pension to up to 35 years to get extra 5 post-2016 years worth of new state pension.

binreminded.bsky.social•58 days ago

I don't believe Abbey Life acted in my interests. They (or the government?) stopped new entrants making the fund weak. I am aware of a relative whose employer paid in a small amount and was about 4 x better off with her scheme. She only worked there for a few years.

jamesdatmse.bsky.social•58 days ago

Not sure if AL acted in your best interests either but contracting out was still a good move even if that provider wasn't. There were quite a lot of cases where contracting out was found by the FOS to be inappropriate, mainly from defined benefit pensions but not always. Except in the DB ...

jamesdatmse.bsky.social•58 days ago

... case subsequent changes still meant almost all being better off. But maybe not you. AL using the sales model at the time also had what today seem like excessive exit charges.

Don't know whether she was in a DB or DC scheme but even in DC like AL the investment choices can make a big differenc

binreminded.bsky.social•56 days ago

I was better off because I had cash to fix my back patio doors after a break-in. Also I had the small amount each month which paid for my Internet etc. Better-off isn't always a long term projection. I had cancer before my State pension and I thought I'd never get it.

Comments

Posting Rules

Reply