state pension

We recently asked about paying for extra years under class 2NIC. On paper we needed 8 years to get to the 35 but were told we only needed 4 years to get the full pension as there was a transition period when previous years were worth more than a year (or something like that). it only cost £600 to get the 4 years required, no brainer really as the payback is less than 6 months into retirement.

Being contracted out prior to 6 April 2016 may result in a reduction in the full state pension but this was more likely to impact those who were close to state pension age at that time and those who were no longer working/paying NI contributions. However, younger workers who paid NI contributions between 2016 and state pension age, continue to earn 1/35 of the state pension per year of contributions until they reach the full state pension figure. Once they reach the full state pension amount, they will receive both the contracted out benefits from their private pension, including any DB GMP step up at age 65, plus the full state pension a couple of years later.

I checked my NI contributions…there were some ‘not full’years…I called HMRC about this, I was told that making extra top up payments for those years WOULD NOT increase my state pension…so, be careful, not all top ups increase your pension, this is because if you have the full amount of contributions and will get the full pension, no amount of filling missing contributions will give you more than the maximum pension. Apparently, some people do make these payments, with no increase in pension.

The majority of people who complain about the triple lock, don't even understand why it was introduced in the first place. It was because the state pension was shockingly low. It is still shockingly low. On the one hand the government calculates the minimum someone needs to be able to live in this country, the minimum wage, which is about £24,500/year, but then wants to give pensioners about £12,500/year. Yes, I understand that some pensioners own their home outright so they don't need to pay mortgage or rent, but more and more people are only renting these days. By 2050 a 1/3 of pensioners will be renting. So, £12,500/year while still renting is nowhere near enough and it's obvious that it wouldn't be enough, because we know minimum wage is £24,500/year. So, triple lock can be seen as a temporary measure to allow the state pension to catch up, but once you get to the stage that you remove it, the government can't just sit on its hands again, because due to inflation the state pension will quickly dip down to being low again. They need to stop concentrating on soft targets like pensioners and spend more time on cracking down on the illegal use of the benefit system and the waste in government and council offices.

I've been on the full state pension for three years now. I have no idea how I would manage on it if I had to pay rent or was still paying off a mortgage. Thank God I own my own home outright.

30 years ago, one in three pensioners were in poverty. Now they're better off than working people. The triple lock keeps rising. But what happens when I retire? Will there even be a state pension? Will I need 3 million to retire comfortably?

30 years ago, one in three pensioners were in poverty. Now they're better off than working people. The triple lock keeps rising. But what happens when I retire? Will there even be a state pension? Will I need 3 million to retire comfortably?

Everyone is worse off because of inflation, except for those in inflation-linked benefits (Triple Lock, Welfare). With an ageing population, this is becoming unsustainable, as working people are so heavily impacted that economic growth has dropped to zero.

Stop messing with private pensions, that’s all I ask. I want to control my retirement date, if I can kick back without handouts what business is it of the government to tell me they’re moving my release date again - just because they’ve failed to get their finances in order.

They hit on the point early. Housing costs are the issue, not pensions.

Most people are wealthier if you pay into an investment for years ie 39 yrs then realise those benefits. It's not rocket science.

The majority of people who complain about the triple lock, don't even understand why it was introduced in the first place. It was because the state pension was shockingly low. It is still shockingly low. On the one hand the government calculates the minimum someone needs to be able to live in this country, the minimum wage, which is about £24,500/year, but then wants to give pensioners about £12,500/year. Yes, I understand that some pensioners own their home outright so they don't need to pay mortgage or rent, but more and more people are only renting these days. By 2050 a 1/3 of pensioners will be renting. So, £12,500/year while still renting is nowhere near enough and it's obvious that it wouldn't be enough, because we know minimum wage is £24,500/year. So, triple lock can be seen as a temporary measure to allow the state pension to catch up, but once you get to the stage that you remove it, the government can't just sit on its hands again, because due to inflation the state pension will quickly dip down to being low again. They need to stop concentrating on soft targets like pensioners and spend more time on cracking down on the illegal use of the benefit system and the waste in government and council offices.

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This happened to me, did a self assessment and got a £7500 tax refund.

Many people are surprised by this… 👉 The same £20,000 pension withdrawal can result in £0 tax or nearly £3,000 tax It all comes down to how and when you take it Have you checked how much Personal Allowance you actually have left once your State Pension is included?

59 now, been saving £100 per month since I was 18 (dad insisted I put into a personal pension as even back then he could see issues with the state pension not being enough) .... Life got in the way with house, marriage, kids and poor paying jobs so never upped my contributions. Now regretting that SO much. With compounding, if I had it would of doubled my pot over time. Now sat with a pot of £350k and putting lump sums of £20k a year in to build it up over the next few years with the inheritance money we have. To anyone out there, START EARLY AND PUT AN EXTRA BIT IN AS OFTEN AS YOU CAN. Your future self will thank you

I work in an auto enrollment DC provider, and am shocked and how many people have so little for retirement, and how many opt out. There's a big knowledge gap on pensions out there.

After tax, NI, pension, ISA and various discretionary charges like charities and some money to my mother each month, my residual take home pay is a little over £2000 a month. I consider I already live very comfortably. I think £43000 after tax, (no NI, pension or ISA contributions) works out at a little over £3000 a month - 50% more than I live on. Granted, I own my home mortgage-free and I have no dependents but, as a counterweight, I live alone so I pay all the bills and there won't be a second state pension coming in.

Everyone is worse off because of inflation, except for those in inflation-linked benefits (Triple Lock, Welfare). With an ageing population, this is becoming unsustainable, as working people are so heavily impacted that economic growth has dropped to zero.

A couple of comments: I think you need to look back a bit more than 30 years to understand the state pension story. Up to 1979 the state pension increased in line with wages. This is quite logical for a pay-as-you-go pension system IF the ratio of number of workers to number of pensioners is flat or increasing. Maggie Thatcher didn't like this so in 1980 she switched it to be linked to RPI. From 1980 to 2008 pensions gradually reduced relative to average earnings. As a practical measure of this my mother had a state pension and a small superannuation pension. Each year they increased by RPI. She lived in a rented council/housing association old person's flat. Each year the rent and rates on that flat increased by more that her pensions increased so every year she was worse off. Things appeared to get better relative to wages in 2008 but in reality wages just fell massively, i.e. workers were impoverished more by the financial crisis than pensioners were.. It was to correct this 30 year impoverishment of pensioners that the triple lock was introduced and it has done its job. The state pension is now a little higher relative to average earnings than it was in 1979. I agree that the triple lock now needs to go. I think going back to linking it just to average earnings would make sense. Perhaps it needs to be weighted slightly to account for the worsening ratio of workers to pensioners. Introducing private pensions into the argument is not valid. Private pensions are simply a form of saving. Everybody makes choices. I can choose whether to spend some money now, so I get the benefit now, or save that money and forgo that benefit now, so I can have a benefit later. I only get the benefit once. People will make a wide range of choices from saving nothing and maximising their benefit now to saving a large part of their income to get a bigger benefit later. You cannot start making decisions on where to set the state pension on the basis of how people decide to save.

The Renee and Paul example is quite telling. Renee works minimum wage. Paul is a consultant with a pension, a house, and a good income. We are told that the social contract is broken because Paul gets to spend his own money and live in his own house in retirement. Apparently, the best way to fix the social contract is to take away a pile of Paul's money and give it to Renee. This is the thinking that results in the current zero-sum quagmire we fine ourselves in. Should we be surprised that productivity (and therefore growth) are stalled when the entire economy is effectively a Ponzi scheme to confiscate the highest level of tax in 80 years from productive people and hand it out to pensioners and the 23%(!!) of working-age people on benefits.

Being contracted out prior to 6 April 2016 may result in a reduction in the full state pension but this was more likely to impact those who were close to state pension age at that time and those who were no longer working/paying NI contributions. However, younger workers who paid NI contributions between 2016 and state pension age, continue to earn 1/35 of the state pension per year of contributions until they reach the full state pension figure. Once they reach the full state pension amount, they will receive both the contracted out benefits from their private pension, including any DB GMP step up at age 65, plus the full state pension a couple of years later.

What about the people that were contracted out,not in a pension scheme of any description:

How does it present Contracted out on your NI record when on the pension summary page it says "£230.25 is the most you can get, You cannot improve your forecast any more" and "You’ve been in a contracted-out pension scheme" - all my 39 entries on the NI Record page say full apart from 2 years when I went back to college?

The majority of people who complain about the triple lock, don't even understand why it was introduced in the first place. It was because the state pension was shockingly low. It is still shockingly low. On the one hand the government calculates the minimum someone needs to be able to live in this country, the minimum wage, which is about £24,500/year, but then wants to give pensioners about £12,500/year. Yes, I understand that some pensioners own their home outright so they don't need to pay mortgage or rent, but more and more people are only renting these days. By 2050 a 1/3 of pensioners will be renting. So, £12,500/year while still renting is nowhere near enough and it's obvious that it wouldn't be enough, because we know minimum wage is £24,500/year. So, triple lock can be seen as a temporary measure to allow the state pension to catch up, but once you get to the stage that you remove it, the government can't just sit on its hands again, because due to inflation the state pension will quickly dip down to being low again. They need to stop concentrating on soft targets like pensioners and spend more time on cracking down on the illegal use of the benefit system and the waste in government and council offices.

But they are happy to accept 5%. Pay rise on £90,000 wages but someone on £12,000 pensions begrudge even a 4.8% pay rise

Pensioners AGAIN. Winter fuel payment, taxing pensions and now the triple lock. Anything else you can think of Torsten.

The biggest problem with the current generation isn't income, it's expenditure. In the 70s/80s we weren't making sure we always had the latest iPhone (we didn't even have mobile phones), we weren't drinking coffee at Starbucks, we weren't bothered with what label was on our clothes, we didn't have food delivered to the house, etc. Live how we used to, then you'll see how much easier it is to pay off the mortgage and save for retirement. DB pensions is probably the only anomaly, because having a pension that guarantees you getting 2/3 or better of your final salary when you retire, is absolutely amazing. But not everyone got one, I didn't, they are in the minority. By 2050 less than 10% of pensioners will be on DB pensions. So using DB pensions as an example of anything doesn't make sense, because they were short lived and even at its peak didn't even reach 50% of the generation at the time.

No mention of the generous defined benefit schemes that still exist in the public sector?

It’s nothing to do with the state pension and the triple lock - the big difference us that as people move into retirement today they are drawing on a lifetime of saving into their pensions, if they were sensible that is, and are now reaping that reward - the generations before that never had that chance and the current working generation has even better opportunities to amass a decent pension pot. Your inference that somehow the State is making the difference is false, and remember that all these pension pots pay tax back into the system so the wealthier pensioners are the more the government gets. All you are trying to do is drive a wedge between the generations to foster antagonism and chaos in our society.