FROZEN Pensions - Action Needed
Jun 13th 2007, 3:58 pm
#31
Assimilated Pauper
Joined: Mar 2005
Location: Ontario
Posts: 40,018
Re: FROZEN Pensions - Action Needed
I entirely agree with you. It seems to me it is a form of discrimination. Saying go live in the US (or Bosnia, or wherever) instead of Canada is stupid. It shouldn't matter a jot where you live now, what matters is your contributions and everyone being treated fairly and equally. And having backpaid my contributions, I'd like to know more about cousin joe in St. Thomas who only paid 1 pound - another inequity.
As for how long it took for someone to come up with a sarcastic answer, there are people who spend inordinate amounts of time on here every day just waiting to shoot down postings. Evidently they don't have work to do!
As for how long it took for someone to come up with a sarcastic answer, there are people who spend inordinate amounts of time on here every day just waiting to shoot down postings. Evidently they don't have work to do!
Jun 13th 2007, 4:11 pm
#32
Canadiain
Joined: May 2007
Location: Up Over, (not Down Under)
Posts: 688
Re: FROZEN Pensions - Action Needed
I don't normally have much time for the European Court of Human Rights but in this case it seems very much that the human rights of pensioners in Canada, Australia, New Zealand and South Africa are being completely disregarded!
I know a lot of things in life are unfair but to penalise the recipients of a mandatory pension schem just because they chose to live in a certain place seems inexplicable! The fact that the countries involved are all members of the British Commonwealth seems to make it even worse!
It is just a money saving exercise on the part of the British Government!
I know a lot of things in life are unfair but to penalise the recipients of a mandatory pension schem just because they chose to live in a certain place seems inexplicable! The fact that the countries involved are all members of the British Commonwealth seems to make it even worse!
It is just a money saving exercise on the part of the British Government!
That would be equality, the government would save a ton of money going to all the rats leaving the sinking ship, and who said that inflationary increases in a pension was a human right, or even that a pension is a human right come to think of it.
Given the flagrant disregard for even basic human rights in many parts of the world, I'm sure there is something more important the court could be addressing. Its the Court of Human Rights, not the Court of Expat Entitlements after all.
Jun 13th 2007, 4:17 pm
#33
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Joined: Dec 2006
Location: Cowichan Valley, Vancouver Island, BC
Posts: 1,377
Re: FROZEN Pensions - Action Needed
Of course, the danger is that in the name of equality they could just turn around and say, Right, no inflationary increases for anyone.
That would be equality, the government would save a ton of money going to all the rats leaving the sinking ship, and who said that inflationary increases in a pension was a human right, or even that a pension is a human right come to think of it.
Given the flagrant disregard for even basic human rights in many parts of the world, I'm sure there is something more important the court could be addressing. Its the Court of Human Rights, not the Court of Expat Entitlements after all.
That would be equality, the government would save a ton of money going to all the rats leaving the sinking ship, and who said that inflationary increases in a pension was a human right, or even that a pension is a human right come to think of it.
Given the flagrant disregard for even basic human rights in many parts of the world, I'm sure there is something more important the court could be addressing. Its the Court of Human Rights, not the Court of Expat Entitlements after all.
Jun 13th 2007, 4:19 pm
#34
Canadiain
Joined: May 2007
Location: Up Over, (not Down Under)
Posts: 688
Jun 13th 2007, 4:59 pm
#35
Born again atheist
Joined: Jul 2005
Location: Europe (to be specified).
Posts: 30,259
Re: FROZEN Pensions - Action Needed
Of course, the danger is that in the name of equality they could just turn around and say, Right, no inflationary increases for anyone.
That would be equality, the government would save a ton of money going to all the rats leaving the sinking ship, and who said that inflationary increases in a pension was a human right, or even that a pension is a human right come to think of it.
Given the flagrant disregard for even basic human rights in many parts of the world, I'm sure there is something more important the court could be addressing. Its the Court of Human Rights, not the Court of Expat Entitlements after all.
That would be equality, the government would save a ton of money going to all the rats leaving the sinking ship, and who said that inflationary increases in a pension was a human right, or even that a pension is a human right come to think of it.
Given the flagrant disregard for even basic human rights in many parts of the world, I'm sure there is something more important the court could be addressing. Its the Court of Human Rights, not the Court of Expat Entitlements after all.
There is another point to be made here. I will retire in a surprisingly
few years on a Canadian pension. Our current intention is to relocate to another country at that time (not the UK). The Canadian pension is, in theory, inflation protected, but of course that's protected against inflation in Canada, not where we'll be spending it. Much more importantly, it will of course be paid in $Cdn. I'll be spending Euros, so will be at the mercy of exchange rate fluctuations.
I know this. I choose to take the risk. Enough said.
Novo.
Jun 13th 2007, 5:58 pm
#36
Banned
Joined: Dec 2006
Location: Beautiful BC
Posts: 1,106
Re: FROZEN Pensions - Action Needed
But in fairness, many people have no idea about this when they make their move. We certainly didn't, back in '75. It's only when you find out about the inequity that it pi**es you off!
Jun 13th 2007, 6:11 pm
#37
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Thread Starter
Joined: Jan 2007
Posts: 1,554
Re: FROZEN Pensions - Action Needed
As I said some people can't decide from one day to the next where they want to live in Canada never mind the future.
Either we can all just go along like a heard of sheep and say well thats it and BAAA nothing can be done about it or it can be kept as an ongoing issue and just maybe sometime something might just get done or maybe not....if you don't try it never will. How many sceptics will then say err no thanks I don't agree with taking the money so I'll just hand it back but thanks anyway......NOT.
Another Q that is still not been answered is:
"Why is it mainly Commonwealth Countries"
No uprating has ever been paid to pensioners living in 48 of 53 Commonwealth countries, representing 98% of all frozen pensioners. The remaining 2% are spread across 100 other non-Commonwealth countries.
Is it because the British Government activley encouraged emmigration years ago
Yet you can have the benefits in the following:
UK (obviously), Barbados, Bermuda, Cyprus, Gibraltar, Jamaica, Malta, Channel Islands, Isle of Man, and a number of small Protectorates.
Err cough cough wink wink
is it because some of them could possibly be tax free havens for the rich....or is that just me.Another point is - Military and civil service pensions are not frozen
EXAMPLE:
Frozen Country Resident (e.g. Australia, Canada, New Zealand, South Africa, Zimbabwe, etc.)
- First pension received in 1974: £10/week.
- 1999 pension payment: £10/week.
- Total pension benefit paid over 25 years: £14,020
- First pension received 1974: £10/week.
- 1999 pension payment: £66.75/week.
- Total pension benefit paid over 25 years: £53,812*
Last edited by DAVIE_MAC; Jun 13th 2007 at 6:40 pm.
Jun 13th 2007, 6:50 pm
#38
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Thread Starter
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Re: FROZEN Pensions - Action Needed
"Because they were locked up for far to long in their cells without exercise"
A driver who pleaded his human rights would be infringed and he would lose his job if he lost his driving license...so he was given a £180 fine...he was speeding and killed a 11 year old child.
If this scum can take it all the way then so can decent people who have actualy contributed to UK society and have fair treatment where ever you decide to live
Jun 13th 2007, 7:02 pm
#39
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Thread Starter
Joined: Jan 2007
Posts: 1,554
Re: FROZEN Pensions - Action Needed
Agreed.
There is another point to be made here. I will retire in a surprisingly few years on a Canadian pension. Our current intention is to relocate to another country at that time (not the UK). The Canadian pension is, in theory, inflation protected, but of course that's protected against inflation in Canada, not where we'll be spending it.
Much more importantly, it will of course be paid in $Cdn. I'll be spending Euros, so will be at the mercy of exchange rate fluctuations.
I know this. I choose to take the risk. Enough said.
Novo.
There is another point to be made here. I will retire in a surprisingly
few years on a Canadian pension. Our current intention is to relocate to another country at that time (not the UK). The Canadian pension is, in theory, inflation protected, but of course that's protected against inflation in Canada, not where we'll be spending it. Much more importantly, it will of course be paid in $Cdn. I'll be spending Euros, so will be at the mercy of exchange rate fluctuations.
I know this. I choose to take the risk. Enough said.
Novo.
Therefore if there was a chance you might be able to influence a decision on this by writing to your MP etc etc (or equivalant) you would just sack it and not bother.
Sorry can't understand that you would just be willing to give up so easily.
I understand the situation totaly OK I also will make the move knowing the full implications I also will not be relying on my state pension to give me the life of luxury...it could pay a mortgage though couldn't it....but your honestly saying you can't be assed one way or another and if something could be done about your not interested.
MMMMMM strange....maybe when you make the move to Europe you will understand just how expensive this place is from day to day and why the only good thing Tony B liar has done is stay out of the joke of the Euro.
Jun 13th 2007, 7:41 pm
#40
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Joined: Dec 2006
Location: Cowichan Valley, Vancouver Island, BC
Posts: 1,377
Re: FROZEN Pensions - Action Needed
Yeh even prisoners in the UK have had their Human Rights abused and won the case in Europe...
"Because they were locked up for far to long in their cells without exercise"
A driver who pleaded his human rights would be infringed and he would lose his job if he lost his driving license...so he was given a £180 fine...he was speeding and killed a 11 year old child.
If this scum can take it all the way then so can decent people who have actualy contributed to UK society and have fair treatment where ever you decide to live
"Because they were locked up for far to long in their cells without exercise"
A driver who pleaded his human rights would be infringed and he would lose his job if he lost his driving license...so he was given a £180 fine...he was speeding and killed a 11 year old child.
If this scum can take it all the way then so can decent people who have actualy contributed to UK society and have fair treatment where ever you decide to live
Many of the pensioners affected by this ruling are the British wives of Commonwealth soldiers who fought for Britain in the Second World War - they met their husbands in Britain while their husbands were serving here. They married and settled here. Later in life the couples returned to the husband's home (Commonwealth) country. They later found out that they were severely disadvantaged when claimed their British state pension. Thanks a lot Britain!! Britain has treated the Commonwealth disgracefully!
Jun 13th 2007, 9:48 pm
#41
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Thread Starter
Joined: Jan 2007
Posts: 1,554
Re: FROZEN Pensions - Action Needed
I believe that the right to your earned pension is just as valid a "human right" as any other. To lose part of this entitlement just because you happen to live in a particular country is a violation.
Many of the pensioners affected by this ruling are the British wives of Commonwealth soldiers who fought for Britain in the Second World War - they met their husbands in Britain while their husbands were serving here. They married and settled here. Later in life the couples returned to the husband's home (Commonwealth) country. They later found out that they were severely disadvantaged when claimed their British state pension. Thanks a lot Britain!! Britain has treated the Commonwealth disgracefully!
Many of the pensioners affected by this ruling are the British wives of Commonwealth soldiers who fought for Britain in the Second World War - they met their husbands in Britain while their husbands were serving here. They married and settled here. Later in life the couples returned to the husband's home (Commonwealth) country. They later found out that they were severely disadvantaged when claimed their British state pension. Thanks a lot Britain!! Britain has treated the Commonwealth disgracefully!
Never a truer word spoken.
I have and still serve with Gurkha soldiers and they have been treated like SHITE with a capital "S". They give their life to the service of the UK and still have no right to a UK passport at the end of it......they have been made to wait in line like asylum seekers...utter disgrace...it's only recently they have been nearly paid the same wages as UK regulars and their pensions are more or less worthless
Britain past & Britain & USA present have a lot to answer for....but that is another thread.
Last edited by DAVIE_MAC; Jun 13th 2007 at 9:52 pm.
Jun 13th 2007, 10:57 pm
#42
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Thread Starter
Joined: Jan 2007
Posts: 1,554
Re: FROZEN Pensions - Action Needed
Bit more info for anyone who is interested:
For many of the 12m people with a broken work record, making up missed National Insurance contributions could be the best financial decision they ever take.
Millions of mothers, part-time employees and people who have worked abroad are missing out on the best value pension on the market by not buying back state pension credits.
Some 12m people, the majority of them women, are on course to retire without a full basic state pension because they have broken work records. But for just £7.55 a week, roughly the cost of a packet of nappies or a couple of glasses of wine, anyone who does not pay National Insurance Contributions (NICs) can buy a pension worth more than £125,000.
That is the pension pot a woman aged 60 would need to buy an annuity to match the inflation-linked income she would get from a full basic state pension, which is currently £84.25 a week.
If you have a broken work record, the chances are that you will have received a letter from HM Revenue & Customs reminding you of your right to buy extra entitlement through "Class 3 National Insurance contributions". What that letter will not tell you is what a fantastic deal you are being offered.
Buying back missed years of basic state pension entitlement is staggeringly good value, provided you do not expect to be relying on benefits for the majority of your retirement income, which is probably why the Government does so little to advertise it.
The Revenue says less than one person in 20 takes up their right to buy back state pension entitlement, which means that a massive number of people with broken work records are missing out.
Experts say filling gaps in your National Insurance contribution record with Class 3 contributions, also known as "voluntary contributions", is the first priority for anyone who is not on course to retire with a full basic state pension, particularly for those nearing retirement, who save most by buying back earlier years' contributions.
"Making voluntary contributions is a no-brainer if you haven't built up enough to get a full state pension when you retire," says Michelle Cracknell of Origen, the independent financial adviser.
"Whether it is women who have had career breaks for children or anybody who has worked overseas for a considerable period, buying back years is the most cost-effective form of pension saving you can make."
It costs just £7.55 a week to buy back the basic state pension entitlement, which adds up to £392.60 a year. If a woman paid an equivalent amount into a private pension for the 39 years it would take her to get the full entitlement, she would build up a pot of just £57,264, assuming annual growth of 5 per cent a year on her fund and tax relief of 22 per cent. This is less than half the £125,000 she would need to buy an equivalent income privately through an annuity. Put another way, she needs only to live to just under 64 to be better off.
"Most people think £84 a week or £4,400 a year is nothing, but they don't realise how much money they need to get this income when they are retired," says Billy Burrows of William Burrows Annuities.
And buying back state pension rights is set to get even cheaper for anyone under the age of 60 on April 6 2010 because the Government is planning to reduce the qualifying period for a full pension from 39 to 30 years for women and from 44 to 30 years for men.
A woman under the age of 56 today who is saving in a private pension rather than buying back missing state pension credits would see her pot grow to a meagre £35,019 in the 30 years she could have been buying her state pension worth £125,000.
While making claiming back extra years even more valuable than it already is, the new rules, which are expected to go through Parliament before April, also mean fewer people will need to claim extra years to get the full state pension.
Last month the Revenue issued a warning that anyone who is currently making voluntary contributions and is on course to retire with more than 30 years' credits may want to stop paying into the state system because it will not make them any better off.
You can claim back voluntary contributions for gaps in your National Insurance payments going back as far as 1996, although from 2009 you will be allowed to backdate only six years. If you have already reached state pension age and find you are not entitled to a full basic state pension, you are still allowed to buy back credits as far back as 1996 although you cannot buy them back for the year of your retirement.
Parents with children under 16 and people who care for disabled or elderly friends or relatives for more than 35 hours a week get help towards their state pension through Home Responsibilities Protection, but this does not fill in missed years of basic state pension; it simply reduces the number of years someone needs to contribute to get a full state pension.
But the basic state pension does not pay out at all if you do not have a minimum 25 per cent of the contributions you need for a full pension. This means that even though Home Responsibilities Protection could reduce the number of years you need to qualify for full pension to perhaps 20 years, if you do not have five years' contributions you still get nothing.
This can mean that many women who do not work because they are looking after children or are stuck in part-time jobs below the National Insurance threshold can end up with no basic state pension at all.
Married people who have not worked throughout their working life can opt to be treated for state pension on their spouse's contribution and will receive 60 per cent of their entitlement. Alternatively, they can buy extra years if they think this will take them above the 60 per cent pension they would get through their spouse. Where both spouses have a full contribution record, both receive the full pension of £84.25p a week.
The Government's pensions White Paper proposes changing this complex system to make it fairer to non-working parents and other carers. Changes are set to take effect in 2010 and a lot of people will no longer need to make voluntary contributions. But despite this, millions of people, whether they reach 60 before then or not, could be missing the bargain of a lifetime by not buying back those years they have missed out of the National Insurance system.
The key questions about extra contributions
How do I know whether I should claim or not?
You need to get a pension forecast by completing form BR19 at the Pension Service website www.pensionservice.gov.uk. Alternatively, you can seek advice by telephoning the HM Revenue & Customs National Insurance inquiry line on 0845 302 1479 or by contacting the State Pension Forecasting Team inquiry line on 0845 3000 168. You can then calculate whether you will have enough years' contributions by the time you retire.
How many years' contributions do I need to get the full basic state pension?
Women currently need 39 years and men need 44 years. However, from 2010 this is expected to be reduced to 30 years for both sexes. This means anyone born after April 5 1950 will need only 30 years' contributions for a full pension.
Why do men have to pay more than women?
This is because the retirement age for women is currently 60 (but it will rise to 65 by 2015). If you are a man aged between 60 and 65 and you are not paying contributions on earnings because, for example, you have taken early retirement, you will get NI credits.
Are there any other benefits of paying National Insurance contributions?
Your spouse will get a bereavement payment in the form of an immediate tax-free lump sum payment of £2,000 if he or she is widowed before you draw the state pension.
How are voluntary contributions paid?
You can pay by cheque direct to HR Revenue & Customs for previous years. You can pay for the current tax year by direct debit.
Will anyone lose out by buying extra years?
Some people on very low incomes will lose out because their means-tested benefits will be reduced. Buying extra years is less beneficial for younger people because the money they pay into the system would grow for longer if it was invested rather than put into the state pension.
For many of the 12m people with a broken work record, making up missed National Insurance contributions could be the best financial decision they ever take.
Millions of mothers, part-time employees and people who have worked abroad are missing out on the best value pension on the market by not buying back state pension credits.
Some 12m people, the majority of them women, are on course to retire without a full basic state pension because they have broken work records. But for just £7.55 a week, roughly the cost of a packet of nappies or a couple of glasses of wine, anyone who does not pay National Insurance Contributions (NICs) can buy a pension worth more than £125,000.
That is the pension pot a woman aged 60 would need to buy an annuity to match the inflation-linked income she would get from a full basic state pension, which is currently £84.25 a week.
If you have a broken work record, the chances are that you will have received a letter from HM Revenue & Customs reminding you of your right to buy extra entitlement through "Class 3 National Insurance contributions". What that letter will not tell you is what a fantastic deal you are being offered.
Buying back missed years of basic state pension entitlement is staggeringly good value, provided you do not expect to be relying on benefits for the majority of your retirement income, which is probably why the Government does so little to advertise it.
The Revenue says less than one person in 20 takes up their right to buy back state pension entitlement, which means that a massive number of people with broken work records are missing out.
Experts say filling gaps in your National Insurance contribution record with Class 3 contributions, also known as "voluntary contributions", is the first priority for anyone who is not on course to retire with a full basic state pension, particularly for those nearing retirement, who save most by buying back earlier years' contributions.
"Making voluntary contributions is a no-brainer if you haven't built up enough to get a full state pension when you retire," says Michelle Cracknell of Origen, the independent financial adviser.
"Whether it is women who have had career breaks for children or anybody who has worked overseas for a considerable period, buying back years is the most cost-effective form of pension saving you can make."
It costs just £7.55 a week to buy back the basic state pension entitlement, which adds up to £392.60 a year. If a woman paid an equivalent amount into a private pension for the 39 years it would take her to get the full entitlement, she would build up a pot of just £57,264, assuming annual growth of 5 per cent a year on her fund and tax relief of 22 per cent. This is less than half the £125,000 she would need to buy an equivalent income privately through an annuity. Put another way, she needs only to live to just under 64 to be better off.
"Most people think £84 a week or £4,400 a year is nothing, but they don't realise how much money they need to get this income when they are retired," says Billy Burrows of William Burrows Annuities.
And buying back state pension rights is set to get even cheaper for anyone under the age of 60 on April 6 2010 because the Government is planning to reduce the qualifying period for a full pension from 39 to 30 years for women and from 44 to 30 years for men.
A woman under the age of 56 today who is saving in a private pension rather than buying back missing state pension credits would see her pot grow to a meagre £35,019 in the 30 years she could have been buying her state pension worth £125,000.
While making claiming back extra years even more valuable than it already is, the new rules, which are expected to go through Parliament before April, also mean fewer people will need to claim extra years to get the full state pension.
Last month the Revenue issued a warning that anyone who is currently making voluntary contributions and is on course to retire with more than 30 years' credits may want to stop paying into the state system because it will not make them any better off.
You can claim back voluntary contributions for gaps in your National Insurance payments going back as far as 1996, although from 2009 you will be allowed to backdate only six years. If you have already reached state pension age and find you are not entitled to a full basic state pension, you are still allowed to buy back credits as far back as 1996 although you cannot buy them back for the year of your retirement.
Parents with children under 16 and people who care for disabled or elderly friends or relatives for more than 35 hours a week get help towards their state pension through Home Responsibilities Protection, but this does not fill in missed years of basic state pension; it simply reduces the number of years someone needs to contribute to get a full state pension.
But the basic state pension does not pay out at all if you do not have a minimum 25 per cent of the contributions you need for a full pension. This means that even though Home Responsibilities Protection could reduce the number of years you need to qualify for full pension to perhaps 20 years, if you do not have five years' contributions you still get nothing.
This can mean that many women who do not work because they are looking after children or are stuck in part-time jobs below the National Insurance threshold can end up with no basic state pension at all.
Married people who have not worked throughout their working life can opt to be treated for state pension on their spouse's contribution and will receive 60 per cent of their entitlement. Alternatively, they can buy extra years if they think this will take them above the 60 per cent pension they would get through their spouse. Where both spouses have a full contribution record, both receive the full pension of £84.25p a week.
The Government's pensions White Paper proposes changing this complex system to make it fairer to non-working parents and other carers. Changes are set to take effect in 2010 and a lot of people will no longer need to make voluntary contributions. But despite this, millions of people, whether they reach 60 before then or not, could be missing the bargain of a lifetime by not buying back those years they have missed out of the National Insurance system.
The key questions about extra contributions
How do I know whether I should claim or not?
You need to get a pension forecast by completing form BR19 at the Pension Service website www.pensionservice.gov.uk. Alternatively, you can seek advice by telephoning the HM Revenue & Customs National Insurance inquiry line on 0845 302 1479 or by contacting the State Pension Forecasting Team inquiry line on 0845 3000 168. You can then calculate whether you will have enough years' contributions by the time you retire.
How many years' contributions do I need to get the full basic state pension?
Women currently need 39 years and men need 44 years. However, from 2010 this is expected to be reduced to 30 years for both sexes. This means anyone born after April 5 1950 will need only 30 years' contributions for a full pension.
Why do men have to pay more than women?
This is because the retirement age for women is currently 60 (but it will rise to 65 by 2015). If you are a man aged between 60 and 65 and you are not paying contributions on earnings because, for example, you have taken early retirement, you will get NI credits.
Are there any other benefits of paying National Insurance contributions?
Your spouse will get a bereavement payment in the form of an immediate tax-free lump sum payment of £2,000 if he or she is widowed before you draw the state pension.
How are voluntary contributions paid?
You can pay by cheque direct to HR Revenue & Customs for previous years. You can pay for the current tax year by direct debit.
Will anyone lose out by buying extra years?
Some people on very low incomes will lose out because their means-tested benefits will be reduced. Buying extra years is less beneficial for younger people because the money they pay into the system would grow for longer if it was invested rather than put into the state pension.
Jun 14th 2007, 12:51 am
#43
Lost in BE Cyberspace
Joined: Jul 2006
Location: Cochrane, Alberta
Posts: 7,861
Re: FROZEN Pensions - Action Needed
OK - do I understand this correctly ?
1 - I have 20 years of work and contributions in the UK - therefore I am 'entitled' to a state pension based on these contributions? - but because I live in Canada, it will not increase annually, ie, frozen - have I understood this correctly ? So would I still get a state pension, but just a c**p one ?
2 - I have worked part-time for at least 8 of those years - I could buy back/pay in to my contributions to bring them up to a 'full' record at £7.55 per week. 8 years x 52 weeks x £7.55 = £3140.
What is the advantage to do this, if my state pension is frozen anyway? Or have I mis-understood this? If I have a 'full contributions' record for all my employment time in the UK, will my pension not be frozen?!
This was not something I was aware of before coming here - I am, however, aware of what I can or cannot do with my private 'work' pension as I have looked into this more.
As many have said, I would not necessarily be relying on a state pension - but I am entitled to something in due course??
1 - I have 20 years of work and contributions in the UK - therefore I am 'entitled' to a state pension based on these contributions? - but because I live in Canada, it will not increase annually, ie, frozen - have I understood this correctly ? So would I still get a state pension, but just a c**p one ?
2 - I have worked part-time for at least 8 of those years - I could buy back/pay in to my contributions to bring them up to a 'full' record at £7.55 per week. 8 years x 52 weeks x £7.55 = £3140.
What is the advantage to do this, if my state pension is frozen anyway? Or have I mis-understood this? If I have a 'full contributions' record for all my employment time in the UK, will my pension not be frozen?!
This was not something I was aware of before coming here - I am, however, aware of what I can or cannot do with my private 'work' pension as I have looked into this more.
As many have said, I would not necessarily be relying on a state pension - but I am entitled to something in due course??
Jun 14th 2007, 1:24 am
#44
Born again atheist
Joined: Jul 2005
Location: Europe (to be specified).
Posts: 30,259
Re: FROZEN Pensions - Action Needed
Bit more info for anyone who is interested:
For many of the 12m people with a broken work record, making up missed National Insurance contributions could be the best financial decision they ever take.
Millions of mothers, part-time employees and people who have worked abroad are missing out on the best value pension on the market by not buying back state pension credits.
Some 12m people, the majority of them women, are on course to retire without a full basic state pension because they have broken work records. But for just £7.55 a week, roughly the cost of a packet of nappies or a couple of glasses of wine, anyone who does not pay National Insurance Contributions (NICs) can buy a pension worth more than £125,000.
That is the pension pot a woman aged 60 would need to buy an annuity to match the inflation-linked income she would get from a full basic state pension, which is currently £84.25 a week.
If you have a broken work record, the chances are that you will have received a letter from HM Revenue & Customs reminding you of your right to buy extra entitlement through "Class 3 National Insurance contributions". What that letter will not tell you is what a fantastic deal you are being offered.
Buying back missed years of basic state pension entitlement is staggeringly good value, provided you do not expect to be relying on benefits for the majority of your retirement income, which is probably why the Government does so little to advertise it.
The Revenue says less than one person in 20 takes up their right to buy back state pension entitlement, which means that a massive number of people with broken work records are missing out.
Experts say filling gaps in your National Insurance contribution record with Class 3 contributions, also known as "voluntary contributions", is the first priority for anyone who is not on course to retire with a full basic state pension, particularly for those nearing retirement, who save most by buying back earlier years' contributions.
"Making voluntary contributions is a no-brainer if you haven't built up enough to get a full state pension when you retire," says Michelle Cracknell of Origen, the independent financial adviser.
"Whether it is women who have had career breaks for children or anybody who has worked overseas for a considerable period, buying back years is the most cost-effective form of pension saving you can make."
It costs just £7.55 a week to buy back the basic state pension entitlement, which adds up to £392.60 a year. If a woman paid an equivalent amount into a private pension for the 39 years it would take her to get the full entitlement, she would build up a pot of just £57,264, assuming annual growth of 5 per cent a year on her fund and tax relief of 22 per cent. This is less than half the £125,000 she would need to buy an equivalent income privately through an annuity. Put another way, she needs only to live to just under 64 to be better off.
"Most people think £84 a week or £4,400 a year is nothing, but they don't realise how much money they need to get this income when they are retired," says Billy Burrows of William Burrows Annuities.
And buying back state pension rights is set to get even cheaper for anyone under the age of 60 on April 6 2010 because the Government is planning to reduce the qualifying period for a full pension from 39 to 30 years for women and from 44 to 30 years for men.
A woman under the age of 56 today who is saving in a private pension rather than buying back missing state pension credits would see her pot grow to a meagre £35,019 in the 30 years she could have been buying her state pension worth £125,000.
While making claiming back extra years even more valuable than it already is, the new rules, which are expected to go through Parliament before April, also mean fewer people will need to claim extra years to get the full state pension.
Last month the Revenue issued a warning that anyone who is currently making voluntary contributions and is on course to retire with more than 30 years' credits may want to stop paying into the state system because it will not make them any better off.
You can claim back voluntary contributions for gaps in your National Insurance payments going back as far as 1996, although from 2009 you will be allowed to backdate only six years. If you have already reached state pension age and find you are not entitled to a full basic state pension, you are still allowed to buy back credits as far back as 1996 although you cannot buy them back for the year of your retirement.
Parents with children under 16 and people who care for disabled or elderly friends or relatives for more than 35 hours a week get help towards their state pension through Home Responsibilities Protection, but this does not fill in missed years of basic state pension; it simply reduces the number of years someone needs to contribute to get a full state pension.
But the basic state pension does not pay out at all if you do not have a minimum 25 per cent of the contributions you need for a full pension. This means that even though Home Responsibilities Protection could reduce the number of years you need to qualify for full pension to perhaps 20 years, if you do not have five years' contributions you still get nothing.
This can mean that many women who do not work because they are looking after children or are stuck in part-time jobs below the National Insurance threshold can end up with no basic state pension at all.
Married people who have not worked throughout their working life can opt to be treated for state pension on their spouse's contribution and will receive 60 per cent of their entitlement. Alternatively, they can buy extra years if they think this will take them above the 60 per cent pension they would get through their spouse. Where both spouses have a full contribution record, both receive the full pension of £84.25p a week.
The Government's pensions White Paper proposes changing this complex system to make it fairer to non-working parents and other carers. Changes are set to take effect in 2010 and a lot of people will no longer need to make voluntary contributions. But despite this, millions of people, whether they reach 60 before then or not, could be missing the bargain of a lifetime by not buying back those years they have missed out of the National Insurance system.
The key questions about extra contributions
How do I know whether I should claim or not?
You need to get a pension forecast by completing form BR19 at the Pension Service website www.pensionservice.gov.uk. Alternatively, you can seek advice by telephoning the HM Revenue & Customs National Insurance inquiry line on 0845 302 1479 or by contacting the State Pension Forecasting Team inquiry line on 0845 3000 168. You can then calculate whether you will have enough years' contributions by the time you retire.
How many years' contributions do I need to get the full basic state pension?
Women currently need 39 years and men need 44 years. However, from 2010 this is expected to be reduced to 30 years for both sexes. This means anyone born after April 5 1950 will need only 30 years' contributions for a full pension.
Why do men have to pay more than women?
This is because the retirement age for women is currently 60 (but it will rise to 65 by 2015). If you are a man aged between 60 and 65 and you are not paying contributions on earnings because, for example, you have taken early retirement, you will get NI credits.
Are there any other benefits of paying National Insurance contributions?
Your spouse will get a bereavement payment in the form of an immediate tax-free lump sum payment of £2,000 if he or she is widowed before you draw the state pension.
How are voluntary contributions paid?
You can pay by cheque direct to HR Revenue & Customs for previous years. You can pay for the current tax year by direct debit.
Will anyone lose out by buying extra years?
Some people on very low incomes will lose out because their means-tested benefits will be reduced. Buying extra years is less beneficial for younger people because the money they pay into the system would grow for longer if it was invested rather than put into the state pension.
For many of the 12m people with a broken work record, making up missed National Insurance contributions could be the best financial decision they ever take.
Millions of mothers, part-time employees and people who have worked abroad are missing out on the best value pension on the market by not buying back state pension credits.
Some 12m people, the majority of them women, are on course to retire without a full basic state pension because they have broken work records. But for just £7.55 a week, roughly the cost of a packet of nappies or a couple of glasses of wine, anyone who does not pay National Insurance Contributions (NICs) can buy a pension worth more than £125,000.
That is the pension pot a woman aged 60 would need to buy an annuity to match the inflation-linked income she would get from a full basic state pension, which is currently £84.25 a week.
If you have a broken work record, the chances are that you will have received a letter from HM Revenue & Customs reminding you of your right to buy extra entitlement through "Class 3 National Insurance contributions". What that letter will not tell you is what a fantastic deal you are being offered.
Buying back missed years of basic state pension entitlement is staggeringly good value, provided you do not expect to be relying on benefits for the majority of your retirement income, which is probably why the Government does so little to advertise it.
The Revenue says less than one person in 20 takes up their right to buy back state pension entitlement, which means that a massive number of people with broken work records are missing out.
Experts say filling gaps in your National Insurance contribution record with Class 3 contributions, also known as "voluntary contributions", is the first priority for anyone who is not on course to retire with a full basic state pension, particularly for those nearing retirement, who save most by buying back earlier years' contributions.
"Making voluntary contributions is a no-brainer if you haven't built up enough to get a full state pension when you retire," says Michelle Cracknell of Origen, the independent financial adviser.
"Whether it is women who have had career breaks for children or anybody who has worked overseas for a considerable period, buying back years is the most cost-effective form of pension saving you can make."
It costs just £7.55 a week to buy back the basic state pension entitlement, which adds up to £392.60 a year. If a woman paid an equivalent amount into a private pension for the 39 years it would take her to get the full entitlement, she would build up a pot of just £57,264, assuming annual growth of 5 per cent a year on her fund and tax relief of 22 per cent. This is less than half the £125,000 she would need to buy an equivalent income privately through an annuity. Put another way, she needs only to live to just under 64 to be better off.
"Most people think £84 a week or £4,400 a year is nothing, but they don't realise how much money they need to get this income when they are retired," says Billy Burrows of William Burrows Annuities.
And buying back state pension rights is set to get even cheaper for anyone under the age of 60 on April 6 2010 because the Government is planning to reduce the qualifying period for a full pension from 39 to 30 years for women and from 44 to 30 years for men.
A woman under the age of 56 today who is saving in a private pension rather than buying back missing state pension credits would see her pot grow to a meagre £35,019 in the 30 years she could have been buying her state pension worth £125,000.
While making claiming back extra years even more valuable than it already is, the new rules, which are expected to go through Parliament before April, also mean fewer people will need to claim extra years to get the full state pension.
Last month the Revenue issued a warning that anyone who is currently making voluntary contributions and is on course to retire with more than 30 years' credits may want to stop paying into the state system because it will not make them any better off.
You can claim back voluntary contributions for gaps in your National Insurance payments going back as far as 1996, although from 2009 you will be allowed to backdate only six years. If you have already reached state pension age and find you are not entitled to a full basic state pension, you are still allowed to buy back credits as far back as 1996 although you cannot buy them back for the year of your retirement.
Parents with children under 16 and people who care for disabled or elderly friends or relatives for more than 35 hours a week get help towards their state pension through Home Responsibilities Protection, but this does not fill in missed years of basic state pension; it simply reduces the number of years someone needs to contribute to get a full state pension.
But the basic state pension does not pay out at all if you do not have a minimum 25 per cent of the contributions you need for a full pension. This means that even though Home Responsibilities Protection could reduce the number of years you need to qualify for full pension to perhaps 20 years, if you do not have five years' contributions you still get nothing.
This can mean that many women who do not work because they are looking after children or are stuck in part-time jobs below the National Insurance threshold can end up with no basic state pension at all.
Married people who have not worked throughout their working life can opt to be treated for state pension on their spouse's contribution and will receive 60 per cent of their entitlement. Alternatively, they can buy extra years if they think this will take them above the 60 per cent pension they would get through their spouse. Where both spouses have a full contribution record, both receive the full pension of £84.25p a week.
The Government's pensions White Paper proposes changing this complex system to make it fairer to non-working parents and other carers. Changes are set to take effect in 2010 and a lot of people will no longer need to make voluntary contributions. But despite this, millions of people, whether they reach 60 before then or not, could be missing the bargain of a lifetime by not buying back those years they have missed out of the National Insurance system.
The key questions about extra contributions
How do I know whether I should claim or not?
You need to get a pension forecast by completing form BR19 at the Pension Service website www.pensionservice.gov.uk. Alternatively, you can seek advice by telephoning the HM Revenue & Customs National Insurance inquiry line on 0845 302 1479 or by contacting the State Pension Forecasting Team inquiry line on 0845 3000 168. You can then calculate whether you will have enough years' contributions by the time you retire.
How many years' contributions do I need to get the full basic state pension?
Women currently need 39 years and men need 44 years. However, from 2010 this is expected to be reduced to 30 years for both sexes. This means anyone born after April 5 1950 will need only 30 years' contributions for a full pension.
Why do men have to pay more than women?
This is because the retirement age for women is currently 60 (but it will rise to 65 by 2015). If you are a man aged between 60 and 65 and you are not paying contributions on earnings because, for example, you have taken early retirement, you will get NI credits.
Are there any other benefits of paying National Insurance contributions?
Your spouse will get a bereavement payment in the form of an immediate tax-free lump sum payment of £2,000 if he or she is widowed before you draw the state pension.
How are voluntary contributions paid?
You can pay by cheque direct to HR Revenue & Customs for previous years. You can pay for the current tax year by direct debit.
Will anyone lose out by buying extra years?
Some people on very low incomes will lose out because their means-tested benefits will be reduced. Buying extra years is less beneficial for younger people because the money they pay into the system would grow for longer if it was invested rather than put into the state pension.
Sorry, I missed part of that. Could you repeat it please?
Jun 14th 2007, 1:34 am
#45
Glasgow Rangers
Joined: Feb 2004
Location: London, Ontario
Posts: 1,548
Re: FROZEN Pensions - Action Needed
Without a doubt the freezing of pensions is a disgrace. In my opinion so to is the whole QROPS thing - does anyone have any experience with this? I am having a hard time transferring a UK personal pension to Canada. I Have treid a couple of institutions that are supposedly QROPS approved but the transfer always seems to get bogged-down in buearocracy and they end up walking away from it. I think the key thing is that I don't want to transfer into a "locked-in" fund and although there are pension products listed on the QROPS list that are supposedly not locked-in I cant seem to get anyone to transfer into a non-locked in fund.
Can I ask - to all those people who have successfully managed to transfer - have you all transfered into "locked-in" funds or has anyone managed to transfer into a regular RSP?
Can I ask - to all those people who have successfully managed to transfer - have you all transfered into "locked-in" funds or has anyone managed to transfer into a regular RSP?
My wifes and my uk work pensions have nearly completed the transfer process over here.
I found a company that will do the transfer and it wont go into a locked in fund, will be set up in a regular RRSP
PM me if you want their details
Eddie