nun

The Government has published it's pension reforms. The key things are that it goes into effect in 2017, that the full state pension will be 144GBP for everyone with 35 (not 30) years of NI credits. This is mostly a good thing for those paying voluntary Class 2 NI as it increases the pension benefit, but going form 30 to 35 years of NI to qualify for it is a bit of a hit. I'm not sure what the situation is for people who already qualify for full pension under the old rules by having 30 years of contributions. Are the grandfathered in or do they have to pay 5 more years of NI?


http://www.guardian.co.uk/money/2013...m-flat-payment

jjmb

reading briefly through the article and responses, it looks like if you retire after 2017, you need to contribute another 5 yrs. As it looks like we are going to stay in the US after retirement (kids and grandkids change your other preconceived ideas), not sure it worth it. My husband will not be a happy bunny as he thought 30 yrs and that's that.

kerry_pippin

Re the query raised by jjmb on whether it's worth paying the extra 5 years... I was wondering the same. Here's my calculation, for me as an EU resident (do others agree?):

5 years of class 2 contributions (£2.65 per week) = £689
Full pension (based on 35 years' contributions = £144 per week
Partial pension (based on 30 years' contributions, if you choose not to pay the extra 5 years) = £144 * 30/35 = £123.43 per week

So you gain £20.57 per week by paying the extra 5 years, and recoup the £689 in 34 weeks. Based on that I'd pay the extra £689.

That all depends on class 2 contributions staying at the same (or similar) level. I haven't seen any indication that they are changing but there isn't much information available yet. Does anyone have anything definite on that?

nun

There's no question that the extra 5 years are worth it. I just wondered if those with 30 years who have stopped paying voluntary NICs would be getting a letter from DPW suggesting that they start contributing again.

BristolUK

The government is always talking about planning for retirement.

I took early retirement in 2004 and moved to Canada with 31 years of conts.

In that time I have moved from a 31/40 pension to a full pension and now 31/35.

When I can draw it has been put back a year.

How does one 'plan' with so many changes like this?

vikingsail

I agree but can anyone answer for me how it is that those who have not worked in the UK due to large gaps in employment due to unemployment. How do they fair? And how do they make the distinction?

dunroving

In the news they have been saying that some of the details are still to be ironed out - however, from the tone of other aspects of benefits reform, my guess is that people who contributed during the past and haven't yet retired will be expected to have 35 years' contributions.Of course, anyone who is due to retire prior to 2017, the question is moot (because the new pension provisions don't come into effect until 2017).

However, as per the figures provided in one of the previous posts, it is still generally a better deal for those who have paid Class 2 coontributions - either 30/35 of the new pension, or paying an additional 5 years both work out better.

Mind you, it will all change again when Labour come into government, I'm sure. I don't know how anyone can be expected to plan for retirement these days.

nun

I work for the state of Massachusetts and was planning of getting state health care benefits when I retire. This is a big deal in the US as healthcare is so expensive and the MA plan is very generous. Well it looks like the politicians think it's too generous and they are changing the rules on current employees. Some changes needed to be made, but they've gutted the plan by changed the vesting from 10 years to 20 years, move the age you get them form 55 to 60 and more than doubled the price the retiree has to pay. Basically I won't be getting MA state retiree health benefits and I've been planning on them for the past 10 years I've worked there. At least I have the option to move back to the UK and use the NHS, although how much longer will that be around?

mikelincs

I believe that if you are genuinely 'on the dole' then your NI is deemed to have been paid.

dunroving

I can see a lot of UK benefits becoming means-tested, TBH, including retirement benefits (winter fuel allowance, free bus pass, etc.) and the NHS. Personally, I would like to see at least some contribution being made at point of delivery by those who can afford it - why not pay £5 for a doctor's visit and something towards prescriptions, even if only a small amount?

From a basic economic perspective I can see the problem the government faces - less money coming in and more money going out means that cuts have to come somewhere. Some of the planned cuts really annoy me though. As far as the NHS is concerned, it annoys me that so much of the added expense is due to self-inflicted health problems (due to smoking, poor diet, inactivity, drinking, etc.)

On Thursday's This Week Show (a must-watch for anyone interested in current affairs and politics), Janet Street-Porter made a really interesting case for NOT cutting "well-off" pensioners' benefits. Here you have people who mainly have worked their whole lives, contributing to the system, and they are now being asked to accept that the few breaks they have in retirement will be taken away. Also, more well-off pensioners will still be paying higher taxes, which surely would offset the winter fuel allowance? (Also, from a health perspective, bus passes encourage getting out of the house, thereby improving health and reducing health care costs).

Also, on Sunday's Andrew Marr Show Ed Milliband made a really interesting point - rather than making benefits means-tested (which is very complicated and VERY EXPENSIVE to implement), why not make benefits (child credits, winter fuel allowance, etc.) universal and adjust the tax system instead. That way, the more well-off will automatically get the benefits but much of it will be clawed back through taxes. It's the first time I've listened to him and thought he might actually have a good idea.

As someone who has worked my whole life, paid taxes, generally not availed myself of most public services, it ticks me off that when I retire I still won't get much benefit from all those taxes I paid. I'm not really one of the "worker vs. shirker" brigade but it does also irk me somewhat that having dragged myself up by the bootsraps, spent my life savings mid-life on 6 years' postgrad education, I may be penalised yet again in retirement for "playing the game". I have to listen endlessly to how the low-paid are "demonised" by the government, but to an extent the same is true of the "well-off" - there's almost an assumption that if someone earns £50,000 a year it's not deserved (obtained due to some unfairness, rather than hard work or self-education).

Thereby endeth today's rant.

dunroving

Yes:

"If you've been claiming benefit

You will automatically receive National Insurance credits for the weeks you’ve been claiming the following benefits (if you have paid enough National Insurance contributions):

Carer’s Allowance

Jobseeker’s Allowance

Incapacity Benefit

Employment and Support Allowance"

From here

nun

I can't agree with that as it goes against the founding ethos of the NHS. Means testing and co-pays are ways that politicians seek to reduce what should be a universal benefit. I know I'm a dinosaur in this thinking, but I'm an old socialist who still believes that things like the NHS should be paid for from general taxation and that no one should have to pay out of pocket for health care when they need it no matter how rich or poor.

I agree with making benefits universal and adjusting the tax system rather than the complicated and expensive system of means testing.

dunroving

My reasoning was less to do with economics than a cocnern about the increasing pattern of abusing the system.

In the US, there is a problem that people who genuinely need health care don't go to the doctor because it costs too much. Here we increasingly have the opposite problem - people visting the doctor for trivial reasons (a snotty nose), and putting doctors under pressure to prescribe unnecessary medications, or medications that can be purchased over the counter (like paracetomol, if it is is not needed for an acute or chronic health problem). Because doctors are under such a time pressure (is it 8 minutes per patient now?), it's easier to write a prescription and get them out of the door than engage in a lengthy argument about whether they really need it.

Maybe a "co-pay" system isn't the answer but like a lot of these questions, my response is "It's all well and good arguing based on socialist principles - but that doesn't solve the problem that we don't have enough money to pay for the way people are using the services!" Unfortunately, the John Serwotkas of this world are full of easy questions and never have answers - he'd probably say that's what we pay politicians for, which is a facile response.

I find myself a socialist for some things, a liberal for others, a conservative for others. I increasingly get frustrated with the constant criticism of politicians from people who themselves don't have any ideas for the answers (I'm not a big fan of politicians, BTW).

dontheturner

Couldn't have put it better myself.

dunroving

Don, how would you fund this though, considering NHS costs are skyrocketing to the point where there soon simply won't be enough money to pay for completely free health care?

That's the part I see simply is no longer working - the situation is completely different than when Nye Bevan (quite rightly) fought to set up the system.