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Government reconsidering £140 State Pension plan

Reports suggest the Government is getting cold feet over its £140 State Pension revamp.

The Government is having a rethink of its plans to introduce a flat-rate £140 State Pension.

According to a report in the Financial Times, the Government has only just realised that many people will lose out – or at least not benefit – from the changes. As a result, Prime Minister David Cameron has put the brakes on the reforms.

How things work at the moment

The table below outlines the Basic State Pension various people can qualify for:

Circumstances

Basic State Pension per week

Single man or woman

£107.45

Married man or woman or civil partner, who qualify with their own National Insurance contributions

£107.45

Married man, woman or civil partner using his wife’s her husband’s or their civil partner’s National Insurance contributions record

£64.40

 

There is a ‘triple lock’ in place to work out how much that should increase each year. The State Pension jumps depending on which is the highest of the growth in average earnings, the rate of inflation or 2.5%.

However, there’s also an additional State Pension to think about. It’s had all sorts of different names in the past, including State Earnings-Related Pension Scheme, and is money from the Government on top of the State Pension. How much you get depends on your earnings.

And then there’s Pension Credit, which is available to poorer pensioners, and bumps up the State Pension to nearly £140 a week.

The whole system is complicated and confusing, which is why the idea of a single flat rate was a popular idea.

The planned reforms

Under the reforms, the second State Pension element would be ditched entirely, with the State Pension bumped up to £140 a week.

For more, you can read State Pension to jump by £40 a week

Not everyone benefits

The problem with the planned reforms is that there will be losers. For starters, existing pensioners won’t qualify for the flat rate. And given older people are far more likely to vote than younger people, the Government clearly feels uneasy about angering them, particularly after the Granny Tax farce earlier this year.

Those who previously would have benefitted from the additional State Pension are also unlikely to be big fans of the reforms.

What happens now?

It’s no secret that the Government has been concerned about the cost of welfare reform. That’s why the Prime Minister supposedly tried to move Iain Duncan Smith, the Secretary of State for Work and Pensions, in the reshuffle.

Back in July the Government announced the White Paper on pension reform had been postponed until the autumn. That paper is still expected to be published, though reports suggest it will be “consultative rather than prescriptive”, highlighting alternative options.

More on pensions:

Auto enrolment: how NEST will invest your compulsory pension

Saving in a pension? You are as well off on benefits

Annuity rates cut 23 times since July!

Cut the cost of passing on your pension

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Comments



  • 20 October 2012

    All good points, Tanni, But your comment about a third down says it all: "We are a very hands on nation but over the last century we have allowed the market forces of consumerism and marketing to dictate how we live our lives. We have gave powers to the nanny state who babysits and decides what is good for us! " You can't have it both ways. Either businesses can do what they like, or a government is strong enough to force them to benefit the people. One is 'raw capitalism', where the most powerful dominate; the other is called a 'nanny state'. I suppose your ideal is an unpaid class of politicians with the wisdom of Solomon and the power of a dictator, who nevertheless allow the people perfect freedom without responsibility and whose outcome is exactly the kind of life you want to lead (and everyone else agrees totally with YOU). But that will never happen. And meanwhile, no government nor any person with the power to affect your life will ever satisfy. It's the Brit's paradise - so much to whinge about at the bar!

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  • 27 September 2012

    Point taken, however we as citizens do not choose to do the sums and neither do we have the real power to do so. If we did we would do a better job. England wasnt won or created in a day, We forget that the entire magna carta, our constitution and implied rights were fought and won by the people ( with the backing of the barons and tribal leaders of England and influences from ruling Monarchies of Europe including Papal fiscal and political influence). Our leaders for the best part of a century seem to have lost perspective. We as a nation did have vast amounts of money and resources ( coal, gas, petroleum interests around the world, centre of finance, centre of commerce, our stock markets and the trade going on with the commonwealth/empire) non of the resources were given to the people apart from those able to invest in the privatisation of our national assets ( glorified share offerings from banks and the utility boards). We should and could have been governed with better foresight rather then short term gains to keep the people sweetened up via political violations of our sovereign wealth and resources. I agree if we all sold up and moved to Africa or South America our pounds would stretch further and we could have all the luxuries of the world. Why should we move, after all growth will continue and developing countries will catch up..so we keep moving and eventually move to the moon? We are a very hands on nation but over the last century we have allowed the market forces of consumerism and marketing to dictate how we live our lives. We have gave powers to the nanny state who babysits and decides what is good for us! Many people would live to their resources, but as our and leading western economies are focused on growth then the people are encouraged to live on credit. Exponential growth has side effects which result in recessions/booms to control the growth and lifestyles of all of us. These are all linked directly to the worlds governments including our own political and economic masters of disasters. It is about time we started being positive again in this country. I see an awful lot of negatives mentioned about foreigners taking our jobs and benefits, yet we forget that all these foreigners are needed to keep our growth growing and succesive government policies allow them in. They can be stopped at the borders but are not. We go and live in their countries yet we do not hear about them complaining. Time to grow up and take it on the chin. I am all for integration and immigration but in a managed way, not the negligent way it's done today. We are all children of Adam or in the eugenical theoretical world of Darwin; from monkeys, we should learn to adopt better planning and use of resources to ensure we have no poverty in the UK and that we do not use scapegoats as foreigners to highlight the failings of policy from the people we elect to govern us. The governments and policy makers plan for a fair few generations ahead...just the morons we've had governing us have been neglecting the interests of the people for their own gains. stop pointing fingers at one another, look at the mirror and do something meaningful and positive for the country. Write to your MP's and hold the planners to account and stop blaming each other for having too much or too little.

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  • 26 September 2012

    Tanni, first your Middle East comment. Those Middle East countries with a fortune coming in from oil revenues can AFFORD to pay out so much to natives - and they've been doing it for at least 40 years. It keeps the plebs from being restless and the powerful still get the majority of the oil revenues. Remember, these are not heavily populated places; they're mostly desert with a few cities, a few more fishing villages and some Bedouin encampments (some say that they're where the power is - all the powerful tribes and leaders are Bedouin). Most of the people in Saudi, Kuwait, Oman, etc. are incomers, and none of them have permanent residency (they can be kicked out as soon as they're not needed). If the UK had this much spare cash, we'd all be in gravy! As it is, even if all the wealth of the top 5% of UK earners was redistributed to the rest of us, it wouldn't be £1000 a year each, let along a month! Now your last remark. Handouts like this won't work - you need to do the sums. It's great to say that the lowest paid ought to be topped up to £20k a year; but I suppose then that us pensioners should get what? More? The same? And the not-so-badly-off who put a lot more into their jobs and have spent poorly-paid years training for those jobs? Should they get 50% more then £20K? Double? Or just the same? What about those who refuse to work well and are cunning enough to blag it off as hard work anyway? Should they still get the same? This is Union talk of the 60s, based on the Russian model which said 'equal rights for all' and meant 'everyone gets the same except Party members'. Lenin said, roughly, 'to everyone according to his need, from each according to his ability'. That was a disaster in practice, because what's fine in theory falls down under human greed and cheating - and that goes on everywhere. The reality is this: your plans for paying out in our 'gimmie' culture are all based on 'entitlement' with nothing said about 'responsibility'. The whole of the government's income wouldn't pay the benefits you think that need paying out. Try working this in a family with older teens - the kids want more in allowances than mum and dad bring home in pay, and angrily demand their 'rights' (the latest iPhone and trainers, of course!) Then who do they blame when they outspend the family income? And you want our country to be run by volunteers? We had that in the 19th century and look who turned up to volunteer! Today's UK society is much wealthier than then and the poorest half is very much better off. If you look at what today is counted as an 'essential', you'll get the point right away - telly, washing machine, mobile, car, enough cash to buy pre-prepared food so you don't need bother cooking - all these are recognized as 'basic human needs' even for the out-of-work with time on their hands. With all the struggle to keep up with the neighbours, we forget that in most countries, this is sheer luxury for the world's REAL poor - even those who consider themselves better off than their poor neighbours. Fact: take today's basic UK state benefits and allowances for a family of four. Transport yourself to Sao Paulo in Brazil, and set up there in a typical middle-class 4-bedroom flat (guards at the estate gates provided with the rent). You'd have enough spare cash after paying for insurance, kids' schooling and car, food, clothing, usual luxuries, etc. to hire a half-time COOK and a full-time MAID/NANNY at the going rate in Brazil. I worked it out once, with the help of a Brazilian friend, who was as gobsmacked as I was. Maybe Rich Britain should - together - cut our cloth according to our means. This and the last government have at least been trying persuade us to do it, but with the majority still determined to hang onto luxuries and spend over their incomes, it's a losing game! No, I don't trust governments, but nor can they buck human greed and foolishness.

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