Why you will be worse off with the New State Pension
Government figures reveal most of us will lose out with the new State Pension.
The vast majority of people will be worse off with the New State Pension which comes into effect next year.
The New State Pension, which will pay a maximum of around £155 a week, has been sold by the Government as a fairer and more generous pension.
But new data from the Department for Work and Pensions has revealed that 80% of men and women who have applied for a State Pension forecast were told that they would not be better off under the new system.
The Government issued 481,000 State Pension statements between September 2014 and October 2015. Statements compare what level of State Pension applicants would have received under both systems, giving them the higher figure as their starting amount.
According to the Department for Work and Pensions (DWP), four-fifths of those 481,000 statements were based on the current system, meaning that they would be better off with the current State Pension arrangement than they would be post-reform.
How the State Pension is changing
At the moment the basic State Pension stands as a maximum of £115.95 a week, with various additions based on your lifetime's earnings.
From April 2016, it is to be replaced by a 'flat rate' State Pension. In theory anyone who has made 35 years of National Insurance contributions will qualify for the full payment of around £155 a week, but in practice many will be missing years due to being 'contracted out' as a result of taking part in certain workplace pension schemes.
The Government has done a terrible job of explaining just how the new system will work, with even the Pensions Minister admitting that it has effectively been 'mis-sold'. According to figures from earlier this year, two-thirds of those reaching pension age next year will not qualify for the full New State Pension.
Win some cash!
Find out how much you could make from the NatWest Reward Account by using the calculator below, and you'll be entered into our competition where we are giving away £100 every day throughout November!
Get the low-down on pensions:
Mis-selling: the Government is in on the act!
Most Recent
Comments
-
I'm glad that I got in under the barrier and qualified under the old system, so that I was able to inherit my late first wife's contributions (which will not be allowed under the new system) and get a State pension of £208.50 per week. I think that a lot of the trouble, though, was caused by the new system being advertised as a "flat-rate pension". It isn't, and nor was the old system.
REPORT This comment has been reported. -
latent If you compared like with like in respect of dependents - so a pension couple with a childless out of work couple I think you'd find the pensioners ahead. Its the child benefits, and working family tax benefits that tip the balance.
REPORT This comment has been reported. -
mds1951 The GMP and increases up to 3% pa are paid with the private pension. Currently the state picks up any excess over the 3%, but in future they will not do that. When all is said and done you can't simplify and ensure that nobody loses out. But I do recognise a fair dollop of hype in this policy - many complaints in the past have been about the benefits to retiring one day after the changes compared to one day before. Anybody that thought this change would result in lots of extra government (i.e. taxpayer) funding clearly hasn't understood the scale of the current deficit.
REPORT This comment has been reported.
Do you want to comment on this article? You need to be signed in for this feature
24 November 2015