Warning on state pension payments

No,

But yesterday I was looking on there to try and find out how long they had after I send in my tax return to send me my tax refund - and couldnt find that either.

Allan Gould wrote

I remember it being announced in May, to the anger of my g/f who made full contributions throughout her working life in order to qualify for her state pension. :-(

I remember it being announced, and being VERY happy, because I am planning to retire long before 6x.

I don't remember it being announced, but I'm happy to hear about it now, because I decided ten years ago not to bother topping up my contributions because it would probably be a waste of money. My 29 qualifying years are looking good.

Miss L. Toe wrote

I hope you are successful, I would advise anyone to get out as soon as they can afford to. I retired at 58, thanks to an offer from my company which I couldn't refuse, 40% enhancement on "pension earned to date". Some were less fortunate, and the following year it was all redundancies.

That's the problem bit, trying to work out exactly how much one needs for a reasonable existance that might easilly last 30-50 years if one retires at

50.

Had a very prompt reply from the BBC website people: they provided the URL, which is

It didn't say you could have the money earlier. It just said you'd have to contribute for less time to get it. They won't pay out until you reach state pension age, whatever that will be in the future.

norm

True, but I will (eventually) get a FULL pension with only 30 years contributions.

But if she's on the MIG then her contributions are practically worthless anyway

- had her state pension been 40 less then the pension credit would have been 40 more! If she's had no state pension at all the pension credit would have paid the lot!

Also the age for the pension credit and state pension will rise to 68.

Miss L. Toe wrote

Well, I/we had a struggle at first because the state pension didn't arrive for 7 years, but the interest rates were 10% on instant access accounts, thanks to the Lady PM's "market forces are gud" policies. That helped.... ;-)

For retirement at 65, much discussion amongst colleagues of a practical disposition produced a consensus that you need 50% of your *gross* salary as disposable retirement income. This assumes a modest life style, not including motor yachts etc.....

For earlier retirement you will have to do your own calculations. My income is now about 81% of my final salary (in 1991). Which is ok, thanks again to Chancellors who have keep inflation down to the index-linking of my pensions.

Hmm I'm really not sure its as simple as a percentage of gross salary or even net salary. Mainly because the more one earns the greater %age one is probably saving and:

I see 3 stages of retirement:

1 - Active - where you are doing all the things you always wanted to do and spending money doing them - this will probably last until age 70-75. 2 - Passive - where you can still be in your own home and not a burden to others but much less active and therefore spending much less money. 3 - In care - An expensive time, hopefully short or non-existant but possibly going on for years - how does one budget for that ?

The other half of the equation is income:

- Pension - fairly easy to calculate

- Savings - Is it reasonable to deliberately run these down to close to zero during phase 1 and thus enjoy your money ? Assuming your pension arrangements will cover Phase 2 ?

Bitstring , from the wonderful person Gordon said

It also assumes you were actually spending your net salary (or 'more or less'). Some of us were sticking away 50% or more of our salary, and we're delighted to retire on about 25% of our previous gross (and still not spending it all).

Of course the -seriously- rich pensioners wouldn't dream of spending their interest, only the interest on their interest......

"Voluntary Class 3 contributions

Important - Please read this carefully before you make any decisions to pay voluntary Class 3 contributions

The Government has published a White Paper titled "Security in retirement: towards a new pensions system (Cm 6841)" setting out its proposals on Pension Reform. The paper includes a proposal to reduce the number of qualifying contribution years needed to qualify for a full basic State Pension to 30 years for both men and women reaching State Pension age on or after 6 April 2010 (at the moment women need between 39 years and 44 years depending on their date of birth and men

44 years). For this to happen the law needs to be changed.

Following the publication of the White Paper, the Government intends to legislate for pension reform as soon as Parliamentary time allows and will publicise any changes.

If you reach state pension age before 6 April 2010 you will be unaffected by the proposed changes. You may want to pay voluntary Class 3 contributions to increase your entitlement to the basic State Pension if you are not currently entitled to the full amount or will not be by the time you reach state pension age.

However if the proposals in the White Paper become law, you may not need to pay voluntary contributions, if you are due to reach State Pension age on or after 6 April 2010 and :-

- have already paid enough contributions to qualify for a full basic state pension under the proposed new rules ;

- anticipate working and paying enough contributions to qualify for a full basic state pension under the proposed new rules

You should therefore consider very carefully whether you should delay paying Class 3 contributions until it is clear whether the rules will change. If you nevertheless decide that you want to pay, you might not be able to get a refund if it turns out at a future date that you need not have paid them. However, if you delay paying the contributions, you may have to pay them at a slightly higher rate.

For more information, see the White Paper proposals"

Miss L. Toe wrote

It was a 'wet finger in the air' estimate when we were working out whether we could afford to take the offer.

I'm 72, and we are dancing twice a week, walking between 5 to 8 miles at weekends and a stroll or two in between. These are not expensive activities, and are healthier than some of the expensive ones!

In fact, at stage 1, I find a surplus in my current account most months, and at stage 2 will probably be financially helping my daughter if she is having to shop, etc for me.

I'm not sure that one can, although a close friend who suffered MND for three years and had to pay for extra home assistance etc, still left enough to incur IHT. He was a bachelor though, no dependants. I doubt that it is worth drastically curtailing your lifestyle when in your prime in order to do this.

ISTR seeing figures that stated that about 20% of people ended up in nursing homes, and that the average length incarcerated (!) was about two and a half years. Those odds tell me not to make too many sacrifices! By my age, (or sooner) the best advice is "Do what you can while you can do it".

They will, but I will not run my savings down too much in case I need to pay to get an operation done quickly, etc.

GSV Three Minds in a Can wrote

very average person

I forgot that bit! We did save up a 5 figure amount after a narrow escape from redundancy in 1981, which helped, but we also got some good holidays abroad in before I retired.

The rate at which I can afford to allow capital to disappear before I snuff it is more my focus. :)

Andy Pandy wrote

But MIG and pension credit were unheard of 30 or 40 years ago, and I'm not going to remind her how bloody unfair it is that she took a responsible decision then, whereas those who opted out are no worse off. I have already had enough ear-ache from her about it!

"Gordon" wrote

Why did the group feel that someone earning (say) 20,000pa needs a pension of 10,000pa (50%), but that someone earning

30,000pa needs *more* than a pension of 10,000pa (33%)?

One is OK with a 10,000pa pension but the other isn't?! :-(

Isn't it obvious? Someone earning £30,000pa would have got used to living a different lifestyle than someone on £20,000. Upon retirement, they would need more money to maintain that lifestyle than someone on the lower salary. The "need" refers to the amount of money required to maintain their current lifestyle, not "need" as in the sense of survival, if that's what you were thinking.

Chris