To think why should I fund pensions for people who have previously opted out

[Loveweekends10]

I have always worked full time at the same time as raising my kids in order that I am financially secure and that my pension will be good.
Now I must pay more contributions because of the numbers of people who only think short-term and chose to not contribute to a pension.
I know people who are not in poverty but just choose to spend the money on going out instead.

accrue our pension, I meant. Durr!

I think those who currently are opted out pay something like 1.4% less national insurance and that is what will change. They will have to pay the normal NI rate - so a 1.4% extra tax in effect for the same benefits so you can see why they are fed up.

What I don't understand is that everyone will get the £155 a week pension or whatever it will be even if they never did a day's work in their life (pension credit will go) but those who have less than 35 national insurance contributions (will be interesting to see if they preserve the credit for those caring for children under 12 at home) will not get a larger pension, it seems to say. So how is that moving from a two tier pension to a one tier one?

Has anyone who has read the proposals able to explain that to me?

I have stayed at home caring for children. I opted out before I had children. Should I opt back in, can I? for when I start work again.

It's similar to the argument about people who have savings or an asset like a home, having to use those to fund their care home, while joe bloggs down the road who earned the same money over his working life chose to spend it on holidays and other things and ends up in the same care home

I hear this trotted out a lot. But in my experience it is rarely the case. It is usually the case that those with property assets are usually richer than those who don't, either by income or inheritance.

We live in a run-down private rental not because we choose to spend my money on fripperies, but because we can't get a mortgage or have enough money for a deposit.I don't mind this, but the idea that we are just careless with money is absurd .

I think some women a long time ago opted out of paying NI at all to rely on their husbands' pensions when they retired. A second lot of people of both sexes opted out of the what was then called the State Earnings Related Pension Scheme (SERPS), paid less NI. Other women have in more recent times not worked but claimed NI credit where caring for children up to 12.

I think the above are three categories of different people and then another category is people who always paid full NI contributions.

Not sure how all 4 categories are affected by these changes.

This link is useful. It explains SERPS became state second pension and now they propose merging the two www.lovemoney.com/blogs/savings-investments-pensions/pensions/15279/contracting-out-pension-what-is-contracting-out.

So I think when employed I opted out of SERPs into a separate stand alone pension which still exists but ceased to have contributions when I went self employed ages ago. So instead of losing the second pension because of that opt out I think I gain the new combined basic and second pension under the new scheme plus I keep the separate stand alone opted out one. That doesn't fell very fair on those people who stayed opted in. Shows what a total con most of these pension things are and how the rules can be changed on a whim and the rug pulled from under your feet and that the best thing is ignored the state, assume it will do little for you and just save.

Compos- I wasn't referring to people who can't afford a mortgage or luxuries though, if you read my post. I was referring to people who make a conscious choice to use their money in other ways, maybe expensive hobbies, or selling their home to go and travel, or whatever. It doesn't sit comfortably with many people that two people earning similar incomes over a lifetime can be treated so differently.

Does claiming child benefit mean you get NI contributions paid automatically?

I wasn't referring to people who can't afford a mortgage or luxuries though, if you read my post. I was referring to people who make a conscious choice to use their money in other ways, maybe expensive hobbies, or selling their home to go and travel, or whatever. It doesn't sit comfortably with many people that two people earning similar incomes over a lifetime can be treated so differently

I know, but my point is that theses people simply don't exist in any great numbers. The argument is usually a rallying cry for those who resent paying what they can afford or their children who hoped to inherit their parents' assets.

Fog, I think so up to when a child is 12 or you may have to make a special claim. There has been quite a bit about this on child benefit threads. Also if someone has a new baby now and earns over £60k they should apply for CB even though they will not get it if one of them will stay at home - in order to ensure they get the NI credits. However this proposed new scheme when it is in force may well change all that and it may not matter if you work or not - you will still get your state pension which makes a bit of a mockery of national insurance as some kind of pot you pay into.

I still have not got to the bottom of the point that if you work 35 years under the new scheme (30 under current law) you get more of something yet they are saying there will be one straight state pension. Perhaps they maintain the second tier for those with 35 years of contributions bnut are just getting rid of pension credit entirely. So either you will get the basic state pension (but no pension credit) or basic state pension plus second state pension if you have 35 years of NI.

I've not heard anything about these changes, would be interested in more info as I have a final salary pension and OH would be affected by any change that required 35 years contributions rather than 30 (EU national so didn't move to the UK early enough to get 35 years)

I think you also have to work and pay NI contributions for a minimum of 10 years.

Does the time spent bringing up children contribute to the 35 years of NI contributions?

David Cameron on Radio 4 this morning was asked about them but only briefly so did not shed much more light.

If you never work once and pay no NI and have no caring responsibility and pension credit goes presumably under the new scheme you still get this new merged basic pension?

Telegraph article on it blogs.telegraph.co.uk/finance/ianmcowie/100022256/state-pension-reform-winners-and-losers-as-the-biggest-ponzi-scheme-ever-unravels/

Biggest ponzi scheme ever - NI and state pensions they say!
I still don't have the answers to my questions. There must be a Government detailed summary put out with this today.

Okay, so you need NI contributions. If you have none at all you would not get the basic state pension at all. You might get instead income support (or universal credit when it comes in) which presumably will be less than the new one tier state pension. I think you need 35 not the current 30 years to get the state pension (originally men needed 49 years of contributions to get it!).
www.pensionsorter.co.uk/statepension.cfm#howm

Thus people at home caring for children under 12 still need to claim to ensure they keep NI credit for their time with that responsibility to ensure they are on a state pension at 67 or 70 of whatever the age will be by the time we retire rather than universal credit.

Well as a carer I already get my NI paid but I have also worked consistently since I left school and even prior to, it is only recently I have had to give up work to care due to my childs age and because of the local authority cuts to my daughters care which has made it impossible for me to work any longer. I don't know, you cannot have it both ways

The alternative is I put my child into care and go back to work full time and the taxpayer picks up the bill for her care which would be close to a million per year. It's up to you

No one is saying that carer credit should be removed. I am just looking for the details of the policy and have failed to find them on DWP website.

So it looks like:-

1. John/Jane - never worked a day in their lives - get no state pension at all; get universal credit at 95 as much as at 35.

1. Janice worked full time from 18 - 67 when she retired. In firm's or state worker's final salary pension scheme. Pays more NI from now on and gets single tier pension which is paid per individual not couple - another feminist improvement - roll on Cameron supporter of working women. I like it.

1. John took 10 years out of work to bring up the family. He claims NI credit. Same position as Janice on retirement - except less employer pension. State pension the same.

1. Ruth never much liked work (or loved it but could never get a job) so was often on benefits. She has no children. She worked for 5 years in all. I think she gets no state pension. I think she needs 35 years of NI now to get it.

1. Xenia self employed - now gets same basic state pension as employees . I think I have 30 years of continuous NI payments already so obviously will have 35 years by the time I am 67 and get my state pension. In fact I will have 46 years of NI by age 67. I keep my private contracted out of SERPS/second state pension too. That seems unfair on those who did not contract out.

I want an efficent system. It may seem fair to pay benefit scroungers the same pension as someone who has worked for 45 years, but these people will get less benefits.

"1. John/Jane - never worked a day in their lives - get no state pension at all; get universal credit at 95 as much as at 35."

What is the point of giving John/ Jane no pension, but they get income support, housing benefit and pension credits that take up to the same amount. Surely its simpler to sack a load of pen pushers and have a flat pension. The cost of the increased pension is offset by decreasing other benefits.

It does feel unfair, but it makes no difference to the tax payer if someone gets paid housing benefit or pension.

OwlLady you posted what I was going to say.
exactly.

Really Tired - I agree. I want to end the charade of national insurance and merge it with tax and have some kind of employer contribution perhaps at 10% of salary, not 13%.

A universal payment in retirement (we would need to ensure people from the 26 other Eu states did not move here when they retire though to claim it).

If the single state pension is the same level as universal credit/income support for the old then there is no point in the distincion. If pensioners who chose never to work for 50 years would instead get much less and only just afford to eat but things like TV licence, internet would be well beyond their means then the distinction might be worth having as an incentive for those people to work who can do so.

You already are contributing via pension credit. I think the flat rate is a lot fairer and simpler to administer. And I think this new

Meant to cancel this post as I haven't really understood what's going on! But I think it only applies to public sector workers. And I think the flat rate pension is much fairer.

It applies to all workers, not just public sector ones but a lot in the punlic sector have final salary pensions so they and any in the private sector who have them will have to pay more NI.

It will certainly be simpler - either you don 't get a state pension (and get universal credit instead or you get a state pension (rather than a basic and/or a second state pension) and you might well have an employer pension too which for higher earners will be the higher of them all.

I think Iget mine at 67 or 66, state pension, whether I am still working then or not and I will have well over 35 years of NI. They should let you stop paying NI after 35 years then if you only need 35 years to qualify. It used to be 48 years of NI for men before they got their state pension and Goodness knows why we brought it down to 30 years and now up to 35 given how much longer people live.

Xenia, I totally agree with you.

I am sure that by the time we get to retirement age the entire system will have changed yet again. I agree with you that income tax should be merged with national insurance for employees and the employer's part of national insurance should be merged with whatever type of taxes companies pay.

We need a tax system that does not discourage employers taking on employees. We need a system that is clear, fair and not too expensive to administer.

All these complex credits/ child benefit fiascos have created more jobs for civil servents instead of front line services.