State Pensions

[Vixnixtrix1981]

Being in my 30s, I've never thought about Pensions. Been in my employers scheme for 13 years so far but recently they have announced a shortfall so are proposing changes.
This made me look at the state pension.
If you have made NI contributions for between 10 and 35 years you get a calculated amount according to the numbers of years you contributed.
Am I being a dick in thinking it's therefore unfair that someone who has contributed, say 50 years NI gets exactly the same pension as someone who has contributed for 35 years?
I am just of the thinking that if you calculate some people's pension on qualifying years, you should calculate them all, if that makes sense.

ni payments go towards a lot more than just the state pension

You don't contribute to your own pension; todays worker pays for todays retiree. The mantra of "I paid in, I'm entitled" really is a misnomer. To put it in perspective, the day the welfare state started paying pensions out, who do you think was paying for the existing pensioners? That's right, the tax payer of the day. And so it perpetuates. I pay for my parents generation, my children will pay for my generation.

Well- someone who has never worked, ever can retire on the full pension, more than someone who worked for say 29 years of their life. Is that fair?

you know that the total amount wouldnt be any more if they did it that way, it would just be less for shorter times

There is no fair about it! Some of us were told when we leave school we would get our pension at 60!
This is all because the pension system is set up a bit like a Ponsi scheme - it is reliant on a new generation paying in enough, the shortfall is because every government since their inception has valued the 'grey' vote such that they have failed to raise the pension age in line with average life expectancy increasing.

So right now it's catch up time, hence equalising male and female pensions to age 65 then increasing the retirement age by a few years.
I expect I will be 70 before my pension will be dished out to me - if at all.
I agree with@dadshere that it is hardly fair that someone who has never worked can retire on a full pension whereas someone that has worked but perhaps for some reason (caring for children or relatives and not been able to claim benefits)
has not managed the full compliment of years will not get a full pension.

is hardly fair that someone who has never worked can retire on a full pension whereas someone that has worked but perhaps for some reason (caring for children or relatives and not been able to claim benefits)

Caring for children means you can claim Child Benefit, which pays your NI for you (which is why people need to claim it as a SAHP)

www.gov.uk/new-state-pension/how-its-calculated

If your starting amount is less than the full new State Pension
You can get more State Pension by adding more qualifying years to your National Insurance record after 5 April 2016. You can do this until you reach the full new State Pension amount or reach State Pension age - whichever is first.

Each qualifying year on your National Insurance record after 5 April 2016 will add about £4.70 a week to your new State Pension. The exact amount you get is calculated by dividing £164.35 by 35 and then multiplying by the number of qualifying years after 5 April 2016.

Example

You had a starting amount from your National Insurance record before 6 April 2016 of £120 a week.

You have another 5 qualifying years on your National Insurance record after 5 April 2016 (each year adding about £4.70 a week to your State Pension) equalling £23.48 a week.

This adds up to about £143.48 a week for your State Pension. This figure may change as the starting amount is adjusted to account for inflation.

and yes its shit that you have to work for longer now, but you realise the age for retiring at 60 was set in 1940,

www.localhistories.org/life.html
In 1930s life expectancy for a man at birth was about 60. By the 1950s it had risen to about 65. Things improved more slowly in the late 20th century but by 1971 life expectancy for a man in Britain was 68. For a woman it was 72. In 2015 life expectancy was 79 for a man in the UK and 83 for a woman.
so you could have 23 years where the state needs to pay for you. I work with women over 60 and in the most there is no reason that they need to stop.

www.web40571.clarahost.co.uk/statepensionage/SPA_history.htm

DH works in finance and was explaining to me (in a way I can’t remember to explain eloquently to everyone) just how much the longer life expectancy and retirement age is costing us. It’s insane. Like really very shocking - as a PP said, the pension scheme was set up in the 50s or something, when the population was much smaller and people did not live as long. If people are living until 90-100 today, and retiring in their 60s, that’s 30-40 years of being subsidised. It’s not financially tenable.

EveningHare

You have actual stats! Completely agree with what you are saying - it’s a frightening situation

When the state pension started a man could claim at 65. The average life expectancy was 62. Most men didn’t make it, and the ones that did were likely wealthier anyway (the richer you are the longer you’re likely to live) now people regularly live to 80-90 or more, the system as it is just isn’t sustainable.

crispysausagerolls
I love google!

I also work in Pensions - its scary how much money you need to pay an annuity

I’ve contributed 35 years this year, Will probably work another 7. I don’t mind the extra. It won’t kill me.
I couldn’t cope with a society where old people were left to starve.

NI contributes to state pension, job seekers allowance, maternity pay, bereavement allowance. I am happy to continue to pay NI into the pot after 30 years. If we all stop paying after 30 years how are we all going to fund all these payments. Secondly, some people don't work. My state pension does not pay out until I reach 68 and I expect it to increase to 70.

It will be interesting to see if I'm still employed at 68/70 !

For anyone who was ever ‘contracted out’ under an employee pension scheme, the number of ‘years’ they will have under the new system will be reduced.

I cannot, for the life of me, find out how to work out how those years are affected. There is something about a Guaranteed Minimum Pension, but it looks hideously complicated.

I don’t think it’s even possible to ‘buy back’ those years either.

I thought I understood the state pension but this thread has confused me. Do you only have to pay in for 30 years?

For anyone who was ever ‘contracted out’ under an employee pension scheme, the number of ‘years’ they will have under the new system will be reduced.

If you have contracted out, it means a private company will have to pay the GMP part of the pension for the years you were contracted out. You can use the new tracing service from the Government

www.gov.uk/government/news/new-pension-tracing-service-website-launched

dudsville no you pay in as long as you work and pay national insurance

Wwwgov.uk you need your NI number it will tell you how many qualifying years you already have, when you will receive your state pension and estimate of how much. It's currently 30 qualifying years to be eligible for full state pension.

What about someone who contributes for 35 years but dies before reaching state pension age?

They dont need the money WaggyMama....

its the balance between having enough money to pay for everyone, (hopefully - for the gvt) some die without taking any money back out, these ones pay for the ones that live a lot longer

As contracting out has now been abolished, each year you work till retirement should reduce the amount of the contracted out pension equivalent. We all pay into the national insurance fund to cover non means tested benefits.
When the state pension was first introduced, the retirement age was 70 for men and women.

Some of us were told when we leave school we would get our pension at 60!

The average longevity when the welfare state started was pension plus 2 years, so would you like to shuffle off at 62 or are you happy for those extra years the NHS has given you?

Overall life expectancy in England is 81 years. For men it is 79.5 years. For women it is 82.6. England has the 29th highest life expectancy.

So you choose - work a little longer as the age of the nation increases and there are no longer enough workers to support you, or we can look at ways to bump you off at 62.

The worst thing for me is that public sector pensions eg nursing pension has now been moved in line with state. Previously I could have retired on my public sector pension earlier. But this is all a good 40 ish years away now. Probably no state pension for me then

@KirstenRaymonde, no that's not so, I don't think.

You pay NI until you reach your state pension age - for me it will be 67 I think. If I choose to work beyond that age, I do no need to pay NI after that time.

But yes, it isn't dependent on how many years you work.