Aug/092
UK State Pension Questions and Answers
What is the basic state pension?
The basic state pension is paid to women at 60 and men at 65, who fulfil National Insurance (NI) contribution requirements.
From 6 April 2020, the state pension age for both men and women will be 65.
The government will introduce the change gradually from age 60 to 65 for women over a 10-year period from 2010 to 2020
How much is it worth?
The full weekly rates are (year to April 2009):
Single person: £90.70
Couple: £145.05
Will I get the full basic state pension?
Not necessarily.
What you get will depend on your National Insurance (NI) contributions - and the rules are stringent.
Your pension depends on how long you have worked for and the number of “qualifying years” you have.
A woman with a working life of 44 years will need 39 qualifying years for a full pension and a man with a working life of 49 years will need 44 qualifying years.
The government plans to reduce the number of qualifying years it takes to earn a full basic state pension to 30 as part of its overhaul of the UK pensions system.
However, the contribution record of people who have been unable to work due to unemployment, sickness or caring responsibilities, may be protected by credits or “home responsibilities protection”.
What happens if I have not made enough contributions?
If you have not paid sufficient contributions you may get a partial pension or you may not receive a pension at all.
If you are not entitled to a full Basic Pension you may receive a reduced amount.
But if you retire with less than 25% of the qualifying years for a full pension, you won’t get anything at all.
People aged 80 and over receive a non-contributory pension, at 60% of the basic state pension as long as they fulfil other requirements, such as residency rules.
What about the earnings link?
A link between state pensions and earnings was introduced by Barbara Castle in 1974.
This ensured that state pensions kept up with the rate at which salaries were rising.
However, it was scrapped six years later by Margaret Thatcher, and more pensioners must now rely on private savings to make up the difference.
Restoring the link with earnings would cost an estimated £0.5bn in the first year, rising to £10bn by 2010, according to government figures.
Isn’t the state pension age changing for women?
Legislation to equalise the pension age at 65 for both men and women has been passed.
The change will be phased in between 2010 and 2020 and will not affect anyone born before 6 April 1950.
If you are a woman and born between 6 April 1950 and 5 April 1955, your state pension age will fall somewhere between 60 and 65.
The government’s www.pensionguide.gov.uk has details on the age and date when you will be able to receive the state pension.
Longer term further rises are planned for both men and women, eventually taking the pension age to 68 by 2044.
Source of article: BBC News
Jul/091
Important! Tax Credits Deadline Approaches
As the Friday 31st July approaches, claimants of all types of tax credits could soon be facing a further financial blow in the credit crunch. If consumers do not apply for their credits then they could face huge reductions in income when HMRC get around to recalling their overpayment.
UK pensioners - many of whom are struggling because of their pensions deteriorating in the credit crunch - are worrying over the prospect of facing further cuts to their weekly income through tax credits. However, pensioners do not have to renew by the end of this month so worry not. This would have otherwise affected over 3 million pensioners throughout the country.
Jun/090
Plan for Retirement
HSBC are advising people to start planning for their retirements by securing pensions.
Most young people these days don’t think about retirement, or even consider setting up pensions. But the HSBC warn that this is not the attitude to have, and that people of all ages must plan ahead or be left in crisis when they do eventually retire.
Also, research shows that the younger generation are hitting milestones later in life than previous generations, so it is even more important they think about their pensions to make sure they are adequately secure.
Jun/090
Opt In and Out of State pension schemes
Due to private insurance Schemes being better than what the state offers, the government are thinking of bringing in the option to opt out of state pensions and being able to look for your own. They are also considering the possibility that if a private insurance scheme fails, people should have the option to opt back into the state pension scheme.
Though this is causing controversy, ministers say this will minimise the ‘burden’ on employed people over the next few years.
Jun/090
MP’s Expenses – The story so far
Around the time when the fierce debate and inquiry into the Gurkhas’ rights was in full swing, the Prime Minister’s director of communications, already up to his neck dealing with requests from the media, received a phone call from The Daily Telegraph. In the very short phone call a request for a secure email direct to the Prime Minister was made. Within minutes Gordon Brown received a letter about expense claims to his inbox and it was at that moment that politics would change forever.
Information on these expense claims was released under the Freedom of Information Act in early June 2009 but for ’security reasons’ specific details of second home claims were deleted meaning that speculation and rumours started to grow and served only to fan the flames of suspicion. The worst possible cases of abusing the system would remain hidden from public view for the time being.
Despite Mr. Brown being confident that his own expense discrepancies could be fully explained, it was clear that, for his fellow MP’s who had been concerned over constant rumours about expense receipts for months now, the situation would be much grimmer.
The crucial question for him was just how many of his own MPs – and how many members of the Government – were about to be caught out.
One by one the Prime Minister received phone calls about ministers who were about to be embarrased – Hazel Blears, Alistair Darling, and Geoff Hoon were to become the focus of the “flipping” scandal. “Flipping” was the term given by The Telegraph to the way in which MP’s would change the details of their second home in order to avoid making payments on both of their homes.
In some light-hearted relief from the public’s anger over the expenses, The Telegraph reported that John Prescott – once labelled the ‘Pie Eater’ had claimed the maximum allowed for food each year and had claimed for 2 toilet seats to be repaired in the space of two years.
Other news stories began creeping onto our screens as the expenses scandal showed small signs of abating but it wasn’t to last. The Telegraph hit us with the Justice Minister Shahid Malik’s receipts for £66,000 on his second home while renting a consituancy home of a crook. Malik appeared on Sky News to protest his innocence claiming he was “one million per cent” within the boundaries of the rules but Gordon Brown had already made up his mind – he had to go.
YOU the consumer/tax payer are footing the bill. The story continues…
Jun/090
Workers paying more for pensions
Members of final salary pension schemes are having to make higher contributions, according to a report from actuary firm Watson Wyatt.
Members of the 100 largest company pension schemes are now having to contribute on average 5.2% of salary.
Last year, the average member contribution was 4.6% of salary.
Final salary pensions still represent an excellent deal as they can lead to a higher retirement income than money purchase schemes, Watson Wyatt added.
Companies have increased contribution rates in order to ensure that they can fund their final salary schemes in the future.
Jun/090
State pension age to rise to 68
The state pension age is to rise to 68 from 2044, as part of government proposals to strengthen pension provision in the UK. The link between the state pension and earnings will also be restored within the next Parliament, Pensions Secretary John Hutton said.
A new savings scheme will be set up with automatic enrolment for staff and compulsory employers’ contributions. Mr Hutton said the changes would secure the future of the state pension system.
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