End of the triple lock?
A good thing for pensioners, as Ms Altman was trying to claim this morning?
Comments
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My works pension increases by HALF of the rate of inflation. I need the 'triple-lock' on the measely State pension just to stand still.
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Ms Altman clarified her comments. She explained that the 'triple lock' only ever applied to the basic state pension and not to tops-ups such as SERPS and not to other top ups such as pension credit (because that's a means-tested benefit, and has had only minor changes made to it, as with other benefits recently). All of which is true.......but she reasoned that removing the triple lock would somehow benefit pensioners??
She explained that the 2.5% option was a figure that didn't relate to anything and, as DD says, was included to enable pensioners to pull back a bit of lost ground on wage earners, when inflation and wage increass are low.
She now suggests that there should only be a 'double lock' (i.e. either an increase in line with inflation or with average wages, whichever is the higher).
She also mentioned the fact that the new state pension is now to be £155/week for everyone - a fact that has now clearly been shown not to be the case.
My own view on all this is that, as Ms Altman was sacked in the recent cabinet shuffle, she should keep her nose out of such things and that the triple lock should remain.
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All of the above comments have a certain validity, but Baroness Altmann does have a point. Ultimately pensions do have to be affordable and a blanket uplift without any link to real movements in the economy would, in the long term, become unsustainable.
We are also going to get it until at least 2020, so that's another 10% even if it fizzles out then.0 -
On the whole Baroness A has stuck up for pensioners and may have been thwarted in her suggestions and ideas when in government. It looks as though a "double lock" will be sufficient in the future...if we don't run out of funds first....
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Ms Altman must have been thining about this change when she was a minister......but kept quiet about it, knowing that it would make her unpopular.
She also accused people of "whinging" about the changes to the state pension (getting rid of SERPS etc)......but then quickly back-tracked when she got the back-lash from that comment.
She then admitted that the new proposals 'hadn't been very well explained". Too right they weren't!! First they tell us that everyone will get £155 (or whatever the figure is currently), then they slide in all the extra rules about the type of NI contributions
required and that being contracted out will actually result in a deduction from the amount you get i.e. those type of contributions act as 'negative' years (rather than not counting as a full year, as you might expect).Ms Altman is only interested in one pensioner - and that's Ms Altman.
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So here's me with a state basic pension, graduate pension, contracted out pension and Serps sitting down scratching my head.
Where the heck do I stand amongst all this gobbledygook?
What's a graduate pension?
Think he means a graduated pension or GRB
Graduated Retirement Benefit (GRB)
GRB was an early form of earnings-related pension, intended to top-up basic pension. It is based on graduated contributions paid on earnings between 1961 and 1975 and is paid to those people who paid into the graduated pension scheme.
The entitlement is based on each unit of graduated contributions paid. Essentially every £7.50 contributed by a man, and every £9.00 contributed by a woman bought one unit. It will be paid when you claim your Basic State Pension, but can also be paid at State
Pension Age even if you do not qualify for a Basic Pension.0 -
I seem to remeber having paid it for a short while, but think I was able to contract out as the returns were going to be so small.
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It seems to be a fore-runner of SERPS (which started in 1978) to top up state pensions. It was SERPS that you 'contracted out' of if you were in a final salary pension scheme with your employer and both you and your employer paid reduced NI contributions.
(Employers rarely mentioned that they saved money by their employees contracting-out and thus helping to pay a significant chunk of the employer's cost towards your pension. As we have seen recently, many employers had a strong reluctance to pay their share into the pension fund - which is why we have so many schemes with massive deficits now).
As we now know, being 'contracted out' has a seriously detrimental impact on the amount you will receive under the 'new state pension' introduced this year.
SERPS was replaced in 2002 by the 'state second pension' - another 'top up' scheme but skewed more towards helping lower earners.
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The 'contracted out' part came as a surprise to me.
I recently applied for a State Pension Statement. I imagined that, as I have 41 qualifying years of NI contributions, I'd get the full £155 when I reached State Pension age in November 2019.
Not so !
I currently receive a full NHS pension. I had not appreciated that the NHS pension scheme was in any way 'contracted out', but apparently it was, end result being that I will actually receive £122.34 a week, or whatever it may have inflated to by Nov 2019.
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I doubt that any Government that wants to be re-elected would dare do that now.
They all appreciate the power of the Grey vote ( The pensioners) who now add up to a significant proportion of the voting public.
To remove hard won pensioners rights would be a disaster in the voting booths!
TF
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I am trying to work out what the triple lock actually means in reality. When I work out how much my total state pension has increased its no where near 2.5%. Does it only apply to the basic state pension element but ignores SERPs and Graduated? My calculation
would point that way. It could all be smoke and mirrors.David
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I am trying to work out what the triple lock actually means in reality. When I work out how much my total state pension has increased its no where near 2.5%. Does it only apply to the basic state pension element but ignores SERPs and Graduated? My calculation
would point that way. It could all be smoke and mirrors.David
Only the basic bit David, the rest apparently has different rules.
Like you, mine has only gone up by a much smaller % overall.
Same with my company pension, only about half of it is covered by the link to inflation, which apparently was almost nil anyway.
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The 2.5% guarantee (on top of inflation/cost of living) was introduced a few years ago to prevent the erosion of state pension spending power. It's only there to make sure that if things start to get more expensive you'll get a minimum 2.5% per year increase but if inflation is low it isn't needed. The guarantee bit is the safeguard against future rises in living costs and inflation, parts one and two of the triplelock, part three is the 2.5%....I think that's right? Pensions fell behind a few years ago and the 2.5% increases were made then to catch up.
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Mmmm...not quite right brue. As I read it, the 2.5% is not on top of anything.
The basic pension is guaranteed to rise by inflation (at a certain date), or the rise in the average wage, or by 2.5%.......whichever is the highest. So it will never rise by less than the 2.5%.
While inflation and general wage increases are low, it allows the pension to make up a little of the ground it lost further back.
Compared with other similar countries, the UK pension is low. In Norway, for example, the basic pension is almost double that here, while living costs are 30-50% higher than here.
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The existing manifesto committment extends to 2020 so there is a good chance the new incoming government will make any changes then.
By the way, no one told me that contracting out would affect my eventual basic state pension and neither was I offered any choice in the matter anyway.
Basic rule on state pensions - you are going to be disappointed!
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One so called pension expert, who was explaining the cost of keeping the triple lock, also hinted that if the triple lock was kept in place, the government would have to make savings in other ways. Such as removing the recently introduced couples shared
tax allowance.0 -
For those that will be on the new state pension, will the triple-lock apply to the whole pension amount?
That's a very good question.
As the new state pension is, in effect, the new basic pension, then yes you would expect the triple lock to apply to all of it.
But a large percentage of people won't qualify for the full amount of the new state pension, due to the rules about contracted out / contracted in NI contributions.
If the amount that you would have got under the old rules (including additional state pension / SERPS etc) is more than you would get under the new state pension, you will get the higher amount.
But how much then is subject to the triple lock?
Hmm......I need to do some more research.......
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