Ponder
this: About 80% of above 50 years of ages will get lower than £155 weekly. It
was inevitable that some will win and some will lose when the fresh flat-rate
weekly state pension of £155 was applied.
The
Government had vowed it would not cost the nation more than that. Hence, if
several individuals will end up getting much more than the present state payout
of £113.10, surely the extra money would have to come from other sources.
But
the announcement has been consistently clear: Anyone who has paid the amount
required by the National
Insurance of 35 years of contributions will receive a weekly pension of
£155. However, our evaluation of the small print on the new flat-rate has shown
this to be untrue.
About
80% of over-50-year-old citizens who have faithfully paid their regular
National Contributions all their life will end up receiving below £155 each
week.
Why?
Because at a certain time they were in a final-salary program and were
contracted out of the State Second Pension — a plan that permitted employees to
jack-up their state retirement payout.
Since they chose out of these extra payments, workers were allowed to pay a
lower rate of National Insurance contributions of 10.6% and not 12%.
The
justification from the present Government is that these workers should not
receive or claim the new higher basic state retirement pay for having paid
lower tax then. This is in spite of the fact that, in the present
administration, they would have been eligible for the full amount of basic
state pension.
It certainly
is a frustrating development for many. How can the Government expect people to
become responsible retirement planners if at this late period retirees are
unsure as to how much they will actually receive?
And
that does not take into account the complication that will ensue when the
inflation-related increases in guaranteed minimum retirement income will be
removed. For many years, the Government has covered these increases; but it has
now turned around by saying that it was only a misunderstanding, not a firm
commitment.
However,
many official declarations have shown that this is not really the case. The
latest official reports state that the Department for Work and Pensions is
correcting this history — and extricating these files from the Parliamentary archives.
A
rather cunning way of denying a pension vow: Pretend it never really happened.
These amendments to the national pension are an unfair decision to impose upon
hopeful people who will be disenfranchised of their dreams during their expected
life of retirement.
So
complex is the equation that even the Department for Work and Pensions is not
certain what contracted-out employees will receive.
Moreover,
people are being punished for a judgment they took twenty or thirty years ago —
a step which, in general, was done by someone else, since many company
final-salary plans involuntarily contracted workers out of the state second
pension.
Looking
in from the outside, it appears just to decrease the payments of those who have
not contributed the entire rate of National Insurance. But this is not a case
of getting something for nothing. By opting to pay the lower rate, they were
surrendering their right to receive the state second pension.
It
used to be that paying lower tax then was considered commendable for it ended
up reducing burden on the state. Today, however, it is more like an insult. And
you could end up being penalised.