STATE PENSION

[Phil]

Just a couple of things the "Age Addition" is if I remember rightly an increase that was brought in back in the early seventies along with that other anachronism the christnas bonus, neither of which have increased since the date of inception. And pension credit has not increased more than state pension this year, state pension has incresed by approx 5.2% but pension credit by approx 4%.

[Stanley]

My basic problem with the pension is that when I was working we had an understanding with the government. We kept our nose to the grindstone on low wages, paid our tax and when we got old we would have an adequate pension to live on. We kept our end of the bargain......

[Tripps]

"and when we got old " we would do the decent thing and pass away within a few years of retirement.

[EileenDavid]

I'm with you Stanley I have already had two contracts broken by the Government and still not got my pension.

Eileen

[EileenDavid]

On my return from Brittany I had received two letters from my MP one with a copy of a letter attached from Steve Webb MP Works and Pensions. The letter explains that the Pension age of women being raised was introduced in 1995 and was quote" done to implement the UK Government's obligations under European legislation to ensure that men and women are treated the same in social security systems." In France men and women got their pension at 60 this has now been raised to 62.

According to the letter "The timetable agreed in 1995 groups people together into COHORTS with each cohort running from the 6th day of the month to the 5th day of the following month. Each cohort experiences an increase in State Pension age of one month over the previous cohort and everyone in a cohort reaches State Pension age on a specified day."

I didn't know I was going to be a cohort we were told it was a sliding scale. Just thought I would let you all know the outcome Eileen

[Stanley]

The Rowntree Trust have just announced the results of their latest survey of how people spend money and what they regard as a viable pension to maintain quality of life in old age. Interesting to see how expectations have dropped as the austerity cuts gain traction. I think the optimum figure for a single person was £16,000 par annum.
More depressing news for people cashing in private pension pots at the moment on Paul Lewis' programme on Saturday. The returns are still falling and I was so lucky to be forced to realise mine a year early because of government regulations on benefits. It would appear that it is almost impossible to get a pension with a guaranteed 3% rise per annum like mine. My dad used to say that Post War Credits (LINK) were the biggest fraud in history. The way pensions have been mismanaged and eroded is I think even worse.

[Stanley]

I did some digging. Pension returns are governed by UK Gilt prices on the day the pension is settled. In 2000 the return was about 2.3%, today it is about 1.1%. I may not have this quite right but in effect the return has halved and this is why it is such a poor return if a pension is cashed today. Many analysts think that the Quantitative Easing by the BofE is one major factor driving yields down.

[EileenDavid]

I haven't got over being a Cohort yet which I believe means I am part of a group in statistics. Still doesn't explain to me as to why a sliding scale hasn't been used or why when they say I should get my pension a month later than my friend whose a cohort before me when I don't get it until 2 months after her confuses me Eileen

[Stanley]

I sympathise with you Eileen. Someone somewhere is loading the dice! One thing I forgot to mention yesterday is that they tell me it is now virtually impossible to get either an index linked annuity or one like mine which has embedded in it a 3% per annum increase. If I can live long enough I shall be a rich man!
I just had a look at a compound interest table and if I can live to be 100 years old my pension will be double what I get at the moment.... Reasons to be cheerful!

[Tripps]

You can use the "Rule of 72" to find how long it takes to double your money. Divide the rate of interest into 72 to give the time required in years. So at 3% it takes 24 years.

[Stanley]

And I am 76 years old so I got my calculations about right!

[EileenDavid]

76 years young Stanley. Still waiting an explaination from my MP on being a Cohort will let you know Eileen

[Stanley]

Eileen, from your mouth to God's ear but I have to admit that when I swing my legs over the side of the bed in the morning I have to remind myself how comparatively young I am!
I hope you get a reasonable answer from your question.

[EileenDavid]

I have had another reply from my MP about the State Pension, together with a schedule from the Works and Pensions. He stated in his letter that his understanding is that those at the beginning of a cohort get their payment a month after the date and those at the end of the cohort get it two months after.

My cohort starts on the 06th July and my birthday is the 9th but I don't get my pension until 2 months later so have emailed him again and also on the matter of age increases.

The Minister of works and Pensions in his letter stated that the reason for the increase in pension age is to come in line with Europe that men and women are treated the same in retirement ages. So have asked if we are to come in line with Europe why they retire at 60. Europe have just put the age of retirement up by 2 years to 62 so Britain have upped their retirement by 2 years to 67.

The letter I received from the department of Works & Pensions has said that the increase is because men and women are living longer. Does the left hand no what the right hand is doing. It's again all about money they must have saved billions on not paying us. There were 38 girls in our class multiplied by 5 classes and that was just in my school who have waited over a year for their pensions.

Watch this space for the next letter from the Houses of Parliment.

Eileen

[Stanley]

The bottom line is that the government are seeking any ploy to pay out less money later Eileen and you are caught in that trap. I feel sorry for anyone trying to find a way through the minefield of pensions.

[Tizer]

Paul Lewis's `Money Box' programme recently had an interesting bit about a new SIPPS pension scam that the regulator said was probably one of the worst scams they've seen. They craftily get you to transfer your pension into an overseas scheme that promises great rewards but you never hear from them again and all your money is lost. It's not regulated, anyone can set up as a SIPPS adviser.

[Stanley]

The only conclusion I draw from all this pensions mess is that it is best to keep it simple! My supine attitude to not chasing greater returns may have served me well. I'm not suggesting that others shouldn't do this but they should realise that if they do they are accepting risks that they really don't need at that stage of their life.

[EileenDavid]

I'd settle for getting my state pension. Eileen

[Tizer]

That Money Box programme was all about pensions. Another item they covered was the exaggerated effect of high commission fees charged on pensions. The effect of the size of the fee is enormous on a final pension pot. This is because of the cumulative effect - e.g. if a person aged 25 accumulates £1000 into their pension fund in the first year then the fee is deducted on that £1000 for that year...and the following year, and the year after that and so on, for the next 40 years. It's difficult to convince young people that pensions are a good idea when facts like that seem to show the opposite! The pensions industry argues that fees have been reduced in recent years but it's complicated by a lack of transparency and the pensions companies often fail to give out full information.

[Stanley]

Have a look at this LINK for some interesting advice on pensions. Basically the Dutch system gives a far better return than a similar fund in the UK.

[EileenDavid]

Well I did say I would keep you posted. My MP explained to me that his interpretation was if your birthday was at the beginning of the cohort then you only had to wait a month after for your pension. Not true according to the dwp as they have me down for the 06.11.2012. I phoned them to organise drawing my pension and was told you can only have it paid in a 4 weekly payments. To get you into the system you will be paid 2 weeks money on the 23.11.2012 for 10.11.2012 until 23.11.2012. When I enquired what about my other 4 days from the 6th when I became elligible for pension was told that this was only a guideline as to when I was elligiable for my pension.

I have written again to my MP and told him Dick Turpin wore a mask.

Watch this space

Eileen

[Phil]

I would just like to say that the four weekly pay cycle is tosh, the system defaults to that payment method, but you can be paid, weekly, four weekly or thirteen weekly, all in arrears.

[Stanley]

Phil's right, my pension is paid monthly direct into my bank account.

[EileenDavid]

I applied this week and wasn't given any options only the 4 weekly. Eileen

[Stanley]

I know the 4 weeks arrears could be a problem for some but the consolation is that it is a one time hit. Once it's in place it works well.