CABPtoCameronletter18.03.2013

Please read this powerful letter to David Cameron, UK Prime Minister, from the International Consortium of British Pensioners.

The UK government released the long awaited White Paper titled ‘The single-tier pension – a simple foundation for saving’ on 14th January 2013. This describes proposals for a simplification of the UK state pension system, previously termed the flat-rate pension. A draft bill outlining the proposals will be published in the days following publication of the White Paper.

These are the highlights of the White Paper insofar as they affect those members of CABP who expect to reach state pension age on or after 6th April 2017:

The new provisions do not affect those already receiving their state pension, or those who expect to reach state pension age before 6th April 2017.

The full rate of pension is expected to be about £144 per week in today’s terms (2012/2013), which puts it just above the current full pension plus pension credit, totaling £142.70. Only the Basic State Pension of £107.45 is payable abroad, and not the pension credit of $35.25.

The single-tier pension will replace the Basic State Pension, additional State Pension, Graduated Retirement Benefit and the Savings Credit.

Like the Basic State Pension, the single-tier pension will be uprated at least by the average growth in earnings, and this will be specified in legislation.

To receive the full weekly rate of the single-tier pension, an individual will need 35 qualifying years of National Insurance contributions or credits.

Those with fewer than 35 qualifying years, but who satisfy the minimum qualifying period, will receive a proportionately reduced amount of single-tier pension.

To receive any pension at all under the single-tier plan you will need between seven and ten years of National Insurance contributions during your working life, not necessarily all under the new plan.

The single-tier pension will be based solely on an individual’s own National Insurance records – it will not be possible to derive, or inherit, a single-tier pension from a spouse or civil partner. However transitional rules will apply to recognize National Insurance records under the current system, providing a derived (Category B) pension for some.

People who retire under the current system will continue to get a spousal pension even if their spouse or civil partner is in the single-tier system. However only the spouse’s contributions for years prior to 6th April 2017 will count towards this pension.

It will be possible to defer claiming the state pension and get an increased pension in return. The increase is set notionally at 1% for every ten weeks of deferral, compared with five weeks at present, but this rate will be finalized closer to the implementation date. There will be no option to take a lump sum deferred payment.

It will not be possible for a person who reaches State Pension age before single tier is implemented to qualify for the single-tier pension by deferring their state pension.

There is a transitional process for those who will contribute under both the current system and the proposed single-tier system. Contributions made before 6th April 2017 will be converted to an equivalent number of years under the single-tier system, with an adjustment made for any contracted out pension contributions.

For those pensioners living outside the EEA in countries with which the UK does not have an appropriate bilateral agreement, the single-tier pension will not be uprated. That means our pensions in Canada remain frozen.

Other provisions for pensioners in the UK, and possibly the EU, such as the Winter Fuel Payment, free bus passes, and the Christmas Bonus, are unaffected by the single-tier reforms.

Pension ages are already being adjusted to reach 66 by 2020 for men and women. It is proposed to increase the pension age further to 67, this being phased in between 2026 and 2028.

Voluntary National Insurance contributions will be retained, but the cost of these will be subject to periodic review as at present.

On the death of a spouse or civil partner any N.I. contributions made under the single-tier plan will not count towards a survivor pension, but any contributions made prior to 6th April 2017 will provide a survivor pension as at present.

It is important to realize that these are only proposals at this stage. The details are likely to change as the draft bill wends its way through both Houses of Parliament prior to becoming an Act of Parliament
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For the full 107 page document go to the following link

But as Professional Pensions reports, there are tensions in the Coalition …

If you scroll down on the campaigns page, almost to the bottom, you will see a button that allows you to suggest a campaign. I have suggested “fairness in the UK state pension – equality of uprating no matter where in the world UK workers choose to retire”.

38 degrees campaigns to win, and they often do.

Switching the indexation of public sector pension benefits from RPI to CPI in March 2011 saved the government £126bn says the Whole of Government Accounts 2010/11.

See link at Professional Pensions – News and analysis from the pensions market.

Professional Pensions in the UK reports that data released from the 2011 census has confirmed there is a huge increase in people expected to reach traditional retirement age over the next few years.

Link to Professional Pensions – News and analysis from the pensions market.

Lord Jones of Cheltenham (Liberal Democrat)
To ask Her Majesty’s Government what long-term projections have been made of the number of United Kingdom residents who are forecast to choose to reside overseas permanently on their retirement.

Lord Freud (Parliamentary Under Secretary of State (Welfare Reform), Work and Pensions; Conservative)
It is projected that in 2050-51 the UK state pension will be paid to 1.6 million people living overseas.
Source: DWP projections
Notes:
1. Projections are based on autumn 2011 long-term projections, realigned to Budget 2012 medium-term forecasts. These are published at:
research.dwp.gov.uk/asd/asd4/ltp1p_notes.pdf.
2. Projections assume that once people have moved abroad, they do not come back to the UK.
3. Figures relate to all people living overseas who are projected to be receiving a UK basic state pension in 2050-51. Not all of these people are UK nationals, and not all of them will have moved to live overseas when they
reached state pension age.
4. Figures exclude deferrers.
5. Figures are rounded to the nearest 100,000.
Hansard source (Citation: HL Deb, 28 May 2012, c124W)

Please watch – link.

Sadly nothing specific on uprating discrimination, other than to point out that it was taken into account! Revealed: The UK’s £7.1trn pensions obligation
Professional Pensions | 27 Apr 2012
and see the papers at Office for National Statistics

Our own John Markham writes (link here) in the Telegraph that the British Government seems increasingly determined to disown British citizens who have chosen to live abroad.