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ChumpusRex

Labour To Raid Pensions For Medium And High Earners

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It looks like nothing is sacred, not even the state pension. Medium and higher earners, who already pay into the state pension pot via national insurance payments are to see their pension benefits slashed and their contributions increased over the next few years.

Pay more, Get less (but only if you work)

From next April any employees earning over £31,800 will find that the amount of State Second Pension they are building up will fall, despite the fact they are paying the same amount of National Insurance which supposedly pays for this benefit. To add insult to the injury National Insurance will then rise in the following April (2011).

What the government is trying to achieve here is a State Second Pension that is the same no matter how much you earn. Eventually everyone who earns above a certain amount (£4,940 in this year) will build up the same State Second Pension for each year that they work, irrespective of whether they earn £5,000 or £50,000. The amount that everyone builds up will be around £80 a year, so after working for 10 years you will have built up a State Second Pension of £800 that you are entitled to draw each year in retirement (this is all in today's terms).

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The amount that everyone builds up will be around £80 a year, so after working for 10 years you will have built up a State Second Pension of £800 that you are entitled to draw each year in retirement (this is all in today's terms).

If we get quantitative easing bullshitters like Mervyn running monetary policy the devalued currency and inflation will make that sum utterly worthless.

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It looks like nothing is sacred, not even the state pension. Medium and higher earners, who already pay into the state pension pot via national insurance payments are to see their pension benefits slashed and their contributions increased over the next few years.

Pay more, Get less (but only if you work)

You're a finance man, yesno? How does this affect the economics of "opting out"?

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You're a finance man, yesno? How does this affect the economics of "opting out"?

Good question, I'm fastly aproaching 40, Iv'e been 'opted out' of state pension for ten years and my pension pot is now ~£25k (was higher pre-crash 35K).

Each year I get a statement suggesting it's time to opt back in. (is this a good idea in view of this article).

Also is it true that it takes only 20 years a to build up a full state pension, the first 20 yrs are for free!

Edited by tuggybear

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