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The Spaniard

Nationalise A Bit Of Your Pension?

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From 12 October 2015 until 1 April 2017 some pensioners/boomers will be able to buy up to an extra £25 per week top up to their state pension.

https://www.gov.uk/government/publications/additional-state-pension-top-up

The effective annuity rates (e.g. over 6% p.a. index-linked at age 65) compare very favourably with market rates.

The timing dovetails nicely with possibly large numbers of eligible people taking tax-free lump sums from their now liberated pension pots.

Coincidence?

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just to clarify - it only applies to those already retired!

it is being touted as a 'good thing' and ahead of the single rate pension from 2016 (?) supposedly will be fairer for those who miss out.

who except the very well off have £25K kicking around that they will 'give' to the Government in return for an extra £25 a week (taxable)

it is essentially the same trick as deferring your pension for several years gives you

of course I can see that taking your pension pot and living off it while deferring your state pension to avoid paying tax on said 'pot' (especially for couples) by limiting the amount below the personal allowance would make sense.

what annoys me is how this is being portrayed as some kind of generous gesture to pensioners who reach state retirement age before 2016 - which it is not. :angry:

editted to add - this extra money the pensioner receives is not 'basic state pension' which is protected to increase by cpi/rpi but SERPs or SP2 - who knows when this will stop being index linked :o

of course if you are 100 you only need to pay £127 to get an extra £1 per week for the rest of your life whoop-te-doo :rolleyes:

Edited by olliegog

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It's similar to current annuity rates except it's claimed to be inflation linked. It's the inflation linking that's the advantage.

If you've recently retired in your 60s then after tax it'll still take about 20 years to get your own money back - depending on inflation.

It costs about £3000 (aged late 90s) to £20,000 (aged late 60s) to get the initial £25 per week. The calculator says it's not available above age101.

It's not clear yet whether it will be linked to cpi, rpi or some other inflation index.

Edited by billybong

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this is the key bit this extra pension is not under the triple lock promise.

The triple lock promise does not cover the State Earnings-Related Pension Scheme (Serps) or State Second Pension (S2P), which replaced Serps a decade ago. This extra pension, paid to those who have made the correct National Insurance contributions, will rise in line with CPI inflation.

and beware Givernments of any hue can move the goalposts, renege, lie at any time.

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