For some people financial issues can be complicated and the issue of state pensions has certainly not appeared particularly straightforward as evidenced by some news reports on this issue – whatever action you decide to take if any regarding state pensions, it would be best to try and get independent and authoritative advice budget permitting.
In terms of analysis for the data of the budget speech (which can be seen here: “http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/documents/digitalasset/dg_196028.pdf“) , rather than looking at a long set of paragraphs, we could also put it in a question and answer format structure such as the Telegraph newspaper has done: “http://www.telegraph.co.uk/finance/personalfinance/pensions/8085653/State-pension-QandA.html“. For reference, the issues that were raised in that article if you would like to take a look at it are after a “definition of what a second state pension is”
, first of all a definition of “contracting-out”, next the question of whether “is it better to be contracted-back in”
, after that “why has the picture changed for another time”
, moreover, “the risk involved”, furthermore “the value of the rebate”, additionally “when the changes will happen”, also the “number of people that have contracted out of S2P”
, subsequently “what about those who have contracted back into the scheme”
and finally “which people should stay in the state scheme”
.
In this article however, we will look at some of the opinions stated regarding the reasons for the changes, what the changes will entail and also briefly touch on the future, in the budget speech given by the Rt Hon George Osbourne, who is an MP and also the Chancellor of the Exchequer in his speech to the House of Commons.
What Is The Main Change That Is Going Ahead?
George Osbourne has said that the Pensions Minister, Pensions Secretary and himself have worked together in order to make a new system which will include a “new single-tier pension”. He said that from now on the system would be “simple”, that it would be based on “contributions”, that it would also be “flat-rate” and that as a result of it people would “know what to expect”.
Will This Cost More Than Previously?
George Osbourne in his speech said that it will “cost no more than the current system”
.
How Much Will The New Single-tier Pension Give?
He said that it will give around: “around £140 per week”
.
Does This Apply To Current Pensioners?
George Osbourne said that this will not be the case and that current pensioners will not be affected: “It will not apply to current pensioners”
– moreover, he said that it could take many years to come into effect.
Why Are The Changes Being Made?
George Osbourne, has said that the changes are needed because the current system does not work: “If people can’t work out what they’re going to get in retirement, or how much will be clawed back by the means-tests – then they can’t work out what they need to save”
. Therefore, he says that in terms of functionality and effectiveness it will be necessary to make a more transparent system that will be easier to use. Moreover, he says that he is looking for a method that provides a structure giving “A fairer pensions system”
.
What Future Change(s) Might Be Seen To The State Pension?
In terms of future changes that might be rolled out, now that the state pension age is going to rise to 66 by 2020, George Osbourne has also stated in the speech that he presented to his colleagues from the seat of government that there will be “a new, more automatic mechanism for future increases in the State Pension Age based on regular, independent reviews of longevity”
. In a further note the Chancellor of the Exchequer goes on to say that: “We also need to make sure that our public service pensions are both fair to those who give their working lives to help others, and fair to the tax-payers who have to fund them.”
Therefore, perhaps the citizens of the country can expect more changes in the future as and when are necessary. Moreover, it is also interesting to note that George Osbourne in his speech said that: “I believe this House should also recommend similar changes to the pensions of MPs”
and went on to say that the system has become “unbelievably complex”
.