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Pension Reform Bill - effects on TA (SERPS) Pension

#1
If my reading is correct the new Pension Reform Bill will be doing away with the Second Earnings Related Pension Schems (SERPS) by 2016. What impact will this have on all of us long serving TA officers and soldiers?

Here is my understanding...

We all paid our National Insurance Contributions (NIC) in our civilian jobs didn't we? (Nods of head in the affirmative). Then when we joined up into the TA (or UDR/R IRISH HSPT) we also paid additional NIC (deducted at source) which I was told by a wise old Pay Corps Sgt Maj was 'Contracted into SERPS so you will get a bigger state pension when you hit 65 laddie".

So... me thinks that now, 'by a mere stroke of a pen' that in 2016 I will and you will, loose that little nest-egg enhancement to the state pension that I/we have paid into all these years and were looking forward to when we retire and start collecting our long awaited and long contributed too state pension with its nice little SERPS top up!

Wrong! By 2019 when I start to receive the state pension the Treasury bandits will have stolen it from me/you back in 2016.

Or am I loosing the plot... please tell me I'm wrong?

TZA1
 
#2
Regrettably I do not think you are wrong ... as I understand it ... and has been mentioned on other threads a lot of people are going to be worse off under the " New " State Pension than they would have been if their final State Pension was based on the " Old " system which included SERPS etc ... linky ... http://www.arrse.co.uk/finance/198048-full-army-pension-state-pension-65-a.html#post5045289 and external linky ... State pension overhaul to leave most people worse off - Telegraph

Edited to add

Small extract from DT report

However, second pension and other top-up arrangements will be removed under the
reforms. These other arrangements include the state second pension, the state
earnings-related pension and graduated pension. This means that many people who
contributed to these top-up arrangements will end up worse off.
 

Travelgall

MIA
Kit Reviewer
#3
The only people who will be better off are those that don't work or work on minimum wage their entire life. So yes, yet again the government has nicked your money.

Edit. Damn sunoficarus beat me to it.
 
#5
Thanks chaps and chapesses! - I for one am prepared to 'have a go' to get this stopped for us miltary peeps! The Military Covenant, opt out clauses in the bill for service personnel up to 2016, petitions etc - lets throw the full weight of ARRSE at them...

Time for another fight with HMG I think... look at the fun we could have!
 
#7
Thanks chaps and chapesses! - I for one am prepared to 'have a go' to get this stopped for us miltary peeps! The Military Covenant, opt out clauses in the bill for service personnel up to 2016, petitions etc - lets throw the full weight of ARRSE at them...

Time for another fight with HMG I think... look at the fun we could have!
Why should you be treated any differently to a civvy who paid NI on a second job?
 

jarrod248

LE
Gallery Guru
#8
Thanks chaps and chapesses! - I for one am prepared to 'have a go' to get this stopped for us miltary peeps! The Military Covenant, opt out clauses in the bill for service personnel up to 2016, petitions etc - lets throw the full weight of ARRSE at them...

Time for another fight with HMG I think... look at the fun we could have!
No, forget it. If all the public sector workers have got nowhere. All the private sector schemes were nicked already by Mr G Brown, what do you reckon your chances are?
 

sirbhp

LE
Book Reviewer
#9
hopefully on topic , i was in the TA after regs for two year , do i expect a bit of a pension from them? they certainly taxed my earnings .
 
#10
hopefully on topic , i was in the TA after regs for two year , do i expect a bit of a pension from them? they certainly taxed my earnings .
TA only accrue pension when mobilised. Arguably the bounty replaces it and is a better financial deal considering the amount of days reservists serve
 
#11
TA only accrue pension when mobilised. Arguably the bounty replaces it and is a better financial deal considering the amount of days reservists serve
Depends on number of days served a year. Final Salary pension schemes are *really* expensive.

I agree with your earlier point - there is no real reason to link TA and SERPS / State Second Pension etc - its just another job and some of the National Insurance Contributions fund these pensions. Most TA soldiers don't even pay NICs on their TA pay, anyway - the earnings threshold for NICs is too high.
 
#13
Depends on number of days served a year. Final Salary pension schemes are *really* expensive.

I agree with your earlier point - there is no real reason to link TA and SERPS / State Second Pension etc - its just another job and some of the National Insurance Contributions fund these pensions. Most TA soldiers don't even pay NICs on their TA pay, anyway - the earnings threshold for NICs is too high.
They can be really expensive but reserves are the type of employees who loose out in final salary schemes, generally they:
Have few years service
Leave before pension age
Don't get career progression pay rises

If the minimum 2 year qualification period is full time equivalent then they wouldn't get anything anyway
 
#14
They can be really expensive but reserves are the type of employees who loose out in final salary schemes, generally they:
Have few years service
Leave before pension age
Don't get career progression pay rises

If the minimum 2 year qualification period is full time equivalent then they wouldn't get anything anyway
Pensions are revalued in deferment and the two year vesting period is probably not applicable to AFPS.
 

OldSnowy

LE
Moderator
Book Reviewer
#15
The original poster was VERY badly advised by the RAPC. Mind you, anyone taking financial advice from a SNCO deserves all they get IMHO.

What I, and many others did, was get real advice. This was of benefit in two ways. Firstly, I found that the TA pay was usually enoug to take me over the limit for NIC payments -or rather, I was paying the maximum already, so all the NIC that had been automatically stopped at source by the Army was refunded each year (The 'Maximum' NIC was stopped a couple of years back, though, so tough luck now).

Also - as it was non-pensionable, it was quite in order to take out a private pension and pay an up-to-a-maximum percentage of one's TA pay into it - and as it was a private pension, it was tax-free - or rather the nice taxman topped it up each year at whatever rate I was paying - usually 25% or 30%. I did this for many years, and it is now sitting waiting for me to cash it in when I hit 60, or 65, or whenever annuity returns go back to something decent.

So no, don't 'attack' the Revenue, or whine - they'll point you to the many Reservists who used their bonce. Sorry to appear harsh, but that's the truth.
 
#16
There may not need to be a fight after all because I think point 3 below will apply to (me) and all those - military and civilian - who were 'contracted into SERPS/ASP through second jobs.

"Most people of working age will have made National Insurance contributions prior to the implementation of the single-tier pension. The Government has designed a transition process which translates people’s pre-implementation National Insurance records into a simple starting amount for the single-tier pension – the ‘foundation amount’.

Under this approach to transition, those reaching their State Pension age after the implementation of the single-tier pension will fall into four distinct groups:

1 Individuals with a foundation amount which is equal to the full level of the single-tier pension. These are likely to be people who have the necessary 35 qualifying years, little additional State Pension and who have not been contracted out.

2 Individuals with a foundation amount which is less than the full level of the single-tier pension. These are likely to be younger people, with fewer qualifying years, or older people who have spent many years contracted out of the additional State Pension. These people will be able to increase their single-tier pension up to the full £144 level, at the rate of £4.11 (to the nearest penny) for each qualifying year they gain before reaching their State Pension age.

3 Individuals with a foundation amount which is more than the full level of the single-tier pension. These are likely to be older people with many qualifying years, and who have not spent significant periods contracted out of the additional State Pension. These people will receive the difference between their foundation amount and the full single-tier amount as an extra payment on top of the full single-tier weekly amount.

4 Individuals with no pre-implementation National Insurance record. These people will benefit from the simpler and easier to understand single-tier system which will give them long term clarity of outcome. They will also be supported to save into a workplace pension scheme through automatic enrolment and the policy measures set out in the Government’s ‘Reinvigorating Workplace Pensions’ document throughout all of their working lives.

Compared to proposals set out in the Green Paper, this approach speeds up the process of transition, significantly increasing the number of people who will receive the full single-tier pension. By the mid-2030s, over 80 per cent of people reaching their State Pension age will receive the full single-tier pension.

Link to the document is here:

 

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