Wednesday, 6 November 2013

Only 365 days to go, but I'd better cross my fingers

Exactly one year from now, on 6 November 2014, my State Pension will begin. 365 days left to go, and I'm counting in earnest.

At the moment I stand to receive the fabulous sum of £6,066 a year. To be realistic, you have to knock off 20% basic rate tax, which drags the figure down to £4,852. It'll be paid every four weeks, so that's £373 per month until April 2015, when presumably it will increase slightly to reflect the march of inflation.

An extra £373 each month probably doesn't sound much to people with good jobs and high salaries, but to me it's a most welcome addition to funds. It will let me put a bulletproof emergency fund in place within two years, because I intend to greatly increase my savings. I'm afraid I can't go on a spending spree: prudence must prevail. I can manage ordinary costs on my current income, but at some point my central heating boiler will expire from old age, and that won't be covered on the house insurance. I need money put by, to meet all the unexpected but inevitable things that will crop up, that boiler being just one.

In fact, while I was away recently, the 'great storm' brought down two old garden fence panels, the post supporting them snapping in the wind. It wasn't a boundary fence, but one that Dad had had erected to protect the greenhouse from chance footballs flying in from the open land at the back. I will repair it, but it isn't critically important to do it before next spring. That said, if I were already getting my State Pension, I'd see to it at once! The pension will let me fix things like this promptly.

Once that emergency fund is there, I can think of more meals out, better holidays, and more cultural events to attend. But not before.

Of course, £6,066 is no fortune. I was talking with Andrew, my mower man, the other day. He's in his fifties, but being outdoors all the time has given him a ruddy weatherbeaten complexion, and although I must be older than he is, I always think of him as much the senior in years! Anyway, his State Pension starting date is still years off, and he was surprised that the amount of my Pension, which I get at age 62 and three months, was so small. 'You can't live on six thousand a year,' he said. Well, I have known a couple of people in the past who most certainly could. But it takes a particular type of person, someone who can live a quiet life, never going anywhere, who doesn't buy new clothes, who eats frugally, and perhaps even grows some of their own food. They will be canny with supermarket offers, and look out for every kind of bargain. They will turn their heating down, and put up with a cold house. Almost certainly they won't own a car, and won't be able to afford holidays. Yes, you can live on very little. But who really wants to? Unfortunately, too many people of all ages have no choice about having to do it.

Clearly the State Pension is nowadays regarded as a mere supplement to one's Main Pension. But in recent years the Main Pension has become a shadow of its former self, and to compensate the State Pension now needs to be of decent size. But it too has been kept small.

Do you remember when the 'Pension Crisis' first hit the headlines in early 2006? I said something about it towards the end of my post The Pension on 24 February 2010. It was the beginning of the end for decent pension arrangements. The government panicked, or pretended to. The pensions industry panicked, or pretended to. I think we all perceived that the notion of an 'expanding pensioner population' was a convenient excuse for smaller pensions. Government White Papers solemnly put an abrupt end to The Early Retirement Culture. State and Private pension provision was cut back as ruthlessly as possible. Meanwhile contributions rose to unprecedented levels. Opt-outs became difficult. The notion of 'retiring at 65' was scrapped. It must have spoiled many dreams of carefree leisure in a well-earned retirement. Now you'd work till you were 70 or 75, or until you dropped. One heard of people in horrible jobs sobbing at the prospect.

And of course there is worse to come. Not only have pensions been reduced across the board, but the date of payment is being put back all the time. I will be very relieved if, 365 days from now, I am still entitled to my State Pension. It's a priority just to get it into payment. Once it's there, I don't think they'll ever snatch it away, but they are quite capable of a dirty trick or two in the meantime. And I don't think they'll worry about losing a few Grey Votes, if a pet project needs more cash - whether it's HS2, or more money for the Armed Forces.

This is all a bit dispiriting, and I didn't intend that. So let me end on a much lighter note! Tonight is the Great Melton Mowbray Pie and Cheese Tasting, over at K---'s. I've inspected the said pies and cheese, which have lain undisturbed in my fridge for days. They seem to have lasted well. If I can just get them down to Brighton in one piece, there will be a tale to tell!


  1. Are you sure you have those figures correct Lucy? £373 doesn't seem enough, though I appreciate the amount might not be the same for everyone. Even so my own State Pension is almost £600 net. Maybe it gets larger with age? I will be 68 later this month.
    Shirley Anne x

  2. Yep, that's right Shirley Anne. Mine is £508 every 4 weeks, but with the tax knocked off the net figure is £406.40. I'm no financial expert, but yours is probably higher because those of us with occupational pensions could opt out of the Additional State Pension and reap a higher benefit from the company schemes. In the early days there was also Graduated Pension, which I paid for a while, then opted out.

    So in my case, the two occupational pensions I have more than make up for the lower state pension.

  3. My last State Pension forecast in 2012 quoted £110.84 per week. It's increased slightly sinced then, but per annum is still that low-seeming £6,066. Everyone seems to have a different pension rate.


  4. I've just found my HMRC pension statement, which says the Contracted Out Deduction on my pension (this is, the amount I lose by not being in the state scheme) is £65.39 per week. Add that back in and it'll be near yours, Shirley-Anne.


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