State Pension. Non existent in the near future?

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pearl123
pearl123 Posts: 2,056 Forumite
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A friend of mine suggested that in twenty to thirty years time there might not be any state pension due to not enough money.
Their suggestion was that we'd either work till we drop or it would be back to the days of the workhouse!
Does this sound like an OTT statement to you or do you see that they have a valid point?
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  • Kim_kim
    Kim_kim Posts: 3,726 Forumite
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    pearl123 wrote: »
    A friend of mine suggested that in twenty to thirty years time there might not be any state pension due to not enough money.
    Their suggestion was that we'd either work till we drop or it would be back to the days of the workhouse!
    Does this sound like an OTT statement to you or do you see that they have a valid point?

    It will probably be reduced to subsistence levels like job seekers & means tested.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    No government that seeks re-election will stop the State Retirement Pension. So your only fear is of a government that plans that there be no more elections. Scanning the horizon ... well maybe that would be the intention of Corbyn or some of the people around him. But I suspect they would continue the SRP while perhaps stealing your wealth in other pensions and ISAs.

    So, no: the SRP is probably pretty secure.
    Free the dunston one next time too.
  • Browntoa
    Browntoa Posts: 49,300 Forumite
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    Everybody has to get workplace pensions now , they will exclude more and more people from getting SRP in the future , either by offset (state top up to minimum level ) or by default so if you have 40 years workplace pension then no SRP
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  • hugheskevi
    hugheskevi Posts: 3,857 Forumite
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    Scrapping it altogether is extreme. There are many steps toward such a destination:

    • Reduce indexation - currently triple lock of greater of 2.5%, CPI and earnings. That is a change from RPI which existed for a long time. The 2.5% is likely to be dropped from 2020. Currently payments to pensioners resident in some countries are frozen, it could be envisaged that payments to all pensioners overseas could be frozen
    • Reduce accrual rate - maximum rate is currently based on 35 qualifying years. This previously ranged between 30 and 44 years and amounts far above the 'standard' rate could be accrued, but is now capped at £159.55 plus indexation going forward (with protection for amounts already accrued above this level).
    • Reduce eligibility
      • Increase State Pension age - already increased from 60 for females and 65 for males to age 67 from 2028. Further increases expected.
      • Qualification requires earnings above Lower Earnings Limit (£5,876 p/a), which is some way below the level at which employees start to pay National Insurance at the Primary Threshold (£8,164 p/a)
      • To receive anything currently requires 10 qualifying years under new State Pension, this could be increased.
      • Credits - qualifying years apply for a variety of circumstances, eg, receipt of Child Benefit, carers, etc. These could be cut back.
      • Don't pay State Pension at all to those overseas.
    There would be quite a lot of tinkering to the current system which could be done to reduce costs that would not have the same political cost as abolishing the State Pension.
    Everybody has to get workplace pensions now , they will exclude more and more people from getting SRP in the future , either by offset (state top up to minimum level ) or by default so if you have 40 years workplace pension then no SRP
    Members can opt-out of workplace pensions if they choose, and self-employed are not covered. The new State Pension is not means-tested under current policy, so this would require a policy change.
  • IanManc
    IanManc Posts: 2,085 Forumite
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    pearl123 wrote: »
    A friend of mine suggested that in twenty to thirty years time there might not be any state pension due to not enough money.
    Their suggestion was that we'd either work till we drop or it would be back to the days of the workhouse!
    Does this sound like an OTT statement to you or do you see that they have a valid point?

    Yes it sounds like an OTT statement.
  • ewaste
    ewaste Posts: 279 Forumite
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    State pension will likely survive as it will form the most important if not essential component of retirement income given the slow death of defined benefit pensions. If anything I think we might move toward a Basic Income social security system at some point in the future.
  • BLB53
    BLB53 Posts: 1,583 Forumite
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    No, not OTT at all. Todays workers pay for todays pensioners and in the future there will be a far higher ratio of pensioners to workers and that will only increase with longevity.

    Also, the way our government seems to become addicted to debt and borrowing, there will be a crunch time when they will be choosing between NHS and pensions so I would not be surprised to see the state pensions restricted for the more well-off pensioners who have other sources of income.

    It will be 20 or 30 years down the line but the ways things are going downhill with public finances it is almost inevitable so anyone who is not saving for the future had better be prepared for a tough time.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    pearl123 wrote: »
    A friend of mine suggested that in twenty to thirty years time there might not be any state pension due to not enough money.
    Their suggestion was that we'd either work till we drop or it would be back to the days of the workhouse!
    Does this sound like an OTT statement to you or do you see that they have a valid point?

    I think you should find some more informed friends. But whether your friend is right or wrong you should do the following things,

    1) Vote of politicians who you think will protect the state pension;
    2) Save aggressively to a workplace or personal pension so you have ample personal assets to fund retirement.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • justme111
    justme111 Posts: 3,508 Forumite
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    BLB53 wrote: »
    so anyone who is not saving for the future had better be prepared for a tough time.
    More likely all those who saved will be required to rely on their own money.
    The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
    Often people seem to use this word mistakenly where "quandary" would fit better.
  • Filo25
    Filo25 Posts: 2,131 Forumite
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    justme111 wrote: »
    More likely all those who saved will be required to rely on their own money.

    That is my concern, that I'm planning for retirement and including state pension in my likely post retirement income, but I end up missing out altogether due to actually making private provision for myself.

    We will no doubt also continue to see the increase in age at which the state pension is payable.
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