Pensions Credit discussion

Former_MSE_Andrea

Click reply to ask questions and discuss the Pensions Credit article.

dunstonh

The sooner this goes the better. It is a disincentive to save and costs too much to run.

The pensions credit is an improvement over the minimum income guarantee it replaced. Its there to help those who cannot help themselves. However, it can be abused by those who choose to do nothing but are in a postion to do so.

Rather than remove it full stop. It should be phased out by date of birth to ensure that those with long enough to go to retirement can do something about their contributions. (Similar to the way the state retirement age for women was handled when that was increased).

dag_2

The sooner this goes the better.

You have to bear in mind that the person who made this comment is an independent financial adviser. He or she is therefore biased, because he or she probably makes a living out of selling pensions.

It is a disincentive to save

Disincentives to save aren't necessarily a bad thing. If people have no incentive to save, then consumer spending increases, which reduces unemployment and raises wages. How can people be expected to save for a retirement when they're dependent on housing benefit through their working lives?

Besides, there has been a lot of mis-selling of pensions lately. I'm not saying that DD is personally responsible for it - however, advisers like DD need to face up to the fact that consumer confidence in pensions has been seriously dented. Moreover ....

However, it can be abused by those who choose to do nothing but are in a postion to do so.

Wake up and smell the coffee. You don't repair consumer confidence by calling your potential customers welfare abusers if they don't buy your product.

People have other priorities for their money. Some people want to pay off mortgages. Others want to put their kids through university. Just because people don't buy pensions for a retirement which might not actually happen, it doesn't make them bad people. So let's quit the moral judgementalism already.

Pension Credit is a means-tested benefit. It's not going to be phased out, for the same reason that income support and housing benefit are not going to be phased out. If you cut pension credit for today's elderly, they will riot. If you let them keep it but tell today's working-age population that they can't have it too, then the workers will riot. Prisons are already overcrowded - but the government is going to have to build a lot more of them if it wants to axe pension credit. Pension credit might be expensive - but the implementation of the 1834 Poor Law Amendment Act taught the government that it's much cheaper than holding people in institutions.

What might happen is that inflation might be allowed to catch up with it. The annual uprating formula for Pension Credit is already different to the uprating formula for Income Support. This shows that the government would much prefer income support to erode away before hitting on pension credit.

I think this thread will be more useful if we discuss what might happen, rather than what should happen. We're not going to agree with each other about what should happen - but being aware of what might happen will help all of us to be prepared for it.

dunstonh

You have to bear in mind that the person who made this comment is an independent financial adviser. He or she is therefore biased, because he or she probably makes a living out of selling pensions.

What an extremely silly response. Yes i make an extremely healthy living out of pensions but my comments on this board are not going to make any difference at all to my income.

I have a far more vested interest as a taxpayer. After all it will be taxpayers who will see double the current taxation to pay for the income shortfall.

Besides, there has been a lot of mis-selling of pensions lately.

pension mis-selling took place between 1988-1993. Thats not lately.

I'm not saying that DD is personally responsible for it - however, advisers like DD need to face up to the fact that consumer confidence in pensions has been seriously dented.

You mean people arent willing to take responsibility for themselves? You cannot keep blaming issues that took place over 10 years ago.

If it was an issue with pensions, then why arent people saving by other means?

People have other priorities for their money. Some people want to pay off mortgages. Others want to put their kids through university. Just because people don't buy pensions for a retirement which might not actually happen, it doesn't make them bad people. So let's quit the moral judgementalism already.

If they had to provide for their income in retirement they would find a way. Knowing that they dont have to means it can be put off. Sooner or later pension compulsion is going to come in similar to the Australian model and they will have to afford it.

I think this thread will be more useful if we discuss what might happen

Ok, you will see the re-introduction of super-tax and general taxation of around double what it is currently if you want the current system maintained.

Those that can afford to move abroad will do so reducing the taxation income down. So the top end wont lose out financially. The lower end will still be scrounging and taking money from those that genuinely need it. The middle income will be the ones that end up paying for it.

That is one extreme, the other is total removal of the pension credit.

In reality you are likely to see something in between but you shouldnt rule out a phased reduction in the benefits, pension compulsion forcing x% pm towards retirement planning and an increase in state retirement age.

Spendless

DD- Are you taking into acccount people like my grandma with your comments on Pension Credit.

At age 50 she had to pack in work to look after my grandad who had a stroke (aged 56). He was never able to return to work(paralysed down right side, couldn't talk, limited mobility) but lived another 25 years.

They had a private pension thru grandads work but of course he'd had to leave work 9 years early so the pension was lower than if he'd worked till 65.

When he died a % of his pension continued to be paid to my gran but because she has a small private pension she has had to pay full rent, council tax, dentits bills.

When the pension credit came in, it didn't entitle her too much but surely anything it gave her was a bonus? considering the situation she was left in.

dunstonh

DD- Are you taking into acccount people like my grandma with your comments on Pension Credit.

In that situation there is a genuine need for help but it shouldnt be from a one size fits all pension credit. I am not saying that those with a genuine situation do not got help from the state. A form of income support should apply. However, the current system is flawed.

Regardless of whether you agree with my posts or not, it is widely regarded that the current system cannot be maintained so change is inevitable.

Spendless

Maybe i mis-understood the reasons for introducing Pension Credit.

I thought it was brought in to help people in my grans situation, not eligible for income support but not with a big private pension either.

I take it you mean it can't continue because a falling birth-rate means we are eventually going to end up with more pensioners than people of working age. Is that right :-/

Just out of interest - whether i agree with you or not - do you share a similar view about Child Tax Credit.? Interested in knowing your views

dunstonh

I thought it was brought in to help people in my grans situation, not eligible for income support but not with a big private pension either.

That is correct but it has now got to the situation where we are telling people, who are say 10 years to go until retirement with no pensions to date, not to pay into a pension as it isnt worth it. They may have the means to save but the pension credit makes it pointless. Do they need the pension credit? No. Funds going to them are funds which are not going to those that genuinely need it, such as your gran.

I take it you mean it can't continue because a falling birth-rate means we are eventually going to end up with more pensioners than people of working age. Is that right

Thats the main issue with regards to pensions over the long term. Of course, they may decide to hit other areas. For instance the civil service pension is the equivalent of 1/4 of the state pension annual cost.

Just out of interest - whether i agree with you or not - do you share a similar view about Child Tax Credit.? Interested in knowing your views

To some degree I do think that the child allowance and child tax credit should be directed differently. Personally, I have used ours to top up my wife's pension. It's not going on the children where it is intended but it is being used for long term saving. I would say that i don't deserve the money and it could be better spent going to those that do.

bexpotta

This is a question on behalf of my mother who has been living in South Africa for the last 23 years. She wants to know whator if she is intitled too a british pension as a britsih citizine, if she wants to return to live in the UK? She is 63 and does not have any private UK pensions schemes. Many thanks

CIS

Sh will be entitled to a uk pension if she has enough contributions, she may also be able to benefit from any NI equivalents she paid in SA, if there is a reciprocal agreement.

Your best bet is to contact overseas pension foecasting at Longbenton, switchboard number 0191 2135000