Means test State pension????????

jlpike

What do you think the likelyhood is that they will do this in the future.

Most people do not have a private pension and with people living longer the amounts to cover the many more pensioners when I retire in 30-40 years will be huge.

No governmnt will do what is necesary now and face the public anger when the problem is 30-40 years away.

The only option for them will be to introduce means testing so anyone who has tried to look after themseves through pensions Isa's savings etc will not get a state pension to pay for those who have pi****d it up a wall even though they may have the same incomes through thier career.

Even if they dont go all the way they may remove SERPS???

You cant have people with nothing dying on the street!

The though of that really worries me. What do people think????

bristol_pilot

I would say that the chance of this or a future government removing the state pension from pensioners who have no other provision is virtually nil. Chance that state pension age will creep up to 70, maybe 75 - quite likely. I guess that the chance of the state pension being means tested is about 50-50, which is why I often post on these boards giving my opinion that people should not save for a small pension. One should either save shedloads (if you can afford to) so that you get a decent pension without relying on the state at all (if you get the state pension, then that's a bonus) or not save at all. A small pension of about £5k per annum is a disaster - disqualifying one from means-tested state benefits which may in future include the state pension.

jlpike

That what worries me.

I am projected to get a £5000 pension. I can't afford to put much more in at the moment.

I put put the minimum in I can as I may as well have it because of the employer contributions.

Hopefully soon I may be in a position to put extra in so if I dont put it in a pension what do I do with it. If I put it in an ISA or savings it will still come under means testing I assume??

Put it in a pot under the bed, property, give it my kids and hop they dont spend it?

Loughton_Monkey

jlpike wrote: »

The only option for them will be to introduce means testing so anyone who has tried to look after themseves through pensions Isa's savings etc will not get a state pension to pay for those who have pi****d it up a wall even though they may have the same incomes through thier career.

That is one option.

Under a recent consultation process, I offered them a different option, and I would like to see them think about it.

I suggested that simple 'means testing' is not the answer. Pensions and Savings are an issue for all people age 18 to 65 (roughly). Throughout this period, the Government has a pretty good idea on your circumstances - income, NI contributions, benefits, marital status, children etc.

It would therefore be possible to develop some sort of 'Opportunity Testing' cumulatively, which (I'm simplifying) would dish out an annual estimate of what you could/should/ought to be saving for retirement to give you a reasonable income.

Then, at retirement, a fairly minimal pension would be granted to all (more or less as now). Benefits would be available, but very much linked to your lifetime earnings - as above. Those who over their lives have generally not had the means or opportunities to save much would clearly get extra benefits. Those who did have the means (but blew it all away) would be denied any extra benefits.

The large majority, hopefully, would have ensured they save - either because it is natural to them, or because they will have received an annual 'reminder' for 40-odd years in a row stressing that 'we have made assumptions that by now, you would have saved a minimum of £X for your retirement').

The public seem to keep on about 'fairness' and this is one step forward. If you and I have both done reasonably well over our careers, you have lived on 90% of your income on average, and put the rest by for your retirement. I, on the other hand, have drunk more Champagne than you, driven a better car, and ensured I spent 100% of my income.

Then there's the other person over there, who has never really earned much.

Now you, and I, would both receive our pitiful minimum pensions. That's our rights. The other person would get the basic pension plus benefits according to 'needs'. But I would get no extra benefits.

I and that other person both have identical 'means' (i.e. we have virtually no savings and virtually no other sources of income). The thing is, I once had means, but was so selfish I spent the lot!

I think that's fair.

StevieJ

I think if they means test my guess is the only people that fall foul would be those with reasonably high pensions eg over £30k.

p00hsticks

Personally, I think that they are far more likely to increase the starting age for state pension than to means test it. However, senior citizens qualify for quite a large number of other 'universal benefits' that I think could easily disappear or get means tested as a part of these cuts - for example, free bus passes, free prescriptions, free TV licenses for the over 75s, winter fuel allowance etc...

StevieJ

p00hsticks wrote: »

Personally, I think that they are far more likely to increase the starting age for state pension than to means test it. However, senior citizens qualify for quite a large number of other 'universal benefits' that I think could easily disappear or get means tested as a part of these cuts - for example, free bus passes, free prescriptions, free TV licenses for the over 75s, winter fuel allowance etc...

Then again does Richard Branson really need them

dori2o

I think it has to be means tested. Of what benefit is it to somebody with private pensions in excess of £40k.

They should also get rid of Pension credit and instead use those funds to ensure everyone has at least the minimum inocme via their state pension, reducing the amount of state pension payable for those with incomes in excess of £40k.

Loughton_Monkey

dori2o wrote: »

I think it has to be means tested. Of what benefit is it to somebody with private pensions in excess of £40k.

That's your view. But surely impossible to 'police'.

You have very little money, but have done well by saving and accrued a pension worth £40K a year.

Me? I'm so stupid as to believe BBC Panorama about pension charges so that put me off. So I just have £35K company pension, and (unlike you) get my full state pension. But I've got, say, £150K in ISA's, £200K other cash, and plan to downsize from my £900K house and release another £400K to live on.

Fair?

peterg1965

Means testing the State Pension would surely lead to some form of legal challenge, we all pay NI which is supposed to be our contribution towards the State Pension. Maybe some form of scheme whereby individuals could pay less, or no NI, in return for no State Pension Entitlements. I would be in favour of this, it would mean I could invest more of MY money where I wanted to.

hugheskevi

There is a way to means-test pensions which would be less controversial and quite simple.

This would be to make State Second Pension inversely related to earnings - the higher your earnings, the less you accrue. So low earners end up with a higher contributory pension that higher earners.

This overcomes the incentive problems with crude means-testing of final pension outcomes, as I doubt anyone would turn down a payrise as it would reduce their State Pension accrual. Higher earners meanwhile would be unlikely to consider a life on means-tested benefits, so would save despite having a higher hurdle to get over before getting clear of means-tested benefits.