Can we rely on the State pension in the future?

jem16

penwise wrote: »

Thanks for the replies.
Yes I do have a personal pension but it is not great and I am relying on the full state pension to make it acceptable.

So will you be able to manage for the 6/7 years that you want to retire before your state pension age?

penwise

JournalGirl wrote: »

I think there will still be a state pension, but I am very sceptical that I will receive it. Like OP's friend, I will be 60 in 2028, so 'currently' pension scheduled for 2034. But as I have some private pension, I would not be at all surprised to be means tested out of my state pension by then.

This means testing is a bit scary.

It is not so bad if u have a big personal pension and could live comfortably on it anyway.

But if u have a small pension that just takes u over the threshold depending on how they do this is it possible u could end up being worse off than someone who hadn't saved at all?

Also I don't think future NI payers would find this acceptable.

princeofpounds

bouicca21 wrote: »

Pensions are the biggest cost in the benefits system. Increasing state pension age is one way of controlling it. A more logical way would be to do what countries like Australia do, and means test it.

In my opinion it is not a logical approach for the UK under the current system. Means testing provides a massive penalty for saving into a pension for those people who are only able to make modest savings, as their state provision gets whipped away in return. Those are precisely the people you need to make provision for themselves.

Comparing Australia to here is dangerous because they make personal pension contributions compulsory by law (about 9.5% of salary IIRC). So the people who don't have enough savings in Australia will be the people who never managed to earn enough to support themselves in the first place. They would need benefits whatever the system, no matter how 'good' they are with then money they earned.

So in Australia, it's a compulsory private pension system with state support removed from those who pay in enough. In the UK it's a compulsory state pension system with state support given to encourage people to save extra.

Very very different.

If there is any benefit which should look something like a 'citizen's income' it is pensions.

penwise

jem16 wrote: »

So will you be able to manage for the 6/7 years that you want to retire before your state pension age?

At present I am trying to save for this - and should hopefully be able to do this- but if I do not get full SP then (due to means testing or some other change) my plans will need a major rethink.

My friend is in a worse position because she is younger there is even greater chances of changes to her SP .

System

princeofpounds wrote: »

The post-war generation and the baby boomers have awarded themselves pensions .

No we haven't. I have never been consulted about my eventual state pension, and I have certainly never been in a position to "award" myself anything.

The level of state pension has been repeatedly confirmed by governments of all parties since the war. Presuming that at some time your own vote has contributed to this consensus, then you too have been party to this award.

Thank you very much.

penwise

princeofpounds wrote: »

In my opinion it is not a logical approach for the UK under the current system. Means testing provides a massive penalty for saving into a pension for those people who are only able to make modest savings, as their state provision gets whipped away in return. Those are precisely the people you need to make provision for

Well said!:)

SailorSam

penwise wrote: »

But if u have a small pension that just takes u over the threshold depending on how they do this is it possible u could end up being worse off than someone who hadn't saved at all?

I'm 61 and have a small private pension pot, so that's one of the things i've started thinking about. I thought i may be better off cashing in my pension and getting a new kitchen and bathroom with the money It's getting towards the time i must look into it, but i agree about being annoyed with people who have never saved.

hugheskevi

if I do not get full SP

What do you mean by full State Pension? The current maximum is over £250 p/w, but full tends to be used as meaning only the £113 p/w Basic State Pension.

Can we rely on the State pension in the future?

I'd be very surprised if the indexation arrangements are not changed in the future - for the last 20 years this has been something every administration has loved to tinker with.

But cuts to the actual amount are unlikely given past form. Means-testing is a potential risk, but that would be a significant policy change and not in the direction the current changes are taking the system. Although the new single-tier effectively caps the maximum amount at £148, down from the current £250+.

penwise

SailorSam wrote: »

I'm 61 and have a small private pension pot, so that's one of the things i've started thinking about. I thought i may be better off cashing in my pension and getting a new kitchen and bathroom with the money It's getting towards the time i must look into it, but i agree about being annoyed with people who have never saved.

I'm not annoyed at people who have not saved - I just hope that I will not be worse off because of saving

atush

penwise wrote: »

Thanks for the replies.
Yes I do have a personal pension but it is not great and I am relying on the full state pension to make it acceptable.

The reason I am asking this question is that if I thought that there would be none or reduced state pension I would have to rethink my strategy

My friend is in the same boat.

Thanks

I am fairly confident that there will be a state pension of some kind, and of the kind now for you.

Your problem is not the SP but your private pension. Which obv you ate not paying enough into as you say it is not acceptable currently. The only way to make it acceptable (esp at age 60 when you wont be getting any SP) is to put in more now and going forwards.

And as you wont be having any SP, you will not only get 25% tax free, you will be able to draw up to your PA tax free each year.