Funding Gap Between Retirement & SP

crv1963

I agree with others, SP will be around- electoral suicide for any government to abolish it. I do think though that the goalposts will be moved- it'll be given at a later age (maybe 75), auto enrolment is a way of future governments to reduce pensioners entitlement to means tested benefits/ top ups and taxation on personal pensions will rise both for DC and DB one, maybe by introducing a tax on the current TFLS? Not necessarily at a persons marginal rate but at a lower rate on a sliding scale, or reduction of the amount that can be claimed back whilst contributing- a bit like the changes to child benefit entitlement, the precedent has been set.

Linton

In my view talk about the SP disappearing or being means tested is scare mongering. It would be politically impossible since decades of notice would have to be given so people would have time to make other arrangements and there would be plenty of general elections in the meantime. Means testing would be problematic because of the massive increase in administration if it were to cover perhaps 1/4 of the whole population. This factor also constrains the increase of SP age. The majority of those under SP age need to be fit enough to work and earn sufficient to live on.



In principle SP itself is perfectly sustainable given an appropriate SP age, assuming there isnt a major fall in the the working population. The only major change I can see happening is the removal of the triple lock, or at least the 2.5% guarantee part of it. That isnt sustainable.


The problem with the inceased numbers of elderly people isnt SP but rather the NHS. That is where major increases in taxation (NI or general taxation) will be necessary. But there are areas where tax could be increased which most people would consider reasonable. In particular the significantly higher taxation of earnings compared with that of returns from investments seems difficult to justify as does the high amount of unearned income that can be sheltered from tax completely.

NoMore

Ok I've re read the thread, and nobody said anything about the SP disappearing.

I said I wasn't factoring it into my retirement plans and Paul Herring said similar, neither of us said we didn't expect to get it!

I was just responding to the OP's question about funding the 'gap' to SP and I don't see it as a gap as I'm not factoring it in to my plans, so when it does come its a bonus on top of my retirement pot. Thats it!

Sometimes this forum is too quick to get the pitchforks out.

Wenlock

I expect there to still be a state pension when/if I reach SP age.

I retired at 50 on a small occupational pension. I am currently paying into a SIPP and intend to drawdown from age 60 or so - sufficient to keep me below the personal allowance each year.

If I live long enough to receive the state pension that extra cash will be a bonus rather than something I am relying on or particularly need.

westv

Well I certainly will be incuding the SP (11.5 years from now) in my plans.
Whether I just have a "SP Amount" as part of my drawdown invested fund income or whether I have a separate "SP Amount" low risk, low return fund for it, I don't know yet.