UK State Pension - will it still exist or run dry ?

molerat

Grumpy_chap said:

molerat said:

Preacher64 said:

The only significant change to State Pensions that I can see would be to Scottish residents in the unlikely event of an Independence referendum leading to separation from the rest of the UK.

The SNP like to tout additional taxes as being “Progressive” and with the current demographic and employment structure in Scotland, maintaining the current SP arrangements would be unsustainable as was outlined in the 2014 Independence blueprint.

In such an event, I can see means testing being implemented and at a relatively low rate which would have a significant impact on a large number of people’s retirement plans.

But all current pensioners are going to be paid by the UK government according to Ian Blackford and the rest will come from the magic money tree.

Wouldn't the "UK Government" (as such) cease to exist in the event of Scottish devolution?

But that is something the SNats don't understand.  They think that someone - they are not really sure who - is going to pick up the tab for everything that currently exists and they will start afresh.  They can't successfully run a shipyard or an airport, still to be seen if they can run a railway, god help us if they have to run a country.

strawb_shortcake

I'm not yet 40 and I can recall hearing this conversation for at must be 30 years now by various people.
My Dad always advised me to start a pension as early as possible as he didn't think he'd have a state pension but he must have been about my age when he speculated that.

TELLIT01

joep2 said:

It'll be means tested with the state pension kicking in only when our accrued private pension cannot support a living wage. 

That will require compulsory membership of private schemes with no opt-out.  Otherwise there will be the same problems there are with the general benefits system of people deciding to spend every penny to take advantage of the 'safety net' rather than taking responsibility for their own future.

Albermarle

TELLIT01 said:

joep2 said:

It'll be means tested with the state pension kicking in only when our accrued private pension cannot support a living wage. 

That will require compulsory membership of private schemes with no opt-out.  Otherwise there will be the same problems there are with the general benefits system of people deciding to spend every penny to take advantage of the 'safety net' rather than taking responsibility for their own future.

The other issue is that those  with pension provision/pots can  choose how much they take from them , or in some cases leave whole pension pots untouched . Means testing would incentivise people not to take income from their pots .
No doubt there are ways around this ( for housing benefit a notional pension income is calculated whether you take it or not ) but they are all potentially controversial and complicated .

Notepad_Phil

SouthCoastBoy said:

Daffodil1234 said:

Thanks all for your comments.

I'd be interested in any links to the previous discussion mentioned on this forum - a search this morning didn't turn up any hits for me when I looked for previous discussions.  However as it's a wide topic, could just be that my search criteria weren't the right ones.

My interest in this is purely as I'm updating a retirement planning spreadsheet and aiming to know what estimate I might put in for my state pension.  I'm certainly not looking to launch conspiracy theories which is why I linked to a well known money advice website (boring money).

I'd welcome anyone's thoughts on how they are planning for their estimates of what they might receive.  My current plan when setting up my revised spreadsheet is going to be to use the current state pension number, but not to increase it annually by as much as the current triple lock.  So rather than going up by (say) 2.5%, in my estimate perhaps I would raise it by 1%.  However if other people have different / smarter ways when planning, it would be useful to hear about them.

I make the assumption state pension will keep up with inflation when planning. However this year that's not happened, if that trend continues over the next couple of years I will amend my spreadsheet, but not too worried about it at the moment

Unfortunately inflation has soared since the (IIRC) September figures that are used to base the state pension increase on. Hopefully inflation will not continue to soar and so there will come a point at which time the increase to the state pension due to September's inflation etc figures will start to be greater than the actual rate of inflation when it comes to being paid in April. i.e. over the long term it does keep up with inflation, though I would much prefer if it were possible to reduce the number of months between the announcement and the actual date when they are applied.

tigerspill

I can't see it disappearing for those that have already built up SP.  It may change at some point - but it will be for the time after a certain future point in time.
Politically there would be zero appetite for this.

Terron

Daffodil1234 said:

Hello All

I recently came across some articles including this one:

https://www.boringmoney.co.uk/learn/articles/will-there-still-be-a-state-pension-when-i-reach-retirement-age/

Extract from article below - this suggests that the state pension fund could run dry, unless either (or both) workers pay much more in, or else retirees receive less from the fund.

I hadn't come across this specific estimate from GAD before and wondered what people make of it.   What is realistically the most likely thing to plan for ?  I'm assuming that my state pension (due to begin age 67, I'm now 53)  will in practice be a smaller amount comparatively than the same amount that retirees receive today.

"Will the state pension come to an end?

The Government Actuary’s Department (GAD estimates that the UK’s state pension fund could run dry by 2033. Quite simply because we’re paying out more than we’re putting in.

The money for state pensions comes mostly from National Insurance contributions, and currently there are 1,000 contributing workers to every 310 claiming pensioners. By 2036, this is expected to rise to 1,000 workers to every 360 pensioners. If we’re already going overdrawn now, this could be the straw that breaks the Treasury camel’s back.

Of course, nobody knows for sure what will happen, so don’t start panicking yet"

Would that be the Government Actuary’s Quinquennial Review of the National Insurance Fund as at April 2020?
That says "The principal projection to 2085-2086 shows that the Fund balance is projected to rise to £104.9bn in 2032-2033 then to decrease and, in the absence of any additional financing, will be exhausted in 2043-2044. This projection does not allow for any Treasury Grants that may be paid in the future to support projected benefit expenditure."
Also "The Triple Lock policy increases most State Pension benefits by the highest of the Consumer Price Index (‘CPI’), earnings growth and 2.5% pa, whereas NIC receipts are projected to increase broadly in line with earnings. That is, these increases cannot be lower, but can be higher, than earnings increases and therefore this would be expected to result in benefit expenditure increasing relative to contribution income."
Basically it is saying that if the triple lock is maintained then NICs will need to be increased within the next 20 years.