If this happens...

Stubod

...perhaps they should stop people voting when they reach 80???......

I think that it is inevitable that at some point the SP will become means tested...

njm123

SouthCoastBoy said:

It will be very controversial https://www.telegraph.co.uk/pensions-retirement/news/take-state-pension-away-rich-retirees-says-think-tank/

The alternative in the actual paper for pensions of making the means test income based - with the threshold being Higher rate income tax rather that asset based is probably politically more palatable.

The whole paper though is just another attempt to stoke intergenerational tensions, by focusing very much on one side of the intergenerational fairness debate.   Seems to be a trend recently among Think Tanks, Some Politicians and Journalists to stoke this debate by suggesting ideas that penalise the older generation (including early retirees) and suggesting the young have it particularly hard.

In general they all show a lack of appreciation that the world/society has changed over time, and try to make like for like comparisons end up comparing apples and oranges rather than taking into account the need to pay for the changes.

For example 

Education, when university education was free only the very brightest had the opportunity, now it's loan based those who benefit from that education pay back their loans.    

Childcare costs , the current younger generation do get some of this paid and have to fund the rest, however compared to previous generations they are often funding this from two salaries as women have much better opportunities to have a career now, rather than stay at home and look after the kids.

Housing Costs, unfortunately those are a combination of a lack of planning in building houses and a supply of cheap money for too long.    There probably is a case for ensuring that those who have actively gained (landlords etc) pay fair taxes on the gain, however most older homeowners will eventually pass the gain on to the younger generations.


On state pension I've often though that the fairest way to set retirement age would be to set it based on your life expectancy at birth using your year of birth.  So someone starting work has a fixed date to work with.    Similar to now spend a portion of your expected adult life in retirement, although probably less that the current 1/3. 


 

p00hsticks

Getting_greyer said:

SouthCoastBoy said:

I think it would be political suicide for whichever party implemented such a change. London and South East would take a big hit due to house prices. Db pensions with their current valuation multiple would benefit greatly in comparison to dc pots

Yep.  Regardless on wether there is any merit in the idea it won't happen.  Older people vote so... 

Many older people also have children and grandchildren who they see struggling with student loans and unable to find decent jobs and affordable housing. I'm not one of them, but I've voted in every election (local and nstional) since I turned 18 in the 70's, and I resent the implication that all elderly people simply vote in their own best interests and not in a way that they believe will help to ensure a better, more equitable society in which to live.

Pat38493

Article is behind a paywall - is this the same think tank that was on R4 yesterday morning floating the idea that we should no longer allow people to access their pension savings flexibly at such a young age as it's causing problems for the economy by letting too many people retire early?

Albermarle

The alternative in the actual paper for pensions of making the means test income based - with the threshold being Higher rate income tax rather that asset based is probably politically more palatable.

AIUI, the number of pensioners paying higher rate tax is rather small. A lot of regular posters on here are obviously very comfortable, with large DB pensions or Million pound DC pots ( or heading that way at least), often with substantial other investments, cash savings and a paid for home + of course the SP to come, or already being paid. My impression is that only a minority are paying any 40% tax though.

Education, when university education was free only the very brightest had the opportunity, now it's loan based those who benefit from that education pay back their loans.    

That is not really true. During the 60's/70's/80's, there was a big upsurge in people from less privileged backgrounds going to University, and with the coming of the Polytechnics, it made it easier to enter higher education with more modest academic results. It was all free, including the student grant.

There was a lot of upwards social mobility in that period, which sadly seems to have largely ground to a halt.

Getting_greyer

p00hsticks said:

Getting_greyer said:

SouthCoastBoy said:

I think it would be political suicide for whichever party implemented such a change. London and South East would take a big hit due to house prices. Db pensions with their current valuation multiple would benefit greatly in comparison to dc pots

Yep.  Regardless on wether there is any merit in the idea it won't happen.  Older people vote so... 

Many older people also have children and grandchildren who they see struggling with student loans and unable to find decent jobs and affordable housing. I'm not one of them, but I've voted in every election (local and nstional) since I turned 18 in the 70's, and I resent the implication that all elderly people simply vote in their own best interests and not in a way that they believe will help to ensure a better, more equitable society in which to live.

I made no reference to individual voter preference within the block but the turnout rate for over 50's is consistently higher than for those under 50. Therefore any party wishing power would take this into account. There's a lot more votes to be lost messing around with pensions as against say cuts to education.

Also, nuanced debate within politics is dead atm. Sound bites and headlines rule.  A policy such as means testing state pension may have some merit, I've not looked at it, but we all know how much the policy would be attacked and distorted in the press to the point where someone nearing pension age may be disinclined to vote for it out of fear for their own lifestyle.

jimi_man

Albermarle said:

The alternative in the actual paper for pensions of making the means test income based - with the threshold being Higher rate income tax rather that asset based is probably politically more palatable.

AIUI, the number of pensioners paying higher rate tax is rather small. A lot of regular posters on here are obviously very comfortable, with large DB pensions or Million pound DC pots ( or heading that way at least), often with substantial other investments, cash savings and a paid for home + of course the SP to come, or already being paid. My impression is that only a minority are paying any 40% tax though.

Sure but that's going to increase. As an example, my DB pension is £31.5 k and when you add the SP to that and add in that both are CPI uncapped index linked (10% this year), even with modest (say 5% inflation) for the next few years, that will breach the HR limit in about three years, simply because the HR limit is frozen till 2026.

I can't be the only one in that position.

bostonerimus

Means testing of benefits is attractive at first sight as it will save some public money, but it inevitably leads to greater social division and attacks on the benefit by those not getting it. Having benefits like SP and the NHS that absolutely everyone can access provides a minimum standard of living.

Pensions_matter_2

I cant see how means testing SP could possibly work. What about all these people who have bought added years for one thing (which would turn out to be on a false premise).

Albermarle

What about all these people who have bought added years for one thing (which would turn out to be on a false premise).

Especially as the Government encourage you to buy extra years, by making it so cheap to do so.