State Pension - will it eventually be means tested?

michaels

Doctor_Who said:

Flugelhorn said:

it is effectively means tested  - some people pay no tax on it, some pay 20% tax on all of it and some people pay 40% on it 

And some people pay 42% (on anything over £43,663)......

They could always move house....

hyubh

SouthCoastBoy said:

I've always thought the state pension will be available to all pensioners that have the necessary NI contributions, however if the following is going to come to fruition, https://www.bbc.co.uk/news/business-66187743, I think there may be a time when it will be means tested, govt debt is becoming unsustainable in the UK.

To avert such borrowings the govt need to reconsider their govt funded DB schemes and benefits, not sure any govt is brave enough to tackle these issues head on though.

I've read this article twice now. Not once does it raise the suggestion of abolishing the triple lock, let alone instituting means testing of the state pension. And public sector occupational pensions aren't mentioned at all either. Appreciate this is a pensions board, but surely you have a better reference...?

Doctor_Who

michaels said:

Doctor_Who said:

Flugelhorn said:

it is effectively means tested  - some people pay no tax on it, some pay 20% tax on all of it and some people pay 40% on it 

And some people pay 42% (on anything over £43,663)......

They could always move house....

They could, and I know people who are delaying taking their pensions until they move south of the border. Maybe we should all move to the Isle of Man!

Flugelhorn

Doctor_Who said:

Flugelhorn said:

it is effectively means tested  - some people pay no tax on it, some pay 20% tax on all of it and some people pay 40% on it 

And some people pay 42% (on anything over £43,663)......

I knew that there was a good reason why I didn't retire to Scotland

Pollycat

hyubh said:

SouthCoastBoy said:

I've always thought the state pension will be available to all pensioners that have the necessary NI contributions, however if the following is going to come to fruition, https://www.bbc.co.uk/news/business-66187743, I think there may be a time when it will be means tested, govt debt is becoming unsustainable in the UK.

To avert such borrowings the govt need to reconsider their govt funded DB schemes and benefits, not sure any govt is brave enough to tackle these issues head on though.

I've read this article twice now. Not once does it raise the suggestion of abolishing the triple lock, let alone instituting means testing of the state pension. And public sector occupational pensions aren't mentioned at all either. Appreciate this is a pensions board, but surely you have a better reference...?

Quite.
The OP is pushing an agenda that appears to have no basis in fact.

No idea why.

Universidad

Pollycat said:

The OP is pushing an agenda that appears to have no basis in fact.

I certainly wouldn't go that far. It is common in my generation and younger to believe that we will not recieve the state pension.

When I was in my early 20s I think there was an element of youthful nihilism to that. But the feeling has stuck around.

What I'd really like people on this board to understand is that for the cohort in their early 40s and younger, there has been a continual changing of financial fortunes that has constantly backfooted us.

My year group was the first to go to University with the grant cancelled. The first to go with tuition fees. The first to go with the revised student loans that hung around until retirement age. My partner and I saved for years to afford a deposit for a house, bought in 2007 at the peak of the market, and spend nearly a decade in negative equity. When we sold it to buy somewhere for our budding family, we sold at a loss. 

Our mistake? Buying a house that was the most we could afford at the time, because that was the advice everyone was giving back then. The basis of that advice was that inflation would reduce the real terms amount of loan over time due to inflation. Infation happened - but salaries remained stagnant, so instead it became ever more of a noose around our necks.

My work pension was cut three times in this period, but the contributions increased. Why? To subsidise the closed final salary pensions we would never recieve. 

Any wonder we don't expect to recieve the pensions we're paying for now? My generation believes that the rules will always change to disadvantage us, because that is what has happened so far.

Having said all that by way of background, I still do not believe the state pension will be means tested in payment.

There are lots of less controversial levers that allow the government to reduce the cost of the state pension, without the increased cost of managing means testing, and in a gradual manner such that it doesn't hit a given generation all at once. (Such as freezing income tax bands indefinitely, for example...)

But if they ever do start means testing the state pension, I know precisely which year they will do it in.

Simes122

QrizB said:

tigerspill said:

I don't think it will be any time soon.  Political suicide  for any party progressing this.

I could imagine it being tapered away at higher incomes, like HICBC.

Far from being political suicide, most people (even most pensioners) wouldn't object in the slightest.

Count me as one that sits outside of most people then.

boingy

The one thing you can say about pensions is that the rules will change over time. When I started my pension in the early 90's I was told that I could access the money from age 50 onwards. Now it's 55 for me and higher for younger folks. That always seemed a bit off to me. In reality I couldn't have afforded to retire at 50 but it would have been nice to have the option and it felt like they had "broken the contract". 

The full state pension is part of my retirement planning and it's quite late for me to make up for that not arriving so I'll be quite peeved if they manage to reduce it for me. However, I can't see the triple lock surviving in its current form for many more years. I expect the next govt to squeeze it somehow but phase in the changes so the pain and the protests are spread out!

 

Pollycat

Universidad said:

Pollycat said:

The OP is pushing an agenda that appears to have no basis in fact.

I certainly wouldn't go that far. It is common in my generation and younger to believe that we will not recieve the state pension.

When I was in my early 20s I think there was an element of youthful nihilism to that. But the feeling has stuck around.

What I'd really like people on this board to understand is that for the cohort in their early 40s and younger, there has been a continual changing of financial fortunes that has constantly backfooted us.

My year group was the first to go to University with the grant cancelled. The first to go with tuition fees. The first to go with the revised student loans that hung around until retirement age. My partner and I saved for years to afford a deposit for a house, bought in 2007 at the peak of the market, and spend nearly a decade in negative equity. When we sold it to buy somewhere for our budding family, we sold at a loss. 

Our mistake? Buying a house that was the most we could afford at the time, because that was the advice everyone was giving back then. The basis of that advice was that inflation would reduce the real terms amount of loan over time due to inflation. Infation happened - but salaries remained stagnant, so instead it became ever more of a noose around our necks.

My work pension was cut three times in this period, but the contributions increased. Why? To subsidise the closed final salary pensions we would never recieve. 

Any wonder we don't expect to recieve the pensions we're paying for now? My generation believes that the rules will always change to disadvantage us, because that is what has happened so far.

Having said all that by way of background, I still do not believe the state pension will be means tested in payment.

There are lots of less controversial levers that allow the government to reduce the cost of the state pension, without the increased cost of managing means testing, and in a gradual manner such that it doesn't hit a given generation all at once. (Such as freezing income tax bands indefinitely, for example...)

But if they ever do start means testing the state pension, I know precisely which year they will do it in.

Is any of the above based on fact?

artyboy

Flugelhorn said:

it is effectively means tested  - some people pay no tax on it, some pay 20% tax on all of it and some people pay 40% on it 

And in fact you can take it a step further in that people that have been high earners during their life will have paid far more in NI contributions than lower earners that have only paid the bare minimum to get their state pension credit each year. 

And what if that high earner has had a bad run of luck with investments, divorce, etc, and is effectively potless at 67, do they still get nothing?

What about the low earner that has lived a frugal lifestyle and been able to build up a decent amount of savings for retirement - do they get nothing?

So no, I don't believe any political party would consider trying this on, certainly not without a multi-decade lead in, and when do politicians ever think as long term as that...