State Pension - will it eventually be means tested?

hyubh

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. 

At the same time, university access was much expanded. The people who actually benefited from non-means tested grants back in the day were a small privileged minority.

The first to go with the revised student loans that hung around until retirement age.

I would wager that you've paid yours off long before retirement age - I know I have (I'm 41). Googling around, I see SLC data shows 66% of the 2002 cohort had paid there's off by 2021 (https://researchbriefings.files.parliament.uk/documents/SN01079/SN01079.pdf).

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.

Unlucky, wasn't the investment you'd hoped! Although, perhaps still better than having rented all the time, paying someone else's mortgage instead...

My work pension was cut three times in this period, but the contributions increased.

Will this be the USS...? Contribution rate even now is only 9.8% (before tax relief), and the 2.5% cap on in-service revaluation has been postponed. So you left with a pretty good DB pension that most in the private sector don't enjoy.

Why? To subsidise the closed final salary pensions we would never receive.

Are you claiming the employee rate in the USS has a proportion in respect of the final salary section deficit...? If alternatively you mean just the employer rate, what's your alternative to employers funding the promises they've made - default?

Any wonder we don't expect to recieve the pensions we're paying for now?

Pretty sure you'll get the USS pension you accrued. Plus from your previous posts you're now accruing a Civil Service pension. Something tells me you won't have a hard retirement...

michaels

Pollycat said:

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.

The article is about an unsustainable debt trajectory and that a big component of that is unfunded state pension promises.

I don't think it is too big a leap to speculate that those unfunded promises might come under pressure if for example the IMF were called in following a debt crisis as happened in Greece when similar fiscal dynamics were in play.

Pollycat

michaels said:

Pollycat said:

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.

The article is about an unsustainable debt trajectory and that a big component of that is unfunded state pension promises.

I don't think it is too big a leap to speculate that those unfunded promises might come under pressure if for example the IMF were called in following a debt crisis as happened in Greece when similar fiscal dynamics were in play.

Then why wasn't it mentioned in the article...?

Stubod

I did think that at some point in the future it would be inevitable that the SP would become means tested, but that in itself could become quite difficult to administer, and be a major vote loser, so I now assume they (gov), will just keep increasing the age at which you can claim it. 

Moving women from 60 to 66 alone must have saved a huge amount of tax payers money...shame they have already wasted it and a lot more besides??

Mutton_Geoff

The state pension is of course a huge Ponzi scheme, previous NI contributions doing nothing to bolster your own "account" unlike Singapore's CPF scheme. I'm months away from drawing mine and have long believed it will be means tested at some point in the future but as others have said, I'm giving 45% back in tax as I had spent a lifetime also investing large % of my salary into DB and DC schemes.

zagfles

So let's see, the govt have just abolished the LTA because they want to encourage older workers to carry on working, now people expect them to means test the state pension? So an NHS doctor who was considering retirement due to the LTA charge will instead consider retiring because the state pension will be withdrawn/tapered if their occupation pension is too high?

They've also spent decades trying to encourage people to save in pensions, stuff like mandating employers provide a pension scheme, auto enrolment, tax breaks etc, so how would a policy of "save for your old age and we'll take your state pension off you" fit in with that? It would become pointless saving in a pension for many/most people. They'll just enjoy their money while they can.

No credible organisation, think tank, or political party is calling for the state pension to be means tested. It would be political and economic suicide.

westv

What does "means tested" actually mean?
Pension income? What if one person draws more than another from a similar size pot? Does one get more SP? Size of pension pot? What about those with DB pensions?
All seems a bit impractical to me and IMHO will never happen.

zagfles

eastcorkram said:

QrizB said:

Pollycat said:

QrizB said:

tigerspill said:

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

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

Really?
Why do you think that?
I've been in receipt of my state pension for 5+ years but I would still oppose it.
Why do you think people who have paid NI for years would't object?

People (in general) like to think they're taxing the rich. Partly because they don't ever expect to be rich themselves.

Tapering the state pension at eg. £1 (per week) for each £100 of income a pensioner receives over, say, £40k pa wouldn't directly affect the vast majority of voters.

Back this up with a press release or two stating that it's inequitable for "hard-working families" to pay NI just to see it given as benefits to "fat cat pensioners" with incomes exceeding the national average full-time wage, and you'll have no problems beyond the letters pages of the Mail and Express.

Absolutely. I think it would prove very popular. Not saying it's a good thing, but I think the vast majority of people would be in favour of it, as it would only effect wealthy people.

Once in of course, it would gradually be increased, to effect more and more people, and then would become unpopular!

Really? Why do you think people want higher taxes on the "rich"? What evidence do you base that on? Lets see now - LTA abolision should have been massively unpopular then. It wasn't, 50/50 split according to yougov polling. Raising of the AA to £60k? How many "ordinary" people will be putting £60k into their pension? Yet more people approved of that increase than disapproved. Kinnock lost the 1992 election after promising not to raise taxes on anyone but very high earners. He lost. Blair realised his mistake and won the 1997 election with a promise not to raise income tax on anyone, a promise made in all 3 elections he won (yes they did eventtually break that promise, but then lost the election).

zagfles

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.

That's what happens when you listen to clueless people giving financial advice. I was told the exact same thing when I bought my first house in 1991. I was also told to get an endowment mortgage. Luckily I was pretty switched on financially at that time and ignored both pieces of advice. 

I bought my house based on what I needed at the time, ie a small one as I was living alone. I got a repayment mortgage. My house went down in price, as did most peoples' at that time, the negative equity problems were generally worse in the 1990's than post 2007. But I didn't care, it was good news for me as by the time I had a family and needed a bigger house, that bigger house was more affordable. I sold my house at a loss but gained more from the fall in price of the new bigger house I was buying.

Pat38493

zagfles said:

eastcorkram said:

 He lost. Blair realised his mistake and won the 1997 election with a promise not to raise income tax on anyone, a promise made in all 3 elections he won (yes they did eventtually break that promise, but then lost the election).

But they did tinker with the NI system to effectively turn a portion of NI into exactly the same as income tax from the payer point of view (or is that what you meant by breaking the promise)?