State Pension, or just another Benefit?

QrizB

kdzkdz said:

It simply does not adequately cover even the basic cost of day to day living by far.(I mean really!)

It really does.

My two parents, in their 70s, are living a happy and fulfilling life on about £14k pa combined income.

Take a look at the "how much to live on" thread for more examples of people living quite happily on the NSP or less.
https://forums.moneysavingexpert.com/discussion/6228191/how-much-to-live-on

On this forum there's @Sea_Shell who has retired early and seems to be having a lovely time with their other half on £16k pa, less than two NSPs.

penners324

The sooner income tax and ni are merged together the easier it will be for everyone 

sandsy

kdzkdz said:

Thanks everyone for the positive response to my thread, the information sources have proved to be very illuminating.

However from what I've read the current state pension value is well down in the league compared to other countries.
It simply does not adequately cover even the basic cost of day to day living by far.(I mean really!)
are our pensioners destined to have the quality of life of a third world country?

The decision has been taken in this country to have a 3 tier pension system, comprising workplace pensions, private pensions and state pension. In many other countries the first 2 categories are less prominent and people pay more tax to receive a greater state pension in retirement. But in this country, it's intended that people will supplement their state pension (defined as a benefit in legislation). International comparisons don't really work when the premise for state pension provision is so different.

Universidad

sandsy said:

in this country, it's intended that people will supplement their state pension

Which is all well and good, unless the government starts hacking the legs off the way we supplement our state pensions (or goes after the state pension itself) which is the premise of this very thread.

However, there are two reasons why I don't think it's likely that anything drastic will be done.

Firstly, because whether Martin is right or wrong about the state pension being a benefit we should not rely on, the truth is that anyone who has paid NI (and especially and in particular anyone who has made voluntary NI contributions) has done something not dissimilar to paying for a contractual entitlement to benefits, and the cost of overriding that would be unsustainable both politically and financially.

Secondly, because making pensioners poor is bad for the economy: when pensioners can't pay for things they need, they rely more on the expensive welfare safety nets that any first world nation worth its salt is honour bound to provide.

However, I do think it's likely that pensioners will pay increasingly significant amounts of tax, so that their spending power is reduced, albeit relatively proportionately to their income levels.

Kim1965

As Hugheskevi points out, the state pension is bolstered by a plethera of add on benefits. My mum did nothing by way of private pension provision, she has her rent paid, council tax, attendance allowance etc she constantly has to spend to keep her savings below 6k.
 I think the uk system means that if you save for retirement, then do a proper job. Having very modest pensions can deny access to various benefits. Its really a bizzare system, but I would not want to be reliant on a benefits policy that will no doubt be less generous in the future. 

molerat

penners324 said:

The sooner income tax and ni are merged together the easier it will be for everyone 

Ain't gonna happen.

What are the chances of any political party surviving if they tell pensioners they are going to increase the amount of tax they pay by 50% ? (admittedly 10% less this month than it was last !)

JoeCrystal

molerat said:

penners324 said:

The sooner income tax and ni are merged together the easier it will be for everyone 

Ain't gonna happen.

What are the chances of any political party telling pensioners they are going to increase the amount of tax they pay by 60% ?

I think there are ways. One way would to increase the personal allowance enough just for people who are at or over SPA. But ultimately, all taxes are bound to change eventually.

Hoenir

kdzkdz said:

If this had always been the case then the public has been duped, because there is and always has been among retirees an expectation that thier contributions would primarily provide them with the security of a pension guarentee in thier retirement. 

Who paid for those that first received it then?  

Silvertabby

molerat said:

penners324 said:

The sooner income tax and ni are merged together the easier it will be for everyone 

Ain't gonna happen.

What are the chances of any political party surviving if they tell pensioners they are going to increase the amount of tax they pay by 60% ?

Wasn't this considered some years ago, but discounted for this very reason?

I suppose the only way round it would be to have different tax rates for salaries etc and pensions - cue more complications.

sevenhills

JoeCrystal said:

I think there are ways. One way would to increase the personal allowance enough just for people who are at or over SPA. But ultimately, all taxes are bound to change eventually.

We all pay taxes and so we should, without taxes we would have poor schools, roads, NHS and public transport!