Will the state pension exist for a 42 year old?

p00hsticks

PersonalIy I don't see the state pension itself ever becoming means tested - means testing is costly and difficult. In my view it's more likely that keeping the costs in check could be achieved much more simply by increasing the age at which it becomes payable and/or gradually eroding the value of it by removing the triple lock. 

Pension credit would remains as a means tested benefit for those who really need it, but the introduction of the new state pension and the increased uptake of workplace pensions should see the number enttield to it decreaseing over time. 

Emmia

badmemory said:

Emmia said:

I'm about the same age as you OP, and at 18 I was sceptical that the state pension would exist for me...

I wouldn't be surprised if it went means tested especially now there is auto enrollment into workplace pensions.

I think they would have to enforce significant changes to auto enrolment to make it possible for means testing to have a significant impact on state finances.  At the moment for many people the pension savings are negligible & employers can exclude far too many employees.

Just my opinion...

The answer is probably to work and save like it's not there, won't be very much or would start to be paid later in life...

So if you want to retire earlier than 68, 70, 75 you'll need to make provision - which is what many people do already.

If it still exists, great!

Universidad

Although the government uses "proportion of lifetime in retirement" as the primary metric for deciding to raise the pension age, they could choose to do it for other reasons. However, you can't cost-effectively raise the pension age without raising the age at which people can actually work. Otherwise you shift people to less efficient benefits.

You can't erode the value of the pension if it goes beyond what people can live on, or you shift people to expensive benefits like pension credit.

It's not financially viable to means test a benefit that most people are entitled to, and if the plan is to reduce the proportion of retirees means testing is counter productive because it encourages people to save less and retire earlier. Plus if you do it too quickly then one generation ends up paying for two generations pensions... And right now this would be a generation that often don't own houses and have had a lot of other ladders pulled up. 
In my view, the most likely path is to increase the tax that pensioners pay. This is like diet means testing and a lot cheaper to implement, and can be tweaked without huge changes

Silvertabby

p00hsticks said:

PersonalIy I don't see the state pension itself ever becoming means tested - means testing is costly and difficult. In my view it's more likely that keeping the costs in check could be achieved much more simply by increasing the age at which it becomes payable and/or gradually eroding the value of it by removing the triple lock. 

Pension credit would remains as a means tested benefit for those who really need it, but the introduction of the new state pension and the increased uptake of workplace pensions should see the number enttield to it decreaseing over time. 

Despite the cries of 'unfair two tier pensions' from some pre-2016 State pensioners, the long term aim of the nSP is to actually save money.

Maximum State pension plus SERPS/SP2 under the old scheme is over £300 per week.  More if the pension was deferred, under the much more favourable rate of 10% per year.  Going forward, the nSP will be capped at (currently) £203.85 per week, with deferral at 5% per year.

As p00hsticks says, once most people are on the full nSP they will not be eligible for means tested pension credit and all the tasty add-ons that being in receipt of PC opens the door to.

And, of course, there is the increased NI revenue since contracting out ceased fully in 2016.  The NI contracted out reduction for someone on just the average salary was in the region of £25 per month employee/£75 per month employer (2016 figures).  Multiply that by just the number of public sector employees.......

Bobinyorkshire

I suspect pushing the state pension age up has the same effect as letting NHS waiting list grow longer ie encouraging those with the means to make their own provisions without seemingly putting ‘unpalatable’ policies to the public vote!  

Moonwolf

As we live longer it probably cannot stay in its same form as it will become increasingly expensive.

No government is going to be able to take away all support and allow people to die.

Left leaning governments will probably feel that keeping it as effectively a universal benefit, perhaps starting later or at a lower level to keep it affordable. Worth noting that when it started and was 65, that was also around the average lifespan, so fifty percent of people never claimed it.

Right leaning governments might prefer to make it means tested, perhaps incrementally, e.g. freezing the pension but adding a means tested element.  To a certain extent that happens now with universal credit for those that have no other provision. However, I can see that people who have saved and paid NI will feel hard done by.

The fact that pensioners are more likely to vote will protect them a bit.

Also, how society changes with globalisation, computing and AI will mean big changes to work and work life balance anyway and how those add in to the mix, who knows.

resk

I'm 43 and I predict I'll get something.  Given the triple lock and how hard it seems to scale that back to a single or double lock, it would take a complete change of direction from a very brave government to means-test the state pension.  It's also hard to see how the existing institutions could get the manpower, competence and integration together to do this.   

Also, every generation thinks they are on the brink of the apocalypse - I reckon 40 years ago some bloke down the pub was confidently telling my dad that the country was skint and he had no chance of getting a state pension.... 

MetaPhysical

If it does become means tested it will be in many, many years time - several generations away.  Great care would be needed not to create enormous unintended consequences.  For example,  why bother saving for yourself and forgoing money that you and your family could enjoy now only to then have the state pension denied to you whilst you watch others that didn't save get given the pension for free?  What perverse incentives that would create....????  In order to means test the state pension to "divert funds to those most needy" (insert some similar claptrap political lingo) to save money, they would unwittingly cost a lot more money because people would then not save for themselves, thinking, what is the point?

Great, great care is needed.

dunstonh

... after a healthy discussion at work recently the general consensus was that the state pension will become a means tested benefit. 

I don't see it.    It would make a prospective Government unelectable.  It would make the UK the only developed country in the world not to have one.        The state pension is not unaffordable.  The triple lock is.

Making auto-enrolment compulsory and pushing more of the state benefits to the private sector is a possibility (the UK is already ahead of others in that respect) but neither major party has any original ideas at the moment.  So, it's not going to happen in the short term.

badmemory

Universidad said:

In my view, the most likely path is to increase the tax that pensioners pay. This is like diet means testing and a lot cheaper to implement, and can be tweaked without huge changes

I wondered if that was the aim when they reduced the %age for NI.  It would make sense to reduce it so that all earners paid only the 2% & it was added to normal taxation.  That way any taxpayer not working would pay more than they are now.  They would have to do it a little at a time to avoid an outcry.