Will the state pension exist for a 42 year old?

Silvertabby

dunstonh said:

... 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.

The Australian equivalent of the State pension is means tested, but the bar is set so high it only affects (what many people would call) the relatively well off.

Plus, I believe I'm right in saying that the means test was applied from day 1.

Albermarle

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.

It was George Osbourne who introduced the Triple Lock in 2010, and in 13 years of subsequent Conservative Governments, they have not changed it despite a general consensus it is too generous. So actually going in the opposite direction to means testing.

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

This, and the fact that most pensioners vote Tory, means they will not touch it as it would be electoral suicide.

I suspect Labour Party strategists will take a similar view.

Brenster

I am 43, and i dont see how they could just stop it.  As has happened over the past 20 years, the age at which you get it may increase, however thier would be riots if they just pulled it, and if they did scrap it, we would all be owed thousands in a rebate as we have been paying into the pot via NI since starting work. 
Also to make it means tested would just be another kick in the teeth for those who have planned and made sacrifises throughout thier working life, so this would be unfair also. 
We do not have a crystal ball, but i personally feel i will get it age 70/71, it rises to 68 soon, and i can see it rising by 1 year per decade on average to keep up with extended life expectancy.

MetaPhysical

Silvertabby said:

dunstonh said:

... 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.

The Australian equivalent of the State pension is means tested, but the bar is set so high it only affects (what many people would call) the relatively well off.

Plus, I believe I'm right in saying that the means test was applied from day 1.

The difference is that it has been means tested for many years - forever I think - and Australian savers have always known that and so have had decades to make provision. Australia has a much smaller population than the UK and a completely different economy in terms of housing costs, warming homes, tax structures, etc than we do. If UK wanted to do similar, decades - fifty years plus -  would be needed to give people "notice". For once, I think this would have people out on the street if they ever tried to do this.  It would be grotesquely unfair to many who had saved for themselves. 

Then again, whenever was political choice fair?  Why is it fair that some have to pay for their own ruinous social care costs by selling their homes after a lifetime of prudence and others get it for free?

GibbsRule_No3.

If they were to means test and I was at an age where I was still paying into a private pension, I would stop immediately. It needs incentives, not threats.

MetaPhysical

Brenster said:

I am 43, and i dont see how they could just stop it.  As has happened over the past 20 years, the age at which you get it may increase, however thier would be riots if they just pulled it, and if they did scrap it, we would all be owed thousands in a rebate as we have been paying into the pot via NI since starting work. 
Also to make it means tested would just be another kick in the teeth for those who have planned and made sacrifises throughout thier working life, so this would be unfair also. 
We do not have a crystal ball, but i personally feel i will get it age 70/71, it rises to 68 soon, and i can see it rising by 1 year per decade on average to keep up with extended life expectancy.

There is no "pot" and there never has been.  We pay NI and taxes and they disappear to people who are currently retired, amongst other things.  We do have a National Insurance record where it is stated quite clearly we are entitled to a pension at SPA with the maximum years of contributions (like I have for example) but that it is subject to change.  It does not come out of our personal "pot" as such and no money or provision has been explicitly ring-fenced for you or me.  What would happen to millions who had bought more years of NI to cover holes if the government then decided to means test the SP after all?  Do they pay us all back? It would wreck the plans of people who have been saving enough to add to the SP anchor to give them a reasonable income, saving with great sacrifice elsewhere in their lives.  To pull the carpet on that now would wreck the lives of millions of people, 99% of everyone over 45 I'd venture to say.  It would be an unholy mess of historic proportions to pull the rug on this one.  Never say never though, politicians are nuts, all of them are.

If bankers operated like this they would be prosecuted.  "Yes we know you have been contributing Mr MetaPhysical all these years but, actually, the money in your retirement plan is not your money, it's not ring fenced for you"

Pat38493

I suspect the question is not whether it will exist when you get older.

The question is at what age will you be able to claim.  Probably this will go up again.

Apparently, when those kind of benefits was first introduced many many years ago, the age at which you could claim was set at 1 year less than the median life expectancy.  The thinking at that time was not that you need to have a nice long retirement - it was that you needed a bit of time to get your affairs in order before you cork it.

strawb_shortcake

I remember my Dad (now 74) telling me in the late 80's early 90's that the state pension wouldn't exist when he got to retirement age and I needed to start a pension as soon as I started work. I would have been around 10 at the time, but I took his advice and enrolled in a work pension at 20. I'm lucky enough to have a DB pension and feel in a pretty good place pension wise.

We currently live on only my wage, my pension forecast is currently set to be £35k at 65 and assumes no pay rises, two SP on top and we are likely to be better off in retirement than working

badmemory

You are lucky that you had a work pension to enrol into.  I am older than your father & the first pension I could enrol into (I snatched off their hand by the way) was when I was 47.  That is after working since I was 17  with only 5 months off to have a child.  Unfortunately people make assumptions about the past.  You were fine if you had a pension through your company but a lot didn't & unfortunately that could land up being especially women.  It can be especially annoying when you find out some male has been employed to do the same job as you at several K a year more than you.  One of 4 & totally US but was very happy to deal with all the carp so ........

MattMattMattUK

I am nearly forty, I take the view that I will either not get a state pension or it will only come in my mid or even late seventies and what I do get if I get anything will be means tested and worth little if anything. The reality is that the state pension has not been sustainable for 20+ years now, pensioners have gone through their lives paying in too little then take far more out than they ever paid in in taxes. 55% of people arrive at pension age never having made a net contribution and it gets worse from their. If we want state pensions to be in any way sustainable we need to pay significantly more tax and the pensions need to come in later, they are not sustainable in their current form. That also means that we need to accept that several generations have had and will continue to experience a free ride, having paid in little to nothing and they will get the benefit of a pension on top, but if we want anyone under fifty to have a pension and a change of a retirement at some point then that is the only real option. Boomers, Gen X and older etc. never paid enough tax, Millennial (my generation) and younger could pay enough tax if rates were increased, but no one seems to want to pay enough take to fund the country, so instead things will just keep deteriorating.