Many People are losing their Access to Pension Credit.

Mustbeananswer??

Silvertabby said:

One of the long term aims of the new State pension is that once most pensioners receive this, thus taking them out of means tested benefits, any other pension savings they have will be theirs to keep.

At the moment, pensioner A on less than the means test limit with no other pensions or savings is eligible for PC top ups etc.  But pensioner B, on exactly the same amount of State pension but with a small private or occupational pension gets nothing.

The idea is to encourage all pensioners to enter retirement with the State pension as the backbone of their finances, but with other pensions/savings as the padding.

I know a lot of people will disagree with me when I say this, but right from day 1 the State pension alone  was never  meant to be enough to live on comfortably.  It was only ever meant to pay for the basics, with 'luxuries' being paid for by other means.

Unfortunately, over the years, "The State pension will pay for what you need" has Chinese whispered into "The State Pension should pay for everything you want".

Excellent post...Silvertabby....you have nailed it there.Its going to be harder for the next generation ??? 

cloud_dog

This is why auto-enrollment was so fundamental to helping improve the position of a vast majority of peoples retirement futures.

barnstar2077

Call me paranoid, but I don't think that autoenrollment was designed to help people, it was designed to make sure people had just enough that they couldn't claim benefits at a later date.

The average agency or minimum wage worker who didn't opt out of Nest is going to have a tiny amount of money in there at retirement, and most of it is self funded by a five to three percent split.  Long term that three percent from the company will just be factored into wage growth anyway.

It is a start that can be built upon, but even then I wonder what will happen to the state pension if the autoenrollment minimums were to be increased over time.

hugheskevi

Silvertabby said:

One of the long term aims of the new State pension is that once most pensioners receive this, thus taking them out of means tested benefits, any other pension savings they have will be theirs to keep.

At the moment, pensioner A on less than the means test limit with no other pensions or savings is eligible for PC top ups etc.  But pensioner B, on exactly the same amount of State pension but with a small private or occupational pension gets nothing.

The idea is to encourage all pensioners to enter retirement with the State pension as the backbone of their finances, but with other pensions/savings as the padding.

The new State Pension was never intended to remove means-testing. It was intended to significantly reduce the number of Pension Credit recipients, but would only make a marginal difference to the numbers in receipt of any type of means-tested benefit (Housing Benefit, Council Tax Benefit, Pension Credit).

In January 2016, DWP published this analysis of the new State Pension, and on page 28 the following chart is included:


As can be seen, under both the old and new system, means-tested was expected to fall from about 50% of pensioners in 2016 to just under 30% in 2060.

The purpose of the new State Pension was simplification, redistribution, and longer-term cost control, not the removal of means-testing.

Silvertabby

hugheskevi said:

Silvertabby said:

One of the long term aims of the new State pension is that once most pensioners receive this, thus taking them out of means tested benefits, any other pension savings they have will be theirs to keep.

At the moment, pensioner A on less than the means test limit with no other pensions or savings is eligible for PC top ups etc.  But pensioner B, on exactly the same amount of State pension but with a small private or occupational pension gets nothing.

The idea is to encourage all pensioners to enter retirement with the State pension as the backbone of their finances, but with other pensions/savings as the padding.

The new State Pension was never intended to remove means-testing. It was intended to significantly reduce the number of Pension Credit recipients, but would only make a marginal difference to the numbers in receipt of any type of means-tested benefit (Housing Benefit, Council Tax Benefit, Pension Credit).

In January 2016, DWP published this analysis of the new State Pension, and on page 28 the following chart is included:


As can be seen, under both the old and new system, means-tested was expected to fall from about 50% of pensioners in 2016 to just under 30% in 2060.

The purpose of the new State Pension was simplification, redistribution, and longer-term cost control, not the removal of means-testing.

Yes, that's why I said 'most pensioners', as there will always be those who won't qualify for the full nSP for various reasons.

And I know that housing and council tax benefits will continue - I was just talking about pension credit.

It's not easy to get every detail into one post!

hugheskevi

An interesting point about Pension Credit is the big skew in claimant caseload between single and couples. The DWP Stat-Xplore tool shows:


It is striking how few younger couples receive Pension Credit - under 9,000 under the age of 70.

As a consequence, there is also a skew in the receipt of Pension Credit by gender:


The new State Pension may well perpetuate this (albeit in the context of an overall reducing caseload)  with the move away from inheriting State Pension, and most future retirees in couples receiving 2 * full new State Pensions which should push them clear of Pension Credit, unless they are entitled to disability or caring premia entitling them to a higher amount of Guarantee Credit, even if they have little private pension saving.

Annoyingly, the DWP Stat-Xplore tool does not cover Pension Credit premia, which is a shame as disability premia in particular are very prevalent and cause the amount of Guarantee Credit entitlement to be higher than new State Pension. It would be interesting to be able to see what proportion of pensioners would be eligible for Pension Credit if in receipt of only the full amount of new State Pension.

Silvertabby

Could the younger (under 70) anomaly be partially explained by the mixed age rules?  ie, if one partner is still under SPA then they could still be working - or claiming other benefits, such as Universal Credit, instead of Pension Credit.  

The_Green_Hornet

Reeves has just announced that the Winter Fuel Allowance will be restricted to pensioners claiming pension credit so the cliff edge is going to get steeper.

Mustbeananswer??

The_Green_Hornet said:

Reeves has just announced that the Winter Fuel Allowance will be restricted to pensioners claiming pension credit so the cliff edge is going to get steeper.

There really wasnt any need to keep in work all those years was there.Mum and Dad were wrong....I should have swung the lead.....it all evens out in the end???  

Mustbeananswer??

Pension Credit = The Holy Grail.