Just for interest...(none political)....ifMeans testing SP, what minimum income level would you set?

hugheskevi

MK62 said:

OBR projections suggest that the cost of the SP will increase from 4.8% of GDP in 21-22 to 8.1% over the following 50 years.......it's up to governments (at least atm) to decide if this is sustainable over that time period. Obviously there are a lot of assumptions going on here, but if the best data available suggests this is going to be the case, perhaps we (as a nation) should be listening and, if deemed unsustainable, taking action now rather than keep kicking the can down the road.

I think this is a little harsh, given it is only 8 years since the huge reform to introduce new State Pension which significantly reduced long-term State Pension expenditure. There was also the introduction of statutory 5 year reviews of State Pension age. These were positive developments around long-term cost control, and it is desirable to have stability for long periods in State Pension after the occasional major reform.

However, the nonsense of Triple Lock is politically somewhere between impossible and extremely difficult for any Party to get away from. We urgently need a target replacement rate for new State Pension as a % of average earnings and an uprating mechanism that delivers that over time, regardless of fluctuations in earnings and inflation. 

Consideration could also be given to having the target replacement rate for new State Pension at State Pension age, after which age payments to individuals increase in line with uncapped CPI so that the real value of pension is retained throughout retirement, whilst the headline rate of new State Pension keeps up with earning growth. Lower income pensioners are protected as they are more likely to become eligible to Pension Credit as they get older.

If cost is managed by increasing the State Pension age, greater consideration may well need to be given to the 50-State Pension age period and the benefits available. More people will be forced into retirement by ill-health at older ages, with very different medical issues than those facing younger individuals.

Automatic enrolment statutory minimums will also have to increase, and all legislation is in place to enable that, but again politically it is difficult to do what is necessary in the middle of a cost of living squeeze combined with a need to raise other taxes. Hopefully, the Budget will set a direction to make slow but steady progress down the necessary path.

In terms of long-term expenditure management, health and social care are arguably in greater need of sorting out than State Pensions. Although that in itself is not a reason that all of them couldn't be tackled at the same time, history has shown that the electorate punishes administrations that try to make too many changes at the same time.

BlackKnightMonty

Sea_Shell said:

I can't see how it can ever be taken away, realistically.

Todays workers effectively pay the SP of the retirees.    You have no 'pot' of your own NI payments to call on.

Could you really tell every school leaver (eg. from this point on) that you will not be entitled to any SP when you reach ...80!!     You must make your own provision.

BUT, we still need to you make NI payments, as you need to pay for those who are already getting the benefit of the SP.  

Sorry, not sorry!! 

I think we are at this point right now. Maybe not SP but the financial / social outlook for the latest generation coming of age is bleak.

Student debt, owning a home, having a stable good income career, having a liveable planet… 

All whilst needing to shoulder the economic and social costs of a nation in declining wealth.

As I have previously highlighted; over half of all uk households take more in benefits and services than they contribute in all taxes (ALL TAXES). In 1977 it was only 37%.  We continue to move towards fewer and fewer households covering the costs of the whole show.

strawb_shortcake

OldScientist said:

Sea_Shell said:

I can't see how it can ever be taken away, realistically.

Todays workers effectively pay the SP of the retirees.    You have no 'pot' of your own NI payments to call on.

Could you really tell every school leaver (eg. from this point on) that you will not be entitled to any SP when you reach ...80!!     You must make your own provision.

BUT, we still need to you make NI payments, as you need to pay for those who are already getting the benefit of the SP.  

Sorry, not sorry!! 

There is already widespread belief that the state pension will not exist, be reduced or only available at greater ages for current school leavers (e.g., see https://www.ftadviser.com/state-pension/2023/10/19/half-of-savers-believe-state-pension-won-t-exist-for-young-people/).

My Dad told me over 30 years ago that he would be unlikely to get a state pension, and I certainly wouldn't so to start a pension as soon as I could. I would have been around 8 at the time and it stuck with me. I do have a good public sector pension, but realistically I can't see the state pension disappearing; changing yes. I just hope it's not a case of keep raising the age as my Alpha pension is linked to state pension age.

BlackKnightMonty

strawb_shortcake said:

OldScientist said:

Sea_Shell said:

I can't see how it can ever be taken away, realistically.

Todays workers effectively pay the SP of the retirees.    You have no 'pot' of your own NI payments to call on.

Could you really tell every school leaver (eg. from this point on) that you will not be entitled to any SP when you reach ...80!!     You must make your own provision.

BUT, we still need to you make NI payments, as you need to pay for those who are already getting the benefit of the SP.  

Sorry, not sorry!! 

There is already widespread belief that the state pension will not exist, be reduced or only available at greater ages for current school leavers (e.g., see https://www.ftadviser.com/state-pension/2023/10/19/half-of-savers-believe-state-pension-won-t-exist-for-young-people/).

My Dad told me over 30 years ago that he would be unlikely to get a state pension, and I certainly wouldn't so to start a pension as soon as I could. I would have been around 8 at the time and it stuck with me. I do have a good public sector pension, but realistically I can't see the state pension disappearing; changing yes. I just hope it's not a case of keep raising the age as my Alpha pension is linked to state pension age.

I suspect your Dad is right. Unless we get spending under control the current economic policies are unsustainable. So further reform to the SP is likely. Increasing the age before your receive it, and reducing the amount your receive for all but the poorest seems likely to me.

crv1963

I very much doubt any Govt. of any Political colour will go as far as means testing the SP, in answer to the question.

What they could do though is make it mandatory to be part of a pension scheme such as the auto-enrolment for all workers. As in no opt out part. Increase slowly over a period of years the percentage paid in by employees and employers. Freeze the pension at current levels although over the short to mid term this would increase the number of people entitled to claim pension related benefits inflation would do the work and as more auto-enrolled claim their pension pots the number claiming benefits would fall.

Also to raise money they could reduce back to £250k the TFLS or lower and leave at that level so again inflation does the work, after all the 5 shillings the over 80s get added to their pension has never been increased by any Govt, nor has any removed it, who wants to be seen as robbing the elderly and vulnerable?

I suspect it is tempting to make the percentage someone can claim back from the Treasury a flat level, but also suspect it must be difficult to do or this would already have been done? The Govt also wants to encourage Pension Funds to undertake capital projects so the last thing they would want is a reduction in pension savings.

I suspect smokers, drinkers, drivers and those with ISAs to be targeted along with increase in rate of CGT, abolish Council Tax and have a flat rate property tax, hammer second home owners and private landlords, all easy targets and within the election promises not to hit NI, Income Tax or VAT.

MK62

hugheskevi said:

MK62 said:

OBR projections suggest that the cost of the SP will increase from 4.8% of GDP in 21-22 to 8.1% over the following 50 years.......it's up to governments (at least atm) to decide if this is sustainable over that time period. Obviously there are a lot of assumptions going on here, but if the best data available suggests this is going to be the case, perhaps we (as a nation) should be listening and, if deemed unsustainable, taking action now rather than keep kicking the can down the road.

I think this is a little harsh, given it is only 8 years since the huge reform to introduce new State Pension which significantly reduced long-term State Pension expenditure. There was also the introduction of statutory 5 year reviews of State Pension age. These were positive developments around long-term cost control, and it is desirable to have stability for long periods in State Pension after the occasional major reform.

Harsh in what way?........it's the OBR's projection, not mine!    

hugheskevi

MK62 said:

hugheskevi said:

MK62 said:

OBR projections suggest that the cost of the SP will increase from 4.8% of GDP in 21-22 to 8.1% over the following 50 years.......it's up to governments (at least atm) to decide if this is sustainable over that time period. Obviously there are a lot of assumptions going on here, but if the best data available suggests this is going to be the case, perhaps we (as a nation) should be listening and, if deemed unsustainable, taking action now rather than keep kicking the can down the road.

I think this is a little harsh, given it is only 8 years since the huge reform to introduce new State Pension which significantly reduced long-term State Pension expenditure. There was also the introduction of statutory 5 year reviews of State Pension age. These were positive developments around long-term cost control, and it is desirable to have stability for long periods in State Pension after the occasional major reform.

Harsh in what way?........it's the OBR's projection, not mine!    

The statement:

MK62 said:

Obviously there are a lot of assumptions going on here, but if the best data available suggests this is going to be the case, perhaps we (as a nation) should be listening and, if deemed unsustainable, taking action now rather than keep kicking the can down the road.

I think there has been quite a lot done in the last 10 years (but still more required), so suggesting the govt/country keeps kicking the can down the road is a bit harsh. I would reserve a statement like that for the inaction on social care.

Hoenir

Means testing isn't free.  The more complicated something becomes. The greater the on cost to administer. 

hugheskevi

Hoenir said:

Means testing isn't free.  The more complicated something becomes. The greater the on cost to administer. 

Whilst not free, it isn't very expensive either.

DWP spends about 2.2% of its total expenditure on running costs, and that includes all of the Job Centre network and staff seeing claimants, which is a major expense in order to be able to hassle claimants in person every week or two about getting a job.

Pensioners come with their own challenges but are easier to administer due to not needing constant interventions.

Linton

BlackKnightMonty said:

strawb_shortcake said:

OldScientist said:

Sea_Shell said:

I can't see how it can ever be taken away, realistically.

Todays workers effectively pay the SP of the retirees.    You have no 'pot' of your own NI payments to call on.

Could you really tell every school leaver (eg. from this point on) that you will not be entitled to any SP when you reach ...80!!     You must make your own provision.

BUT, we still need to you make NI payments, as you need to pay for those who are already getting the benefit of the SP.  

Sorry, not sorry!! 

There is already widespread belief that the state pension will not exist, be reduced or only available at greater ages for current school leavers (e.g., see https://www.ftadviser.com/state-pension/2023/10/19/half-of-savers-believe-state-pension-won-t-exist-for-young-people/).

My Dad told me over 30 years ago that he would be unlikely to get a state pension, and I certainly wouldn't so to start a pension as soon as I could. I would have been around 8 at the time and it stuck with me. I do have a good public sector pension, but realistically I can't see the state pension disappearing; changing yes. I just hope it's not a case of keep raising the age as my Alpha pension is linked to state pension age.

I suspect your Dad is right. Unless we get spending under control the current economic policies are unsustainable. So further reform to the SP is likely. Increasing the age before your receive it, and reducing the amount your receive for all but the poorest seems likely to me.

This sort of argument seems flawed.  National accounting is far more complex and counter-intuitive than the annual accounts of a small business

Total government debt currently amounts to about £2.5Tn.  To whom is it owed?

 Well, oddly enough it is balanced by about £2.5Tn in gilts.  OK, who owns the gilts?

On the whole we do, in the form of our financial institutions such as pension companies, insurance companies, banks, investment funds etc.  The interest from the gilts and their capital value when they mature returns to us.  So in the same way that the cost of liabilities are pushed to the future, so is the means to pay them.

Is the model sustainable in the long term? Almost certainly not.  But then nothing is.  The best that can be done is to manage for the lifetimes of the people alive now.  For SP, something like the current rate of increases SP age with some tweaks may well be sufficient for a few decades.

Howeve the enormous changes in the world economic structure that seem to have started could well be of far greater importance as problems for the future generations of UK people to resolve.