Pension Credit - is it fair?

eskbanker

mikedaveross said:

To separate the workplace pension argument, from the state pension discussion.

This is about whether it is fair of just, for all, to uplift the state pension to the same amount as someone who has full NI contributions with pension credits?

But the point is that it isn't for all, and is inextricably linked to whether or not someone has additional income?

mikedaveross

OK. Lets say they dont. They just have the full state pension. They worked for 30 years to achieve this.

Someone else only worked for a few years, but gets pension credits to uplift their state pension to the same amount?

SacredStephan

I'd be fascinated to know why some pensioners are aware that they are entitled to Pension Credit but choose not to claim it.

TheSpectator

mikedaveross said:

OK. Lets say they dont. They just have the full state pension. They worked for 30 years to achieve this.

Someone else only worked for a few years, but gets pension credits to uplift their state pension to the same amount?

Fair or unfair, the Govt have decided there is a minimum amount a person needs to live on. 

There is lots of 'unfairness' in the benefits/credits system but little point dwelling on them.

eskbanker

mikedaveross said:

OK. Lets say they dont. They just have the full state pension. They worked for 30 years to achieve this.

Someone else only worked for a few years, but gets pension credits to uplift their state pension to the same amount?

Someone working for 30 years without making any effort to contribute to a workplace or private pension hasn't really 'worked to achieve' the full state pension, that's just a by-product of working for a living.

I do get your point, but it's applicable to a whole range of benefits rather than just pension credit, or even the state pension itself, although correctly referring to that as a benefit often seems to provoke indignant reactions!

mikedaveross

My concern here, is people will believe that they need to 'purchase' extra years all of a sudden because they havent accrued enough to get the full state pension, for whatever reason, & will be left with a very small state pension.

Only to find out that they needn't have bothered spending the extra cash to purchase these extra years, because someone who hasnt gets pension credit to top them up to that amount anyway.

eskbanker

mikedaveross said:

My concern here, is people will believe that they need to 'purchase' extra years all of a sudden because they havent accrued enough to get the full state pension, for whatever reason, & will be left with a very small state pension.

Only to find out that they needn't have bothered spending the extra cash to purchase these extra years, because someone who hasnt gets pension credit to top them up to that amount anyway.

Which is why guides like the one on this site highlight that very issue:

Beware: If you'll retire with no other pensions or sources of income, then boosting your State Pension might not be worth it

There is effectively a minimum-income guarantee for pensioners, called Pension Credit, though it has to be claimed. It tops up low-income pensioners' incomes to £218 a week (or more if you have caring responsibilities or a long-term health condition).

https://www.moneysavingexpert.com/savings/voluntary-national-insurance-contributions/

Altior

Simple answer is it's not 'fair'. It's a contribution based system, and an individual who has made zero cash contributions could not only still effectively gain access to the full benefit, but also get all of the bells and whistles that come with qualifying for PC. So be much better off than an individual who has contributed.

Moonwolf

mikedaveross said:

OK. Lets say they dont. They just have the full state pension. They worked for 30 years to achieve this.

Someone else only worked for a few years, but gets pension credits to uplift their state pension to the same amount?

You keep trying to make the same reductive point and people keep pointing out that it is complicated and it might not be fair in some cases but unpicking it is difficult.  Does the fairness depend on how much the person without a full NI record has has bad luck or didn't try?  

That is the reality, there is always unfairness in complex systems and there will be cases where a few people take advantage of it.  Often, particularly with benefits it reaches the place where the cost of trying to catch it is greater than the money saved.

mikedaveross

I just needed to make sure I was understanding it right... 

You dont actually need to accrue the full entitlement of NI years to receive the full state pension.