Pension Credit - is it fair?

eskbanker

mikedaveross said:

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.

You do, but can get close without doing so....

Altior

Don't forget that people can also get class 1 credits without actually paying anything themselves (eg if they claim not to be working).

mikedaveross

I'll take away the moral dilema of otherwise leaving someone with clearly not enough money to live on because they hadnt contributed enough to the economy...

DullGreyGuy

mikedaveross said:

But I do question, if poor planning for your future is the reason, & just relying on it just being uplifted anyway, then where is the fairness or incentive to work value? 

Why stop there? Should alcoholics and smokers get NHS medical care given the risks were known? Should mountain rescue go out looking for hill walkers that were carrying bottles of prosecco rather than waterproofs, food and torches?

Works both ways though, if you pay for private schools, medical care etc should you pay as much in given you arent ever going to use key expensive services?

The system is far from perfect but not a return to having to justify yourself to gain access to benefits or medicines etc is the best way forward either. 

af1963

PC recipients are very often *not* people who "only worked for a few years".  A pre-2016 pensioner who was in a low paid job with little or no SSP/Serps, or someone who worked in non-pensionable jobs before pensions became mandatory, or who brought up a family in the years before NI credits were given for that, is quite likely to have an income below full new state pension / pension credit level.

Altior

DullGreyGuy said:

mikedaveross said:

But I do question, if poor planning for your future is the reason, & just relying on it just being uplifted anyway, then where is the fairness or incentive to work value? 

Why stop there? Should alcoholics and smokers get NHS medical care given the risks were known? Should mountain rescue go out looking for hill walkers that were carrying bottles of prosecco rather than waterproofs, food and torches?

Works both ways though, if you pay for private schools, medical care etc should you pay as much in given you arent ever going to use key expensive services?

The system is far from perfect but not a return to having to justify yourself to gain access to benefits or medicines etc is the best way forward either. 

100% there should be a moral hazard when it comes to medical care. If you watch any of these 'fly on the wall' trauma shows, invariably it will involve scraping someone off the floor after coming off a horse or motorcycle, resulting in treatment that will cost six or seven figures. It's a different topic to the welfare system in retirement however. My own view is if you undertake a palpably very risky activity, you should bear some of that cost. 

Smoking/drinking is a bit different as most of us will need medical care toward end of life, or approaching it. Something like 1 in 5 will be a care home resident I believe. So dying early due to smoking/drinking could actually save the state money in the long run, especially when the extra duty that heavy smokers/drinkers will have paid over a lifetime is considered. 

Altior

Actually to bring it back to the topic of pensions, this can be seen in the annuity figures for smokers/non smokers. As actuarially smokers are expected to be drawing on a pension for less time than non smokers. So that will be replicated in the state pension liabilities. I've never been inclined to try and calculate it personally, but it's not as straight forward as smokers will inevitably cost the state/taxpayer more money overall than non smokers. 

Albermarle

Altior said:

Actually to bring it back to the topic of pensions, this can be seen in the annuity figures for smokers/non smokers. As actuarially smokers are expected to be drawing on a pension for less time than non smokers. So that will be replicated in the state pension liabilities. I've never been inclined to try and calculate it personally, but it's not as straight forward as smokers will inevitably cost the state/taxpayer more money overall than non smokers. 

In the past I have seen calculations that show smokers cost society less than non smokers, for exactly the reasons you have mentioned in both posts. However if you google it, you only get info about the direct costs, such as this from Gov.uk
Smoking costs the economy and wider society £21.8 billion a year. This includes an annual £18.3 billion loss to productivity, through smoking related lost earnings, unemployment, and early death, as well as costs to the NHS and social care of £3.1 billion.

eskbanker

Albermarle said:

Altior said:

Actually to bring it back to the topic of pensions, this can be seen in the annuity figures for smokers/non smokers. As actuarially smokers are expected to be drawing on a pension for less time than non smokers. So that will be replicated in the state pension liabilities. I've never been inclined to try and calculate it personally, but it's not as straight forward as smokers will inevitably cost the state/taxpayer more money overall than non smokers. 

In the past I have seen calculations that show smokers cost society less than non smokers, for exactly the reasons you have mentioned in both posts. However if you google it, you only get info about the direct costs, such as this from Gov.uk
Smoking costs the economy and wider society £21.8 billion a year. This includes an annual £18.3 billion loss to productivity, through smoking related lost earnings, unemployment, and early death, as well as costs to the NHS and social care of £3.1 billion.

On the flip side, tobacco duty revenues were £8.8 billion last year:

https://www.gov.uk/government/statistics/tobacco-bulletin/tobacco-statistics-commentary-april-2024

Altior

I'd have to see the calculations used. It's not clear to me why smoking would cause unemployment. SSP perhaps, PIP for sure. It does however bring employment. Then there's the duty received, sales VAT, corp tax on suppliers. There are so many factors and only some of them can only be estimated. For example smoking can help to prevent overeating/obesity, but that couldn't be confidently valued. Is the social care cited net of savings from people dying before they can't care for themselves.