Pension Credit - is it fair?

Brie

SacredStephan said:

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

In my experience it's due to pride - they didn't need benefits to get through their working life so why would they claim them now?  The same pride that they have at not asking their children for help despite being penniless after having spent so much time and money on bringing up those children.  I always tell them it's payback time.  

As for the OP - don't forget that some people don't accrue NI credits for various reasons.  Often this has to do with being supported by family members.  So a woman who is married to a man with a good income but gets widowed and doesn't have the means to buy credits.  An individual who has mental health issues that means they don't engage with the bureaucracy.  In both those situations they'll find they have a less than adequate SP and pension credits are necessary.  

Sarahspangles

People who had intermittent employment and low pension provision probably haven’t had an easy life. Many will be in insecure rented housing and their choices will narrow further if housing benefit doesn’t cover all their rent. If they inherit something their benefit is cut until it runs low.

Women (mainly) who own a home after divorce or widowhood are particularly disadvantaged because the running costs are difficult to meet and they can’t retain capital for upkeep. I cringe every time I see a woman ‘get’ the home in a divorce because the children aren’t yet independent, while the husband ‘keeps’ the pension. 

swindiff

Life isn't fair, the alternative is letting pensioners with less than full state pension provision starve or freeze to death.  You could argue is it fair because I have worked hard all my life I have to pay more tax than someone who hasn't.  That's just the way it is in a "civilised" society.

Linton

I find it difficult to see why it isnt fair. If you think people on pension credit enjoy a better life then you, you are at liberty to give up on work and pensions and claim it yourself in due course.

FIREDreamer

Linton said:

I find it difficult to see why it isnt fair. If you think people on pension credit enjoy a better life then you, you are at liberty to give up on work and pensions and claim it yourself in due course.

Ignoring fairness or otherwise, you probably need a pension fund if about £100k to be better off than someone on pension credit given that the freebies it comes with are worth about £4,000 per annum - possibly more for a renter.

If you can’t save £100,000 you may as well not save at all. Seems a perverse situation.

Exodi

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?

Sorry, but I saw this same vacuous stereotype being thrown around during the many WFA discussions and I can't sit back and watch again.

Having a NI record does not automatically mean someone has worked their whole life. It's entirely possible to have a full NI record living a life on benefits. It's entirely possible to have a full NI record being a stay at home parent to several children.

If you don't think this is fair, it's no less fair than someone paying five figures in NI a year being entitled to the same state pension as someone who has made the minimum contributions.

Plus it's hardly as if employees are doing anything in particular to build NI credits - it's not even optional, it's just a side effect of being employed.

We live in a compassionate country where those with more help those with less.

MetaPhysical

It's also not "fair" that I have paid £5000 a year in NI contributions for in excess of 20 years and yet I am entitled to the same SP as someone who contributed a fraction of that.  That's just the way it is with contributory systems like NI and I accept that.  However, what would most definitely be unfair is they then means tested my entitlement to state pension when the time comes for me to claim mine after having paid vast amounts of NI contributions and tax.

Universidad

eskbanker said:

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.

Wait until folks learn what sordid activities led to me recieving child benefit!

Altior

Exodi said:

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?

Sorry, but I saw this same vacuous stereotype being thrown around during the many WFA discussions and I can't sit back and watch again.

Having a NI record does not automatically mean someone has worked their whole life. It's entirely possible to have a full NI record living a life on benefits. It's entirely possible to have a full NI record being a stay at home parent to several children.

If you don't think this is fair, it's no less fair than someone paying five figures in NI a year being entitled to the same state pension as someone who has made the minimum contributions.

Plus it's hardly as if employees are doing anything in particular to build NI credits - it's not even optional, it's just a side effect of being employed.

We live in a compassionate country where those with more help those with less.

Not everyone wants a system where people who work hard (and therefore have more) give more than people who avoid working their whole life. Not only give more, but get more, for example via the gateway PC benefit. 

Of course any system has people in scenarios where they fall through cracks, and other people who see it as their mission in life to cheat it. 

Do you feel for example that an individual who has never formally worked, but been collecting benefits for their adult life for not formally working should get the PC bundle? And someone who has been on effective minimum wage that whole time, working ft in a menial job and accrued a minor private pension entitlement as a result should not? 

Exodi

Altior said:

Do you feel for example that an individual who has never formally worked, but been collecting benefits for their adult life for not formally working should get the PC bundle? And someone who has been on effective minimum wage that whole time, working ft in a menial job and accrued a minor private pension entitlement as a result should not? 

I get what you're trying to do, but someone that has been collecting benefits for their adult life could have been born with, or developed, a debilitating disability, been involved in a serious accident, etc. It's too easy to just frame a person on benefits as someone who can work but deliberately chooses not to because they're too lazy. But to answer your general question, I'm not sure if it's a serious suggestion (what's the alternative - let them starve to death?) and more generally I don't think you should seek to punish people on benefits (but of course there can be questions on the eligibility or perceived generosity of benefits).

I'm not too clear on your objective with your latter point, I know you're trying to come up with the most extreme example of someone with the smallest possible private pension, but I'd still imagine they'd be better off after a lifetime making employer matched auto-enrolment contributions at NMW compared to the value of the passported benefits gained from being in receipt of pension credit.

I certainly don't envy people in receipt of pension credit.