The "half your age" rule

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82174500#Comment_82174500

As has been said many times, this forum is not representative of the large majority of the population.

For many however much they try and save up ( pension or otherwise) it is difficult for them to build up any significant assets. Just staying out of debt is a struggle for many. So the state pension will always be the bedrock of many ( most?) peoples retirement planning, even if they manage to build up some form of other retirement income.

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/82174737#Comment_82174737

The view may be taken that those with sufficient means already do not require SP and that money may be better re-directed to the increasing numbers of those that do not have sufficient means. If that is the view, then no forewarning is required. If it is the State who control SP then it becomes/is political, and as I have zero faith in the State then it is incumbent on me to plan accordingly.

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/82174759#Comment_82174759

I don't doubt that, but I do doubt the faith folk seem to put in it, or that it will, in itself, be sufficient. Of course, it may be that they have no other choice, but if they do, then perhaps consideration should be given to some means of supplementing the SP.

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/82174754#Comment_82174754

I admit the risk of it not materializing in a few years is minimal. Whether that applies 20 years or so down the line is another matter. I have no crystal ball. It also appears to me that in these interesting times, the only things that should be taken for granted are death and taxes.

Cobbler_tone

https://forums.moneysavingexpert.com/discussion/comment/82174685#Comment_82174685

I personally think areas such as means testing, or canning it altogether will need to be planned a long, long way out. Imagine paying NI all your life to be told you can't have anything out. Look at the reluctance to tackle the Triple Lock, which is miles away from not paying a state pension. Even means testing the WFA was set at £35k income. The age to receive it will probably keep getting pushed out but at 61 I'll be surprised if there is too much of an impact to your circumstances. You can never have enough though and hope it hasn't/doesn't impact your retirement decisions, unless you prefer to be working of course. A lot of people are not fortunate enough to not be reliant on the state pension after contributing to it all their working lives.

El_Torro

Erm, isn't the rule half your age plus 7?

Oh wait, I'm thinking of a rule that covers a different situation….

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/82175313#Comment_82175313

To some extent it depends if you view the SP as some sort if automatic entitlement or just another welfare benefit. Indeed, HMG views SP an a benefit - albeit a contributory one - and pension credit is means tested, so arguably wheels may already be in motion for means testing. In addition, even though there’s a specific pot of money for NI funds to flow into and out of ostensibly to fund SP, in reality it is not really a ring-fenced sum that is separate from the rest of the government’s money. That’s because when the NI fund runs low (after, say, years of deficits in a row), the Treasury steps in and injects money and any surpluses in the fund are used to pay off the increasing national debt.

As I said before, I think it is a little unwise given the UKs economic circumstances and the change in demographics to believe the status quo will be maintained. Politicians will for sure keep hoodwinking folk that everything is rosy in the garden, but one day the reality chickens will come home to roost.

Cobbler_tone

https://forums.moneysavingexpert.com/discussion/comment/82175495#Comment_82175495

The fact that the State Pension is technically a benefit doesn't mean it's "just another welfare benefit". It's based on a contributory contract between the citizen and the state. Pension Credit is means-tested because it's anti-poverty support; the State Pension is designed to be a universal retirement income.

I agree the status quo won't last forever, but there are many ways governments can control costs before resorting to means-testing: raising State Pension Age, altering triple-lock protection, freezing thresholds, or increasing taxation. Those options are politically difficult enough. Means-testing the State Pension would be among the most politically toxic reforms imaginable because it would undermine confidence in saving and in the value of decades of National Insurance contributions.

Veloflyer

If you believe any contract between the individual and the State will always be honoured, then I fear you may be disappointed. SP is only sacrosanct as long as HMG says it is, and if you trust HMG with your future, I can only wish you good luck with that.

Cobbler_tone

https://forums.moneysavingexpert.com/discussion/comment/82175523#Comment_82175523

Respectfully, you're arguing against a position I don't hold.

I don't think the State Pension is sacrosanct, nor have a referenced that. I just think "governments can change the rules" and "means-testing is likely" are two very different arguments.

Until I see evidence for the second, I'll continue planning for retirement on the basis of probabilities rather than dystopian fiction. 😄