Will state pensions EVER be means tested ?

ceridwen

Now why (when I saw the title of this thread) did the phrase "Over my dead body" come straight to mind. I suspect that is an attitude I share with the vast majority of the Baby Boom Generation.

I am often astonished to hear those in a younger generation almost resignedly say "bet State pensions arent there for us". But I have never heard anyone in my generation say that - we are the "protest generation" and I have my doubts whether any Government would even try that one on us - as we would soon vote them out of power.

terryw

1 > Quote from EdInvestor above:
1 > Only the pension credit top-up is means-tested.

1 > The state pension is yours by right in accordance with how much you have contributed and is unaffected 1> by the amount of your other income. End Quote.

You are dead right here, but the state pension is not enough to live on (£85 a week or so) and then this is taxed if you have even a small amount of other income.

The big worry for the future (bearing in mind the increase in the numbers of OAPs) is that the very existence of Pension Credit is a great disincentive NOT to save for one's old age either in assets or a private pension. Pension Credit brings the actual cash per week up to £125 or so, and this is then a passport to other benefits including Housing Benefit.

Is it worthwhile saving to accrue extra money in old age for this to be taxed, and to become ineligible for state benefits? Many people think not - Pension Credit penalizes the thrifty. A far better idea is to give a state pension which is enough to live on to every OAP and do away with all the extras and means tested benefits.

Even now there are many thousands of older people who have saved and earned the right to a small personal pension, who would be just as well off if they could relinquish said pension and claim Pension Credit instead.

Unfortunately, this government just loves means-testing and the situation is likely to get worse rather than improving.

Brum_Man

EdInvestor wrote: »

The earnings link is to be restored in 2012.

Subject to fiscal strength

EdInvestor

terryw wrote: »

You are dead right here, but the state pension is not enough to live on (£85 a week or so) and then this is taxed if you have even a small amount of other income.

You are forgetting about S2P, the state second pension, which can easily double the basic. This only started in 1978, so the beneficiaries have only been claiming a full record for a short while.

But in coming years, most pensioners will get this (or a contracted out additional personal/company pension instead.)They will be much better off than today's pensioners.Pension credit should in due course be phased out for the vast majority.

As well as this, in a couple of years time the pension age allowance will be raised to around 10k, which means most pensioners won't pay tax. Increased numbers of working women with their own pensions will also mean the next generation is better off. It's not as dire as many younger people think.

terryw

EdInvestor wrote: »

You are forgetting about S2P, the state second pension, which can easily double the basic. This only started in 1978, so the beneficiaries have only been claiming a full record for a short while.

But in coming years, most pensioners will get this (or a contracted out additional personal/company pension instead.)They will be much better off than today's pensioners.Pension credit should in due course be phased out for the vast majority.

As well as this, in a couple of years time the pension age allowance will be raised to around 10k, which means most pensioners won't pay tax. Increased numbers of working women with their own pensions will also mean the next generation is better off. It's not as dire as many younger people think.

Very true comment Edinvestor. As an opinion, Pension Credit is giving completely the wrong idea to younger people......as I said it is a disincentive to even thinking about income in retirement. It is boring topic to a youngster but, as we know, the quicker you start doing something about it, the bigger the pension pot is likely to be .

Here's hoping we both have a long retirement.

Just_landed

Hi carrying on this thread, I take it from what is said the state pension is not means tested . Could anyone tell me what happens when you go and apply for pension credit and you do not have your 39 or 44 years contributions, does big brother assume you get the full state pension even though you get a reduced state pension when working out how much in tax credits to give you ?

EdInvestor

Just_landed wrote: »

Could anyone tell me what happens when you go and apply for pension credit and you do not have your 39 or 44 years contributions, does big brother assume you get the full state pension even though you get a reduced state pension when working out how much in tax credits to give you ?

Pension credit provides a minimum income of around 127 pounds a week to people who get pensions below that.So if (say) you got a reduced state pension (non means tested) of 80 pounds a week due to not having paid enough NI, then you would get 47 pounds a week of pension credit on top, which would be means tested.

There are no tax credits involved.

terryw

Just_landed wrote: »

Hi carrying on this thread, I take it from what is said the state pension is not means tested . Could anyone tell me what happens when you go and apply for pension credit and you do not have your 39 or 44 years contributions, does big brother assume you get the full state pension even though you get a reduced state pension when working out how much in tax credits to give you ?

For many people the 39 or 44 years has dropped to 30 years . Request a pension forecast for yourself.......you may receive the full OAP anyway.