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Original poster

What will eventually happen with the State Pension?

345 replies

BrainInAJar · 01/02/2024 22:39

Hello,

I recently turned 40 and have been reviewing my finances.

A lot of stuff online factors in getting the State Pension. I'm trying to be on the safe side though and factor in that I might not get it, not the full thing anyway and maybe not until a much older age than earlier generations.

Just out of interest, what do you think will happen? Will any Government be "brave" enough to make sweeping changes? How much notice will we get? Who will be the first generation, if any, not to get a state pension?

Thanks

OP posts:
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6
Ginmonkeyagain · 02/02/2024 07:43

It might help if they stopped calling it a "pension". It's no more a pension scheme than my dining table is. It is a contributions based state benefit.

nappyvalley2024 · 02/02/2024 07:57

I don't think the government can retrospectively take away a pension the working people have been paying into. I have been paying NI for 15 years.

Before anyone says ni pays for today's pensioners blah blah, yes that is true but is done so on the promise that you pay in and you will get a state pension when it's your turn.

Spendonsend · 02/02/2024 08:07

Its quite a big issue. I have always faithfully paid into my pension, but the reality is it won't be enough to live off without the state pension too. There will be a lot of people like this. Anyone earning minimum to average wages, which is a massive chunk of the workforce is going to struggle to put enough by. I think a lot of private pensions were set to be a supplement.

I guess they will push the age up to 70 and stop the triple lock.

Interested in this thread?

Then you might like threads about this subject:

Retirement & pensions
PerfectYear321 · 02/02/2024 08:18

Hmmmmaybe · 01/02/2024 23:41

It’s the ethics of it

britain weirdly lacks a common ethical belief that you should only rely o the state in old age if you need to

i don’t understand why people don’t want to aspire to not have to use the welfare state if they can avoid it

it is the ultimate in benefits entitlement! (Again. To repeat - the taxes and.ni that have been paid in are highly highly unlikely to be enough to fund a state pension)

Is this actually true? Do we have any actuaries on here?

Does the government actually invest the NI contributions people or are they literally just paying for the pensions of the current retired people.

Anyway, ours is the least generous state pension in Europe. If it goes then we really are a failed state.

ClafoutisSurprise · 02/02/2024 08:18

I think whether taxpayers are making ringfenced contributions (and I don’t think anyone who is the least savvy about pensions believes this is the case) or whether they’re paying into the state and supporting the retirement of current pensioners - and other public spending - in the expectation future workers do the same for them is not that significant. The fact is, there is a tacit understanding that, if you can, you pay in now and when your turn comes you will be a beneficiary.

Tearing up that part of our current social contract will be significant.

It’s not as straightforward as saying that you either can’t save privately and get a state pension or you’re able to pay in amounts that make the state pension irrelevant. You have to pay in huge amounts to get anything like a meaningful pension so the loss or reduction of the state pension will be felt by all those who’ve made private provision other than the very wealthiest.

Beezknees · 02/02/2024 08:32

I don't think it will end up means tested but I think they will just continue to push back the age at which you can claim. I'm 34 and expect to be 70+ before I get it.

PerfectYear321 · 02/02/2024 08:35

NewKingontheBlock · 02/02/2024 00:05

so major reforms are needed to create a sustainable structure for people’s retirement to be funded

Then these reforms will probably have to start with 18 year olds now so the system changes for the future, not for older people who have planned their futures on there being a state pension, whether you like it or not everyone who has paid their contributions is entitled to a state pension.

I feel so sorry for this generation. We've fucked them over in so many ways....I suppose it's logical to take the state pension off them too!

bombastix · 02/02/2024 08:40

Well the clue is that the UK now makes a workplace pension structure mandatory. That's a very clear intent of "do not rely on the state". People should make their own arrangements because the Government can simply change the rules on pensions anytime. That's a bad space to be in. If you are working then it's time to think about contributing to a pension and take some control.

MrsDanversGlidesAgain · 02/02/2024 08:41

britain weirdly lacks a common ethical belief that you should only rely o the state in old age if you need to

Any backup for this 'common ethical belief' or do I have to 'educate myself'?

puncheur · 02/02/2024 08:44

I imagine it will eventually be merged with all other benefits and personal tax allowances to provide an extremely bare bones UBI, just enough to keep people off the streets.

TeaMistress · 02/02/2024 08:47

bombastix · 02/02/2024 08:40

Well the clue is that the UK now makes a workplace pension structure mandatory. That's a very clear intent of "do not rely on the state". People should make their own arrangements because the Government can simply change the rules on pensions anytime. That's a bad space to be in. If you are working then it's time to think about contributing to a pension and take some control.

Yes that would be an ideal position to be in if you are able to afford to pay in to a pension. Sadly a lot of people are in a position where they can't afford this

MigGirl · 02/02/2024 08:52

I think what people forget is the state pension was brought in to help old people fund there last few years of life when they could no longer work or where ill. Due to most people living longer and generally in better health a lot have been claiming it for 20+ years this isn't sustainable and was never what it was intended for either.

I mean take my family, all retired at 60/65 are now early 80's late 70's only.now really in there early 80's do I think my aunt and uncle couldn't work at all (in fact uncle probably still could). They have all volunteered (my dad and his wife still do) which is great but if they had to could at lest work part time. They also all have their own pensions and go on lots of holidays, while you could argue they are entitled to the state pension. Non of them actually need it to fund there living as had good work pension yet they have all been claiming it for 15+ years.

I think it probably does need to be moved to a latter date and also means tested.

Beezknees · 02/02/2024 08:54

bombastix · 02/02/2024 08:40

Well the clue is that the UK now makes a workplace pension structure mandatory. That's a very clear intent of "do not rely on the state". People should make their own arrangements because the Government can simply change the rules on pensions anytime. That's a bad space to be in. If you are working then it's time to think about contributing to a pension and take some control.

Unless you're a high earner though it's really not possible to save an amount towards a pension that will actually sustain you for 20+ years. With cost of living the way it is some can't afford to save at all.

FiveShelties · 02/02/2024 08:55

Hmmmmaybe · 01/02/2024 23:41

It’s the ethics of it

britain weirdly lacks a common ethical belief that you should only rely o the state in old age if you need to

i don’t understand why people don’t want to aspire to not have to use the welfare state if they can avoid it

it is the ultimate in benefits entitlement! (Again. To repeat - the taxes and.ni that have been paid in are highly highly unlikely to be enough to fund a state pension)

I think many people think they are entitled to a state pension because they were originally told that their contributions went to their own pension. I remember starting work and being told that the NIC went into a pot for my pension rather than just going into a pot for everyone to share.

The thought of managing on a state pension is tough but it is easier and usually cheaper to pay everyone the same and then claw back via taxes, for those who have a private pension.

I don't want to be part of a society where we have people working forever because there's no state pension - would rather someone gets it that does not need it than people don't get it and they really need it.

MigGirl · 02/02/2024 08:57

Also what a lot of people maybe aren't realising is that as the population shrinks (Yes birthday's are dropping all over the world). We will have a problem with more retired people then those actually working, there then won't be enough people paying into the pot to pay all the pensioners, so something will have to give.

Spendonsend · 02/02/2024 09:00

bombastix · 02/02/2024 08:40

Well the clue is that the UK now makes a workplace pension structure mandatory. That's a very clear intent of "do not rely on the state". People should make their own arrangements because the Government can simply change the rules on pensions anytime. That's a bad space to be in. If you are working then it's time to think about contributing to a pension and take some control.

I think the issue is not all work place pensions are equal. The mandatory 8% total contribution, on a minimum wage isnt going to be enough to live off.
Especially if, like a lot of minimum wage employees you have several part time roles, if you dont hit 10k you dont auto enrol

MigGirl · 02/02/2024 09:06

Unless you're a high earner though it's really not possible to save an amount towards a pension that will actually sustain you for 20+ years. With cost of living the way it is some can't afford to save at all.

I think that's why the younger generations are seriously screwed though. My elderly family are the baby boomer generation and while non of them where hugely high earns, probably just above average. They have finial salary penson, or good pension pots from good jobs. My FIL admitted last year that he gets a cost of living increase on his pension every year. It was over 10% last year due to cost of living, I'm sure that despite actually saving into pensions we will be poorer in old age than they are as the pensions aren't as good anymore.

I also feel for those younger then us who also had/have university tax/loans to pay as they will struggle even more.

BIossomtoes · 02/02/2024 09:09

sandberry · 02/02/2024 00:09

At the moment and for another 10-15 years our pension spending and healthcare spending will be massively under strain and then that strain will drop as the baby boom generation die off.

Fubdamentally we are at a predictable time of high spending and low income as a society (as are many other societies) and like parents who are encouraged to see high childcare costs as a blip in the lifetime cost of parenting and not rush into drastic action maybe to live frugally/borrow money etc we just need to hang in there.

Unfortunately we’re a bit like the parents who didn’t consider childcare costs until they had to go back to work which has left us in more of a crisis but still there is light on the horizon.

There is no point cutting out the state pension, by raising the age you hold off a few people while we wait for the natural rebalancing that is 10-20 years ahead.

This. It’s a short term problem which will naturally resolve itself as my generation dies. By the time those in their 40s reach pension age my very expensive generation will be gone. The current situation is a blip.

Spendonsend · 02/02/2024 09:16

Generation x is still pretty big.

I think there are more millenials than xs but less z and alpha.

So i am not sure it just dissappears as an issue.

fonfusedm · 02/02/2024 09:17

This. It’s a short term problem which will naturally resolve itself as my generation dies. By the time those in their 40s reach pension age my very expensive generation will be gone. The current situation is a blip.

Why is it short term, there aren’t loads more dc being born so why would the problem go away? Economically the impacts are been felt now & have been impacting younger people for some time so if it lasts until todays 40 yr olds are 80 that’s quite a long time.

igivein · 02/02/2024 09:18

eg the whole “I’ve paid in” - there is no fund that is paid into - it’s paid out of the states
current resources

This is a spurious argument @Hmmmmaybe . The state pension was definitely sold to me as you pay contributions for x amount of years and when you retire you get to draw your pension. If there's no pension at the end of it, what am I paying in for? Also, my current contributions are paying for current pensioners (I have no problem with this), so you're telling me I should fund other people's pensions but not get one myself when the time comes?
My workplace pension is Teachers Pension Scheme which is largely funded in the same way - so are you telling me that because my contributions aren't going into a specific pot with my name on it I shouldn't expect to draw that either?

rookiemere · 02/02/2024 09:21

There would be a huge outcry if they tried to get rid of it or did stringent means testing, plus it would be expensive to administer. Many people like me would stop saving into AVCs as what would be the point, so it may not also produce the financial savings expected.

I think what will happen is that the triple lock will go and pension will cease to rise with inflation. Those without any other means will claim additional benefits.

BIossomtoes · 02/02/2024 09:23

fonfusedm · 02/02/2024 09:17

This. It’s a short term problem which will naturally resolve itself as my generation dies. By the time those in their 40s reach pension age my very expensive generation will be gone. The current situation is a blip.

Why is it short term, there aren’t loads more dc being born so why would the problem go away? Economically the impacts are been felt now & have been impacting younger people for some time so if it lasts until todays 40 yr olds are 80 that’s quite a long time.

Because the boomer generation is much bigger than any following it. It won’t last 40 years. The youngest boomers are 60 this year. The vast majority of us boomers will be dead in 20 years time, well before anyone who’s 40 now reaches pension age.

Ap24 · 02/02/2024 09:23

PerfectYear321 · 02/02/2024 08:35

I feel so sorry for this generation. We've fucked them over in so many ways....I suppose it's logical to take the state pension off them too!

Show quote history

I agree. I just wonder how far you can push them before they snap. It doesn't seem worth contributing to a society that treats you so poorly.

myphoneisbroken · 02/02/2024 09:27

I don't see how they could get rid of it. The VAST majority of people need the state pension to have a reasonable standard of living in old age. I am very fortunate to earn a decent wage and have a defined benefit pension, but I will still need the state pension. The whole MN "build up a huge pension pot and retire at 57" thing only works for a tiny percentage of high earners. I don't know anyone like that IRL.