What will eventually happen with the State Pension?

[BrainInAJar]

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

@ArseInTheCoOpWindow

Women's State Pension age was lowered on 1940 because,on average, they were several years younger than their husbands and couldn't qualify for the married couples pension (as it was) until they also reached 65.
At a time when many fewer women were in paid work, this meant hardship for a lot of couples. So it was changed.

Population is shrinking, yes, causing issues financially as fewer people to fund pensions etc. However, we chose to have fewer children due to our own financial pressures - if we could have guaranteed good NHS care ( not needing to go private at times), NHS dentistry, an ok state pension at 60 and everything my parents had and we do not get until 67 or at all, and able to take work pension at 60 and so on may have had. Another child.

knowing the need to pay for so much my parents have never had to pay for or grandparents does affect choices - wonder if that reduces birth rate at all?

Anyone who gets more money annually from assets than they do from taxable income (over a certain, reasonably high limit of course - not going to go after a pensioner with a few stocks and shares).

The global elite may be mobile, but the houses and property they own can't leave the country.

“Far in excess” … “decent pension”? Really? This sounded optimistic to me so I put it into a pension calculator. Set my age as 21, retirement age 67 (so not 35 years) and earnings of £30k. 8% contributions.

The result was just over £8000. Another calculator was more conservative and gave me around £7500.

Compound interest is often referred to as miraculous and it is certainly very powerful, but even it has limits. No, the current workplace pension arrangements are very far from being a substitute for the state pension, let alone an improvement.

I doubt it will become means tested or abolished completely. No voter would accept that. But I do expect the age will continue to go up and the triple lock will stop.

With the current escalating obesity crisis it's highly likely that many won't even reach pensionable age

The issue is going to be health.

Yes lots of people are living long, long lives, but the percentage who are healthy is much smaller.

There are also enormous inequalities: a low paid or precariously employed manual worker is far less likely to be able to work far into their 60s and 70s than a middle class office worker.

Moving the goalposts on pension age may just be one way of shifting these people onto disability benefits instead.

Eventually, we may not have a state "old age pension" as such, but you can claim a benefit when you're too ill to work, whether that's at 50 or 80.

I imagine:

• state pension age will keep rising with the expectation people work longer.
• The value of the state pension will gradually "reduce" with inflation.
• It will essentially become a benefit for those who cannot afford to save for themselves or cannot keep working.
• The new "expectation" will be people provide for themselves through savings or work.
• maybe we'll see people with lots of equity in their house downsizing to help fund their retirement, if they're really struggling

We're already seeing these trends (e.g. with auto-enrollment) and they will just continue.

People who don't qualify for the full state pension now get pension credit top ups, housing benefit etc. So benefits supporting retirement isn't exactly a new model. However, with benefit freezes there will be more and more of a shortfall between what people need (e.g. to pay rent) and what people are paid by the state. Essentially the state safety net will be erroded.

A real kicker will be what happens to health care for older people when the NHS isn't fit for function, and private medical insurance is too expensive in old age...

A real kicker will be what happens to health care for older people when the NHS isn't fit for function, and private medical insurance is too expensive in old age...

There was a thread earlier this year where a poster advocated for the withdrawal of any health treatment from age 70. Whether that was just keyboard warrior bravado I've no idea but the irony was that poster was berating people for being stupid but apparently not realising that one day they'd be the 70 year old not being able to get treatment and being referred to in the terms they used for the elderly.

Thank you for explaining that. You’re an outlier though.

A real kicker will be what happens to health care for older people when the NHS isn't fit for function, and private medical insurance is too expensive in old age...

it’s already heading that way by stealth. i know 5 people who have gone private because the wait was too long.

A real kicker will be what happens to health care for older people when the NHS isn't fit for function, and private medical insurance is too expensive in old age...

It’s already happening. There are waiting lists for private elective surgery now because people are using their savings to pay for hip/knee replacement and cataract surgery.

knowing the need to pay for so much my parents have never had to pay for or grandparents does affect choices - wonder if that reduces birth rate at all?

of course it has an impact. Obviously it’s more acceptable to not have dc these days & many women don’t want them or want 1 because they like their job etc. But many families are stopping at 1 because of costs largely housing.

If you make it means tested then you completely disincentivise anyone to save for their retirement, only exacerbating the problem. I don't know what the answer is but if I've paid other people's pensions for 50 years via my taxes I bloody well want something back.

Should any govt decide to means test the SP then it's a change that will take YEARS to implement - not just because people will, reasonably enough say if I'm not going to get it why should I pay in? - but because it's a fundamental and major change to the basis on which the SP is based. And that's before any govt even starts looking at whether means testing is economically justified.

Not to mention it being electoral suicide, obvs,

And many older working age people are off sick waiting for treatment. In all the publicity about getting people back to work the government neglect to mention that part of the issue is waiting lists.

Yep, many of the “silver exodus” who left the workplace did so because of health reasons.

https://amp.theguardian.com/society/2022/aug/21/number-of-unemployed-over-50s-shoots-up-amid-silver-exodus-from-workplace

One thing is for sure taxes will not be going down and services are likely to be cut.

You’re describing a poorhouse.

And yes - we will end up back with that. We cannot afford to fund everything the state pays for. We are not a rich nation - we are a debt ridden nation that uses smoke and mirrors to balance the books while not producing at the level needed to sustain our desires. Eventually the piper must be paid.

For anyone with kids - start them (assuming you can) a pension now. They will benefit from the compounding and they’re going to need it.