To think the govt should just scrap state pension

[DexyMidnight]

... For new entrants.

Everyone born after say, 2006, should pay less NICs and be mandatorily enrolled in an Australian style pension where you must pay 9.5% of your pre-tax salary into a pension fund. Even part-time, term-time, ad hoc workers.

I worry often about whether the state pension will exist when we are older. Will it be means tested? Can it go on with an ageing population?

A solution along the lines of the above would let the younger generation know where they stood.

@supergirlthesecond tax is taken when it is paid out; as state pension is below allowance threshold it is not taxed, so if you have a private pension you pay tax on it minus any remaining personal allowances
if you get some other benefits some are not taxed ( like ones for disability) some are

endoftheline that happened to me as well. I was bitter about it for a long time as I'd paid the highest premium to then find out I'd a genetic illness (which I knew nothing about) so they refused to pay out citing I'd had it my entire life and not declared it.

I know others in my department stopped paying when they saw what happened to me.

My extra pension contributions were a waste of time as well as they were paid into some dodgy Icelandic scheme ten years ago.

Seriously wish I hadn't bothered with either. I basically threw away almost £200 a month!

How would it work for people who don't end up doing much/any paid work in their lives? eg. some disabled people or long term carers to family members/DC with SN

Well we can't stop new people joining and paying because we are paying now so pensioners can get the money.
There isn't a pot where the gov are getting the money from, current pension contributions are not going into a pot, they are going to pay for pensioners' allowances.
It is such a fragile system it makes me sick 😭😭😭

(Paid by my employer, not me, into the dodgy Icelandic scheme!!)

Fundamentally the issue is – as previous posters have pointed out – that we have an ageing population that is living longer. They are supported by the younger people who are still working.

And this remains true however pensions are organised.

It will not be solved by shifting to a personal model or a private model.

I find these discussions always have a tendency to delegitimise the state pension.

I don’t get pension until I am 66, was told initially 60 and then 65, this was really piss asking by the government, everyone should have their own pot as no one knows what the future holds. Your pot should be controlled by yoursełf and not some greedy pension company.

SoonerthanIthought - How could it possibly be fair to means test the state pension? Everybody, regardless of salary, pays National Insurance at some level. Are you suggesting that those who earn more, thus paying more NI, should be denied the state pension?

The trouble is that any pension system which relies solely on people earning and paying into a pension via wages runs the risk of disproportionately disadvantaging women who take time out of work to have children, care for dependents, work part time to support family etc. To say simply you have to plan to earn your pension, without addressing those systemic disadvantages leaves women in particular vulnerable to having very little in retirement. I don't have a problem with people knowing from the start that there is no retirement safety net, as long as we support people who can't self fund their pensions due to other social responsibilities. So things like access to childcare, a better care system for the vulnerable and elderly, more widespread flexible working, to.allow women to work and save for their retirement as needed.

I do think pensions/NI is something that needs to be taught. A lot of people, and I was one, don't understand how it works. E.g. There's not a special pot for every person where their NI gets paid into for them to then take out of it.

I won't get it, currently trying to get the dwp to sort out them screwing up my contributions on transfer from incapacity benefit to ESA. Three years so far and counting.

9.5% is a lot for most people who aren't on large salaries. I just don't think that's realistic with wages being at the level they currently are.

To get a private pension to pay out £8k pa for life, you'd need a pension pot of around 175 to 200k.
How are people going to get to that amount? there is also the problem with fees and annuity rates going up/down if we are all private.

The Govt has had no problem funding triple lock for today's pensioners and heating/bus and until recently TV licenses, this is totally unsustainable and only done to garner votes.

There is also no reason why pensioners should nt pay NI, if you are on JSA you do.

As a country we seem determined to go back to the 19th Century.

"SoonerthanIthought - How could it possibly be fair to means test the state pension? Everybody, regardless of salary, pays National Insurance at some level. Are you suggesting that those who earn more, thus paying more NI, should be denied the state pension?"

No milktraylime barrel (I loved that chocolate!), I don't agree with means testing, for a number of reasons. But my observation from mn and other places is that many do - see discussions on cb etc! So I suspect that politically there may be a point at which it won't be impossible for a government to introduce means testing of the state pension.

Of course that then has a knock on effect of whether it is worth saving - there will be a salary point at which you'll be no better off saving for a pension. (I think there already is, because of pension credit, but the tipping point will change.)

I don't think any government would be politically suicidal enough to actually do this. The backlash would be huge.

@Orangeballon you do realise that you don’t have to just give money to some “greedy pension company” with your eyes shut, right?

What exactly do you plan to do with this pension pot that you’re holding yourself?

Make your own investment decisions? Hold it as cash?

Cos you can do both of those things via a pension wrapper - with a greedy pension company - and get tax relief too

The Singapore system would be better - your NI contribs go into your private pension pot which you can top up

We tried that back in the 90s. I opted out and the money that went in to my pension at the time is now worth far less than it would have been if it’d left it in the state pension.

@TeacupDrama. Thanks!

@camomila in my proposed example (modelled on Australia) there is still state pension for anyone who has no or insufficient private pension so the disabled and long term unemployed and carers etc would qualify for that.

This is how National Insurance started out, a hypothecated tax on workers and employers. Pretty soon politicians started treating it as just another part of tax receipts for general spending, and changed the system. The same will happen if we start again. Something has to change, though, but expecting people to provide for their own pensions in an economy where regular, secure employment with good chances of career progress is only a dream, is completely unreasonable.

I think you should be able to opt out of the state pension. I would use my NI contribution to top up my private pension.

Don’t see why I should pay into the National system when there is a pretty high likelihood that it won’t exist when I retire

Tony Blair set up a pensions minister (Frank Field) to look into all this & told him to "think the unthinkable". Frank Field did that & a year later presented his report. Tony Blair then sacked him (removed him from the cabinet).

The pension system will never change.

The current state pension is more than I earn.

I retire in seven years. I'm looking forward to it.

@Screamanger. Your NI contributions effectively pay for people retiring now. Your state pension (when you receive it) will be paid by those then in work.

No Government of any persuasion will change or get rid if the state pension. Not only would it be political suicide it just cant be done financially.

Presumably you’d like to opt out of paying tax @Screamanger? That isn’t the way it works. All I get for my council tax is my bins emptying, the roads maintained and the protection of a police force. By your logic, why should I educate other people’s children or pay for social care - I don’t use those services.

@screamanger I guess that's more or less what I'm suggesting - if there's no guarantee you'll get it (and there's not) then I think you should be allowed to divert the portion of your NI that is (or at least in theory is!) allocated to pension provision towards your own pot.

Someone said upthread am I just suggesting doing away with the NHS in favour of reduced NIC. No, absolutely not. Purely private health insurance with no recourse to the HNS is a rich man's game. Totally different to saving for your own pension imo.