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.

If that happened, that party would never get re-elected and the next lot in would reverse it. Never going to happen.

The government say quite clearly that your national insurance goes towards your state pension so any government who scraps it will have to repay any contributions. I'd happily have mine back to invest into a private pension provided it was guaranteed never to be taxed!

Singletomingle is that true? Can you show me? Genuinely interested x

I’ve never seen that @Singletomingle
I’ve only seen statements that you pay NI in order to qualify for State Pension. It’s all about qualification, not purchasing something specific. That is why the government can legally make changes to the amount of the pension, or the age when you can take it - the legislation does not promise you a specific payment, only a qualification for a payment.

The government website clearly states "you pay national insurance contributions to qualify for certain benefits and the state pension" there are also sections for topping up contributions to get full pension etc.

You're right about the qualify part but there are sections to show how much you have paid in and how much pension you qualify for. I don't see how they would be able to scrap it based on that?

Impossible to foresee any problems with this isn’t it?

Like how maybe those sections of the population locked out of the state pension might one day for a majority of the electorate and just want to abolish the state pensions even for people already receiving it, or at least run it down to totally inadequate levels.

Divide and Rule will always end up being used against you, even if you think you’re the one initially benefitting from the exclusion of a weaker segment of society.

@Singletomingle the government website is full of words like could and may.

On the sections where you find out what you have qualified for so far, it is called a ‘State Pension Forecast’. Forecast, not guarantee.

Topping up section won’t tell you that you’re guaranteed a certain amount, it will tell you how to buy additional years. It may tell you what the forecast of what that extra year is currently worth - but it doesn’t promise a specific amount.

Current amount on government website is £168.60. When you retire in, say, 20 years time - are you going to argue that you should only get £168.60, not what it has been increased to over 20 years? Of course you’re not! Because you would argue that your NI payments were qualifying you for full state pension, whatever that now is. You can’t have it both ways!

I remember starting work at 18 and the thought of ever needing a pension was totally alien. I first started paying for my occupational pension in my early 30s, when it still felt pretty remote but I was advised that the local government scheme was too good to miss.

The intervening years have flashed past and here I am collecting two public sector pensions, as well as the state one. This may sound smug but anything could have happened to me in those years - I could have had a life changing accident or illness which would have meant my state pension would have been the bulk of my income now.

Those awful things could happen to anyone. Beware of voting to reduce state provision, nobody knows when they might be reliant on it.

I'm not arguing at all about vague language or things liable to change that happens and it wouldnt surprise me if at some point a government tries to scrap the state pension. My arguement is that it is quite clear that national insurance contributions count towards recieving a state pension, if that is scrapped or made zero there will be a huge number of very angry people who at the very least will go to court and win reinstated pensions at the very least.

Why do you think they would win anything?
You say you’re not arguing about vague language - but these people that you think are going to win in court would be arguing precisely about language.

Why do you think people haven’t already challenged the rise from 65 to 67 and above? Because NI has never been presented as a contract for a specific purchase, only ever a qualification for a benefit, which benefit is determined by the government of the day.

Even the WASPI legal challenge focuses on the timing and notification, and what duty the government had in notification - not whether the government has the right to make changes.

Even the lay person I think is generally pretty clear that whatever NI they pay, the government can change the payment - otherwise we wouldn’t have so many people on here and elsewhere saying “there’ll be no state pension when I retire”.

Husband been retired over 30 years, myself 11 years, we both pay income tax, had modest jobs when employed, thankful for bus pass etc., although it looks as if the bill for TV licence will land on the mat next year.

I would expect any legal challenge to removing the state pension to win because there is a clear link between national insurance and recieving a state pension in some form. When and how much isnt as clear cut.

I am against means testing the state pension as it is then precisely the people that would be contributing most to other people's pensions who would then not get one themselves. When on earth do those people actually get something back for their contributions if not in old age?

I think the much bigger issue as a ticking time bomb is the lower home ownership in my generation and younger. Presumably all these people who never got on the housing ladder the taxpayer will also have to house as well as pay pensions to which will be a far larger cost than the cost of pensions.

@Singletomingle I’m sure the government has access to far better legal minds than either of ours! If you’re right, they’ll change State Pension to a fiver a week from age 80. Job done!

The government say quite clearly that your national insurance goes towards your state pension

No, that's not what it says - at least not in the sense that you are interpreting it.

What they're saying is that your NI contributions count towards your pension entitlement. For each year that you pay in, you're building up your entitlement, not an actual pension.

I’ve already had my retirement age moved by 7 years since I started to pay NI Contributions so I am sure there will be move changes to come.

more changes

chazsbrilliantattitude and anyone in your family over 70 is getting their pension courtesy of the money that I paid in NI all my working life. So next time you see your granny give her a hug from me. Tell her she's welcome. And many thanks to all you working people who are in turn contributing to my pension.

And by the way, I might not be paying NI any more, but I am still paying income tax, petrol tax, tax on spirits (hic) , VAT, council tax ...... Just a gentle reminder for those people who think pensioners don't actually contribute financially to the general economy.

Gah I don't know if people have read the OP - I'm wondering whether it wouldn't be a good idea to:

-Scrap the state pension for future! (not current) entrants to the workforce
-To tell people you are doing so
-To make them pay a set portion of their pre tax income into a private pension
-in exchange for lower NICs

Hasn’t that already happened though? Well without the overt scrapping of the state pension. You have to have a workplace pension now don’t you? There was a big campaign a couple of years back.

Auto enrolment is a massive step forward. Fact is, the state pension was never intended for such a large proportion of the population to live for so long post-retirement. I don’t think the govt will do away with the state pension but I suspect the qualifying age will rise to 70; that’ll probably be the ceiling. And I doubt the payments will increase much

No cornettoninja because you can opt out entirely and because there's been no reduction to NICs as a trade off and no clarity or guarantee about whether state pension will exist universally in future.

Quite different on a few fronts.

I think whatever happens the govt needs to make auto enrollment compulsory. And the limit needs to be increased. 5% or whatever it is now is woeful.

To get back to your original question, DexyMidnight, I think YANBU to suggest that the state pension in its current form is unsustainable and there needs to be radical reform.

It's a very difficult situation to address, because we can't expect taxpayers of the future to both fund their own pension and pay for current pensioners' state pensions through yet more taxation.

I think in future there should perhaps be a wealth tax, eg everyone with assets worth more than, say, £20m, pays a percentage per year in tax.

I thought the limit was 10% of post NIC earnings?