Means testing State Pension

[CuriousMariette]

Do you think the time has come for this to be introduced? I don’t think the current system is sustainable as many people are living too long. I know it’s not fair and would be political suicide but Pensioner’s didn’t even suffer a 80% furlough during lockdowns. I say this from a place of having “paid in” as people say for 30 years plus already and would likely not receive a State Pension in this scenario.

I would means test it. Other countries do and pensions still take up much of the budget. The money will be needed for NHS, which I think will end up constituting the bulk of Govt expenditure in the longer term. In general EVERYTHING should be means tested.

@whatkatydid2013

I think what would be better is to rework national insurance/tax and slowly make NI lower/increase tax so that unearned income (whether belonging to pensioners or others) eventually attracts same tax as earned income.

I don't know what you mean here. National insurance isn't paid by state pensioners but the normal tax rate applies.

@DontBlameMe79

I would means test it. Other countries do and pensions still take up much of the budget. The money will be needed for NHS, which I think will end up constituting the bulk of Govt expenditure in the longer term. In general EVERYTHING should be means tested.

But then the people who pay in (net contributors) will vote for the lower tax / low public services parties. Why should they pay into a system that they get nothing from? I would expect to be paying a much lower level of income tax if I had to fund my own pension, healthcare etc. Means testing the few things that net contributors get would end up with a US style system where individuals pay privately for services and get what they can afford. That would mean lower earners also only getting what they could afford to pay for privately too.

@CityMumma78

No!!! Those that have contributed have as much right (if not more) to the pension pot! Those that don’t work still get a state pension. I keep seeing idiotic suggestions on MN where the working MC get penalised for owning their homes and working!! Madness.

Yep and these suggestions come from people who are already consuming more than they are paying for. They are already being heavily subsidised by others, although this is something they don't seem to grasp. A poster on minimum wage claimed that she was paying for others to be on furlough. This poster is a single parent and claims various tax credits, child benefit etc which offsets the small amount she contributes in IT and NI. As a higher earner, I have no issue with contributing to others but I think that those who are being heavily subsidised should be educated on how much they are already getting before they shout for more.

In a round about way, it already is means tested! My earnings are double that of my dh, and as a result my National Insurance contributions, on which my state pension is based, is also double his. Yet we will receive the same state pension. I have also paid into a private pension, so will not need to claim further benefits in retirement.

@Soontobe60

In a round about way, it already is means tested! My earnings are double that of my dh, and as a result my National Insurance contributions, on which my state pension is based, is also double his. Yet we will receive the same state pension. I have also paid into a private pension, so will not need to claim further benefits in retirement.

It's also already means tested in that those who have made private provision pay tax on their state pension. So, someone who has 12.5k a year private pension income, plus the state pension will be giving 20% of their state pension back in tax. Someone on the state pension plus benefits (pensioners are entitled to housing benefit, for example) won't be paying any tax.

Haven't read the whole thread but surely it IS means tested as state pension is taxable income??
If you think rich pensioners need to pay more then increase taxes.

Many things are already means tested. Welfare, the dole. I can’t see why pensions and the NHS should be different, especially when we have an unsustainable funding model for both (which everyone agrees is the case). I never hear any solutions for that offered, just “I’ve paid in and deserve to get paid out”. A very selfish approach really.

@ThreeFeetTall

Haven't read the whole thread but surely it IS means tested as state pension is taxable income?? If you think rich pensioners need to pay more then increase taxes.

I think you haven't understood what means-tested means!

@DontBlameMe79

Many things are already means tested. Welfare, the dole. I can’t see why pensions and the NHS should be different, especially when we have an unsustainable funding model for both (which everyone agrees is the case). I never hear any solutions for that offered, just “I’ve paid in and deserve to get paid out”. A very selfish approach really.

So what are you going to use to encourage the big earners to stay in the country?

And how are you going to stop the Tory voters raising the pension age again and again?
At the moment the middle earners the people who's votes count have a vested interest in the state pension.
Means test them out they won't give a shit. Lower tax rise the pension age yeah!

@ThreeFeetTall

Haven't read the whole thread but surely it IS means tested as state pension is taxable income?? If you think rich pensioners need to pay more then increase taxes.

Yes we could all go back to the 70s and pay 35% on basic rate income tax, wouldn't that be great. We will soon be back to 70s inflation and a whole new generation will find out what fun we had back then.

The big earners who are rich enough to leave the country don’t care about not getting the state pension - they won’t even notice. So no problem with stopping it for them.

Middle earners would pay a bit less tax because fewer people would need the pension if it was means tested. Overall they would be a bit worse off though as they would not get the pension, but that’s necessary to fix the funding problem. This is the Australian system I understand.

The entitlement and lack of economic reality on this thread is quite breathtaking.

No to this. I'm a relatively high earner but the state pension is an integral part of my pension planning and without it I would struggle to pay the bills in retirement. At this stage in my life I would not be able to save enough in a private pension to replace the income. I'm certainly not alone in this.

Private pensions are poor value for money when compared to the state pension as they are invested in private companies which exist primarily to pay out dividends to their shareholders. Far better idea for everyone to pay more tax and NI to invest properly in a state pension for all (and good quality healthcare and education provision for that matter)

If you introduce the principle of means testing to the state pension you can be sure that pretty soon access to it will be limited to only the poorest in society and then will be subsumed into universal credit. We must fight to preserve the principle of a basic state pension that we all earn and which cannot be taken away.

Middle earners don't give a shit about UC how well does that work for those who need it?
Same with disability payments.

Do the same to state pension and you'll be back to the days if your cold inside put a hat on.

@DontBlameMe79

Many things are already means tested. Welfare, the dole. I can’t see why pensions and the NHS should be different, especially when we have an unsustainable funding model for both (which everyone agrees is the case). I never hear any solutions for that offered, just “I’ve paid in and deserve to get paid out”. A very selfish approach really.

The state pension isn't a benefit, like the other things you mentioned. People pay for their future pension, it is delayed pay in effect. You can't remove a right that has been paid for without reimbursing the payments.

How would you feel if you paid into a Christmas savings fund and then someone decided you had enough money after all and didn't need the money you had set aside?

Whilst successive uk governments haven't saved our pension contributions they have to honour the commitment.

You could change the rules going forwards but not the historic rights. But I think it runs the risk of reducing pension savings from low snd middle earners.

It is not selfish to want to receive something you have paid for.

It is selfish to expect someone to give up what they have paid for in order to reduce your own taxes.

@BigYellowHat

No way. I’m not paying in for 30 plus years just so all the lazy cheapskates who can’t be bothered to work get my contributions. If I’ve paid in, I’m having it thanks very much. And before anyone accuses me of it, yes I’m a Tory voting Daily Mail reader.

You have not paid in. There is no state pension fund. You will be a welfare beneficiary when you get the state pension- just like the rest of us.

@SquidMonkey

You can be damn sure if you're buying a house alone you're still expected to pay 100% stamp duty. And the same VAT on all the goods you buy as well. You get a measly 25% Council Tax discount. Wow. That will make up for supporting a household financially and doing all childcare etc alone. Not!?

I really can't believe a poster has come on here pretending that the idea of assessing individually not by household is detrimental to women when it's so obviously the case that the opposite is true and this is one of the main causes of poverty for women and children who've been treated appallingly by men.

Well Margaret Thatcher attempted to address that with the poll tax and look where that got her. At the time I had an elderly couple as neighbours on one side, he was chronically ill and she had been his carer for years. On the otherside I had neighbours who both worked and had 3 adult working children still living at home. They paid the same rates (council tax) and I never understood why it was apparently so dreadful that each adult was supposed to pay their share. My sister was a lone parent living just round the corner with two young children, I honestly can't remember if she got a single person reduction back then.

We were two adults so we probably didn't gain or lose on the deal but those two households did demonstrate the unfairness.

The state pension isn't a benefit, like the other things you mentioned. People pay for their future pension, it is delayed pay in effect.

That's really not how it works. Today we are paying for those above us, when we are pensioners those working will be paying for us. Hence why with an ageing population the model isn't sustainable.

Do you think people who die before retirement get a refund?

No way.

I don’t begrudge the rich or very getting a whopping £9000 a year state pension. If they are entitled to it they’ve paid their taxes.

Or would you rather push the richest earners even more towards tax evasion?

@AuntyBumBum
Yes you're right it's not means testing but taxing people (the state collecting the money afterwards) is pretty similar to means testing which is the state keeping the money back from being paid in the first place?

We will soon be back to 70s inflation and a whole new generation will find out what fun we had back then.

You're ignoring that current generations have the fun of soaring housing costs & wage stagnation.

Nope. I’ve paid a lot of NI throughout my working life so far so why shouldn’t I get some of it back when my time comes?

@monfuseds

You have to have 35 years of national insurance contributions for full state pension, that is qualification enough.

Young people who are looking at a state pension age of 68 (despite unlikely to live longer) will end up paying far more than 35 years.

It's a minimum. I have 11 years the go and already have 40 year's worth of payments in. DH is in a very similar position. As is almost everyone I know.

It isn't just the current young generation that will have put in many more years than the minimum required.

Piss off. By the time I retire I will have worked for over 50 years. When I started work (aged 16) you weren't allowed to put into a pension until you were 25, by which time I was married with a mortgage and interest rates were 18%. I have fucking earned my pension and despite me now having a private one it will be nowhere near enough to live on. Also I used to work for the NHS. A few years ago I got a letter saying basically 'we don't want you to have a pension with us anymore, here's your money' - no asking me, just a cheque. That was weird, but true.

@GoldenBlue

Yes, and I have been asked if I want to make extra contributions in the past.

Plus I remember in the early 00s that the stamp wouldn't be paid once my youngest dc was 6 so a good reason to work

I get frustrated about the people who don't seem to work at all and pay any NI in the first place unless they are disabled. Do they receive a pension