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.

@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.

Quelle surprise

Yes, I think I opted out and subsequently back in.

If you look at the history of state pensions, it was created as a contract between govt and worker specifically to provide a pension. That is why it is a separate amount and not just part of paye.
Too many people see it as something old people should be grateful for, when in reality they have paid in to it for their whole working lives.

The benefits system does not operate like a piggy bank so you get out what you put in. We contribute to a pot to help people who need it because that’s how we choose to run our society (compare eg with USA where there is far less contribution by all to the benefit of the few). There will always be many who are net contributors (put in more than they take out) - quite rightly so as the burden should fall in those with the broadest shoulders. There are many who don’t need the state Pension and many who need more than they currently get.

@vancleefarpels Agreed. As a net contributor, that doesn't worry me at all. It is how it should be.

However the state pension was created as a separate contract to provide a pension. If the govt no longer wish to enter in to that contract, then they need to say so and change the whole structure of NI and paye for those entering the system now.

These things take decades to change to allow people to plan. Look at the issues faced by some women when the female state pension age was changed too quickly.

If you think about how much you put in over 35yrs for the state pension and what you get back out us a pretty poor return to be honest. Shockingly bad.

I get £663 per calendar month state pension and £113 a month work pension. A grand total of £776 a month. If my husband dies before me, likely because he's older, I won't be able to manage. He was self employed so no private pension for me to inherit as we couldn't afford it. It appears that many people think pensioners are well off. We paid our NI in full all our working lives and every day I worry about money.

@Dreamstate

If you think about how much you put in over 35yrs for the state pension and what you get back out us a pretty poor return to be honest. Shockingly bad.

It's a good return for low earners though. Low earners put very little in (none if their stamp is being paid for them).

You also have to remember it isn't just what you put in, there is also what the employer puts in for you. Of course some big employers have cottoned on to that and they know they can save money by hiring part timers or zero contract people and keep them under £170 a week and they won't be paying the employers part.

To balance that NI isn't just for a pension.

Complicated isn't it.

The system now is inefficient as some do not need the state pension

So who decides who “needs” the pension they’ve been making contributions to, in some cases, for 50 years? The vote against any party putting this in their manifesto would be the biggest landslide ever. .

No as it is many who never paid in get paid or get top ups
Its not even that much either
What should happen is the money paid in should go in a pot towards it and mot be touched for other spending

@Dreamstate

If you think about how much you put in over 35yrs for the state pension and what you get back out us a pretty poor return to be honest. Shockingly bad.

That really depends on how much NIC you've paid. Plenty of people pay little or nothing but still accumulate "credits" and get full state pension.

For a start, two part time jobs instead of a full time job and you pay a shed load less (if any) NIC than someone earning the same on a single job, but still get "credits".

NIC needs scrapping - it's a historic anomaly that has no place in the modern world.

@ancientgran

You also have to remember it isn't just what you put in, there is also what the employer puts in for you. Of course some big employers have cottoned on to that and they know they can save money by hiring part timers or zero contract people and keep them under £170 a week and they won't be paying the employers part.

To balance that NI isn't just for a pension.

Complicated isn't it.

Likewise many people deliberately choose to work 2 or more part time jobs to avoid paying NIC, or refuse to work more hours so they don't breach the threshold for paying it.

And you think we didn't have that in the 70s? The 70s house prices did soar, they will seem low to you but have a look at what people were earning and what a 15% interest rate on your mortgage looked like. We also had 35% income tax rate as previously mentioned.

Not this again 🙄

We didn't have free nursery places either so it was really hard to work and actually generate an income if you had young children.

Who gets free nursery places?

Are things the same? No. Is everything better? No. Is everything harder? No.

Buying a house is harder

@AnotherSillawithanS

I think the government could look after its elderly if it didn't have to look after the young so much.

And the baby boomers look aghast when they are called the selfish generation.

Not this again

Yes, this again. Because it’s spot on. A house isn’t cheap, however low its asking price, if the money you borrow is at 15% interest. It was like buying a house on a credit card now. And if you’re paying 35% tax and NI at 9% on your earnings. It may be inconvenient for you but that was the reality.

It's harder to buy a house today eg save the deposit then it was in the past. The gap in affordability is much greater. This doesn't mean it wasn't hard in the past

All the data says it's harder but @Blossomtoes you're welcome to post stats that show I'm wrong.

@Blossomtoes

Not this again

Yes, this again. Because it’s spot on. A house isn’t cheap, however low its asking price, if the money you borrow is at 15% interest. It was like buying a house on a credit card now. And if you’re paying 35% tax and NI at 9% on your earnings. It may be inconvenient for you but that was the reality.

You seem to forget that with inflation running between 20 and 26% at n the 1970s that the real value of your mortgage debt was being inflated away 20 to 26% per year.

Also although you mention 15% interest rates you fail to mention MIRAS where the interest on your mortgage was tax deductible from your income (before tax).

Lastly the average house in March 2021 cost more than 65 times the average UK home in January 1970, but average weekly wages were only 35.8 times higher.

@monfuseds

All the data says it's harder but *@Blossomtoes* you're welcome to post stats that show I'm wrong.

I didn’t say you’re wrong. I am saying don’t belittle people who say it wasn’t easy in the past. It’s never been easy to buy a house. That’s why people used to buy doer uppers, do all the work themselves and live with their relatives’ cast off furniture for years.

@monfuseds

Many is not all. Talking of many, strangely enough many older people want their children and grandchildren to have affordable housing.

And yet the Tories are still in power 🤔

Look at how much house prices rose during the labour years, 97 to 2010 and compare that to the increase in the following 10 years. We live in Lancashire and our house more than doubled in value in the Labour years. It has increase a fair bit in the last couple of years, but only reached its 2008 value by 2018.

You seem to forget that with inflation running between 20 and 26% at n the 1970s that the real value of your mortgage debt was being inflated away 20 to 26% per year.

Ridiculous exaggeration - the 26% was a single peak and those levels were only for a couple of years.

I didn’t say you’re wrong.

You literally attempted to correct my post where I said it was harder.

I am saying don’t belittle people who say it wasn’t easy in the past.

Who did that? I certainly didn't! 😆

That’s why people used to buy doer uppers, do all the work themselves and live with their relatives’ cast off furniture for years.

You may need to sit down for this but people do this nowadays too. I know mind blowing!!

Also although you mention 15% interest rates you fail to mention MIRAS where the interest on your mortgage was tax deductible from your income (before tax).

Lastly the average house in March 2021 cost more than 65 times the average UK home in January 1970, but average weekly wages were only 35.8 times higher.

You’re conflating different time periods. MIRAS wasn’t introduced until 1983 so very few people benefited from it and high inflation rates - which were of little benefit to anyone when the cost of everything you bought was shooting up like a rocket. What with that and an effective tax rate of 44%, saving a deposit was hard, not least because high inflation eroded it as fast as you saved it.

You literally attempted to correct my post where I said it was harder

I literally didn’t. I literally said it’s never been easy.