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.

@puffyisgood

I'd support it for ludicrously rich pensioners, but realistically there are probably only a few hundred thousand of these.

Where do you draw the line? The 'ridiculously rich' have probably contributed millions in tax and NI over the years. The pension should be a universal as it is at the moment. I would change the way NI contributions are calculated though. If you are self employed, you can set yourself up as a limited company. You can then pay yourself just enough to pay the minimum in NI, but not enough to pay income tax. You will pay just a few pence per week in NI. You will then get the full state pension. Any additional income you take will be in dividends which you do not pay NI on.

@Crabwoman

No for most of the reasons mentioned above.

Also, wouldn't it be a huge cost to implement?

Pendioners would have to submit accounts regularly which could be very stressful and whole new branch of the DWP and associated software would be needed surely?

Not sure of the figures but maybe (like winter fuel allowance) it's not worth the cost of administration and upheaval.

Pensioners, not pendioners 🙈

The 'ridiculously rich' have probably contributed millions in tax and NI over the years.

Unlikely, the majority of the ridiculously rich pay far less tax then they should.

My gran receives a little over 1400 a month in her pension and whenever she mentions that I experience a little fury each time (not for her obliviously).

The welfare state was experienced in its golden years by one generation. We taste only the dregs. I’m 30 and DH and I are ploughing as much money as we possibly can into savings for us to have a little nest egg for our retirement. Even though we both have private pensions they’re meagre in comparison to what we’ll need.

The pension system is broken. The nhs is failing. Welfare and housing are completely substandard. There’s no ‘welfare state’ left.

@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.

The net contributors have to get something back from the system they pay into, otherwise they'll stop paying in. The architects of the post war welfare state understood this.

That's why removing child benefit from high earners was wrong / calculated to start the dismantling of the system.

I thought pensioners still paid income tax if there income was over the tax free allowance anyway

Yes, they do.

@monfuseds

How is universal basic income supposed to be funded?

Income tax increase of course... another yay for the squashed middle!

@monfuseds

and what do you mean, that many people are living too long. how very dare they.

We do have an ageing population though because people are living longer but there are less babies. It's quite a shift in terms of population dynamics & we need to plan for it. Acknowledging this doesn't mean you think old people need to be culled.

Government should address that which makes it harder for people to have children, or we are going to be in a real crisis in a generation or so. Housing costs, benefit caps and cuts, energy increases all- all make it much harder to afford children.

@Toomuch2019

No. I remember some research from when I was back doing my masters which generally showed that socially once any type of benefit becomes means tested overall society support declines over time leading to further cuts for those who need and benefit from it the most. Can't quote where it was from but it stuck in my head for a long time

That makes sense to me.

I'm on the view once you start means testing it then you'd be taking middle income people out of the pension.

The same people who can afford private provision in both pension and health care. The same people who are most likely to vote.

Can you imagine the MPs voting not to give themselves a pension? Then in turn why would they want to increase the state pension.

It would be the end of the Welfare State, if the people paying most in get zero out.

@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.

I'm 60 and have worked all my life, have enough contributions already to retire, but have to work until 68, continuing to pay tax and NI, which won't benefit me with anymore pension. So your statement about poor young people working until they are 68 is bollocks cos its happening already!

as well as the hell no because I have paid into it (and my late husband paid in too and died before he got a penny), means testing and the associated admin is an expensive process. Pensionable age is already getting pushed back further and further as well. If you (or anybody) doesn't want their pension, they can not claim it or give it away to charity but keep your mitts off mine!

Income tax increase of course... another yay for the squashed middle!

It's just not viable to tax PAYE any further.

What would be saved by removing pension from the super rich would not be worth the cost of assessing for it, and it is likely that those at that level are also giving more back than they receive in state pension anyway!

Pensions, including the state pension, are subject to 20% income tax. Like everyone else, you get a c12.5 k allowance before you pay tax. So someone with a 50k a year private pension and a full state pension will be paying most, if not all, their state pension back in income tax anyway.

So your statement about poor young people working until they are 68 is bollocks cos its happening already!

Just because it's also true for older people doesn't mean it's bollocks though does it. Plenty of people on this thread mentioned 40 years or so of contributions.

@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 already pay tax on my pension, as state pension is equivalent to the personal allowance you are allowed to earn before tax, so any extra private pension is taxed, I have a total pension income of just about £200 a week, after tax, including state and private, I have just a fraction too much to claim any benefits which are means tested. I do not go away on holiday, although I did when my husband was alive as our 2 pensions together meant we were rolling in money but he died at 66 so did not profit from his 50 years of paying in to the system. I find it offensive to hear that younger people want to squeeze people like me even harder

@Wineisoverrated

My gran receives a little over 1400 a month in her pension and whenever she mentions that I experience a little fury each time (not for her obliviously).

The welfare state was experienced in its golden years by one generation. We taste only the dregs. I’m 30 and DH and I are ploughing as much money as we possibly can into savings for us to have a little nest egg for our retirement. Even though we both have private pensions they’re meagre in comparison to what we’ll need.

The pension system is broken. The nhs is failing. Welfare and housing are completely substandard. There’s no ‘welfare state’ left.

wow that's surely not one person's state pension? Surely she must have paid in superann and/or to a private pension?

Means tested in Australia and they’ve got a very effective system of private pension saving

Yeah, right.

As an example, the teachers' pension scheme has been downgraded twice, to give less. The private pension schemes all have a compulsory element of investment, so your income is not guaranteed.

When friend downsized because she couldn't afford to live in her house, she had her state pension cut.

It's shit.

The pension system is broken. The nhs is failing. Welfare and housing are completely substandard. There’s no ‘welfare state’ left.'
this is the issue

No. The people paying in the most would be taking out the least (or nothing). I wouldn't vote for that.

@CuriousMariette

Please do not forget that while it is paid tax free we still have to pay income tax on the excess if any

I'll have been working for 51 years by the time I get to state pension age. I have another 7 years to go to get my full stamp.

If you means test it, does that mean I'm going to get all of my stamps back? Why exactly should I pay NI towards a state pension if I can't claim it?

@Wineisoverrated

My gran receives a little over 1400 a month in her pension and whenever she mentions that I experience a little fury each time (not for her obliviously).

The welfare state was experienced in its golden years by one generation. We taste only the dregs. I’m 30 and DH and I are ploughing as much money as we possibly can into savings for us to have a little nest egg for our retirement. Even though we both have private pensions they’re meagre in comparison to what we’ll need.

The pension system is broken. The nhs is failing. Welfare and housing are completely substandard. There’s no ‘welfare state’ left.

Not from the state pension, she doesn't.

No - everybody pays in to get their pension - why on Earth should they be denied it. Too many women have already lost ££££'s because the changed the age of retirement at too short notice for people to plan.

Peoples circumstances change, you can be comfortably off for various reasons - including being frugal in your pre-pension years - are they to be penalised for that.Then you can find yourself much poorer if circumstances change in your life.

Means test pensions and expect other things to follow - pay for medical treatment, pay for education if you choose to have kids etc

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

Yeah. What should also be taken into account is the amount of free childcare provided by senior citizens to their working age children.
Which working age children are meanwhile mulling over getting their elderly parents pensions cut.

@Lockdownbear

If you do that you'd turn the country back 80 years and before you know it you'd be scraping the entire Welfare State, sickness benefits, NHS all of it would slowly but surely go.

This. And you’d get even more people moaning about how saving and being prudent means they subsidise people who spend all their money. It’s a shocking idea.