State Pension

[JollyPollysjolly]

my Husband is sure that by the time we reach state pension age (me 45, him 49) that it will no longer exist - or maybe when we reach 100 ha! Anyone with any knowledge that can add to this idea so I can argue back?

The "motivation" is that taxes are compulsory, there isn't a choice not to pay them, assuming you re in work.

When the current generation of pensioners were working they were supporting far fewer pensioners and at a far lower level of pension. Those pensioners also lived shorter lives so there was less time to fund. 67 year olds now could live another 25 years.

Free childcare hours were less needed as two income houses were less common or necessary and fewer jobs required degrees so you’re comparing apples and oranges there.

I think it will, and should, be means tested. Some people are very lucky to be awarded gold plated, final salary pensions and generous contributions from their employers. Others have had to muddle along and save a pot for themselves with little or no help from their employers. Anyone who can retire early can’t really stamp their feet and demand that they need a state pension on top. In the same way that our children can’t claim any supplementary help on their student loans, that we can’t claim child benefit, bursaries on school fees… means testing should be a very valid argument for State help on pensions too.

Final salary pensions aren't 'awarded' they're paid in to. I paid between 6 to 8% of my salary and extra into AVCs once I paid my kids through university.

I meant what's the motivation to pay into a private pension if others that don't do this just get given pension credit to bolster their pension and the ones who paid in privately pay tax so don't end up much better off than the ones who never paid private pension get pension credit and don't pay tax on it?

It may not exist in the universal benefit that we have currently. As a employer pensions are now mandatory it may move to a means tested one.

Politics of aging populations are shifting hugely, will be very interesting to see how that plays out. Baby boomers appear to be the last gen to be moving to the right as they age.

Yes they are. Most people pay that percentage into a pension but do not receive a final salary pension. It was a benefit that was awarded to a very small segment of the population.

I think the discussions around assisted suicide are connected to our aging population. People are living too long and needing too much care. I would expect that by the time I am elderly (if that happens), I’ll be given a quota of insect per day and then expected to shuffle off at a government appointed time.

”It was a benefit that was awarded to a very small segment of the population.”

Not really small. Huge numbers of state employees had Final Salary pensions - even many who haven’t yet retired still have portions that are. LGPS, TPS, NHS…

I disagree about 2 income houses not being common. I'm a boomer and I worked full time so did my DH and all my female friends worked full time too. We just took out a year for each DC we had. In my Mum's generation most women stayed home with young children. My Mum helped me with childcare for my DC and they went to a childminder some days when babies and to nursery when 3. There were no free childcare hours on offer. I think it's a good thing DC get them now so all DC get a similar start before school and not everyone has parents willing to help with childcare.

But they're not available to staff in many if not all of those roles now. So yes a limited number of people were awarded them.

@JollyPollysjolly no one knows BUT if you are risk adverse then assume SP will be reduced/means tested or age increased significantly so pay extra into private pensions.

I assume your DH is risk adverse and you are more relaxed?

Agree with this, all the women in my family have always worked for generations, even my great grandmother worked as a seamstress. Working class women have always worked.

This. 👍

The thing is though that many private pensions aren’t worth very much. I earn a decent salary, pay in more than the minimum contributions and my employer pays in more then their minimum contributions, and my pension is forecast to be about £10k a year. That’s a good pension when it’s added to the state pension, but take away the state pension and I will have worked hard most of my life to gain qualifications and get a higher paid job and promotions, paid in more then I needed to, to basically be left with the state pension amount. Those with private pensions worth a bit less would get theirs topped up to state pension level and therefore wouldn’t gain anything extra either. What’s the point of working hard and paying in extra if that will be the situation? I may as well take the extra money now and spend it.

And I'll add that many civil service jobs are paid less because they had good pensions. The same work in the private sector attracts a higher salary.

Other countries state pensions are much more generous than our state pension is, and they get to retire earlier as well.

But I do think that the state pension should be means tested, but on a sliding scale and salary average. We need better rewards in place for those that DO save towards a private pension and will never claim state pension.

Women also could retire and claim SP 7 years earlier than now, men 2 years earlier.

Has the SP really increased significantly in real terms over the last 40 or 50 years? Triple lock is just a catch up after the link between earnings and SP was removed in the 80s.

Numbers claiming? now that really has risen but so has the UK's wealth - how do other countries manage? & with lower pension ages.

Bottom line is that people will not vote to scrap the SP and the wealthy wont accept means testing either.

When state pensions were introduced, the pension age was about 3 years less than average life expectancy.

We cannot afford for people to work for c40 years then be funded by the state to continue to live comfortably without working for another 40 years. However life expectancy is hugely variable by region and socioeconomic group. I think we will move to an employment and retirement model that is more flexible rather than a set cutoff age - employers will need to be obliged and required to create relatively "light" roles that people who spent their 20s-50s in physically demanding roles can step into in their 60s/70s/80s and can continue to be economically productive while they have capacity. Rather than a blanket retirement age there will be a physical and mental health checklist carried out every 3 years and when your capacity is such that you can no longer perform any kind of productive work you get signed off to retire with an expectation that you won't last more than a few years. Perhaps also an official "semi retirement" where if medical advice is to lower your working hours you can draw 50% of the state pension and work 16-20 hours per week.

I don't think those under 40 today will experience what my parents are enjoying - now in their 15th year of healthy and active retirement where they definitely had the capacity to continue earning during that time.

I don't exactly relish this prospect but it's not viable for the economy to support such high numbers being economically inactive.

The biggest issue with such a scheme would be that it could only apply to the poor - as wealthier people have private pensions and decades to build up other income-generating non-pension investments, which may be much larger than the state pension. These oncome streams would still.allow the wealthier to retire from age 60 or even 55. You could theoretically balance this by having an additional extra income tax on any pension or unearned income drawn before the individual qualifies for a state pension but I think that would be unenforceable. Something would be needed to enforce the same concepts for the higher socioeconomic groups though - that ongoing income being received for decades is still ultimately being generated by an overburdened shrinking population of economically active adults and there are fundamentally going to be limits on how much wealth they can generate to service the obligations of the incomes that the private pension providers are committed to.

@Babyroobs those people on high SERPS pensions did actually pay much more into the system in fairness. I'm massively pissed off as didn't opt out of SERPS either reducing my NI contribution or having that money diverted into another scheme but all I will get back from it is to reduce the need for 35 years for a full pension. I only need 30 years total (or possibly less) as a result of how they calculated those who had made SERPS contributions but won't get them. When they changed the system those with SERPS contributions should have been given the opportunity to move that money into another scheme and kept everyone on 35 years contribution for a full record.

’Fewer jobs needed degrees’

I was constantly told l was over qualified with a degree in the 80’s. It was really hard to find jobs as no one wanted to pay graduate salaries. A degree was looked down on. So yeah, fewer jobs needed degrees.

Bur having a degree made it harder to find a job.

Yes agreed. Have just been a bit shocked at a few I've come across recently getting £300 + a week. Not sure how common it is for people to get that amount ? I think there's this line of thinking that all pensioners are on a pittance of state pension but there's a lot that aren't.
As others have said I think it's the ones who get a very small private pension that rules them out of any other help that come off worst and people will think what is the point.
I also think that rather than attacking state pension they could look at means testing universal benefits like the winter fuel payment, which could save quite a bit.

I agree with this, and part of me thinks I may as well stop or reduce my voluntary private pension contributions and put that into savings instead because I will once again fall into a gap, earning too much to qualify for a state pension but earning too little for a decent private pension. At least that way the state will have to take care of me for once.

I hope at least if the SP is means tested, it's only the very well off and the rich who miss out, not those getting a small private pension.

You really need to understand a lot more about the reality for current working age parents.

Free childcare hours doesn't really mean free childcare. The government funded part is such a pittance childcare providers go bust or have to increase fees elsewhere to cover the shortfall. Fees per child are easily in excess of £1k per month.

Mortgage rates may recently have been lower but the proportional cost of houses to wages has massively inflated over the past 20-30 years. Adding in mortgage rates rises in becomes disastrous.

University education is now out of reach for those without the ability to take on huge debts. No more living grants for lower income families.

New barristers barely make minimum wage.

Junior doctors have seen huge wage deflation, and coupled with high debt many are moving abroad.

I don't think many boomers understand how disastrous this last 12 years have been for younger generations.

I don't think many boomers understand how disastrous this last 12 years have been for younger generations

Used on what?