Tories and Labour mooting possible means testing of State Pension

[Turmerictolly]

www.theguardian.com/politics/2025/jan/17/kemi-badenoch-pensions-triple-lock-means-test-alarm-tories

I would be so gutted if this happened but there's noise from both parties about this recently. I think it might be inevitable. What will happen to those of us nearing 60 who have made plans that include the full state pension we've paid contributions for?

NI is just another tax. It is in no way hypothecated. NI and income tax should be merged so more people understand this. And state pensions are a benefit and can be removed by a government if they wish. There is nothing stopping them.

There probably is something stopping them at the moment. Certainly for people within a short period from retirement. Given the way that people have been informed about state pension entitlement and the current wording on the HMRC pages for individuals a legal challenge on the basis of legitimate expectations would be quite strong.

If Reform/Tories succeed in getting the UK out of the ECHR (and repeal the UK legislation currently providing protection for human rights) it would be easier to remove people's pensions.

I don't view the state pension as a benefit because I have paid tax and NI to the required criteria to receive it. As stated in this thread, middle earners are getting screwed, it should never be the case that someone gets more in benefits than working.

Take the state pension away and what's the point, even less incentive to work and save. Some pensioners on pension credit who haven't worked are getting more than someone who has. Spend and enjoy your money and the state will take care of you.

I assume this also means that anyone with a public sector pension will also not get a state pension - teachers, nurses, police etc? Or will they be exempt?

Deleted because I misread your post - sorry!

Right so we could potentially end up with public sector workers on their very generous pensions paid by the tax payer also receiving their state pension whilst those of us who have worked hard and saved etc losing our state pensions. Time to tell DC to work for public sector!

I still don't agree it's a benefit. It's only in recent years that people have started calling it this and frankly I think it's said to convince society that 'everyone' receives benefits because there used to be stigma attached to benefit claimants. Now everyone is entitled to benefits, it's perfectly normal and people should be getting more and more despite never or hardly paying in.

So basically only those who haven't bothered saving would get a state pension, where would the incentive be to make own provisions?

Means testing state pension could work if it was compulsory for employees, employers and the self-employed to pay into a pension of a minimum %, no exceptions, which you cannot access until state pension age. Then a fair tapering system (based upon age if it is introduced for the current workforce) Essentially there would be no choice(!).

But if someone can still access their pension in their 50s, and others can't or choose not to pay into a pension, then some (probably many, especially renters) would probably be better off, or feel more vindicated, blowing most of it before state pension age on a jolly nice time and buying jewellery (i.e. keeping money out of bank accountds) to pawn when they are older for treats. If this can happen, then there is no incentive because those who 'play the system' will end up better off.

Believe what you like, the state pension legislation states that it is a benefit like any other.

Not read whole thread but there was something on this over the summer.
IIRC the Govt needs to give 10 years notice to make state pension changes.
which basically means any govt that tries to bring it in would be voted out before it could pass into law.
I do think triple lock needs a rethink.

Well yeah I get that. But just because they can doesn’t mean they should.

As PPs have pointed out, people who are still working or who have decent private pensions will pay tax on their SP so are still giving back.

It could be a spectacular own goal if people are disincentivised to work and save for their future if they are going to be penalised for doing so.

I think it’s important to remember no one is trying to do this.

Badenoch can say what she likes, we have another 4ish years of a Labour government and they haven’t proposed this as far as I’m aware.

Also the people saying the U.K. is doomed, I don’t agree, things aren’t great now but that’s not unique to the U.K. and I think we’ll bounce back eventually.

Current government (who I didn’t vote for) do have some different ideas than recent governments but they got elected so we’ll see what happens. I hope they make a success of it. (Not least because I think there’s a chance Starmer could fall and we end up with fruitloop Rayner in charge).

But it’s not “like any other” though.

People don’t pay into housing benefit/universal credit/disability allowance or whatever whilst they are working so that they can “claim” it back in the future. They get these benefits “for free”. Not so with the SP where people are forced to pay it but with the promise of a future return. So totally different.

NI IS the government making people pay in and not being able to access their money until a certain age.

It would be grossly unfair to make people pay into a pension and lock it away imo, if I go to work I'm happy to pay tax but not to be forced to pay into a pot that I can't access. This would simply not work as your pension amount would be controlled by some fund manager and depending on which funds, when it was invested, what was happening when you took your pension out it could be a disaster!

But nevermind as long as we take care of people who can't be bothered to work or will only work part time, continue to have kids they can't afford, spend all their money etc it's ok. If it's ok for people to take no responsibility for themselves then it's ok for me to decide what I want to do with my money, when I want to do it and how I spend it.

I think they need to increase the auto enrolment % for employee pensions as a starting point.

IFS report on penisons.
and yes currently 10 years notice is needed to makes changes to the state pension:

ifs.org.uk/publications/pensions-five-key-decisions-next-government

This is interesting on what National Insurance is for - it's from Parliament

https://commonslibrary.parliament.uk/research-briefings/sn04517/

The payment of NICs entitles payers who have met certain conditions to receive contributory benefits. The biggest of these benefits is the State Pension. The link between payments and entitlement to benefits is known as the ‘contributory principle’ and was envisaged by William Beveridge in his report on social security and allied services, written in 1942 and partly implemented in 1948. Beveridge had hoped that contributory benefits, alongside other policies, would leave a residual and diminishing role for means-tested benefits.

However, several subsequent developments have eroded the strength of the contributory principle. For example, the role of means-tested benefits has tended to expand, while working-age contributory benefits have remained at a flat rate not designed to meet full household costs. Pension-age provision has not followed this trend, as the value of the State Pension has significantly increased since the 1970s.

Unlike other taxes, most of the money raised through NICs does not go into the consolidated fund (the government’s bank account), but a separate pot of money, the National Insurance Fund (NIF). Money in the NIF is reserved exclusively for spending on social security benefits, such as the State Pension. A portion of money raised through NICs is allocated to the NHS before the rest is transferred to the NIF.

The NIF works as a pay-as-you-go fund. Therefore, receipts from contributions in one year are spent in the same year for contributory benefits. While there is a link between someone’s record of paying NICs and their entitlement to contributory benefits, there is no direct connection between the amount of NICs they pay into the NIF and the value of contributory benefits they are entitled to claim

Yes, I agree that this needs to happen as well. Short sighted for successive governments to step away from this. An increase at the same time employees NI was cut would have made sense, as would increasing it instead of employers NI at the last budget.

Oh come on now ….. every bloody post in WFA, housing or benefits rampantly states how the elderly are all in six figure pensions, living in mansions etc . This whole thread is about how the elderly don’t “deserve” pensions or to leave anything to their children and should have their pensions, inheritance and everything else taken away from them

What? I thought I must have misunderstood your earlier post, but maybe not

Even if there were a formal proposal to means test, which there isn't, there is nothing to suggest that people entitled to public sector occupational schemes would be assessed differently from others. Who said anything about means testing meaning public sector workers get it all but others don't? That's just ridiculous. And nice little suggestion that public sector workers don't work hard 🙄. I work in the private sector btw.

And you can claim all you like that the SP isn't a benefit, but it is. It is not a pension in the true sense. Governments are keen for people to think it's a pension because it distracts from how big a proportion of the benefits bill relates to the state pension.

But there are still eligibility criteria attached to those benefits. You don't get unemployment benefits simply by not having a job. The state pension is no different in that sense - it just so happens that eligibility is linked to your NI record.

But there are still eligibility criteria attached to those benefits. You don't get unemployment benefits simply by not having a job. The state pension is no different in that sense - it just so happens that eligibility is linked to your NI record

And it's that last bit that makes it different, the link to NI contributions.

Still doesn't make the state pension a pension not a benefit though!

Exactly which is why means testing the state pension would be a really dumb idea as it would act as an incentive not to save into a private pension.

The cost current state pension however is rapidly becoming unsustainable accounting for 45% of the income &NI tax paid by a worker on an average salary.

A far better solution imo is to increase the pension age by 2 or 3 months every year.

As a PP pointed out ultimately the only options to resolve this are:

1. Means test the SP
2. Increase the Retirement age
3. reduce the value of the SP

Although I think it will be the wrong decision I think that a future Government will choose the means test solution as it pisses off fewer voters (those that fail the means test) whereas the other two impact everyone.

@AKettleOfDifferentFish my point is this, and I appreciate I may be wrong, but if I have saved and paid into a private pension then that may be means tested and I potentially won't get the SP but those with an occupational pension technically don't have 'savings' in a private pension but a very good pension (much better than the majority of I guaranteed private pensions) that isn't taken into account for means testing so they get both?

I thought it was common knowledge that governments 'float' ideas to get a feel for how badly the public will take an idea.

This has only been floated by the leader of the opposition as far as I can see. I'm not sure that really counts as the government floating an idea to see what it can do.