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?

Good.
Pretty much all other benefits are either means tested and/or assessed on some other qualifying need.

But it comes down to the same stuff - if it's means tested, then it will have a cliff edge like other means tested stuff, so there will be people who get it who have little money, people who have lots of money and who don't need the extra AA and then people who are just over the threshold and who lose out.

Do they seem to have many difficulties with health/ disabilities ? Myself and my colleagues are frequently amazed at who gets awarded it and we do see people in their own homes when we fill out the forms. I had one guy awarded it recently and he was still riding a bike daily although did have some minor mh struggles? I honestly thought his claim would get thrown out straight away but no- he was awarded AA and then a load of pension credit on top, all council tax paid etc. I'm amazed how easy it is to get yet so hard for younger people to get awarded PIP. I think things really need to change. I'm not sure about means testing but I regularly help people to claim it and they have 200K + in the bank. I'm not disputing that many who do claim it do have significant disability, but a lot seem to get awarded it based on not a lot.

@cakeorwine But that's true for every thing that's mean tested. Does that mean we don't means test or do we need a better means tested system?
My relatives are all in houses worth over 1m (bought in 70s/80s London) & they all have another home either here or abroad. Do they have needs? yes. Do they really need £300/£400 a month free? free transport to hospital appointments? And the prescription costs must be insane! Realistically it's not sustainable. I don't believe pensions will be free for over 60s much longer, I think the age will increase in the next decade.

Pensions are only free to the people who never worked.

To those of us that worked all of our lives they were bought.

Just seen the update. I withdraw my comment.

@Miley1967 my relatives who qualify have sight, hearing & mobility issues. They do have difficulty with "normal" things but equally live pretty normal lives which includes holidays as I say. it does help that most have them have partners & wider family.

Realistically it's not sustainable. I don't believe pensions will be free for over 60s much longer, I think the age will increase in the next decade.

This meant to say prescriptions!
don't think I can edit on the app

I was about to say prescriptions are free for over 60's !!

@Miley1967 I also think if are astute you can successfully complete the form so i'm sure many are deserving but get rejected.

I do hundreds and they rarely get turned down even when I think they don't meet the criteria. I guess this is why I just think the threshold for being awarded it must be very low. They do no kind of assessment and I'm not sure they often speak to the GP. I'm really not sure how they assess it. My colleagues have a theory that they just award it so easily as adult social care is in such crisis at the moment and they probably have a point.

An estimated 1 million pensioners could be missing out.

https://www.saga.co.uk/saga-money-news/what-is-attendance-allowance-and-can-i-claim-it?srsltid=AfmBOooZ-qjpo1T4WD8UsBk21w4EtOMC9mD5BPSHLVD84jEolUoeFFRq

I know that the success rate varies - and that appeals are often needed.

My colleagues have a theory that they just award it so easily as adult social care is in such crisis at the moment and they probably have a point.

that makes sense & I reckon loads more could apply but they don't.

I think you've muddled up your attributions. The paragraph beginning "Why don't you focus on wealthy pensioners..." was written by someone else, I merely quoted it.

Yes, means-testing the state pension might work, so long as you give the people affected a whacking great tax cut. You can't just keep rinsing the middle classes like this.

So sorry @MereDintofPandiculation . Incorrect attribution and apologies.

People who have not paid all their NI do not get a full state pension.

Yes they do. People who don’t work while their children are under 12 are given credits out of taxpayers’ money to boost their pensions. This pushes many of them into full pension status despite the fact that they didn’t contribute for years.

That's one category of folk who may have stopped work for a brief period, not everyone who doesn't work.

It can be decades, not a brief period, depending on how children’s births are spaced out.

I’m not saying it’s a bad thing (and definitely didn’t say it applied to everyone who doesn’t work). It’s just that it’s not only older people who get allowances, as is often suggested. Those credits are worth around £11500 a year at today’s rates.

But if they haven’t don’t they then get pension credit which is a gateway to other benefits like winter fuel allowance, free eye care etc? This is the argument about why removal of the wfa is so unfair to those who have earned the full state pension through 35/40 years of contributions. They may be substantially worse off than someone who has contributed many fewer years and is eligible for pension credit

The state pension is already effectively "means tested" through the perfectly sensible system of income tax, as pension income is taxable.

The full state pension is currently £11,973 per year and the tax free amount is £12,570. The median retirement pension pot is enough to supplement that to the tune of about £4k per year meaning a tax liability of ne £680 effectively clawing back 5% of the state pension even for those who are at a still relatively low income. Meanwhile anyone with a retirement income of £60k - achievable with a pension pot of £950,000 which isn't unusual for someone with a full lifetime career of well paid employment - will pay 100% of the state pension element of that income in normal income tax

£11,973 a year isn’t a lot to live on if this is your only source of income.

I don’t see anything wrong with saying for the (small) number of people who have private pension income in excess of £100k (very easy to establish as these people will submit an annual tax return) you either don’t qualify or receive a reduced amount. Then give that money to people who need it to live on.

I mentioned in an earlier post I know a couple who are in this position, their state pension gets paid into trust for their grandchildren. This is clearly ridiculous and should be stopped.

As others have said we have an ageing population, falling birth rate, fewer working people paying for state pensions etc. It’s just not sustainable to pay it out universally anymore. We can either recognise that and take action now or ignore it and wait until drastic action is needed.

The state cannot afford to pay pensions for wealthy people anymore. So it shouldn’t in my opinion. I think the same thing about the NHS but that’s a different conversation.

Grrrr

As has already been posted many times, the income tax system works well as a ‘free’ proxy for means testing anyway. In your over £100k example, 60% of the top slice, which might as well be the state pension, goes straight back to the treasury. The fact that they choose to do something you disapprove of with their after tax income is a distraction.

For almost everyone with pension income other than the state pension 20% of the state pension goes straight back in tax. How much more money do you thing will be clawed back, and at what cost of a complex means testing process?

Now, overhauling the tax system to make it simpler, and rolling employees NI into it (as the conservatives started) would mean than pensioners and those working would pay the same rate. That would be a good thing. Having a more graduated tax system, without cliff edges, would also be good. And could be structured to progressively take more from the higher paid, unlike the current perverse system that actively discourages anyone from working for between £100 and £150k. If we had a few hundred thousand more people paying tax in that bracket it’d make a material contribution to the treasury.

Having got rid of employees NI you’ve silenced the argument that ‘well. I’ve paid my NI so I’’m entitled to the state pension. Increase the auto enrolment % from its current inadequate level. Then dump part or all of the triple lock such that the state pension reduces in value over time, and is replaced by pension credit or whatever it’s called. Then you have a long term strategy for reducing the cost of the state pension, while giving people ample time to have made alternative provisions.

I don’t disagree with it at all, I just think it’s ridiculous to have a system that’s saying some people need to live on 12 grand a year where others who don’t need the money get paid the same amount.

I don’t begrudge them or their grandchildren the money I just think there are better places for it to go to.

What I have proposed wouldn’t be expensive at all, HMRC has the information on high earners because they submit tax returns. That surely has to be cheaper than the DWP paying out state pension for HMRC to then claim it back? This was the argument for capping child benefit at £50k, it was an easy and cheap way to do it.

I don’t think the tax system “actively discourages” anyone from earning at that level. I don’t think anyone earning £95k offered a promotion to £125k is going to turn it down. They would still be better off.

I completely agree that auto enrolment contributions should be increased but the government are already hammering employers on NI which will lead to higher prices and job losses, the last thing businesses need right now is even higher costs.