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?

But it’s more than those who don’t work or make any contributions over their lifetime but get pension credit

It sounds like she said it the immediately retracted it and everyone else agreed it was a terrible idea. Hardly classified as "mooting" does it? Why are we scare mongering?

I have a little pension from years worked 1985 to 1990. The company was declared bankrupt but I quit a fortnight before it happened, so my rights were protected. The trustees/receivers bought a deal to solve the problem at the going rate so now I get £300 per month. My pension pot was £16,000 total between employer and employee contributions, from age 60, so at 69 I am already quids in. It might just be the best investment I didn't know I had made.

You worked for a company for just five years and will get £300 a month pension from it ? Thats really good !

Not even sure a civil service one would be that good after five years.

It was a stupendous deal done on the assumption of 8% annual growth, which was standard at the time. The most valuable years I ever worked frankly. I worked in the pension industry and have traded in other fragment pensions to augment bigger pots, but even so this one is the best I have ever heard of. I was tremendously lucky I know. It's actually even better than that because it's £300 per month after tax.

I reckon the annuity company probably curse my name every single month!

Obviously this is true for some people. But if you look at averages I doubt there are many people claiming a full pension for 30+ years. (Plus now the pension age increases so much it’ll be even less) And the few that are will be countered by those that never claim any/hardly any. My father died at 66 (had one year state pension at the time. Would have zero now days). My mother died at 69 (had 9 years state pension as could claim from 60. Now days she would have claimed 2 years before dying). Surely the bigger issue is those that have never paid in ANYTHING yet get pension credit which is the same as pension?? (If not more if you take into account the other extras you get).

In theory, I’m actually not totally against means testing the state pension. I’m not against means testing any benefit. Anything that is given to people for “free” should be means tested. But it needs to be at a realistic level. And yes it also means means testing PIP and other disability benefits. Of course it isn’t a disabled persons fault they are disabled. It also isn’t an old persons fault they are old. If someone is able to work in a job earning 80k a year why should they be able to get PIP? If someone is bringing in a private pension of 80k a year why should they get a state pension? It all needs to be means tested. Not just punishing the old because they’re old.

I was always told I needed to make sure I worked and earned my years paying NI so I would get my state pension. My parents (and school!) told us that if we didn’t work and pay the right amount of NI years we’d be destitute in old age. Turns out that’s bollocks. You just get pension credit instead. So quite honestly, if they say they are means testing the state pension I think a lot of people will just spend all their money and stop saving. Because they’ll make the threshold too low. Why would anyone work their arse off and save every tiny bit into a private pension to still struggle in old age while those that haven’t paid a penny in tax get pension credit and free prescriptions and council tax paid and rent paid etc.

State pensions and public sector pensions are unaffordable in their current forms and most people know this.

It's a problem though that will be kicked down the road as much as possible due to the political fallout that comes from it. No politician wants to own it. In the same way they don't want to own the "dementia tax" and so don't want to do anything about the adult social care problem.

State pension is a lot less likely to get hit because it affects everyone, rather than a minority of the population. But they will probably go down the boiling frogs route (chipping away at it bit by bit) rather than making big unpopular political announcements. Raising the state pension age is a great way of doing this.

Yes the pension credit

someone stated on another thread that a visitor who came from overseas to stay with their children living here was able to claim this benefit when they were here. How is that right?

She’s just made sure the tories won’t get reelected

But that article is seven months old, plenty of time to backtrack.

That’s the nature of insurance schemes and it’s a National Insurance Scheme. Some people pay in and never get anything out and some people get out more than they paid in. Some people die very soon after retirement and some live into their 90s. There’s a problem now because more people are drawing their pension for longer.

It’s also true that if they means test the state pension why should anyone on a modest income pay into a private pension as they’ll come out with the same anyway

They may find it's compulsory, as it is in Australia, where the state pension (SP) is means-tested.

And spending up your savings can be seen as deprivation of assets.

And your car, artwork, furniture are all assets to be weighed against the SP.

Oh, and when you downsize (to make room for the young 'uns who need the Boomer-tastic homes those fucking parasites have been occupying ) your pension will be reduced because you have made a profit.

Do I sound annoyed? Yes I fucking am.

Good point. Most work place pensions allow you to pay more into it , whilst the employer has a minimum amount to pay legally.

But surely people would just opt to pay in the bare minimum if their state pension will be means tested?

I don’t know what the government will do but the triple lock looks totally unaffordable.

We will spend 146 billion on pensions this year. That is enough to run a small country for a few years. We have a lot of wealthy people who do not need it. The estimate is that there are around 1.2 million pensioners with an income of above 60k a year in the UK. Don’t tell me that they really need it. And if you are a higher earner now and contributing to a pension, the government provides a huge tax break for you. These aren’t things that very poor people solely dependent on the state pension can manage, particularly if they have no other assets. Those people should get it.

Getting rid of the triple lock would be political suicide though. Not that the govt haven’t already committed political suicide in other ways.

I suspect that whatever government removed it would never ever be restored because of the cost. Political suicide or not.

There is a headline today about the IMF coming to resolve public spending the UK. That is hysterical. But if they did, pensions and the triple lock would be first on the list along with other discretionary benefits.

We might do better to think that the age of universal benefits are over. We cannot afford them; we can’t tax younger workers to sustain pensions or disability benefits to the degree we have or part time working.

146 billion in pensions. It makes our future spending on schools or young people look truly pathetic. The UK is starting to look like a gerontocracy. That is not good news if you have children.

I would personally be happy with a phasing out of state pension, combined with lower taxes so I can make up the shortfall myself. In Singapore you pay high national insurance and it goes into your own personal account. Labour need to make some sensible choices - putting inheritance tax on pensions has made me consider whether it's actually worthwhile putting more away. Why bother living carefully when Labour will just tax it away?

We never eat out, buy clothes at Primark/ supermarket, very careful with subscriptions etc. go on one holiday a year. We could be living much more lavishly, but choose to do the sensible option. Why bother when Labour will punish you for good choices?

I think the issue as to individual contributions being hypothecated to a personal account is the issue. The wealthy would be fine with that. For 90 percent of the country they would be worse off. This is the thing that can’t be faced on left or right. They cannot say, sorry, but you are not contributing enough. Neither side can face doing it.

If we taxed wealth not income we could afford it.

Hypothetically speaking, I might have bought an ordinary industrial estate shed nearly 30 years ago with a 10 year commercial mortgage, and I might still be letting it to another tenant now. Is that wealth or income?

Also hypothetically, it might have been funded by the sale of a small flat in London that was for several years my sole asset.

Because all this is hypothetical, you can draw your own conclusions but at the time I did a lot of work in commercial real estate, and I listened and learned. Truthfully there have been bad years too, like the ones when the tenant went bankrupt having trashed the building which cost almost two years rent to fix, without any rent received.

Again for the people who insist they’ve paid in for decades - the state pension does not operate in the same way as a private pension. Your state pension is not an investment vehicle, your NI contributions are not ringfenced for you in the future. Your NI contributions fund today’s pensioners. Today’s pensioners funded the pensioners of their day.

I fully expect the state pension to be means tested for a number of reasons by the time I reach pensionable age (I’m a millennial):

• We will probably not have the working population to support the pensioner population - the pyramid will flatten, or even invert, and there will not be enough NI contributions to fund all pensioner adequately. We have an ageing population and ever more working age people out of work.
• It is common knowledge for today’s workers that it’s important to contribute to a pension. There was a campaign about 15 years ago when it became “opt out”. Most workers are making pension contributions to some degree, whereas a number of today’s pensioners did not.
• Our generation has fewer housewives (cost of living), and so more workers who should be paying into their private pensions.
• As the state pension becomes unaffordable, the government will likely run a campaign insisting those approaching pensionable age are better off than their predecessors due to building up their private pensions over a number of decades, and so the state pension is now only needed by those without the “luxury” of a private pension.
• There may even be a penalty system if you have chosen to opt out and not saved enough into your private pension when you could have done.

Separately, the triple lock is unaffordable, and will probably go prior to means testing being introduced.