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?

I’m one of todays tax payers, paying towards my future pension pay out and for the pensioners already there. Will todays workers still have to pay national insurance to subsidise those that will be entitled to state pension under any new means tested process brought in, or will we be able to opt out?

"This is the problem, that people are led to think that they have paid in to anything - that isn’t the case at all."

If you however invite people to pay top-ups for any missing years, you do create the impression that they are paying into a future entitlement.

Agree. Doesn’t take much over the state pension to start paying tax and very many do.

Perhaps changing the tax system to bring in similar tax from wealth, investments, and the like, to align with income tax, would be fairest, as rich pensioners with dividends for income would pay more tax, as would everyone else who receives money thus way and pays less proportionately compared to income tax.

I don’t really mean this but arent a lot of high pensions from civil service, public sector, with their gold standard pensions. I know people who have great pensions from having worked a long time in public sector, way higher than mine will be for sure. I wonder if these pensioners realise how little many others receive, as they are well provided for and assume we must all receive similar from private pensions. If only!

I had to work and pay national insurance for 35 full years to qualify for the full state pension. It isn't a benefit.

Should you be able to opt out of paying taxes for unemployment benefits if you have a job? Housing if you own your home? Education if you don’t have kids? That’s not how taxation works.

I think it would be great if we could continue to pay out state pension to everyone but we can’t. My argument isn’t a moral or political one it’s economic.

I work in benefits for older people and the amounts many are getting are truly shocking. I have no idea how this is currently sustainable let alone in the future as the number of pensioners increases and tax payers lessen. Something has to change.
I guess the only light on the horizon is that the amount of pensioners eligible for pension credit may lessen as more people get better private pensions.
I am 56 and fully expect there will be nothing left in ten years when I reach state pension age.

Then what is it?

It's under the same government umbrella.

It was called 'social security' at one time, but anywho.

In 2024 to 2025 the government is forecast to spend £303.3 billion on the social security system in Great Britain.

Total GB welfare spending is forecast to be 10.8% of GDP and 23.8% of the total amount the government spends in 2024 to 2025.

Around 55% of social security expenditure goes to pensioners; in 2024-25 we will spend £165.9 billion on benefits for pensioners in GB. This includes spending on the State Pension which is forecast to be £137.5 billion in 2024 to 2025.

In 2024 to 2025 we will spend £137.4 billion on working age and children welfare. This includes spending on Universal Credit and its predecessors, and non-DWP welfare spending.

In 2024 to 2025 we will spend £90.4 billion on benefits to support disabled people and people with health conditions, and £35.1 billion on housing benefits

Meanwhile expenditure on unemployment benefits in the United Kingdom was one billion British pounds in 2023/24, a decrease when compared with the previous year..

....

Now as I remember, several years ago the government of the time sent a letter to people that included a pie chart of where tax is being spent. One of the sections was 'welfare' and it was the biggest section of the pie.
People thought it was just unemployed people..
Like the chart was designed to make it look like the unemployed were this massive massive drain on society.. what the chart didn't show was that pensions were included in welfare and made up the vast vast majority of that section..
(It was a long time back now though, so my memory is a bit fuzzy on the absolute details)

I agree radical changes can't just be brought in to means test the state pension when people have paid in often for 40 years or more and been told they will get it when they reach 67. If it's to change it would need to start for those people entering the workplace. People who have not yet paid into the system could have compulsory enrolment into a new system and pay 10 percent which all employers should match, so 20 percent going into their individual pots. They could add more if they wanted a better retirement. Lib Dems and Reform UK are against means testing the state pension. I'm thinking more pensioners and those approaching their pension might vote for those parties.

Exactly. A good point.

That would mean pensioners all receive different amounts. A bureaucratic nightmare. Pensioners who have a private pension already pay tax on that pension.

If your parents worked and paid taxes all their lives why should they give it away to those that have not worked? Also I presume your parents are paying a lot of tax on their 6 figure earnings in retirement.

Lib Dems and Reform UK already issued statement they would both keep state pension universal and keep the triple lock.

The LibDems were against tuition fees until they got into power and voted for them.

A social contract. Some people never worked and paid NIC's and they get Pension Credit for not having paid in. In fact they get more money than those on the New State Pension with no private pension as they get free council tax, free dental care and also qualify for reduced entrance fees at many places. Why would it make sense to punish those who did work for 40 years plus paying NIC's but give those who never paid in or who paid very little PC?

I know but Lib Dems brought in the triple lock.

@DecemberTulips using your information that means that pensioners are getting £28.4 billion pounds in 2024-25 that is not state pension. So £137.5 billion on state pension.

@caringcarer

"Lib Dems and Reform UK already issued statement they would both keep state pension universal and keep the triple lock."

The LibDems and Reform can promise what they like but at the last election the Reform pledges were under funded by £150 billion and the LibDems were under funded by close to £100 billion.

Still at least they were better than the Greens at over £200 billion!

As someone in my mid 20s I won't get a state pension I think.

I think people from 40 onwards are probably safe but under 40 I think we'll see a different kind of pension

The problem with your approach is that you think you can ask the generation below to fund your pensions but not get the same pension themselves, thereby breaking the social contract.

We so-called WASPI women had a legitimate, documented entitlement to a State Pension beginning at 60. You know how that worked out.

Yes, the vast majority had 15 + years notice of the change and chose to ignore it until it happened.

My limited sympathy is with those who got short notice of the changes from 65 to 66 and 67.

Well here is our problem. People like yourself already starting to say they don't expect state pension, even though as you state it will be the only benefit you ever received, having been net tax payer your whole working life. Unacceptable, paving the way for such reforms. Nobody in this silly country ever asks how is it that in Europe pensions are higher and contribution based, maternity leave is often longer, university education 'free' and health care without massive waiting lists and accessible. Yes they contribute more but once we add all our fractured taxes (inc £2500 council tax), we are high a tax country. May be we just need to review the systems and spending. Why would we pay someone who works part time, receives UC, housing benefit, NHS/dental, etc for years, then pension/pension credit, then free care home, yet punish self sufficient, self funding folk. This is why UK productivity is low, work does not pay! I see work adjustments in all social classes/earning brackets - they simply follow policies. Reduction in income/hours for UC, or to avoid higher tax rates, or 'putting spouse/relative on books as self employed to reduce tax, or having children single for housing and 3 year unoficial maternity leave (no need to work), or extra money with boyfriend on the side, etc. These policies make people tax evasive unlike in Scandinavian countries and resentful. Nowhere else such proposal, effectively a break of social contract would be acceptable especially if billions are sent abroad. Uk the sheep accept all. May be just may be reward work with benefits being time limited and based on salary and years of contributions, maternity leave pay based on salary, same for pensions. You will see how quickly people work extra to increase their benefits. Not rocket science. Removing pension the final benefit for someone like you and me will be the final straw and people may behave differently or emigrate and take their assets abroad - many mid income peeps (50k+ are already doing so). I am also in 40s and already been robbed of serp contributions I paid which were compensated by reduced contribution years for full pension - to just 27 years. Which is useless if I carry on working beyond 40s or if pension is means tested. Finally, Australia has means tested pension but NO inheritance tax, which means that people save as much as possible for retirement and whatever one does not use up goes to next of kin. Uk inheritance tax negates this desire. So I bet people will just stop saving, spend their money, work less and this will have even worse impact on the future of UK finances. Plaese think before you accept this unfair proposal. Other solution is to increase contribution years requirement to 40+ years and to stop rewarding people who did not work enough - pension credit, housing, nhs, unless disabled. But proper checks are needed on disability (like those walking 10k hikes but disabled with knee, or back but gardening/repairing house, or depression leaving hair purposely unwashed for 2 weeks prior to assessment, or pushing for their child to be adhd diagnosed despite several professionals pushing back just for increased UC and child disability element - all true close to home scenarios). Then we wiil be able to afford to support properly the truly disabled. Until we accept some hard truths about the UK systems nothing will change.

You've paid the necessary NI and are entitled to it, but LOL at the idea that that makes it "fully funded". You'd be shocked at how big a private pendion pot You'd need to buy an annuity equivalent to the state pension (clue: it will be vastly more than the NI most people pay over a lifetime).

Even those changes were announced back in 2011ish so it's hardly short notice.