What do you think will happen to the state pension in the future?

[Darkling1]

I’ve heard people say that it may be means tested in the future. I’m in my late 20s and wonder what the state pension will look like years from now.

I’ve recently started to invest a small amount into a SIPP each month. I can’t help but worry about the state pension, especially as the age keeps rising.

I think the age of state pension will continue to rise over time. I can see it being pushed to 75 by the time I’m eligible to claim.

What do you think will happen to it?

Yeah, you see, although I know pensions are officially defined as benefits, morally I don't agree with that classification at all because people pay in all their working lives to receive their pension. And, more generally, I think you need to keep in mind that benefits are generally only paid out to those who have paid into the system. It's how the whole system works, and in a sense you're right about entitlement - in the sense that people who have paid into the system are entitled to get something back if they need it. You actually sound like you don't approve of the core concept of the welfare state, your prerogative if that's the case, but that's the system in the country we live in and personally I'm glad there's a safety net for the most needy.

I'm not naive and am fully aware that some people game the system, but it's an awful lot harder to get benefits one isn't entitled to than you might want to acknowledge (for some people it's a push to get what they are entitled to), and imo it's unhelpful in the extreme to tar those who have paid into the system and are genuinely in need, with the same brush as the tiny minority who somehow do manage to claim benefits they aren't entitled to. And, as I say, morally I don't agree with the classification of pensions as a benefit, official or not.

I don’t think it’s a benefit. Had we paid that into a private pension, we would be entitled to it.

Nudge theory, much?

Politicians will wholeheartedly welcome strict rules- as once in place, they will stay there. Our freedom is invaluable and we should defend it. Digital IDs will be sold as a panacea for a problem to fool people. It will not make our life better, only worse.

Nail on the head. Especially that we will sleep walk into the entire welfare system failing and disappearing if we don't reform it. Same applies to the NHS - if we don't reform it to a European model, it will collapse and we'll end up with the US model instead. We really need to tackle the issues rather than hope "someone else" will deal with the problems and pay for it!

You havn't paid "into" anything - you've paid your taxes as and when due (presumably). There's no "pot" like there is with a private pension where money in is linked to pot value and money out. NIC is just a tax, it's not an insurance policy and it's not your "personal pot".

What's your alternative to the ever increasing black economy, money laundering, drug dealing, organised crime, modern slavery, etc., that's ALL on the backs of false/fake identities.

I understand and agree this is the reality and has always been a reality

But they need to not call it Insurance as its misleading.

They need to not have a system where I can log in and see a 'forecast' page.

And they need to not have a record my personal payments saying if I have gaps i can buy them back to secure the pension.

They need to not say i have to contribute for 3 more years to go from 213.91 a week to £230 a week pension.

No other tax is presented that way. I pay it. I know how much I paid as it says on my payslip. There's no income tax forecast saying i have 10 years in my judiciary category and need to build up more if I want the full judiciary experience.

The wording has changed over the years and is less and less like a pension scheme, but back in the late 1990s/ 2000 I used to get a postal statement of my pension described like i was building a personal pension.

I know its not true, but its not sensible to structure it the way it is and then complain people thought they had contributed and would get it.

if we don't reform it to a European model, it will collapse and we'll end up with the US model

Not this tired old myth again. Even Jeremy Hunt has said that the funding model is the least of problems with the NHS and changing it wouldn’t improve anything. He added that the disruption in even attempting it would take years and cost so much in productivity and money that it would be an act of sabotage.

Unfortunately your National Insurance just doesn’t pay into any pension pot. The money helps pay current pensioners whilst your payments qualify you to receive the promise of the same from the next generation. However the demographics of fewer workers and more pensioners means this model is unsustainable. Australia realised the unsustainably a few years ago; and changed to a contribution model. We need to do this in the UK.

Communism?

I agree, the whole thing has been a fiasco for decades. When the welfare state was first introduced, people paid a "stamp" for national insurance which gave them certain benefits such as unemployment, sickness, and yes, state pension, but it was a fixed weekly amount to buy a "stamp". That's when it genuinely was a kind of "insurance".

Over the decades it morphed into a tax as it became income/earnings related and more and more people became entitled to "credits" without paying anything, such as unemployment, caring responsibilities, part time work, etc etc. At the same time, the earnings related element was used by successive governments to raise general taxation for general country running costs, not for benefits!

Even worse were the 80s and 90s with SERPS and S2P which were "income related" enhancements to the state pension which gave the impression that you were paying in for higher benefit entitlements, which were subsequently scrapped!

The whole thing has been a fiasco for decades, over successive governments of different colours. They're all basically fudged the issue and just used NIC to raise taxes without any real thought nor planning to long term benefit costs.

I think everyone understands that. But part of our taxes go towards our pensions, so you're quibbling over terminology here.

No, you do not understand.

your NI contribution pays for current pensioners.

younger worker’s NI will pay your pension. (the promise).

there is no state pension pot.

Wrong link!

I think we can take the “research” of the Intergenerational Foundation with a pinch of salt given its raison d’etre.

I can’t find the latest figs but from 2021:

State pensions
£6,146.6 bn
Public sector pensions
£2,896.5 bn

https://www.taxpayersalliance.com/real_national_debt_hits_180_534_per_person

£5 trillion is a lot, but it doesn't all have to be paid in one go.

I am not denying the pension issue is enormous and needs to be tacked, but im guessing only a certain %of that 5trn needs paying each year. So its a bit more in line with gdp.

The crap NHS will be killing off lots of OAPs anyway, so that will reduce the state benefit burdens!

🙄

Fair challenge- the data was quite old so found some a bit more recent.

Ditto the Taxpayers’ Alliance. Try and find some unbiased sources.

All sources say the same thing!

The latest official figs are from the ONS and date back to 2018. https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/articles/pensionsinthenationalaccountsafullerpictureoftheuksfundedandunfundedpensionobligations/2018

In 2018, pension liabilities of central and local government comprised:

• £4.8 trillion of state pension entitlements (224% of 2018 gross domestic product (GDP))

• unfunded defined benefit workplace pension entitlements for public sector employees estimated at £1.2 trillion (55% of GDP)

• funded defined benefit workplace pension entitlements for public sector employees worth £413 billion (19% of GDP)

This article does not include a time series. The ONS is working on a revised time series for 2010 to 2015 and new estimates for 2016 and 2017, which will be published in two articles planned for spring 2021 on government-managed and non-government-managed pensions respectively.

Not particularly up to date, is it?

Do you think the numbers have improved after COVID 19, the Ukraine War and Brexit?