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?

Honestly I'm not sure. I think there needs to be a serious conversation
made about private sector employer contributions if there are changes made to the state pension. For example my employer only pays the minimum of 4 or 5% which on my part time salary works out at about £40 a month. Yes I put double and a bit more in from that but I can because my N.I contributions are so low, under student loan repayment etc. However a lot of my full time colleagues can't afford to put more than 4% in or opt out because of all the other deductions. However you do run the risk of less people employed by making employers pay more.

I do also think people need to be a bit more financially savvy in some respects. People are looking at the state pension age and not looking to how they can retire earlier than that due to savings, downsizing and private pensions. A lot of people are sticking their head in the sand about it a bit.

I do appreciate that a lot of people don't have the financial means to manage day to day let alone 30 years ahead. DH and I are aware that we both have health conditions that may mean we need to take early retirement or lower paid work as we get older. Hence the thought process we have about doing what we can now in late 30's early 40's.

Interesting…why 10years? Seems to be quite rushed?
personnalynI would have banked on 20ish years prob 25 because people need to actually have a steady work and it isn’t going so well for many so that means a lot will then have « health » issues which also would be state funded so…all in all 10 would backlash??

Auto-enrollment workplace pensions came into being for most in 2018. I expect them to start cutting the state pension as soon as most people have 10 years paid into a personal fund.

The employer contributions are generally quite low.

I think 70% of pensioners now have private pensions so why not cut it now?

Because it would be electoral suicide.

All the more reason to scrap NIC and increase income tax so the mind "Link" between paying NIC as being "towards" a state pension will cease. After all, it is just another tax.

I think 70% of pensioners now have private pensions so why not cut it now?

Because many of those private pensions will be too small to keep those pensioners out of poverty. So benefits would be required. Although there’s a change now with auto enrolment, it barely affected current pensioners.

The suggestion that it be means tested, though unpopular, makes more sense.

Personally, the idea that triple lock will take state pension above personal allowance also makes no sense to me. I would peg it so that didn’t happen.

Because it would be electoral suicide

I don't see why it wouldn't be for any age group.

Because many of those private pensions will be too small to keep those pensioners out of poverty. So benefits would be required. Although there’s a change now with auto enrolment, it barely affected current pensioners.

Upcoming generations of pensioners will statistically be poorer as more of them will be renting.

I don’t have the patience to explain it to you, maybe someone else has.

You have the patience to sit on MNs all day though!

I didn’t have enough qualifying years for a full state pension. There were no credits for being a SAHM back in the day. I get just over £100 a week, instead of approximately £175, the basic rate for older, pre 2016, retirees. Younger retirees, with full contributions, pick up around £220 a week. I have an occupational pension, which puts me over the limit, by a small amount, for Pension Credit. If I hadn’t started saving for a pension in my 30s, the state would have picked up the tab! Neither DH or I were high earners, but I worked in the public sector so I joined the scheme.

www.gov.uk/state-pension/how-much-you-get

Younger generations have had far more pension awarenuss thrust upon them!

Pensioners turn out to vote in elections in much higher percentages than younger generations @jaws33 so their views carry weight among politicians. No party that wants to win an election can afford to piss them off. And as there are so many pensioners... no party is going to threaten the grey voters.

@Papyrophile I understand that but I would expect a rival party to offer an alternative & it depends on what age cut off they use. And I don't believe all pensioners would vote to screw over their dc & gc!

Politicians are fresh out of easy appealing alternatives! There's nothing to spare for bribing the electorate and the sensible members of both main parties understand that. Some think the "rich" should pay more; some believe the under-employed should work harder and Nigel Farage just lies.

But what's the answer to that? What could we do to the current older generation to make them accountable today that won't leave them starving and freezing with the inevitable costs to the NHS.

I feel so sorry for my dc and other young people. There will be a huge divide between the haves (those who will inherit huge sums to buy property, pay into private pensions ) and the have nots. I can’t wait for my dc to get their EU passports and seek a better life and prospects outside of the Uk.

How many are working full time or on a good wage? Uneducated 18 year olds on minimum wage aren't paying for anyone, they're still a net taker.

And it goes back to part of why pensions were brought in to begin with: to get older people out of the workforce and make space for younger people.

If 65+ year olds, at the peak of their career in a desk job, with decades of experience and who know its discrimination (tribunal) to sack them, they're hardly going to give it up for manual care work or low pensions. Not when they can flog their houses and holiday and go into rental. Council are bankrupt, they can't afford millions of court cases for deprivation of assets.

So how do the youth get those jobs and pay meaningful tax if there are elderly job-blockers?

Uneducated 18 year olds on minimum wage aren't paying for anyone, they're still a net taker.

What are they taking? They barely use any services if they’re healthy.

Gordon Brown removed the pension credit dividend, and so killed off a lot of final salary pensions. So, on the basis of property being a good investment, a lot of people put their money into property and became “accidental landlords” thus triggering rampant property inflation for first time buyer/easily lettable homes. Which fed on into the cost of property as a whole. Now everyone is screwed there because first time buyers can’t get on the ladder, so second time buyers etc can’t move on, and the returns from being a small time landlord aren’t there any more either.

Today most pensions depend upon how investments perform. As evidenced by the endowment mortgage fiasco, investments may go up, but they may also go down too. Which left many with endowment mortgages unable to pay the principal at the end of their mortgage, as their investment had not performed as well as had been envisaged. This could easily happen to pensions too. Added to that, even though we have auto enrolment, many people simply are not putting enough money aside in their pension. When it comes to food on the table today, many just can’t afford to put money aside in pensions at all, and some opt out. Combined with the fact that due to demographics and the government’s penchant for spending money we haven’t got on god knows what, the country simply cannot afford the triple lock on state pensions.

So…….in essence you won’t get a decent state pension, and nor should you expect a decent private pension either. I’m old, my generation did alright thanks, but my kids and their kids are screwed good and proper. Plan for poverty, because that’s what you will likely get.

Sadly, @Noseyoldcow has nailed the history. My pension is doing everything I expected of it when I planned around Gordon Brown's depredations in the early 2000s, and we enrolled our infant child too. The Chancellor's first budget has brought that within the scope of IHT now. I can't decide whether I admire her insight into inter-generational savings planning or resent the fact that she has de-railed my tax-planning nous. A bit of both.

I think the performance of private pensions is something people need to understand when they talk about scrapping the state pension.

Lots of middle aged us saw our parents caught up in pension fiasco, or saw parents pushed to retire at a bad time for thier investments so their draw down was much less than anticipated.

Its very hard to accumulate enough to be ok for most of us.

I should be means-tested like the winter fuel allowance.

No point in paying people who have a big enough private pension or buy to lets as an income and/or wealth in general.

I would also reduce the no longer affordable public sector pensions.

Sorry @Papyrophile but it’s hard to sympathise. You’re just going to have to use that lovely pension for its intended purpose and spend it. If I had a handsome pension pot I’d be knee deep in five star travel brochures.

I know 8 early retiree's of 55 to 60 who have left work since covid and taken their workplace pensions, all had good pensions and all have been in long term marriages. We will be some of the last that can do this.

Welfare is paid not just for altruistic reasons though that’s how it’s viewed. It goes way back to when Lloyd George first brought in the state pension and how he was hailed as some sort of Angel on earth. Welfare is actually there just as much to placate the masses.

Actually, it was Nigel Lawson who started the death of DB pensions in 1988 as he was concerned that companies were using pension schemes to avoid tax. Tax credit on share dividends wss further reduced by Norman Lamont and only finally abolished by Gordon Brown. He also reduced the amount of advanced corporation tax paid by companies to compensate, but the companies chose not to pass it on to their pension funds. Blaming Gordon Brown is just Tory propaganda.