To be angry with people who describe the old age pension as a "benefit"?

[FlubandSlub]

When I started my working life, aged 16, I entered into an agreement with the government for them to save my pension money for me. It was stated that it would be until I turned 60 which would be when I could starting drawing my old age pension. Even though I made my FULL pension payment contributions by the time I turned 51 the government has decided it will not abide by the original agreement and that it is going to keep MY money until I am 67. Probably hoping I will die before then.

Consider this, not only did I contribute to my pension, my employer did too. It totalled 15% of my income before taxes. If you averaged only £15 000 p a. over your working life, that's close to £220,500. Read that again. Did you see anywhere that the Government paid in one single penny?

We are talking about the money that I and my employer put in a Government bank to ensure that I would have a retirement pension. It was not money that the Government had any right to spend on other things! Upon reaching the age to take it back they've started to call the money we paid in a "benefit" !

If you calculate the future invested value of £2500 per year (yours & your employer's contribution) at a simple 5% interest (that's less than what the govtpays on the money that it borrows from overseas), after 49 years of working you'd have
£892,919.98.

This money was supposed to be in a securely locked box, not to be used as part of the Government's general funds.
Successive governments borrowed the money to spend on other things but that doesn't make my pension some kind of charity or handout!! If a private pension company did this we would sue them. Unfortunately the Government can legally rob us blind and get away with it

IT'S MY MONEY! IT IS NOT A BENEFIT!!

It is a benefit and was described as such on its introduction in 1908 ( Old Age Pensions Act if I remember rightly).

The problem now is that the next generation probably aren’t going to receive a state pension funded by the next generation - as the model has become very unaffordable (and forecast to get even worse).

So they get the joy of funding it, but also probably not getting it.

I thought the original idea was that Nic would cover current state pensions and the welfare state and the NHS. Cradle to the grave. I suppose everything is so much more expensive nowadays but it’s costing DWP about 280 billion going out with over half to pensioners versus a bit under 200 billion coming in from Nic. Then we need a few hundred billion for NHS.

We know all that. We know our personal contributions aren't put in a shoebox on a shelf in a safe. The fundamental argument remains the same. We pay into a scheme that, in the fullness of time (and provided we have paid NI contributions for the qualifying number of years) pays our state pensions.

You pay NI contributions for many years (and your employer pays Employers' NI contributions as well), and the fact that you have done so will qualify you to receive a state retirement pension.

The OP is right. The state pension is not a 'benefit' in the way we understand that term to be currently used, which is often in a derogatory and contemptuous way.

You have fundamentally misunderstood how the state pension and NI works. It is a benefit. You are welcome to have feelings about it, but you were not paying into a savings scheme.

But that isn’t what happened. The NI and tax you paid during your working life paid the pensions of the previous generation. When you retire, those working will be paying for your pension. This is why an aging population and shrinking workforce doesn’t compute, why the pension age has to rise as people live longer and partly why we are in the economic mess that we are in. Your NI didn’t go into an account ringfenced for you

The contributions that your employer made would have been to an occupational pension. That would have been part of your terms and conditions of employment so yes, there was an agreement that your employer would save money for your pension for you instead of paying it to you immediately. It is now compulsory for employers to offer an occupational pension by law (it wasn't always) but there's no state funding involved.

That's not the same as the state pension, which is a statutory benefit and part of our social security regime. Your eligibility for a current state pension depends on paying NI contributions over a period of time. Your employer's only involvement in this would be that it would collect and pay NI for you if you were paid through PAYE. NI contributions are not and were never saved by the government for you personally in your old age. Paying them entitles you to a state pension when you reach pensionable age.

I used to work in a job where we had to have an understanding of the benefits system. Some of the benefits have since been replaced with newer ones e.g. tax credits being phased out), but the State Pension has long been considered a benefit. Current NI contributions fund current pensions, there is no magic pot.

YABU for all the reasons already mentioned.

You haven't paid anything into your state pension. That's not how it works.

It is a benefit it counts as such by the government themselves.

Your payments where never ring fenced for you either you were always paying for those older than you.

Guess you’d be mad at being called old aged pensioner as well however with how mad the words benefit about a benefit have you.

That’s not quite right. NI isn’t a personal savings pot or pension fund. What we all pay in now goes straight out to cover today’s pensions and NHS costs. The “qualifying years” just give you entitlement under whatever rules the government sets at the time, but those rules can and do change. That’s why the state pension is legally classed as a benefit. It’s not guaranteed like a private pension scheme, it’s funded by the state and can be subject to change.

The state pension has always been a benefit. It's a government payout to support people who have retired from employment subject to meeting eligibility criteria.

This is really a thread about how successfully receipt of benefits has been demonised over the last however many decades.

However even if you ignore the NICs etc £220,000 over say 22 years ( 60 to 82 years of age) is £10,000 a year so not far off what you would have got . Now it’s from 67 so 15 years is about 14,000.

It's very simple (probably too simple).

EITHER: your pension is what you paid in + return on investments made with it, paid out over a set period of time, or surrendered to you as a lump sum.

OR: your pension is paid out of the countrys budget regardless of how much it amounts to over the time of claiming.

If it's the former, then yes, it's your money. Not a benefit.
If it's the latter, then you can get lost. It's the countrys money and the country decides if and how you receive it and that makes it a benefit.

Now what you - or anyone else for that matter - actually believes won't change that fact. The only thing that can have any effect is being part of "the country" that makes the decision.

The ballot box is thataway ---->

Hence why I said apparently and made it clear it wasn’t my own words, I think most people know that you can’t take ChatGPT responses as 100% reliable and I didn’t try to dress it up as being that 🤷🏻‍♀️ it helpfully addressed each of OP’s misconceptions though and on this occasion I think is pretty accurate.

I have spent the last thirty seven years of my life paying for the state pension of the three generations of workers above me.

When I retire in a few years time, I fully expect the three generations of workers below me to fully fund my state pension.

You are confusing two things here. Employers do now have to provide a workplace pension scheme for their employees, but they also pay Employers' NI contributions, as anyone who has ever worked in accounts or payroll will tell you.

Your own NI contribution is deducted from your payslip, and your employer will calculate their element as well, which is an expense to the business. Each month your employer adds the two together and pays them both over to HMRC.

Guess OP isn’t coming back

It works like that in lots of countries, Canada for example. Not here!! So YABU

Just admit it, you're butthurt about the fact that one day, you will be on benefits. Goodness knows why, it's nothing to be ashamed of.

It's all unsustainable, unfortunately.

I mean it is a benefit - it is the largest part of the DWP's benefit budget.

I am not sure why you angry at other people because you have misunderstood how it works.

As for "I worked hard and paid for my pension with NI" Here is the thing - in order to get the private pension worth the same as the state pension you would have had to have saved a pot of at least £300k - have you paid that much NI?

Your national insurance contributions in your payslip entitle you to state pension after a certain number of years contributing. The 15% you and your employer contribute are nothing to do with the government, they will be going into a private pension run by a company like Aviva or Standard Life. Suggest you use a pension finder to track down that pot. You can access it usually from 55+ although obviously the later you take it the more monthly income you'll receive. You will receive state pension in addition to this.

@FenderStrat problem with that expectation, especially if you were born between 1946 and 1965 is you were funding the state pensions of far fewer people than you expect the generations below to fund.

Look up the dependency ratio.

TL:DR you got a good deal.

How would you feel if they tried to wriggle out of that arrangement ?