Pension credit only £3 less than State Pension

[SpanishBaguette]

Maybe it's been obvious to others but I've only just found out that Pension Credit will top you up to no less than £227 per week which is only £3 less than the state pension.

AIBU to be hacked off that I need to pay 35 years of contributions to end up with a near identical pension to someone who gets it for free. WTF?

There are people in between. Not everyone on less than £41k has chosen to do so and not every who is not working at all has chosen to do so.

Don't think anybody would begrudge your sister per pension/credits

5000 members is a relatively small number. Lots of lower paid workers were excluded from pension schemes and women in particular were affected due to being in lower paid jobs and being part time. Pensions often were a management perk and blue collar workers often did not have access to the same benefits as white collar workers. There were of course some enlightened companies, but they were not the norm.

Surely if she had enough money in her private pension to fund all these luxury holidays, that would mean that she'd been in employment for a long time so will probably have made enough NI contributions to qualify for the State Pension that isn't a gateway to other benefits.

If you have paid enough NI to qualify for the State Pension, I don't think you are allowed to choose to have Pension Credits instead. Otherwise, all the pensioners who are struggling on just the full State Pension would have done that too.

@thepariscrimefiles some of these stories just don’t add up and it always amazes me as to how many people know the ins and outs of other peoples finances.

So how would that work? There is no money to raise the State Pension, and I assume that the amount of pension credit has been calculated just to cover people's basic needs. Would you reduce Pension Credit and cut off access to other benefits like Housing Benefit/Council Tax benefit so that a fairly large group of pensioners would be living (and dying) well below the poverty line and many would be homeless?

If, as a higher rate tax payer, you think that the amount your mum gets is too much, so you don't donate to any UK charities any more, how come you are happy for your mum to get this much money but not other people? Other people's taxes pay for your mum to receive so much money that she saves £5k per year. The people on here who think that Pension Credit is too high would prefer that your mum to receives far less money and be on or below the poverty line because she hasn't worked and paid NI. I would have thought that fighting for your mum to receive disability benefits would have made you more empathetic towards other people who are on Pension Credit but it seems that only your mum is worthy of these benefits.

@Friendlygingercat it depends on what you consider modest.

I think one of the biggest issues is what those on a full old state pension are worse off than those on pension credit due to pension credit being a gateway benefit. It's the gateway element that is the real issue.

Yes, its very wrong. Then they get their rent paid for, and their care home paid for. They are also more likely to have children who will do exactly the same.

The benefits in this country are far too generous.

I know the ins and outs of a lot of people's situations because it is part of my job to do benefit checks for older people. We have to ask if they are receiving any private pensions and many will openly tell you that they took it all early and spent it all on paying off the mortgage or ' having a lovely life travelling'. A case i am dealing with currently took all their private pension in a lump sum ( £150k ) and gave it to their son to buy a house ! Then they look all confused when you tell them that it may be a problem to try to claim pension credits straight after doing this ! Many older women will tell me that they never worked because it wasn't the done thing to do or that they worked abroad for years and then came back to the Uk for retirement. Unfortunately to assess someone for pension credit I do have to ask a lot of questions. Many will still not tell the truth, forget about premium bonds and dormant bank accounts , have private pensions that they've never bothered to claim or track down etc.

Do you not think it’s unprofessional to be putting information like this on a public forum? I know it’s not identifying, but I can’t imagine either your bosses or your service users being particularly pleased about it.
I work in finance and would dream of divulging information about my clients, identifying or not.

Don't be so ridiculous. It's a completely anonymous forum. So sick of people posting crap like this.

I don’t think it’s unprofessional at all. Nobody can be identified by her posts and the poster will have insight and a perspective that many of us won’t have due to working with many different families over the years and a better knowledge of the system.

The rest of us can only speak from our own experience of pensions and benefits and what people we know tell us about claiming which will be a smaller sample size without the full facts as obviously people also aren’t always truthful and open to their acquaintances regarding their financial status so I’m interested to hear from someone who knows more than I do on this subject.

Absolutely. Some people are so full of crap trying to shame others who are just trying to explain how things work in real life ! .

Full State pension is below the threshold for pension credits if you have no other income or savings. So she gets a small amount of pension credit but by qualifying for pension credit she also gets housing benefit so she gets her rent paid.

Her private pension wasn’t a huge amount but if she had taken it as a small monthly payment she wouldn’t have qualified for pension credit and the associated benefits, but the driving factor in her decision was that she would have to pay her rent. She is better off than she would have been if she had kept her small private pension.

There is definitely an anomaly where those who have a very small private pension are worse off than those who don’t have one.

You are citing anecdata - I can do that too.

The large company I joined on entering the workforce (in the latter 80s) only admitted full timers above a certain grade to the pension scheme. When I was applying for jobs at this time the model of lowest grades not being eligible for the pension scheme was a very common model, exclusion of part timers was the default. It resulted in me taking one of the lower offers as it came with full pension rights. This maps quite well onto the current outsourcing models where unskilled and semiskilled workers do not benefit from the perks in the procuring company whilst the company claims to give benefits to all grades.

It is also the case that most workers then as now did not work for large companies and small companies/businesses did not often run company schemes due to the costs.

However you cut it, company pensions were a perk for the minority of workers in the private sector.

As you will know if this is your field, few company schemes offer full public sector style index linking, most pensioners in such DB schemes get discretionary rises which rarely keep up with inflation (as many pensioners found as their income largely disappeared during the rampant inflation of the 70s/80s). In the 80s 7k was a management salary and that will also affect the final pension (as you know).

I don't think it's unprofessional.
It's pretty shocking how entitled and selfish some people have become and how much they take it for granted that, no matter how irresponsible they have been, they will be bailed out by younger tax payers.@Harriet9955's are shocking. This should be everyone's business, at least those of us who work and pay tax. While I have full sympathy for those who have worked as carers on v low wages and not been able to save or been forced to stop working to care for their husband with v early onset dementia, there are so many other people who think it is their right to have younger tax payers foot their bills for them.

The system is plain wrong. As I said in my earlier post, it incentivises people to be lazy, not to save, not to contribute anything useful to society and disincentivises all the things you would want to encourage.

Its no surprise to me when you look at the history of pensions and the recency with which women were deemed a subunit of their husband, that older single women are one of the groups most likely to be living in poverty despite having small additional pension provision (which as you say, can end up being a disadvantage).

This whole “anyone over 50 is rich because of the pensions” is just lazy identity based thinking which glosses over the fact that a third of pensioners live in fuel poverty and a sizeable proportion of younger adults are doing very nicely thank you.

The sooner the fad for identity politics goes out of the window and we get back to economic class analysis the better.

With over 40 years of NI payments at NMW I have paid in over £500,000

That will, at conservative estimates that do not include the interest payments I don't receive, buy me an annuity of £24 - 36,000

You can’t have. You haven’t paid £12.5k a year in NI for 40 years.

You might have paid £50k

If she has a full post 2016 State Pension, she will receive £230.25 per week, which is above £227.10 which is the upper weekly limit for Pension Credit eligibility. If she retired and took her state pension before April 2016, her state pension would be £176.45 so she would be eligible for Pension Credit and the other benefits that Pension Credit brings.

You can't have done. Someone on the current NMW of £488 per week would pay NI of £19.68 per week. That would be just over £1000 per year. They would have to work for 500 years to pay £500,000 in NI contributions.

The UK's rules on taxation, benefits and pensions are so complicated that I'm often astonished anyone understands them. Nevertheless, there does seem to be a sizeable cohort (including a couple of @Harriet9955 's cases) who expertly 'play' the system to the point one laments the loss they might have represented to GDP.

IMO, one of the main failings of our taxation is that there are so few incentives for ordinary workers to take on more work or hours. If we decide that a full time job is 35-40 hours per week for example, surely overtime would be worth more if the tax were reduced to 10% on hours above FT, so people would want the extra hours?

@SamphiretheTervosaur what? there is no way someone on NMW would have paid £500k of NI over their working life. For a start you don't pay any tax at all on the first £12.5k of your income at that level.

No you haven't. £50,000 maybe. I don't that would buy you a great annuity.
Most pensioners are taking out far more than they put in, taking into account the interest.