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?

My 95 year old auntie was a tenant farmer’s wife for 50 years. She worked hard and earned nothing because her role was primarily in the home. My uncle died at 70 and left her with nothing because he never had anything to leave. I guess she should’ve topped herself 25 years ago seeing as her pension credit claim is such a burden.

It is true that demographics have changed, but successive governments have had access to figures that should have made it clear that changes had to be made ages ago. It is not the fault of today's pensioners that they ignored them.

Pension arrangements have also changed, as have laws covering sexism in the workplace. I couldn't pay into an occupational pension until I was 37, as I worked in HE on a series of renewable contracts, and was not eligible to join the pension scheme. My pension was massively curtailed as a result. Yes, I (and people in my position) could have started a private one, but there was no internet and it would have involved going to an FA (much rarer then than now) and signing up to something that was also relatively rare. Unemployment was very high, and committing to paying in to something they may not be able to afford next year (whether because of redundancy, contracts not being renewed or interest rates going even higher than the 16% we were already paying) was too scary. With hindsight I wish I had, of course, but life isn't that simple. Many women just wouldn't have had the money, even if private pensions were as easy to get then as they are now. The gender pay gap was horrendous.

Yes, today's taxpayers pay for today's pensioners, as has happened since the welfare state began, and yes, demographics have shifted. But it was always meant to be a reciprocal arrangement, so that we would get pensions in our turn. In line with the point of the thread, which is about the unfairness of paying PC at the same rate as pensions paid for by those who have worked for decades, it would be just as unfair to remove SPs from people who paid the pensions of the generations before them - particularly if the removal takes the form of means-testing which would penalise those who tried to cushion themselves in retirement by paying into occupational pensions when they could.

No, it isn't the fault of today's pensioners that successive governments have failed to act, but the current situation is unsustainable and today's pensioners need to accept that. Apparently the government is commiting to the triple lock for the duration of this parliament. I think that's a mistake.

Indeed. I started a private pension in 1992 aged 20 when I worked in a small company. Moved to a larger company and joined their scheme in 1996. Might not have been every employer but plenty of companies offered a pension scheme in the 80s & 90s. My grandad retired at 65 in 1977 & also had a small occupational pension.

Well today's pensioners are a huge drain on younger generations, particularly as younger generations are poorer and many are unable to afford a home of their own, now that prices have risen so much. This has benefitted older people and disadvantaged the young. Those who work and pay tax do pay a huge amount for pensions, NHS usage by the elderly (the heaviest service users) and other benefits. The demographics have entirely changed since current pensioners were paying for those above them. These are well known facts and stating them does not make anyone ageist. It's so easy to try to dismiss facts that you might not like hearing as ageism.
I understand that some, especially women, had no access to work based pensions until later. This did not stop them from saving money themselves for their retirement, making investments or buying an annuity. Sure, there are some who were forced to care for ill partners from a young age or were unwell themselves but most were as capable of work and saving as a typical, younger person is now.
Even if you dismiss this and believe that pensioners are 100% entitled to their pensions, any sensible pensioner can see that the current system, especially the triple locked pensions are simply unaffordable and that changes need to be made.

There was already a massive riot when they tried to withdraw the WFA and lots of shouting about killing pensioners. I'm sure the government would like to get rid of the triple lock but they know that there would be an outcry from pensioners, many Labour MPs and probably politicians on the other sides who think that they are right wing!

Oh dear!

Ok, so what would you do about it?

The options, unless I've missed something, are:

• Cancel the SP and let pensioners live on whatever they have saved towards independence in retirement (ie any occupational pension and savings), bearing in mind that they will have factored in the SP that they were led to expect, and that any pretence of a social contract at any age will be destroyed.
• Reduce the value of the SP by cutting the triple lock, so that year on year an increasing number of pensioners become dependent on benefits to live.
• Replace SP with means-tested Pension Credit, and thus encourage everyone to do nothing about their older age, as it will be financially catastrophic to do so for anyone unable to save enough to cover what was the SP as well as an occupational pension. Presumably having savings will count against pensioners too, so more of them will be reliant on the state for more things than at present.
• Phase out the pension part of NI and gradually cut the SP for new entrants to the scheme, so that on retirement those who have paid in half the required number of years on retirement get 50% pension and so on on a sliding scale, the rest to be covered by individual arrangements.
• Stop covering NI contributions for the unemployed, the sick, SAHPs and others who currently qualify, and make the SP entirely contributions-based. Decide whether such people should be allowed to make use of any of the other services covered by NI, or whether pensions should be singled out as only available to those with full contributions.
• Scrap the idea of retirement altogether, so that anyone without a large enough occupational pension works until they die.
• Any other ideas?

Yes damn those disabled people needing support how dare they have a basic standard of living without working for it

I agree. It's a very difficult situation and people need to face up to it rather than denying that there is a problem.

That may be true for you. It may even have been true for me. But it wasn't true for many people, for whom the thought of a personal pension was very much science fiction

I think what people really want is a comfortable life in retirement - and who doesn't? Life is short and old age isn't what we were promised. The people upset on this thread think they've paid their NI and are fairly taking out what they've put in. Except, the reality is that the majority of people receiving the state pension today made nowhere near the equivalent NI contributions they would have needed to buy a retirement fund equivalent to the state pension they receive.

The average annual contribution is approx £1000 per year - so over 35 years that is £35,000.

If you've worked hard, paid your NI but never had any extra to save odds are your pension is not more deserved because of "what you put in". The idea that you're more worthy of comfort in your old age than anyone else is mind boggling. Perhaps you'd like wealthy pensioners who have contributed ten times your NI to get no state pension?

And the stories on here of Susie and her seven holidays on pension credit make me laugh.

I feel very sorry for those who aren't enjoying their retirement. Who feels bitter about having worked while they see others in gold plated cars having not worked.

Sounds like these folks don't want pension credit to unlock further support. I'm sure Labour would be happy to cut it. But when you hear the stories of people in pension credit that you do empathise with - know you actively wanted them to have a worse life because your life wasn't how you imagined.

I think the crux of the matter is that those on pension credit, not only get their pension topped up to a similar level as the state pension, but they also receive extras which then makes them better off.

I also think expectations of what retirement looks like nowadays is expensive. As I said previously a large part of my job is to visit elderly people, complete disability benefit forms, do benefit checks etc. The vast majority have at least one large car in the drive, obviously they want to carry on driving and many do so well into their eighties, a lot talk about foreign holidays ( On attendance allowance forms we have to ask a question about whether they have been out of the country in the past 3 years ). Many have adult kids in foreign countries that they want to visit, many in the city I live in go off to India for the winter to visit relatives or warmer climates because it helps their arthiritis or whatever. Many want home adaptions, they need a wet room or walk in shower becau se they can't step into the bath any more or need a stairlift. Many older people have had a certain lifestyle throughout their lives and the expectation is just that this will continue ! Unfortunately they don't have the private pensions or savings to support it all ( replacing cars and maintaining them , holidaying etc ) especially not for the thirty odd years some live past retirement age ! I do think past mid eighties they spend a lot less, give up the cars etc..

Really really good point. I appreciate that perspective. I don't want anyone to be cold or hungry or unable to access quality healthcare. I also think some folks on this thread are forgetting all the ways people contribute to the economy and it's not always direct. Women are disproportionately affected by low incomes in retirement and I'm astonished at the venom on this thread. Like life has become a race to the bottom and if I can't have what I want then no one else should.

As I said, those who've got no private savings for retirement have probably put in very little money to the NI pot. They want a reallocation of public funds presumably - so they get even more while others get less. Probably the pension credit first (I mean they didn't even work) and then the high earners/wealthier pensioners second (I mean they also don't deserve it - who cares that they're the ones who've been actually funding the pension in the first place!).

Then they stay on UC.
Why do they deserve more than double a working age person?

By this logic, why does anyone get more than they put in for NI? Have you personally contributed 250k in NI... as that's approx what level is needed to buy an annuity equal to the state pension. People in glass houses...

Most people don't have the money to pay a decent amount into there pension and pay their current bills.
Only DB schemes tend to be worth anything in retirement. Those of us with DC schemes will be little better off than had we not saved at all

@Harriet9955 that may be what you experience, but the majority of pensioners are outside the benefits system beyond being in receipt of a state pension.

They should get enough for basics - the governments deems that to be around £400 a month.

I understand that you don't agree with how the redistribution of wealth is managed at the moment. I assure you, many high earners feel exactly the same and would very much like to make the same NI contribution as the average person and invest the remainder for their private retirement funds. However that is not the way it goes and, I think you'll find, many other high earners are happy to pay taxes to live in a society that does provide for all - the elderly being high on most people's list. I am constantly astonished at how often it is those who've paid minimally into the system seem to expect the most out of any wealth redistribution. Hands up for a wealth tax and hand wringing about the wealthy pensioners. It's not even your NI that's subsidising them - as you're not likely to be paying for own state pension.

Many people would like to work hard primarily in the home but if we did who'd provide her money.
They chose a lifestyle choice why should others pay for it.

@Livingincanadaafter19yearsinlondon, I'm not sure which parts of your post are addressed to me, but I assume some is as you quoted my post.

FWIW, what I would like to see is a fairer distribution so that pensioners who have worked get a decent standard of living, but I would restrict universal pensions to those who either paid in the right number of years or had good reason for not doing so. Those reasons would include things like illness, disability or caring responsibilities (for a disabled person or someone otherwise unable to care for themselves, not decades of looking after your own children and house).

Anyone with no income at retirement age should get a household means-tested pension, so someone who has been 'supported' by a partner or spouse in their working years can continue to do so in retirement, or get UC. A pension should be a reward for years of work, not a prize for reaching retirement age.

I don't think that people who have worked for decades should only have a subsistence standard of living, and I'm bored with the venom that is spat at older people by posters, bots and sections of the media. Lazy stereotypes about millionaires with houses worth 100 times what they cost ignore little things like class, sex and geographical location, and show no understanding of how life was different (particularly for women) when today's pensioners were young.

It's true that most people don't pay in as much as they get out, but that's because for a lot of people wages are rubbish, and have always been so for large sections of the population. The SP should take that into account, and pay according to the number, not the value of contributions, as those on higher incomes have more to invest in occupational or private pensions, and get higher rates of tax relief when they do so. It's hardly fair to penalise people for having a badly paid job even after they've retired.

At the same time, it makes no sense to penalise those who have paid into other pensions by means-testing their whole income. Pensions are taxed, so they pay in that way, in any case. Someone with an occupational pension who loses a SP will pay a lot less tax than they do now, so the savings won't be as high as face value might suggest, and it would be cruel to upend people's retirement plans yet again. Women have already had between 6 and 10 years added to their pension age, and that impacts on couples as well as on single women. It may be 'fair', but for the people concerned it has massively interfered with their plans for older age, and slashing their incomes by £11k would be unconscionable, as would forcing people onto the sort of accountability that being on means-tested benefits brings.

Wealthier pensioners tend to be those born before the early 50s anyway, as they had access to SERPS in their own right, and could inherit SERPS from their husbands. My mother, who only worked for about 7 years between my brother reaching 13 and her retirement in her early 50s, gets nearly twice the full new SP because of those legacy perks and the home responsibilities payments she got for three children until the youngest was 16. The New SP is single tier, so most people on here will get a flat rate, regardless of what we paid in, and we won't inherit if we are widowed. Gradually, more and more people will be on the single tier pension as the older generations die, which will reduce costs naturally.

Changes do need to be made and they need to include everyone on any form of welfare.
Start by making all benefits taxable so those on UC pay tax on anything they get over the standard free allowance. That should cut some welfare spending and help balance the books

That is the amount for jobseekers and is low to encourage people to take any job to get back into work. It is also intended to be temporary. People unable to work are on double that as it is a wage replacement payment.