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?

This is why it needs to be phased. If you know what the consequences are, you have from 18 to 67 to prepare. Realistically, it is only the severely disabled that would not be able to prepare. They would not be exempt but there would be special assistance in the form of care homes for them. Not money thrown at people,

I appreciate the sentiment but I think you presume everyone is as physically healthy, mentally robust and with an average intelligence or higher. I've been in education for over 20 years and have come to the realisation that many many people have barriers to work - getting them into the workforce is actually more expensive than paying benefits.

The state cost of birthing and educating citizens (even to the age of 18) is high. It's actually much cheaper to bring in young immigrants who are already educated and were raised elsewhere. So immigration boomed which fixed one problem but created another - as those immigrants age they have children and perhaps get sick and strain the system again.

We now have university/college fees which are making it even harder for people to gain higher education. Social mobility is harder to achieve than ever.

Ultimately you have to decide what type of society you want to live in.

If you've not been to America/Canada you should go... It's a great example of the policies many people here support. Few people live the American dream... success is all down to an individual and it's rather depressing. Not because people don't want for better - life sometimes gets in the way of your best intentions.

Personally, I believe all working people subsidise those who don't/aren't/can't/should but don't work. It's just a matter of how much you are doing so.

More robust systems, yes. But removal of the benefit... If you like a country that doesn't have a safety net there are plenty of places to go. Taxes are just as high but the wealth is distributed differently.

I and many others have already gone somewhere else, i.e no more subsidising pension credit.

At the detriment to their own future are you expecting low paid workers to subsidise pensions of those who never contributed / worked? Not going to happen, they aren't stupid.

Well no... Low paid workers aren't really subsiding anyone - the highest earners are. And the highest earners are/will be the first to lose the benefits they fund.

I can't quite wrap my head around why low earners believe they should be subsidised while others should not.

High earners who choose to stay in the UK have to accept their tax dollars support people who work as well as those who don't work. It's a choice to stay and live in a society like ours. It's a social contract... I personally don't want to live in a society that has no safety net. I accept that some will abuse the system - but I want it in place for those who need it.

People vote for things imagining they will never be on the other side of the vote. See it everyday in the states with Trump voters - but why is my wife being deported, she only did petty crime? Why is my healthcare going up - I don't believe in Medicare or subsidises but wait... I also had them...

Low earners add to the pot and want a subsidy while simultaneously resenting others who also get support. I truly don't get it.

It's about the society you want to live in - not how much tax you pay or work you do.

Perhaps a moot discussion - high earners are leaving and soon there won't be anyone to subsidise anyone!

I can't quite wrap my head around why low earners believe they should be subsidised while others should not.

Because despite being low earners they have contributed SOMETHING.

Unlike those who spend a lifetime on benefits never holding down a job and then expecting UC to be replaced by Pension credit. Those people have contributed NOTHING.

The tax dollars of higher earners are already subsidising those choosing not to work and availing themselves of other benefits. I really can't see why pensions won't be next.
So you keep saying, but with respect I think you are coming from a place of blinkered privilege. High earners may contribute more in ££, but that is how a welfare state works. Low earners pay tax proportionate to their income, and also produce goods or provide services, so everyone who works subsidises anyone who doesn't. The difference is that higher earners have more money after tax than lower ones, which is (IMO) fair enough as it provides incentives and rewards risk and effort, but doesn't mean that they are necessarily contributing more overall. Contribution is not all about money.

There is no difference in that regard between someone on benefits and someone who pays no tax because they consider that they are 'supported' by a spouse, yet still 'avail themselves' of things like roads, education, healthcare, defence, law and order and much more. All taxpayers pay towards public services, and anyone who lives here benefits from that.

Yes, there are tiers of taxation, but there is also differential tax relief on pension contributions, so higher earners' pensions are cheaper. I do think that differential tax relief might be scrapped in the next budget. I hope so, even though it would impact negatively on me personally, as it is just not fair.

I completely agree that benefits shouldn't be a lifestyle choice... 100%

I have worked all my life imagining that if I didn't, I wouldn't be entitled to the state pension. I had never even heard of pension credit before.

However - there are a host of reasons why British citizens may have found themselves unable to work consistently over a lifetime. That is who I am focused on. Many of these are women who have incomplete records - the current pensioners were born in the 50s/60s and had far fewer opportunities for work that women do today. NI credits for periods when you were on mat leave (for example) did not always exist.

I am not saying people do not abuse the system - cradle to grave is a well documented phenomena. Pension credit is, in my opinion, only going to exist so long as pensioners hold so much voting power. In other countries (where the pension vote matters less) you do not see such generous systems.

My beliefs about the society I want to live in may not align with yours. However, having lived in multiple countries abroad I can say, hand on hearts - the lack of a welfare state creates a completely different set of problems for societies to deal with.

I may be wrong.

But, as far as I can see, high earners have had all benefits stripped away over the last two decades.

Pension relief is generous up to a point. As a high earner you will know that after a certain income threshold, you actually lose your pension allowance via the taper and can only make contributions up to 10,000 per annum. So the highest earners actually can't avail themselves of this tax relief.

I am certain pension relief will be diluted in the budget.

And, based on the mood of the country, I sense the removal of the universal state funded pension will go shortly after.

People will, as you have said, repeat the trope that the high earners had enough "disposable income" to save for their own retirements.

That's simply not true to say people in receipt of Pension credit will have no savings ! I have work clients( I'm an advisor )who have 60k in savings and get pension credit because they are both of a couple on a disability benefit and claim to be caring for each other which raises the pension credit threshold hugely. many people do not understand how Pension credit works. they seem to think that all claimants are on the bones of their arses. It simply isn't true. A lone pensioner on a low state pension and a disability benefit and getting severe disability premium can have a significant amount of savings and still get PC. Some of the amounts of PC that people get are crazy. It seriously needs looking at as it's completely unsustainable.

I agree that it's confusing.

Many thresholds are different for people with disabilities? Surely that is a good thing?

I really have no clue what to believe! Anyone on disability will tell you how hard it is to get and hold onto. While stories, like yours, imply claiming disability is easy and we can all get rich from it.

As I've said before...choosing to live here is choosing to participate in the social contract. Everyone working is subsidising someone who isn't in work - for whatever reason that may be.

Say this disabled couple depletes those savings....then what? Pension credit? Or turf them onto the street. I don't want to live in that country.

There are two types of Pension Credit. Guarantee Credit and Savings Credit, Lets not deliberately conflate/omit to create more froth Those work clients of yours will be on the latter

Another one who has no clue how PC works !

Turn on one another? That's quite an unpleasant interpretation of my belief that those on PC should not be better off than those in receipt of full state pension and very little else.

A 'few thousand' is quite a substantial anount of money to those just over the threshold and hence are worse off.

I think your stats are slightly skewed.

It's unlikely that you would claim for a many years as you've contributed so why would your need to contribute a full year, each year?

I'm sorry if you think it's unpleasant. How else would you describe advocating for a system that leaves a segment of the elderly population less well off? It's a race to the bottom.

I mean - I can understand advocating for a system that lifts others up. But that's not what you want...

I don't want to see any elderly person in or close to poverty - whether they have worked all their life or whether they have not. You apparently don't mind.

As an additional rate tax payer I buy into the social contract that comes with living here - my taxes pay for benefits in England while I am in receipt of absolutely nothing. At my salary, I can't even contribute more than 10,000 into a pension (it's called the pension taper). Every single financial benefit my taxes fund goes to others.

I choose to stay.

I appreciate many people have worked all their lives and now find themselves worse off than others.

I've been expected to contribute all my adult life. And I do..I love it here. I choose to stay even though I could move to many places and pay less or no tax.

Everyone in work has to contribute to those who don't or can't work. Low earners aren't touching the sides of their own drain on the system... I don't say that to be crass - they are extremely valuable. Even the people you think aren't. The reality with people on benefits is this - nearly every single dollar goes back into the economy (directly or indirectly) as they can't hold any substantial savings over. Their is no wealth hoarding, no inheritance inequality.

My numbers were illustrative of the annual income needed to make an NI contribution equal to the pension. Many people have 35 years of work and 30 years of retirement... ?

YANBU another piss take enforced on working people.

When we ask what’s the point working, posters often say ‘better pension’. Well even that’s not happening now.

What’s the point in any of it?

I think you are deliberately missing my point. You say you don't want to see a segment of the population less well off. But that is exactly what PC does; it leaves those with small private incomes worse off than those who are totally reliant on the state. If the state deems a state pension plus a tiny occupational pension sufficient, it seems bizarre that those not making that additional provision are entitled to a higher standard of living. But by all means, give those on the lowest incomes the same extras as those on PC.

Average life expectancy after retirement is 18-24 years. Working life will be around 45 years so you'll pay in for twice a long as you collect.

I wonder how long it will be before government realises that many people are opting out of workplace pensions because the funds accrued will provide less than PC. I would expect PC will be phased out, or reduced by the amount that should have been invested.

Well, time will tell, but judging by the outcry after the removal of the WFA I don't think the mood of the country would take kindly to a contributory benefit being stripped from those who have paid NI for decades, at whatever level.

It's not (and shouldn't be, IMO) the amount of ££ that someone has paid in that counts, but the number of years they have contributed to the economy and the welfare of the country, whether that is by caring for those who need it or by producing goods for others to buy and use, or any of countless other ways. It is a strange mindset that sees all contributions to society as financial.

Those who earn more get tax relief, so pensions are cheaper for them, and yes, there is a taper, but that is to prevent them from sheltering money from tax in a pension scheme. It is not a 'trope' to say that high earners can support themselves in older age - it is a reality. Anyone paying higher or additional rate tax is likely to be paying into an occupational pension, or into a private one, both with the incentives that entails. The vast majority of higher earners will not be surviving on SP alone, but many lower earners do just that.

When people who have worked for low pay (often as one half of a working couple, paying childcare and both juggling jobs and other responsibilities to make ends meet) see others opt out of working and ending up better off because of gateway benefits, then of course they resent it. You'd have to be a saint not to, really. When they then see others getting free social care in older age that has to be paid for by those who have saved or bought a house the knife twists more. Accusing them of 'unpleasantness' for feeling it is unfair is breathtakingly insensitive.

I don't think I'm missing the point.

Those entitled to pension credit get access to a host of benefits because of the nature of the system. Basically it unlocks others to save costs on repeated financial and fit assessments by various government agencies - previously DWP and the council and housing etc all had separate systems in place to assess entitlement. It might sound strange but it actually saves money. So while they fixed one problem in terms of cost efficiency.. they caused another with the benefit allocation and how the benefits those receive feels unfair to those who can't access them.

Digital id will make it easier to share information and I expect thresholds will come into play. Yes, I agree, pension credit is unlikely to exist in our futures

You start losing your pension allowance once you earn over 200k... It tapers from 60k to 10k. Their are penalties if you contribute more than allowed and this is tricky with the new mandatory pension contributions.

The highest earners aren't hoarding wealth in pensions as the government has set up a system which means they can't.

I'm not trying to be insensitive. Of course people contribute in many different ways! But, high earners put actual money into the treasury.

They will be the ones paying the taxes which fund everyone else's retirement... At the same time - the more they earn, the less they can save in their own pension fund.

So fund the country and fund yourself. Save save save any disposable income. Why are only higher earners expected to buy into that social contract?

@Livingincanadaafter19yearsinlondon it doesn't feel unfair, it is unfair.

Digital ID will only be required for employment so it's going to take a generation to filter through. And I think it might be the hill many would die on. Though I agree, it would make info sharing easier.

Tbh there will come a point when I just say fuckit and stop declaring all my income/paying all my due taxes. I could easily get away with it in my sector but I do it out of principle.

@Livingincanadaafter19yearsinlondon Everyone who works buys into the social contract, not only higher earners! You were arguing upthread that there is nothing wrong with couples only paying one lot of tax and NI between two, which does suggest that you value money over other types of contribution.

Nobody has suggested that higher earners hoard money in pensions - as I said, there are limits on how much can be paid in to prevent that.

If you can’t understand why, after a lifetime of working, people might resent getting less money to live on in older age than those who haven’t worked then I don’t know how to explain. Maybe you can explain what incentive you think exists for someone in that position to pay tax and NI to help others to stay at home when younger and/or to get more money to live on when older?

You know, that's a good question and this thread has really got me thinking about my belief system.

Higher earners pay the most taxes and, all their dollars are redistributed to others. We are constantly told we should be satisfied with the benefit of living in this society.

I think, tbh, I've been drinking a koolaid that no low earner does! I have had to accept that I pay in so others take out.

You are right - it's completely unfair to work all your life and see others better off than you. Cue my existential crisis!

I thought you did say higher earners have lost their pension to stop hoarding money in pensions. I apologise if not.

My earnings case is a bit unique as much of my salary is actually in the form of an illiquid stock. The company pays tax on my stock but I can't actually sell it (as the company is not public). The result is that my pay looks high to HMRC and but I can't access any benefits, including pension tax relief... it is an example of how "apparent" high earners get short shrift.

I feel super defeated this morning. You are right - it's not fair. Just had a look at entitledto... my actual take home salary is just a little higher to what I'd get with benefits! Wtf is actually wrong with this country...