I’ve easily found £30bn of savings, so why can’t the government do this?

[OwnGravityField]

How about this state pension adjustment proposal?

Currently, the state pension system pays the same to everyone, even to households with very large private pensions and investment incomes. Much of this money ends up funding luxuries.

The proposal is simple:
*full SP for everyone who depends on it (60% of pensioners)
*households with more than £12,000 a year from private pensions, work, or investments have 50p of SP withdrawn for every £1 above that level, up to the value of the pension itself
*A quarter of pensioners would only have a modest reduction, and only the wealthiest 15% would no longer receive a publicly funded pension they do not need.

I used chatGPT to do the calculations.

Savings? THIRTY BILLION A YEAR

That’s 1% of GDP

List of things that could improve?

restored trust between generations so young taxpayers see their money spent on genuine need, not luxury.

national renewal: homes, NHS, lower childcare costs, investment in schools, training, the police force. It could be used to help families who are struggling with mortgage costs.

re-directing spending from low-value consumption (luxuries, imports) to investment (homes, healthcare, infrastructure) improves living standards

Positive effect on the bond markets, sterling value, credit-rating agencies, inflation trends, reduction in government debt - the UK really really needs this right now

I’d absolutely get up off my bum and vote for a party that proposed this. Would you?

I'm sorry but I've got to laugh. ChatGTP is rubbish with stats and it can't access up to date stats.

God help the poor pensioners if they have to deal with something similar to the poorly designed and implemented UC system. It was meant to be fully implemented by 2017 its still not fully implemented and it relies on antiquated systems. For example anyone self employed has to manually add data (every single transaction) despite HMRC implementing making tax digital. It's a crap system.

Oh lovely - another "let's pick on the pensioners" thread. 🙄

I recently retired and while I like browsing on here and contributing to debates I am sometimes taken aback and even a little upset at the ageism some people express. I see myself as a person first and foremost rather than a "pensioner" with all the negative connotations that the word can have. I still pay income tax, in fact I have now been paying income tax for about 50 years and will pay it until I die. So i do feel that I still contribute to the economy even though I am in the eyes of many a disgusting drain on society who has outlived their usefulness

HRTWT
i will just stop working now then - get UC and get a state pension when I’m retired.
Nice.

Ask Chat GPT where does the magical pension pot of money come from … or try doing some thinking yourself. My own analysis of your policy - never mind the bruising at the ballot box for the Party that leads on this policy, this is a rally call for insurrection.

Capital Gains Tax on that lot

The number of posters who want to provide numerous disincentives to work is amazing.

I think those that work hard and save hard would leave the UK.

Those that think working is too hard will be left to fend for themselves.

So correct me if I’m wrong but roughly it would be:

£12k SP only, no tax
£24K SP and private pension, 20% tax paid on the £12k over tax threshold
£24k - £36k 20% tax plus 50% SP ‘tax’ on this band, 70% altogether
£36 - £50k back to 20% tax again for this band
£50k - £100k 40% tax on this band

You’ve got to see OP that it makes no sense to gouge the pensioners most who are only just above the equivalent of minimum wage? And I don’t see how you’re working out that doctors, teachers etc would be barely affected, unless you are saying their pensions are so big that the overall effect isn’t much on them.

OP.

Please would you share how you are saving for your pension?

How much are you contributing to the government's pot of money?

I asked your beloved chatGPT why your proposal won’t work and this is what it told me. I hope people learn how to use these AI quickly as this thread shows how dangerous it is in the hands of the naive.

There are plenty of reasons why this proposal — though well-intentioned — could be seen as ridiculous or deeply problematic, both practically and politically. Let’s unpack them clearly:

🧮 1. It’s administratively
unworkable

The state pension is currently universal, meaning it’s simple and cheap to administer — everyone gets it automatically once they qualify.
Your proposed means-testing system would require:

• Annual verification of every pensioner’s income from all sources (private pensions, dividends, rent, etc.)
• Constant adjustments to their payments as their circumstances change
• A new bureaucracy to monitor, verify, and audit this information

👉 That would cost billions to run, eat into savings, and create endless disputes, errors, and appeals.

💸 2. It would
destroy simplicity and trust

Part of the success of the UK State Pension is that everyone feels they’ve earned it by paying National Insurance. Making it conditional breaks that link and turns it into a means-tested benefit, which:

• Stigmatizes recipients (“welfare” rather than “earned pension”)
• Deters people from saving for retirement — because extra savings reduce your state pension
• Creates resentment among those who’ve paid in but get less back

👉 It undermines the social contract that sustains public support for the system.

⚖️ 3. It creates a
perverse savings penalty

Withdrawing 50p of pension for every £1 of private income above £12,000 means:

• A 50% effective marginal tax rate on top of income tax and possibly council tax support tapers
• So someone earning £1 extra could lose 70p+ in total — worse than working-age disincentives
• This discourages saving and work among older people

👉 Economically irrational — it punishes thrift and rewards not saving.

📉 4. The “£30 billion savings” is almost certainly
wildly overstated

To save that much, you’d have to:

• Assume zero administrative cost
• Ignore behavioural effects (people adjusting income to stay below £12,000)
• Include wealthy pensioners’ entire SP value as “savings,” though many would find legal or financial ways to minimise losses

Realistic estimates (from IFS and OBR-type modelling) suggest such means-testing might save a fraction of that, maybe £5–10 billion at best — before bureaucracy and avoidance eat it up.

🧓 5. It’s
political suicide

You’d be:

• Taking away benefits from a highly motivated, politically dominant voter group (older, wealthier pensioners)
• Creating administrative chaos for 12 million people
• Turning a popular, universal benefit into a contentious one

No government would survive that — even if the economics made sense.

💬 6. It misunderstands
why
universality exists

Universal pensions aren’t a “handout to the rich”; they’re a social insurance — like the NHS:

• Everyone contributes and everyone receives
• The redistributive effect happens through the tax system, not by cutting entitlements directly

If you want the rich to contribute more, the clean fix is taxing pension income more progressively, not dismantling the universal state pension.

✅ In short:
The proposal sounds efficient on paper, but in practice it’s:

• Bureaucratically unworkable
• Economically self-defeating
• Politically impossible
• Socially divisive

That’s why most economists, actuaries, and policymakers consider such a plan a fiscal fantasy — not a credible reform.

@OwnGravityField I am a pensioner. I paid NI for 45 years (I didn't retire till my late 60s.)

So you can't seriously suggest that pensioners now can forgo their pensions when we have contributed to it for decades.

And don't forget that we already pay tax NOW on anything just over the threshold for basic taxation (threshold being just under £13Kpa.)

So our pensions are being taxed now.

My widowed mother pays tax when her own state pension plus my late father's (small) occupational pension is included. Previously she never paid tax in her life.

I agree with you, I’ve had same idea but I’d make the threshold the HRT.
I’d also close DB schemes in public sector to new entrants & further accrual. I’d offer wage rises now to appease workers.
CGT on homes

There’s a gapping flaw in your policy OP, and that is that you won’t see the saving for decades. You can’t implement it for those that have already retired or those approaching retirement. The average life expectancy in this country is 83, so if you’re going to take 16 years of state pension from someone that’s in the region of £192k. People plan their retirement income to suit their planned lifestyle, so need time to save and make up that shortfall - or it’s political suicide!

Exactly. I paid NI for over 45 years and even my state pension plus tiny occupational pension is now taxed.

That isn't the answer OP. Everyone pays in for years to get a state pension. You can't take that off people as they have also worked hard to have a private pension.
It would also take money out of the economy in terms of older retired people having less spending power.
It isn't fair and it wouldn't work

Aside from the rights and wrongs the administration would be a nightmare.
Far easier to do it through tax and add national insurance to pensioners ( for their higher use of health care).
I am a pensioner who worked and saved into private pensions all my life but factored state pension in. I am happy to pay more but the burden suggested would be too much.

Many older people are opting out of the NHS and paying for private healthcare. They don't have the luxury of time to wait for surgery or appts.

So tax would be 20% on £12k- £50k band then leap to 90% for £50k - £62k? Crazy.

CGT on first homes would just mean the housing market would stagnate unless something drastic was done to stamp duty at the same time. I want to downsize in a couple of years to release equity and free up a family home. I’m going to get a house that costs £100k less. About £40k of the £100k will be eaten up in moving fees and stamp duty. If there was CGT as well I just wouldn’t bother.

They shouldn't be giving pensioners who owns a property heating allowance at all.
Labour should have targeted the massive debt from the start . Pay that off and bring down taxes.
We are heading for a Reform government not because they have brilliant polices but because Labour don't have anyone who can even do the most basic maths.

So you would hardly be impacted by what you are suggesting OP. Surprise surprise.

What could you do personally to earn more money, to save more into your private pension and support your children yourself?

Same.
ETA I'd made the full amount of contributions required, but was then told that a rule change meant that I now needed to pay more. Wish I hadn't now.

Excellent analysis.

However Farage has said he will implement a more extreme version of this, whereby the state pension would be means tested and only those with no other income would get it. Funny how it's not political suicide for him!

Why did the Government back track on means testing the Winter Fuel Allowance??? Child Benefit became means tested years ago. Feels generational-biased.

Oh my goodness could he actually do that?😱

And single pensioners? It doesn’t cost less to heat a house, or have internet if you are single. You only get 25%, not 50% of council tax.