To think when the state pension is removed, the social contract is broken?

[JulyJulyNovember]

https://www.bbc.co.uk/news/articles/c8e2yp1gg37o

It seems likely that in due course, the universal state pension will be withdrawn. At this point, I don’t see how there will be any incentive for young people to build wealth here.

I don’t think poor pensioners should be homeless, but I don’t think they should be provided for in large, unsuitable council houses or in nursing homes where places cost thousands a week. We are moving to a more individualistic world.

I agree. Many people seem to expect to get a pension when they've rarely contributed to it, and at the moment they do get one. Does receiving benefits and credits for NI for the whole of your so-called working life constitute making contributions? I don't believe so, but I don't know how any government could tell this portion of the population that they're not entitled to a pension. (I should add that anybody who is truly unable to work is obviously not in this category).
I'm retired, didn't work when my DC were small and never had a great career so I only have a small occupational pension. This added to my state penions wouldn't come anywhere near meeting my basic needs, but we're lucky and have paid off our mortgage and have saved. Between DH and I we have enough, but I don't know how many single people can hope to manage in the future. It costs almost as much for one person to live as two.

@orangebloon: So you can pay zero NI and get pension credit. Not state pension. Someone could move here from abroad at 60 and never work and get pension credit and all the benefits it comes with.

This is true. I know somebody who came here from Zimbabwe who was allowed in because his mother was born here. He'd never lived or worked here before and came in his mid-50's, eventually getting the right to full support in retirement.

If only the politicians over the past few decades had actually stuck with one of the three "contributory" state pension schemes, we'd have less of a problem. But, no, instead they have to make a name for themselves to constantly tinker and change things. That's left us with all three schemes being irrelevant, i.e. state graduated pension, SERPS and S2P. All introduced at huge fanfare and cost, then all scrapped. Now whatever "extra" earnings related state pension had been earned/accumulated has been eliminated for new retirees, and everyone is back to getting a basic state pension, even if they thought they were gaining entitlement to an enhanced earnings related state pension. Politicians of the last few decades ought to be ashamed of themselves for getting the country into this mess. Far too many people have paid little or no NIC and yet still eligible for the same state pension as those who've paid thousands or tens of thousands in NIC over their working life for nothing extra. It's all a shambles.

The median NHS pension is £7-10k a year. The consultant retiring on a £90k pension is one of a relatively tiny number. It’s hardly worth claiming the state pension as virtually all of it will go back in tax.

This is not quite correct. The NHS pension, pound for pound, is about the best of all worlds (even taking into account the fact that it’s not as good as it used to be).

It is lifelong and index linked and still DB. That alone is the reason it’s referred to as “gold-plated”.

People who earn less in the NHS will of course not be retiring on 90k pa. But what they will receive - if they make all the contributions - is a pension that is - by an absolute country mile - more generous than anything now offered in the private sector. So being low paid in the NHS does offer some relative pension advantages (before you even consider the generous sick pay and leave and the immunity from being sacked).

To be clear, I am fortunate enough to be able to have most of the “nice things” I want on a personal level. I just think it’s entirely wrong to exclude those who contribute the vast majority of the largesse from its subsequent distribution. (See also - childcare cliff edge, child benefit, and probably many other examples).

I would claim it even if it all went in tax tbh. It won’t though - we’ve taken tax and retirement advice, just like every other NHS doctor we know. (Remember that next time they spit the dummy and go on strike!)

It’s not. You have to claim it.

You can take all the advice you like. An NHS pension has tax deducted at source via PAYE. The state pension currently takes almost the whole personal allowance. By claiming it all other income over £50k is pushed into the higher tax band.

Thank goodness our socialist overlords will graciously allow me to keep 60% of the reward for my 35+ years of NIC’s. Praise be!

Yes, but then it just gets deferred and you get more in later years.

You actually think that contributing to a pension system for 50 years and receiving £960 per month to live on, is like being gifted a pot of gold? This is less than half of the UK national living wage!! I beg to differ. 😒

Rubbish. The highest "marginal" income tax rate on pensions is 60%, so whatever the state pension, they'd still get to keep 40% of it in worst case scenario. But for someone on £90k pension, the extra £12k state pension would be £10,000 at 40% and £2,000 at 60% so they'd receive an extra £12k in total, but their tax bill would increase by £5,200, meaning they'd still be better off by £6,800. So, no "virtually all of it" WON'T go back in tax.

You don't qualify unless you have at least 35 years of contributions. These people are receivig social security benefits!

But "contributions" don't necessarily mean actually paying any NIC. You get "credits" for various reasons, such as unemployment, caring for your own children, being part time but earning over the NIC threshold but under the next threshold where NICs are actually paid, etc etc. It's quite possible never to have paid a penny in NIC your entire life but still accumulate enough "credits" to get full state pension.

Raising children, being a carer or working part time are all contributing positively to society and IMO deserve a state pension.

@Vinvertebratei was not referring to the theory of NHS pensions but to the lived fact that the majority of workers in the NHS are never going to receive the huge payout that your DH will get.

Here in the real world, the pension pay outs are much lower for low pay bands and having a NHS pension will not mean that they will not have to juggle paying for essentials and forego the nicer things in life, not to mention that many won’t have been in the NHS their entire working lives and many women will have had time out for having children. Those things make a huge difference to what individuals end up with.

I did not mention once that the NHS pension is not worth having however, everything is relative. I am not disputing that high earners also pay more tax, (which is fair).My only point was that only a small percentage of NHS employees have huge work place pensions. The myth that all NHS workers will is a myth.

@Ownedbykitties I’ve never suggested that all NHS workers will have huge pensions. I’ve given the very specific example of DH who sits at the top of the pay scale. However, everyone with the NHS pension is going to get a far better deal, relatively speaking, than a person earning the same salary without the benefit of a DB index-linked pension with massive employer contributions.

Surely that isn’t controversial. It’s a fact.

I'm actually quite glad that I went self employed in July 1990. My pension is all DC. Thanks to the power of compound interest and a modicum of investment, it's fairly decent right now. But I also banked on George Osborne's dictum that pension funds did not form part of one's estate. And RR has changed that big time.

Hence we are giving our DC money now, while we still expect to live another seven years. DC is quite embarrassed by the wealth cascading down.

That's the crux of it, and it's an issue that no country seems to have successfully got to grips with.

It's one thing to have a ratio where 2 working age peoples' contributions are required to fund one retirees' pension, and quite another to have 1 working age person be taxed enough to support 2 retirees' pensions.

Radical change is needed - I don't want it, but its inescapable.

@Differentforgirls. I believe I read that the woman in question is in her eighties? I’m in my seventies and there was no such thing as free child care then. No family allowance until second child so there would be a chunk of time without FA. In fact, I do not believe there was full NI payments for women who did get family allowance. There hasn’t been a windows pension for decades. My DMIL is mid nineties and doesn’t get one.

I'm surmising as I am not rude enough to ask. She is 88. I don't care tbh. I love her.

If you don’t claim it you don’t get it. Ever. Payment is never automatic.

Sigh! It’s really not.

10k a year = £240k ish DC pension pot. The average pension pot on retirement is half that. So twice as good as private sector pensions. I’d say that’s good.