The state pension won’t suddenly stop, will it?

[TeapotCollection]

I’m 51. We were talking about pensions at work and someone who’s about to retire said there’d probably be no state pension when I retire

This can’t happen can it? I can imagine the government saying in a few years that anyone born after <date> won’t get it but surely it can’t suddenly stop?

Unlikely, but the age at which you get it will probably increase and real terms value become almost pointless to the extent people are reliant on private pensions or benefits.

But there won't be the political headline of 'an end to the state pension' (in name, if nothing else).

You may consider them insane, but my workplace pension is 10% of my pre-tax income! You can't opt to pay less in for lesser benefit. I know many starting to opt out because of the cost of living with mortgages, bills etc. If I earn £40K, thats £4K a year gone before tax, NI, student loans etc. Sure if I opt out 30% of it will go to those things, but an extra £2.5K a year take home is over £200 a month. My mortgage has gone up by £300 a month since we moved onto the new fix. Opting out is what keeps some people afloat at the moment.

Funny how you all (the younger ones) blithely think you will be entitled to and receive a state pension
On a previous acrimonious thread the ageist comments asserted that the old cost too much and should lose their WFA etc. as families need it more that were rife a few days ago - shows how the current thinking is going.
Be careful what you wish for.

Mostly, the private sector compulsory workplace pension is very poor value. However for many it's the only option.

I don't think they'll scrap the state pension but I do think they'll raise retirement age. So then more people will go on the sick, and it won't count as pension spending, and whatever government is in power can fulminate about workshy benefits claimants.

It won't just stop. I expect that it will gradually deteriorate as they will stop increasing it with inflation, such that eventually although the amount will be the same, it will only be enough to buy a few loaves of bread. When the state pension was first introduced it was 5 shillings a week (20 shillings=£2) - 5 shillings in 1909 would be worth £36.70 today so the pension has definitely grown faster than inflation on average over the years.

Also at the time when the state pension was introduced, state pension age was only a couple of years less than average life expectancy so most retirements were short. If the legislation at the time had pegged state pension age to average life expectancy minus 3 years then it would have been more sustainable, but of course so many people are living for way longer than they are capable of working. Having retirement age set at the same level for ages meant that life expectancy crept up and up and retirements became longer and longer, but each time there's a correction to account for this people protest massively.

Of course, it'll be a very brave and suicidal Govt that allowed the SP to go or be run down.

Population is getting older, they vote more and will quickly get rid of a Govt that tried this.

Anyway what would people live on? DC pensions are rubbish, can take some lower paid workers a life time to build up say 150k and then get a £6k or 7k annual pension from it.

I think the opposite will happen, SP will increase in real terms, less reliance on pension credits, paid for by higher NI contributions.

The WFA thread was about very wealthy pensioners getting up to £600 not about poorer ones.

The giveaway here is that governments of all kinds suggest you need a private pension and have done for decades. The state pension is a ticket to poverty now, never mind when you might claim it OP.

I agree.

The whole WASPI thing used to really annoy me as it was only a specific cohort for whom the goalposts had been moved with very little warning (they were meant to be safe from the changes but then,that was put forward). Others,who were jumping on the bandwagon because they had not received a personal letter,should really have kept themselves informed as the changes had been known since the mid 90s. It became ridiculous to hear so many women who claimed they only looked into their pension a week before retiring.

I work in a profession that’s very secure and fairly well paid from entry level. Nonetheless, I know many colleagues who have opted out.

I am in the WASPI generation, yet I was aware of the changes. I think many of the women affected had retired early on an occupational pension and then found they had an additional number of years to fund.

I worked for a small company for the last 22 years of my working life, and up until the last four years they didn’t have a workplace pension. I did make alternative arrangements but the amount that will be paid out is negligible.

The spa is the same for men and women. Currently it is 66 but is increasing to 67 (depending on your dob) and was going to be increased to 68 by 2028 in line with increase in life expectancy.
Now Covid has resulted in life expectancy decreasing and for now seems to have a longer term effect than anticipated. But I would be surprised if they stopped the planned increase in spa because inflation is massively adding to the cost to the government.

I would say that anything that takes up more than 10% of ones income is actually quite a lot, rather than not much. But each to their own. And I haven't checked the numbers...just commenting on the relative numbers!

UK state pensions seem low in comparison to many European countries, as we have, in total, better private pensions. Obviously not all, but pension credit and other benefits top up those entirely dependant on the state penison. If you look at the total income of retirees across Europe, rather than focus just on the state pension element, UK retirees are nowhere near as badly off as a straight state pension comparison would show:

"The task of comparing pension provision in the UK with that of other countries is complicated by substantial differences in the structure of pension systems across the developed world. Countries differ not just in the reliance placed on state pension provision as a component of overall pensioner income but also in the structure, eligibility criteria and financing basis of the state pension system.

A comparison of state pension alone shows the UK providing a lower level of pension than most other advanced economies relative to average earnings, however, the relative position of pensioners converges if income from all sources is considered.

According to an OECD analysis published in 2019, the UK has an overall net replacement rate of 28.4% from mandatory pensions for an average earner (well below the OECD average of 58.6% and the EU average of 63.5%). When voluntary provision (mainly workplace pensions) is included as well, the UK’s net replacement rate rises to 61.0%, while the OECD and EU averages rise to 65.4% and 67.0% respectively.

The UK devotes a smaller percentage of its GDP to state pensions and pensioner benefits than most other advanced economies. Income from occupational and personal pensions is a relatively important source of pensioner income in the UK, in contrast to many other countries where state provision (financed either through social insurance contributions or general taxation) is dominant"

Source: OECD analysis 2019

https://forcespensionsociety.org/2021/04/how-do-uk-pensions-compare-with-those-in-other-countries/

I think it’s likely the age the state pension is given will go up further by the time we get there (so into 70+) Depressing thought.

I can’t see them withdrawing it entirely, however the Tories stopped child benefit being a universal benefit in the last 10yrs so who is to say the Government won’t means test pension on income in the future?

I opted out (when that was possible, about 15 or 20 years ago) assuming there would be no state pension by the time I got there. But I'm a few years younger than you and I think there will be for me and you.

You can’t opt out of paying NI towards a state pension.

I can certainly see them means-testing the state benefit at a very high level, similar to the way they've means tested child benefit for those with incomes over £50k. Perhaps means test the state pension for those with incomes over £100k to start with (means test it based on tax returns like child benefit) - that would impact a tiny proportion of pensioners but it has to start somewhere. Then lower the threshold or use fiscal drag to bring more people into it as the years/decades pass.

You could in those days. You could pay less NIC by "opting out" and the amount of NIC you saved was paid into your private pension instead. There've been lots of changes over the past 40 years or so. We've had S2P, SERPS, and before that we had graduated earnings related state pension. The politicians have buggered about with it for decades and the problems still aren't resolved.

You could opt out of the additional state pension at the time, though, and either pay a reduced NI rate or get contributions paid into a personal pension.

I did the same - figured I’d prefer to have my own extra pension rather than trust the government.

We’ve contributed to it with our NI payments so no they can’t take it away. It would have to be for babies born after a certain date in the future. I’m 52 and I’m fully expecting it!!

Luckily it’s not my only pension .

That's not how it works though, it's not a pension saving pot. Your NI contributions pay for people currently taking out of the system, not your pension in 20/30/40 years.

I think they will increase state pension age to (at least) 70

AND

increase the number of years' full NI contributions you need to have for the full state pension to (at least) 40, possibly as high as 45.

The vast majority don't go to university at all. The figure for people starting university is around the high 30 percent, 6% of these will never graduate, usually leaving in their first year. It really isn't the case that the majority of people don't eneter the workforce until they are in their 20s.

I'm happy with equality in retirement age provided we have equal pay. But we don't.

No but it will be gradually pushed back.

To an age at which the majority of us are more likely to be dead than to claim it.

That's exactly what the state pension was intended to do when it was introduced. The qualifying age was set higher than the average life expectancy, so that only a minority of people would receive it - as a 'reward' for being lucky enough to have a long life, probably largely through having been able to have a sedentary and/or 'safe' job, rather than having no option but to work in dangerous and physically-demanding jobs, which meant that they wouldn't die as young.

This decision was made by politicians, who were able to have a sedentary and/or 'safe' job, rather than having no option but to work in dangerous and physically-demanding jobs, which meant that they wouldn't die as young.

I agree that they will just increase the pensionable age again, to the point that most people die beforehand - although the politicians nowadays will ensure they have generous workplace pension plans as well.

In the same way that they will probably never actually ban petrol and diesel (new cars, yes, but not for those with existing ICE vehicles), but the taxes will go so sky high that very few people can afford it - but the rich will still pompously insist that it's freely available, just as it's always been, and that the government haven't banned it.

I suppose, in a way, I'm one of the 'lucky' ones, as my health means that I will almost certainly never live long enough to claim a pension - so at least I'm free of having to worry about it, I guess...