Reply With QuoteI'm very pessimistic and don't expect to receive much, currently 48. I think there'll be a shrug and a "sorry what can we do? We have so many oldies and so few paying in with our low pay workforce".
Sent from my CLT-L09 using Tapatalk
Guys
What are your thoughts about the UK State Pension existing into the future, say 30 or 40 years from now. Some noise around it becoming means tested and so on however I suppose the tricky bit is how to justify that to people who have made NI contributions but no longer get to benefit from them? Would be interesting to get people's take on where you see this going?
I'm very pessimistic and don't expect to receive much, currently 48. I think there'll be a shrug and a "sorry what can we do? We have so many oldies and so few paying in with our low pay workforce".
Sent from my CLT-L09 using Tapatalk
Same age and same view here.Originally Posted by stefmcd
Unofficial policy is that we work until we drop dead.
Unless we become MP's of course.
So clever my foot fell off.
A bit gloomy but what with climate and Coronavirus things who knows what will be needed in 30-40 years.
Regarding ni contributions and justification, I remember my dad in the late 1960s telling me he had paid an extra 6d in the pound to the government for an enhanced state pension (superannuation) but after years of paying in the government just cancelled it...!!!
As I am a bit of a moral socialist ( we do live in a society after all) I do think that state pension should be means tested as should all benefits. If you don't need it, don't claim it. A bit like Kennedy speech " ask not what your country can do for you..."
Last edited by redmonaco; 10th May 2020 at 23:44.
There will be little / state pension. That was the point of the NEST contributions I’d guess.
National Insurance is just another tax, the money isn't ring fenced for anything, although you have to have paid certain contributions to qualify for certain benefits.
I don't understand the structure of NI at all.
When state pensions were first introduced not everyone lived to get anything back, and for those that did the life expectancy was probably about 5 years after pensionable age
The fact that people live so much longer has devalued the pot considerably to the point that anyone who only has a state pension as income would probably be able to claim a whole host of other means tested benefits.
I would say we are on the path to the state pension becoming a means tested benefit. I can also see the age when you can claim increased dramatically as well.
With an increasing and aging population, it's inevitable something has to happen.
But with the big push in recent years for people to start work/private pensions, imagine what will happen if it's announced the state pension will be means tested. Huge swathes of the population will deem it worthless paying into their own if it means losing state pension, they may as well keep the extra money each month safe in the knowledge the state will pick up the tab.
Also, if they do means test it, I'll bet they make a complete hash of it, with no tapering and/or consideration of duel incomes, much like the current situation with child benefit or carers allowance
I’m 40 and expect (and am planning) to receive nothing. Depressing
Opposite camp here - I think it is and will remain the avail to all pension. What I do see is up to a 3 % rise in NI contribution to pay for it
I’ve told my children to plan on getting nothing from the state.I won’t be around in thirty years.
I also think it will be means tested in 20 years or so, cannot see how it can be avoided. I remember Alan Sugar a few years ago saying, he did not want to take his Pension, but he was told it could not be cancelled and it had to be paid to him. He donates it to the Homeless. I can see anyone with Private Pension and income above X will not be eligible for State Pension.
The same here. Depending on future IHT and care requirements for wife and myself, they may inherit the house, but that will be it.
My mother is 92, and been in a care home for a year, so that is £50+K of her money gone, plus her house on an old peoples development has been unsold, and still paying high management fees.
I used to think that no government would get away with taking away a pension that people had paid into for decades. Then they took away SSP/SERPS. How can private sector employees plan their retirements when they already have all the risk of DC pensions and no future guarantee element?
Still, the public sector will be alright, their gold-plated occupational pensions are guaranteed by the rest of us, so they won't miss it.
Last edited by Seamaster73; 11th May 2020 at 08:18.
Speaking as one who is largely dependent on the pocket money that Big Liz sends me each month:
The maths don't add up. Too many claimants and not enough contributors. Long-term unsustainable.
Any major changes need to be flagged so far in advance that the Govt. really need an Official Clairvoyant. The debacle with "women of a certain age" perfunctorily being told that their future financial planning had just been put back by a good few years was unforgiveable.
I'm not planning on getting anything, so have planned accordingly.
Only my personal view but I’ve said to my clients for years that I think the state pension will have some form of means testing in the future. When stakeholder pensions came in (2001 from memory) it was based on various comparisons, Australia being one and I’m sure I recall that the average pension pot for them was around 5 times what ours were back then. So this was the government’s attempt to get people paying more into pensions by making it low cost - initially the charges were capped at 1% (later increased to 1.5%). The problem with low cost pensions are it’s fine making them cheap but if you can’t afford it in the first place then it’s kind of irrelevant as people that can afford it pay more in and people that can’t, don’t. Make them 0% if you want but if you couldn’t afford £30 a month when they were 2% you won’t be able to afford it if they were 0%. They did offer a lot of flexibility though to be fair - stop, start, increase/decrease at any time and transfer away without penalty. So the signs were there that the government were trying to get individuals to take personal responsibility for their own pensions.
This has migrated on to more group personal pension plans and then government approved NEST pensions which effectively took over the stakeholder plan. Started off slowly, bigger companies at first, then smaller ones, smaller employer and employee payments increasing gradually then X amount of years down the road there reasonable payments going in. The big difference is stakeholder was ‘opt in’, whereas NEST is ‘opt out’. Human nature - lack of action etc means people won’t opt out.
Simultaneously pension ages began rising - woman to age 65 initially then slowly the state pension age increasing - 66,67,68,69,70?
Labour started this, Conservatives have continued it so it’s not just about politics, it’s about an ageing population that the younger working ones can’t afford in the future as there just isn’t enough of them. I remember going to a pension meeting years ago and it being touted that we would need 1 million working immigrants every years to maintain the pension at 65 for the foreseeable future.
Pension freedom has changed everything too. They have made it more desirable to build up pots as it’s so much more flexible and your heirs can more realistically inherit your funds in the future.
All the signs are there for sure. Unfair if you’ve paid into the system for years on a promise I guess, but that’s where we are I think. The incentive for many will be not wanting to work until 70.
On the one hand the demographics point to the state pension being unsustainable and therefore likely to be means tested, but on the other the same demographic changes will mean that old people become a larger part of the electorate so policy will be skewed to their benefit. I can see there being big increases in NI contributions at some point.
Sent from my iPhone using TZ-UK mobile app
I’m not expecting anything from the state.
My business will have to be my pension indirectly, so long as it survives these dangerous economic times.
I wouldn't be surprised if they withdrew or means tested it but think it's much more likely they'll delay the receipt of it again to say 70/75 over a transitional period as every sitting Govt worries about being re-elected.
They should just confirm it will be phased out over the next 40 years so at least people can plan with greater certainty.
Last edited by deepreddave; 11th May 2020 at 08:40.
Wow, what a bunch of doomsayers. There is zero suggestion from either party that the current system will change. Assuming of course that any party who suggested this would actually get elected.
Personally I do think we will see some incremental changes
1) The amount of tax relief on personal pensions contributions will reduce.
2) tax free income from personal pensions will reduce.
3) OAP pension dates will increase
4) it will not be means tested, but people will be encouraged to defer it.
As for those assuming they wont get a pension from the state. Excellent plan, and exactly the same plan I adopted in 1978. Hope for the best, plan for the worse.
Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
Friedrich Nietzsche
I'm looking at earlyish retirement in a few years but it will be 10ish years before I get state pension. I'm actually hopeful that it will still be in place and not means-tested but, whether it is or isn't, I'll treat it as bonus income at that point.
p.s. my work pension won't be huge compared to some here but my wife will have another comfortable work pension (hers public sector 'final salary') and we'll have no mortgage and modest expenditure (as long as I can stay away from fancy watches).
p.p.s. this period of 'lockdown' has made me ponder just how early I want to take retirement. Obviously I'd be able to do stuff in a normal retirement that I can't do in lockdown but I do find I'm missing being in the office.
I'm sure the financial sector will come up with some innovative "product" to make money on the back of. I can see an intermediate pension which will make a payment from your chosen retirement age (say 60) and then step down the payment at your state retirement age.
I can see a point where the product becomes a sort of insurance policy (which you will pay handsomely for no doubt). It'll be a bit like car insurance in America, what liability do you want, it'll be $$$$. So, if the retirement age is moved that would be covered (and no doubt priced in) under you payment.
In future, pick your retirement age, pick your annual income requirement at that point, that'll be £££ per month thank you very much. Lost your job, stop paying, no problem, move out your retirement age/decrease your annual income. Better job, want to pay more, no problem, bring your retirement age forward/increase your annual income in retirement. Simples!
They replaced serps with the s2p pension.
Aye, and then did away with it.
I'm another one who thinks that it will be means tested. I also think the age to qualify will increase to at least 72 by the time I get there (currently 38).
I foresee means testing of some sort for the NHS too at some point.
I think both staying as is will be unaffordable in the future.
But still the new state pension brought much needed simplification to the system imho. If older you will benefit. If in your 20s or 30s you will get a bit less. New system a bit more sustainable tbh and will benefit the govt in the long term. Sustainable has to be better than unsustainable.
Going by past and present statistics that wouldnt work as the majority of immigrant workers over the last 20 years or so have been low paid and therefore received benefits like Housing Benefit, Tax Credits etc so took/taking instead of contributing.
Also lifestyle expectations have skewed the ability to raise taxes. In the 1950s to 70s income tax was at a much higher rate and also the majority didnt expect multiple holidays, multiple bathrooms, new cars etc etc. so could live on less. I'm in my 60s now but when I left home my first dwelling was a bedsit in a house where 5 other rooms shared 1 bathroom. When my daughter left home to buy she wouldnt look at anything that didn't have an ensuite!!! :0)
This pursuit of endless "Growth" is deeply flawed and will have to change in the not too distant future.
The problem is that access to final salary schemes outside the public sector ended when Gordon Brown changed the tax system and then allowed business to de-risk their future by moving to defined contribution schemes. This neatly placed the risk on the individual which was an ultimate betrayal given Labour’s positioning as the friend of the worker.
This in turn was followed by government encouragement to build personal investment portfolio’s; these largely focussed on buy to let properties which in turn drove the ongoing (unsustainable) boom in house prices we have seen.
Today this, allied to cost of student loan repayments, means that many don’t have the spare money to invest anything over the bare statuary minimum into a private pension.
When combined with current annuity rates of around 4% many will find themselves unable to survive old age without the state pension.
As others have already stated, the NI contributions are not ringfenced so pensions are paid for out of current spending. Given the enormous (and growing) cost of interest on government borrowing, this will create yet more pressure on pensions as increased longevity creates an ever growing pensioner population.
This will inevitably create an enormous headache for future governments and has not been helped by the dithering of successive government each failing to address the problem but leaving it for the next lot to deal with knowing how unpopular it will be.
All told a great exercise in the laws of unintended consequences.
Sent from my iPhone using Tapatalk
'George & Dragon - Unwind with a pint or two in our own virtual pub. Friendly banter and clean jokes please and no politics or religion.'
The subject is inherently political.
______
Jim.
Brilliantly put.
If you are young and think that the state pension is rubbish (which it is) then surely the common sense thing to do is to start preparing for your retirement. So invest in whatever you think will serve your purposes best.
I 100% agree with this sentiment but I think the problem for most young people is actually investing enough to make a meaningful difference when they retire.
Young people not investing sufficiently for their retirement is a problem that existed since time immemorial. Most of my social circle are retired and you can split them into two camps, those who have a good disposable income and those who are truly on their uppers by having to rely on the state pension. The ones on their uppers typically started work in the 1960s and just lived for the day with the old adage I can always sell the house if things get tight. I always responded by saying "only a complete fool saves up for years to buy a decent house only to have to sell it and live in a dump just to have some savings to get by on"
In my last but one job I ran a dept of just over 20 young girls in their twenties and I could not persuade them not to opt out of their company pension. They were walking straight into an impoverished retirement but in their eyes, retirement was not even on their radar. It was too far away even to think about. Living for the day was the mantra of their life.
The Government Actuary does a useful Quinquennial review of the National Insurance fund, if you are thinking about the future of State Pension it is a good place to start.
It includes projections through to 2081. The next iteration will be particularly interesting.
Last edited by raysablade; 11th May 2020 at 13:31.
It is counter intuitive but since the advent of BACS payments it has been much more efficient to provide a universal benefit out of general taxation than it is to try to provide an effective means test.
The better off receive far lees in benefit than they contribute. The “means test” is applied automatically in general taxation.
Means tests deliver stigma and reduce social cohesion, maybe that’s their point?
Society and life has changed DRAMATICALLY despite the fundamental issues you mention.
It's very hard to sit in with the lights out eating bread and milk and practising being as tight as a ducks ar$e in water. People do want to live a little bit.
We've long worked on the assumption there won't be one by the time my or Mrs P's 'official' Govt permitted /sanctioned retirement is reached...I think it's probably age 67 already for usand I'd expect that could roll further away as time passes and the Covid costs rack up. Sod that for a game of soldiers. Get out as early as possible, be self funding is my advice, Govt's shouldn't be relied upon for something this important.
Try asking the 3.8 million women born in the 1950s who had their retirement age delayed by 8 years. At current rates, that's a loss of around £72,000 each.
https://www.waspi.co.uk/
I'm in my early 60s and worry it might not be there when I'm due to collect in under 4 years time!
This... wasn’t that the whole point of introducing the ’workplace pension’ scheme?
Yes but by not investing for their future, they will be eating bread and milk in their final years. The thought of being poor in your retirement must be horrendous.
Let’s be honest, there is little to no state pension already is there. What is it, £500 or so per month? That won’t even cover my council tax, electric and gas. So hardly a pension is it really, but still I will be mightily jacked off if there was any push to take that away. I’ve worked 30 years so far on PAYE without a day of unpaid leave (aka unpaid tax). I have a measly private pension and can’t afford to make a material change to that. I would hope the country would rise up and get all a bit punchy. Can you really imagine our European brothers and sisters putting up with this suggestion? Hardly! They riot over a few cents on petrol prices.
Last edited by tz-uk73; 11th May 2020 at 17:47.
You get used to it.
I find it odd that someone spending over £500pm on council tax, gas and electric can’t afford to pay more into a pension. Not a criticism but some people live on a state pension.
A fair question and one I ask myself regularly.
Last edited by tz-uk73; 11th May 2020 at 18:13.
I hear what you're saying (a bit) but imagine saving like hell, doing without stuff to have a good life, penny pinching for your future and turning up your toes in your mid fifties. How pi$$ed would you be theoretically (quite, I think is the answer) and it does happen, often.
Is that a silly question or what or am I missing the context ??
Like many posters, I do not expect there to be a state pension for all in 30-40 years and either there will be a means tested benefit or perhaps a pension only available to those over 80 or similar which would reduce the cost significantly. I therefore haven't made any financial plans for retirement based on it and if it does still exist in its current or a similar form then will enjoy it as a fund for leisure activities/holidays!
More of a concern is any changes either to pension contribution tax relief or to public sector pensions/accrual etc. Whilst it is absolutely correct that they are still "gold plated" in comparison to private pensions, they have become slightly "tarnished" when compared to several years ago. I have been a member of a public sector pension for nearly 15 years and during this time, it has changed from a final salary to a CARE scheme and the retirement age has increased from 60 to around 68 so I am slightly concerned what changes will occur in the next 30 years! The only positive it that changes are not generally retrospective and so do not affect benefits which have already been accrued.
Unfortuantely I cannot afford public and private pension contributions on top of current expenses (and would hit the LTA rather early if I did) and have opted for the former as it seems the most cost effective for me at present. I will aim to divert my current mortgage payments into savings for retirement outside my pension to cover any gap between my desired retirement age (probably early 60's) and the age at which I can take my pension without significant financial penalty.
I hope that by starting my pension at around age 17, I have put myself in the best position I can to be able to do the above though!
The simple fact of life is that pensioners are the single largest voting group. Come hell or high water, they always come out and vote whatever the weather. They tend to vote conservative because the Tories have traditionally looked after them, Osbourne introduced the triple lock and that has push the state pension up quite a bit although it is still derisory. Therefore it is in every political parties interest to look after pensioners and the chances are that for the forthcoming years, the state pension will steadily increase in real terms.
However in 10 years time, the baby boomers will be rapidly dying and no longer voting, that is when the state pension will be curtailed and anyone retiring on a state pension in say 20 years from now is going to have a very bleak existence indeed. There will be no sympathy for them because they were the architects of their own misfortunes.
You would be dead and thus unconcerned.
Posting Permissions