Means testing state pension.

1summer

I worked in a bank and was given no choice about opting out. I never fully understood the implications until I was approaching retirement.

You're not alone, Isummer. It was a disgrace, really, and the people saying that women 'should have taken advice' have no clue, really.

I'm not following the logic that opting out was the same as a means test though. You could have a million pounds in the bank, or five other pensions, and you would still get both the TP and the SP equivalent to the NI you paid into it. The problem is that not everyone realised that some of their NI was being diverted to the TP (or other opted out pension). I don't blame them for that at all, and think it should have been on every pay slip in large red type, but it is not means-testing, however you look at it.

If anyone reading this is still working (particularly if you have worked in the public sector), it is worth checking your state pension entitlement and paying any missing NI contributions if you can afford them. If you live four years after you start getting your pension you will break even, and any longer will put you in credit.

I have an NHS pension. Never knew I'd opted out until getting pre retirement pension forecast just before I retired.

People were making life-changing decisions without having all the information. I think there should have been a longer window for paying back the contributions when people realised what had happened, but for many they were too expensive to pay in the time they had.

State Pension is technically a benefit. Not all benefits are means-tested. There are some which are contribution-based eg New Style JSA, and SRP. In the case of others, entitlement to them depends on certain conditions being met, eg disability, or maternity, bereavement, etc regardless of income.

My school staff room had a financial advisor come in. He specialised in advising teachers. He explained the system about so-called opting out and how it would reduce our State Pensions (though as it was not optional, we could not change anything), but he said our TP would be higher and outweigh the loss.
One thing I was most grateful for was being advised I could repay the two years superannuation I has taken out when I came out of teaching to start a family, as many did in those days. For a small sum I regained two years extra Teacher’s Pension.

I think there is a moral entitlement to the state pension if one has paid NI and income tax for years but any government with a big majority can do as it pleases. I still however believe it's Tory/Daily Wail/Torygraph scaremongering.

AGAA4

I don't think state pension is a benefit. People pay in all their working lives so it wouldn't go down well if you were told you wouldn't be receiving anything.

It seems the new higher state pension is actually classed as a benefit since April 2016.

“In addition, the introduction of the new State Pension from 6 April 2016 is also classified as a “benefit” under Section 1(1) of the Pensions Act 2014.”

Well the Press has little to fill it's pages and newscasts at the moment. The new government has stopped feeding the traditional culture wars so they are now setting about creating something new to get people raging against each other. Harmony is the last thing they want.

Can someone enlighten me about opting out and why some think they have been short changed? As I understand it with my own pension the "opted out" amount is included in my company pension. Correspondence from both my pension provider and the DWP confirm this. So I get less in my state pension but more in my company pension. As I retired aux years before my state pension age (being a Waspi), the opted out portion was included in my company pension six years earlier than I would have received it if it was still in the state pension. I'm not complaining, I'm just curious really, have I missed something significant?

Aux=six

You are right, GINMC. That is how it works, but not everyone had correspondence from pension providers or the DWP. They therefore didn't realise that they weren't paying the part of the NI contribution that covered their state pension.

Many people, particularly women with children who had busy lives were just interested in the take-home pay, and if they did examine their payslip could see that they were paying into both Occupational Pensions and NI, so assumed that they would get both pensions. When they got to retirement age, however (in many cases 6 years later than expected) they found that unlike their friends who hadn't worked, they would get a smaller SP. This is why they feel short-changed. Plans were made on the assumption that they had paid for two pensions, and nobody had told them otherwise.

Means testing state pension is a possible course of cash to run the NHS and benefits system, BUT it is very much the “nuclear” option, the economy would have to get a lot worse before that kind of action is needed.

Currently the other measures being discussed, limiting benefits and increasing taxation for the wealthy will be sufficient.

Thank goodness my DH opted out. His employer didn’t have a pension scheme and opting out made him start to pay into a private scheme. He opted back in at a later date but kept the private one going. Now he gets both reasonable state pension and together we have an investment pot.
I don’t think the LP could possibly make the SP a means tested benefit, at least not in the immediate future , it would take many years to introduce IMO.
As has been mentioned Australia already has that in place. Neither my DD or her DH will get a state pension there but they have always known that. They pay into the ‘super’.

I don’t understand what you’re saying Pamela. If there was no pension scheme how did your husband opt out? Opting out was just transferring money from NI to an occupational pension, which he couldn’t do if there wasn’t one. Sorry if I’m missing something obvious- I slept badly last night

Calculation of the old SP could be very complicated.
DH has a very small works pension, part of it has GMP applied, part does not. In about 15 years, it has hardly gone up at all, presumably because he was not opted out and that saved his firm money at the time?

AGAA4

I don't think state pension is a benefit. People pay in all their working lives so it wouldn't go down well if you were told you wouldn't be receiving anything.

Quite! They can keep telling us until they're blue in the face that it's a "benefit" and that what we've been paying for for ourselves personally has been given to someone in the generation before us - but it won't make a scrap of difference to the fact that we KNOW it is something we have paid in for specially and that the person that is getting funded by it is ourselves personally. I know I'll be livid if they start reaching out grabby hands for MY money I MYSELF paid in for and all the more so because I worked full-time for all the necessary number of years to qualify for that pension (ie none of it was "credited" to me - I literally "bought and paid for" every bit of it myself). Not to mention the little question of how would they plan to "square that circle" of the amount we get is dependant on how many years we ourselves have put into the pot (whether paid in for or credited in for). If we'd not had a job ever during that time or been credited for that time then there would be no State Pension there for us personally. So obviously - the pension we have paid for is our own.

If he wasn’t opted out, his NI will all have gone to his State Pension so it should have gone up every year with the triple lock. I don’t know that opting out saved firms money (but I could very easily be wrong there). It was just a different way of allocating contributions - swapping from the pension part of NI to the fund in employees’ personal pensions.

Yes, we KNOW it is something we have paid in for

We know we paid in for it even though it is paid out of current general taxation because those married women who were fooled into paying a Married Women's Stamp years ago do not receive a State Pension for those years because there were no contributions towards SP made during those years. We were lied to by employers and did not find out until later.

If you looked at a forecast on the Government Gateway website you could see just how many years you contributed towards your State Pension.

Doodledog

If he wasn’t opted out, his NI will all have gone to his State Pension so it should have gone up every year with the triple lock. I don’t know that opting out saved firms money (but I could very easily be wrong there). It was just a different way of allocating contributions - swapping from the pension part of NI to the fund in employees’ personal pensions.

It was probably better as the other part of that particular firm's pension had 0% increases many years!

But it was a very complicated system.

Sorry - I missed your post CariadAgain. I agree with you 100%. I’d be happy if the government scrapped the credits to people who could work but don’t. How much would that save?

OldFrill

Please be aware "this money co.uk" is part of the Daily Mail group.
Certainly noting like Martin Lewis' money site.

That explains a lot. I expect the Telegraph will be trying to rattle empty cages.

Lovetopaint037

OldFrill

Please be aware "this money co.uk" is part of the Daily Mail group.
Certainly noting like Martin Lewis' money site.

That explains a lot. I expect the Telegraph will be trying to rattle empty cages.

The article states quite clearly that the government has no plans to means-test pensions.

I'm waiting for them to introduce a Euthanasia Bill.
That will sort out the pensions problem.

vampirequeen

It's scaremongering. Parts of the press have been doing it since the election. Labour are going to tax the poor. Labour are going to tax the middle class. 'You whoever 'you' are, are going to have to pay out another £2000/£5000 a year. There is no evidence produced. It's all just conjecture and trouble causing.

Labour have to do something as there's a £20billion black hole that they weren't expecting when they planned for after the election.

Tbh, and I know I won't be popular for saying this, but there are people who don't need the WFP. My mam, for one, who isn't rich but is what I'd class (and I know this is just my opinion) as well off. I asked her what she did with her WFP and she said she just left it in the bank because she could pay her bills. My problem with the change is that it's an abrupt cut off point. If you get pension credit then you get WFP but if you're outside of the cut off point by only £1 then you lose £300. I think there should have been a sliding scale with the amount decreasing as incomes increased. The scale could go up to the point where the pension credit recipients would be before cutting off completely. That way the poorest would be on an even footing.

I agree with all you’ve said! I do think Labour should have phased this out after this year though and it’s awful (for them) that’s it’s their first big move and off course it’s unpopular.

Having said that my parents didn’t need the WFP/WFA and received it for many many years, & I know far wealthier pensioners than they were receiving it too.

As I’ve stated before I just feel sorry for those not eligible for pension credits but still struggling who will be hit by this move.

As for “means testing” I think it’s a nonsense, the Telegraph every single day has “click bait” headlines about how the Labour Party are going to destroy us all.

We need to pull together and I despise this divisive behaviour!

Sorry, means testing State Pension

“Labour have to do something as there's a £20billion black hole that they weren't expecting when they planned for after the election.”

We need to get this into perspective £ 20 billion is a lot of cash but is less than 5% of spending which is £550 billion, some extra has got to be found.

CGT charged at marginal tax rate (up to 45%) will raise most of that, other changes, private schools, expats, non doms etc will contribute more to fill the “Black Hole”

It’s very good practice to cut down on waste, there is no need to give benefits to those that don’t need them, spend the money of improving services.

Its nasty and deliberate scaremongering for a vulnerable group and they should be ashamed, there is absolutely no evidence for it.

I would say the so-called 'vulnerable group' is more alarmed by the doom-laden pronouncements Kier Starmer, a not very skilful demagogue, persists in making at present.