UK State Pension - Is it really enough?

1. Why do you need the minimum wage ? you are not working
2. the state pension itself is not taxable - the minimum wage is taxed
3. OAPs get free bus passes and free prescriptions. Younger people have to pay for both
4. for those on just the state pension you may be able to get pension credit -
5. the heating allowance has been reinstated for many

I have no doubt that there are some elderly people who are not in a good financial state BUT just look at the coffee shops which are inundated by pensioners. I often listen to conversations when travelling on the bus about how pensioners have had a nice lunch in the local pub.

I was never a fan of Maggie Thatcher but I did think the poll tax was a good idea as there would be so many single pensioners who would have benefited from a smaller outgoing than 2 thirds of council tax.

And those coffee shops will lose business if pensioners like me can't afford lifes little luxuries like having a coffee out. Shopping centres like the one in my town would be empty if pensioners couldn't get the free bus to them. As for prescriptions people get them at sixty now and, when I worked for the NHS many younger people didn't pay for prescriptions [and there is also the cheaper option of buying prescription prepayment certificates]. I bet many of those pensioners boasting about having a pub lunch probably provide free child care for their grandchildren...

ordinarygirl
I have no doubt that there are some elderly people who are not in a good financial state BUT just look at the coffee shops which are inundated by pensioners. I often listen to conversations when travelling on the bus about how pensioners have had a nice lunch in the local pub.

I’m glad you acknowledge that there are some elderly people who are not in a good financial state

I’ll make the same allowance for those younger people who are not in a good financial state.
Our town is full of eateries, cafés, restaurants, coffee shops, bubble tea shops etc. and despite the fact that there are young /younger people who are not in a good financial state these places are always full of young people-in school uniform, in hoodies, with babies in prams, in the latest fashions, with incredible eyelashes and huge lips, made up so similarly that it looks like a uniform.
Whichever group you look at there are always the haves and the have nots, but deciding that older people deserve less?
Karma will come back and bite you on the bum!

That state pension has always been taxable. It doesn’t matter how old you are, you will pay tax on income over £12,570.

A free bus pass is only any use if you live in an area with good bus services. Many do not and have to use trains and taxis if they do not have a car and, if they do, they have to find the cost of that.

Retirement Living Standards have calculated that a single person needs to spend £13,900 a year for a minimum lifestyle. That does not include having a car. It allows for £57 a week for groceries and £42 a month for food out or takeaway - just £10 a week. It isn’t going to buy a lot of coffees.

£13,900 equates to a pre-tax income of £14,200.

The current new State Pension for 35 years of NIC is £12,548. Many people do not receive this amount and need to claim Pension Credit which will give them an income of £12,376. They would be able to claim housing benefit if they rent plus council tax support. An owner occupier could claim council tax support.

The amount of Winter Fuel Payment was set 26 years ago and has not kept up with the rise in energy prices. The equivalent value in 2026 is almost £400.

Cossy’s idea of a Universal Basic Income of £15,000 is a good one to avoid all the faff of poorer pensioners having to make claims for support from several different agencies.

DWP surveys indicate that there are still thousands of pensioner households who are entitled to help but who are not claiming it. The poorest households are single pensioners particularly women. Having a UBI would help them.

Molly's right - there is no reason why pensioners shouldn't have lunches and coffees with friends, ordinarygirl. Would you rather we all stayed at home out of the way, and talked to the houseplants?

I am sick of hearing about what people 'need' and the drive to draw the line there and stop anyone having more than we 'need'. If people can afford lunch and coffee out, the chances are they have worked for years and paid into pensions so they could do just that when the time came. I don't understand the resentment.

Doodledog

*Molly*'s right - there is no reason why pensioners shouldn't have lunches and coffees with friends, ordinarygirl. Would you rather we all stayed at home out of the way, and talked to the houseplants?

I am sick of hearing about what people 'need' and the drive to draw the line there and stop anyone having more than we 'need'. If people can afford lunch and coffee out, the chances are they have worked for years and paid into pensions so they could do just that when the time came. I don't understand the resentment.

I was in my thirties before I could afford to have a coffee out and then it was an occasional treat. And an unmarried friend used to take us out for a meal once a year because, as a family we couldn’t afford to go out for meals. I probably wore my knees out working for the NHS and now it seems people are looking at me with resentment if I go out and have a cup of coffee. I met up with my family last week who were having a meal at the pub across the road and took some water with me because I don’t drink alcohol so I hope that is acceptable to some .

But do you 'need' that coffee, MayBee? That seems to be the question, with the implication that older people shouldn't have more than we 'need', and are somehow 'lucky' if we have paid into occupational pensions.

It's true that there are a lot of older women in cafes, but the reasons for that are pretty clear - women tend to outlive their husbands so they might otherwise be on their own, and younger women are likely to be at work during cafe opening hours, whereas older women have lived through that stage of life and finally have some free time.

How many cafes would survive if pensions were cut so that they no longer covered the cost of an occasional coffee?

I haven't received my SP yet, I'm one of those unfortunate women who has had to wait another 7 years! Once I reach pension age we will have a joint income of around £26,000 which I think is a good retirement income - but we don't have housing costs or any debts to pay luckily.

It does seem wrong though that pensioners with a very small private pension are having to pay tax - the tax threshold should be raised to at least £15,000 or even higher, maybe £20,000?

In addition to this pensioners should be eligible for various kinds of help with things such as dental costs, opticians and hearing costs, reduced council tax and free TV licences. Many of these essential services used to be free or reduced for pensioners but have slowly been taken away. The winter fuel payment has been reintroduced recently but is always under threat! The threshold for this should be lower, having a household income of £35,000 should be more than enough to manage fuel bills!

How can a single person living on £12,500 manage to find the money for these things? And how can it be right that if that person has a small pension of a few thousand a year they are taxed on it!

It is these measures that the government needs to look into, rather than raising the SP to be in line with minimum wage I feel

Coffee? Out? How very dare we!
Blimin love Cafes, Tea Shops & a 'Posh Hotel with a Garden View or Balcony' for a cup of the good stuff

I've always thought the pension was probably set with the idea that recipients would have no rent or mortgage by that stage of their life. Therefore less needed than at a younger age when still working on home ownership and paying rent/mortgage.

That's an assumption that, of course, makes it hard for those who aren't in the fortunate position of owning outright in their older years.

Sadly, we are living in an age where intergenerational warfare is being stoked by politicians and political commentators, again this notion of one person’s pocket being picked to pay for another’s free or easy ride without regard to the challenges and extra costs that older age brings.

Once upon a time, the only people of retirement age who could afford a comfortable lifestyle where those of private means, the upper class person with a private annuity or trust fund. Nowadays, many middle and working class pensioners are very comfortable. Around a million now pay higher rate tax so have an income of over £50,250. There will be many who have income in the middle range and may have valuable homes. But until such time as one can pay a council tax bill with a brick or a roof slate, or there is a way to release capital from a home without the loansharking of equity release companies, then it boils down to income. Many are asset rich but cash poor but many are simply poor even after a lifetime of work.

That there’s less than £200 between the tax threshold and the Pension Credit ceiling is ludicrous. That’s a cliff edge that the previous government should have seen coming and this current government should do something about.

On a recent thread I suggested a reintroduction of the tax age allowance. This had been in force for decades until George Osborne abolished it. It was means-tested on a tapering scale just as the tax personal allowance is now for those with higher incomes. I’d set it at £1,000 for those under 80 and £1,500 for those above. It would be a basic rate tax break equivalent to the Winter Fuel Payment. It would solve the problem of those with income equivalent only to the rate of the the full nSP (not aSP) being caught in the tax net next year.

I would get rid of Winter Fuel Payment and pass the responsibility for support to energy companies without loading the cost onto younger consumers. British Gas, Octopus, E.ON et all aren’t going to go broke for lopping £4 or £6 a week off the energy bill of pensioner households. The overall cost of WFP is around £2 billion. Spread around the sector is won’t make a huge dent in their profits. It would go some way to compensating for the social tariffs that haven’t been introduced or the “moral poll tax” of standing charges that militate against customers who are trying to economise on their bills and get to a point where their standing charges cost more than the energy they use.

£4 a week off my bill and I might blow it on a cafe coffee or the utter decadence of a sourdough loaf from the hardworking artisan baker in the market.

It's called putting money into the local economy, which supports local business, provides jobs and yields tax revenue for local and central government.

My Father was born in 1900, my Mother in 1904.
When they harried in 1933 my Mother was forced to give up work, most married women were then.
They had lived through WW and the Depression.
My F was a miner.
No Health Service no benefits in those days.
He was diagnosed with cancer in 1948 and died in 1949.
I was 11.
My M was 44 and did 3 part time jobs to keep a roof over our heads and me safe.
How was she expected to own her own house in those circumstances, she couldn’t.
She worked forever but at least she eventually got something out of the state as she lived to 101 and spent the last 7 years in a good residential home which was paid for almost entirely by SS i.e. the government.
We just topped up by about £100 a month.

I think that state pension should be enough to live on without benefits, and if people have other pensions on top they should not be penalised for having them, other than through tax, which is not a penalty so much as an obligation.

A decent level of pension should include 'extras' such as WFA - it would be much cheaper to remove the admin associated with working out who is entitled to a couple of hundred pounds a year, and just give it to everyone as part of the pension. That way, those who don't qualify for PC are not worse off than those who do.

Doodledog

I think that state pension should be enough to live on without benefits, and if people have other pensions on top they should not be penalised for having them, other than through tax, which is not a penalty so much as an obligation.

A decent level of pension should include 'extras' such as WFA - it would be much cheaper to remove the admin associated with working out who is entitled to a couple of hundred pounds a year, and just give it to everyone as part of the pension. That way, those who don't qualify for PC are not worse off than those who do.

Yes!

Whatever the future of distributing/paying for State Pensions, its very worrying to think how many aren't claiming Pension Credit at the moment.
There needs to be a rethink into how to find these people and provide them with the help to claim.
What we're doing now clearly isn't working well enough.

The point you make UTBB highlights the general issue regarding State Pension. ONS says there are over 16,000 people in the UK who are over 100 years old. They will have been born even before the contributory State Pension was introduced in 1925.

Literally, we have people claiming State Pension who are age 67 to perhaps 107. That’s 40 years of overlapping generations, four decades in which life has changed enormously with regard to employment policy, state and workplace pension provision and general state support.

I think there is a very good argument for Cossy’s suggestion of a Universal Basic Income of £15,000.

You are right KCC. The push to get people to claim what they are entitled to has been going on for decades. It was why WFP was first introduced at two rates, a higher rate for people receiving Income Support in the hopes that it would encourage more people to claim it.

Were you aware that in 2011/12, under the Coalition government, the DWP ran a study where they identified people who they thought were entitled to PC, paid some extra money into their bank accounts and invited them to fill out the forms to formalise the claim? Many didn’t bother.

assets.publishing.service.gov.uk/media/5a7a1600e5274a319e777c0a/795and796summ.pdf

Over autumn and winter 2024, I was part of a volunteer group in the village helping people see if they were entitled to PC and therefore the WFP. We identified many who we thought were, helped them fill in forms etc. Weeks on, I would ask some of the people how their claim was going. Some said they had decided not to bother. It wasn’t my place to enquire why, whether there was some psychological barrier or whether they had more income than they were letting on. Fair enough. They may just have wanted to understand the gist of how it all worked and when they plugged in the real numbers realised they did not qualify.

One can only lead a horse to water …

Mollygo

ordinarygirl
I have no doubt that there are some elderly people who are not in a good financial state BUT just look at the coffee shops which are inundated by pensioners. I often listen to conversations when travelling on the bus about how pensioners have had a nice lunch in the local pub.

I’m glad you acknowledge that there are some elderly people who are not in a good financial state

I’ll make the same allowance for those younger people who are not in a good financial state.
Our town is full of eateries, cafés, restaurants, coffee shops, bubble tea shops etc. and despite the fact that there are young /younger people who are not in a good financial state these places are always full of young people-in school uniform, in hoodies, with babies in prams, in the latest fashions, with incredible eyelashes and huge lips, made up so similarly that it looks like a uniform.
Whichever group you look at there are always the haves and the have nots, but deciding that older people deserve less?
Karma will come back and bite you on the bum!

Well said!

I know of someone who lived in abject poverty unless they borrowed on the never, never which just made things worse so they would default on loans so they were always either pretending they had moved or taking out loans from dubious sources. On hearing their circumstances where there was lots of illness and disability, I suggested they might like to make a claim for benefits which they were entitled too. They were horrified as they didn't consider themselves to be social leaches. Trying to persuade them that it was their entitlement just made them angry. The mother, even when she was living on oxygen as she had COPD, would not claim for help as she died. The father has now had 3 strokes, is still in hospital with some really serious problems and will not be able to go home. I am praying that the hospital will insist he goes to a funded home with a Social Worker to make any claims because his daughters are saying they can't afford to pay for him but still won't claim "benefits".

I used to find that the other reason people did not/would not claim disability benefits was because to do so meant they had to admit to themselves that they were disabled.

I once made a visit to complete an Attendance Allowance form where the elderly lady had her daughter with her, who had arranged my visit. Every question I asked, the older woman would deny any problem, the daughter would disagree and explain the problem and I could see that the older woman was having difficulties walking round and doing things, but she would not admit it.

In the end I ended the visit. Both women were too distressed, one not prepared to admit her level disability and the other frustrated by her mothers unwillingness to admit to any problems.

That is a very common problem, M0nica, especially if there are memory problems. My Mum hasn't walked for years but still insists she can! She has to be watched carefully because very occasionally she will suddenly push herself out of her wheelchair and face plant the deck. The rest of the time she can barely shift position in her chair. The mind is a very powerful thing even when failing.

I haven't read all the posts so maybe someone has already said this - "to qualify for the new state pension, you need 35 years of National Insurance Stamps".

My husband is always going on about the welfare bill. I keep telling him that a large part of this is pensions.
I wish when it was discussed, they would say how much of the bill goes to pensions, I think many people would be surprised. Apparently its between 42% - 47%.
Luckgirl 33 people are taxed on their income your SP is added to any other private pensions and you are taxed the same as anyone who works. So basically you saved to have a better income in retirement and then you're taxed on it.
I really don't think the UK can afford to increase SP I think they should sort out the NHS. Too much wastage and not enough doctors.

melp1- I think it’s only fair to point out that any private or occupational pension anyone receives had the benefit of tax relief on the contributions that were made into the scheme. Of course pensions have to be taxed - people work hard for their monthly salary and are taxed on it. Why should pensions be exempt?

I agree. I do think the nil rate threshold should be higher, but not that pensions should be exempt.

What is spend on pensions and on overall welfare benefits is disclosed in annual statements published by the government.

The State Pension and other contributory benefits, e.g. maternity and bereavement benefits, are paid from a ring-fenced fund of NIC called the National Insurance Fund (NIF).

Part of the NIC collected by HMRC each year is allocated to the NHS (about £35 billion) and the rest sits in the fund. The money is invested with the Debt Management Office and interest adds to the fund.

You can see the accounting here, latest numbers for 2024/25:

assets.publishing.service.gov.uk/media/692f0e3cb3b9afff34e963bc/Great_Britain_National_Insurance_Fund_Account_-_2024_to_2025.pdf

Credit balance at start of year £86.4 billion
Income £138.3 billion
Outgoings £143.2 billon
Credit balance at end of year £79.3 billion

That credit balance has increase over the years helped by the equalisation of the state pension age and acceleration of the rise in the state pension age. In other words people receiving their state pension up to six years later than anticipated.

Jeremy Hunt depleted the fund by £10 billion by reducing NIC from 12% to 8%. Rachel Reeves has sought to increase the NHS allocation by £25 billion a year with the unpopular rise in employers NIC.

With more people than ever reaching SP age (a result of the post war baby boom) and exceeding the number of pensioners dying, we have reached a stage where NIF outgoings are exceeding NIF income and the credit balance is being eroded. It’s predicted to be exhausted by 2040 at which point Treasury will need to step in and plug the gap as is required by statute.

This further link, from which I have copied the graphic, shows the total welfare expenditure. AME is Annual Managed Expenditure. Pension Credit, the Winter Fuel Payment and Disability Benefits are not paid from NIC.

www.gov.uk/government/publications/dwp-annual-report-and-accounts-2024-to-2025/dwp-annual-report-and-accounts-2024-to-2025