What do you consider a low income in retirement?

I am not sure how people would define a benefit, but SP comes under the same umbrella as Child Benefit, Employment Support Allowance, Pension Credit, UC, DLA, PIP, and many many more, some of which can be based on NI contributions, or disability, or are means-tested. They are all administered by the DWP. Below is their own definition of their role.

www.gov.uk/government/organisations/department-for-work-pensions/about
If people are saying the the SP is not a benefit, it sounds as though they think there is a stigma attached to claiming a benefit, which there really should not be. SP is based on NI contributions or credits, but a shortfall can be made up by claiming Pension Credit.
Governments can change the rules, including their own, some without going through parliament, about who gets what, the amounts payable and the funding of them. Just as they can determine how the NHS is funded, or how much is given in overseas aid, or defence, or the arts, or justice and much more.
Although we are a democracy, we can only exercise that right infrequently. ( Unfortunately in my constituency, my vote won’t oust the current MP.)

A State Pension is different from other pensions. With a private pension, you agree on how and when you will be paid for your investment.

With a State Pension, the government decides from year to year what it will pay. It is not an investment that pays out in the way you agreed when you paid in. The government, having said it would be paid under the triple lock, stopped it when they felt they 'could not afford it'. It looks like there is talk about doing this again. And of course, they have also changed the age at which you can get it and are thinking of doing so again. I don't know of any other pension that can do this.

One of the difficulties is that NI was meant to provide in-work benefits and an end-of-work-life pension. It was always and insurance, not a pension in the usual sense. I think many believed they had insured that they had enough to live on in old age.

The government is now taking some of that fund to pay for the NHS. It was always intended, rightly or wrongly, that the NHS be paid for from general taxation. It could be suggested that telling us the NHS is paid from NI, which was never set up for this purpose, makes it easier for the government to make a (false) argument that we cannot afford the NHS. But that, of course, is my bias. If I were running a party that wished to destroy anything the state is running and put it all into privatised hands, I might consider this a useful step in that direction.

How the economically far-right, and those that vote for them, think the next generation, let alone the current one, will be able to pay always and at every step along the way, is beyond me. But then, of course, they know many people won't be able to. They simply don't care about those people but will group such people and "other" them, as they always do. Eventually some of those doing the othering will realise they can't afford an economically far-right government either. I wonder if they will do that in time?

M0nica

The State Pension is NOT a benefit. It is a pension where the amount you receive is directly related to how much you have contributed towards your pension during your working life. Pension Credit is a benefit because the payment is means tested and based on need.

The State Pension is not a benefit imo but the Government refers to it as a benefit.

I had this discussion with the then Pensions Minister when I first retired and was told quite firmly that yes, it is a benefit.

The State Pension is NOT a benefit. It is a pension where the amount you receive is directly related to how much you have contributed towards your pension during your working life. Pension Credit is a benefit because the payment is means tested and based on need.

I don't see the two things as comparable.

A pension may technically be a benefit, but it is not the same as unemployment benefit in that everyone gets it after a certain age, and it is recognised as a 'reward' for a lifetime of work, and intended to be paid for the rest of your life. Most other benefits are meant to be temporary stopgaps to help during periods of unemployment or illness. Comparing them has never made sense to me.

FWIW, I do think that other benefits are too low (particularly for those who are disabled or long-term sick), but would prefer to see them discussed separately to avoid falling into the trap of pitting generations against one another.

I may be way off beam here, but is it right that the minimum income the government expects a person of pension age to need to live on ( and if SP doesn't reach it, Pension Credit is there to top it up) is so much higher than the minimum income for someone younger who is out of work or too ill to work?
( Housing costs should not be relevant here, as there is Housing Benefit or the Housing element of UC to take care of rent).

Doodledog

Norah

Doodledog

It probably would cover needs, but it would perpetuate inequality. Someone could work very hard on a low income and then get a lower pension if it is based on financial contributions rather than years. Of course, the better paid can also make other provision so it’s never going to be equal but at least spreading the load a bit to give everyone the same state pension goes some way towards that.

Are you agreeing or not? I'm confused. Stupid, I know.

I was giving my own opinion, rather than agreeing or not, really.

If pressed to agree or otherwise, I suppose I agree that a minimum pension of £18k is good, and a lot better than now; but if instead of some getting £40k everyone got £27k it would be fairer. I don’t think that there is necessarily a link between reward and hard work (ask people in the HOL) and it’s a double whammy for someone who has worked hard for low pay (and whose childcare and commute costs will represent a higher percentage of income) to get a lower pension too, based in the fact that their contributions were smaller.

The basis on which we pay tax and NI is that it is proportionate to our income. If we take out proportionate to our contributions too, there is no point in having a welfare state - there has to be enough in the system for those who can’t work, or who have a low income to be covered too.

Thanks for answering.

I like to read your opinions, mind opening. Last paragraph makes me think, surely first sentence is true, I'll ponder the rest.

Norah

Doodledog

It probably would cover needs, but it would perpetuate inequality. Someone could work very hard on a low income and then get a lower pension if it is based on financial contributions rather than years. Of course, the better paid can also make other provision so it’s never going to be equal but at least spreading the load a bit to give everyone the same state pension goes some way towards that.

Are you agreeing or not? I'm confused. Stupid, I know.

I was giving my own opinion, rather than agreeing or not, really.

If pressed to agree or otherwise, I suppose I agree that a minimum pension of £18k is good, and a lot better than now; but if instead of some getting £40k everyone got £27k it would be fairer. I don’t think that there is necessarily a link between reward and hard work (ask people in the HOL) and it’s a double whammy for someone who has worked hard for low pay (and whose childcare and commute costs will represent a higher percentage of income) to get a lower pension too, based in the fact that their contributions were smaller.

The basis on which we pay tax and NI is that it is proportionate to our income. If we take out proportionate to our contributions too, there is no point in having a welfare state - there has to be enough in the system for those who can’t work, or who have a low income to be covered too.

Grannygrumps1

I paid 49 years worth….. so why the heck should someone who hasn’t contributed or contributed less years get the same… the system is immorally wrong.

Because, at some point, you may not have as much or have paid as much as someone else, for something you need, but we would still want to meet your needs. It called community or on a wider basis, society.

Doodledog

It probably would cover needs, but it would perpetuate inequality. Someone could work very hard on a low income and then get a lower pension if it is based on financial contributions rather than years. Of course, the better paid can also make other provision so it’s never going to be equal but at least spreading the load a bit to give everyone the same state pension goes some way towards that.

Are you agreeing or not? I'm confused. Stupid, I know.

It probably would cover needs, but it would perpetuate inequality. Someone could work very hard on a low income and then get a lower pension if it is based on financial contributions rather than years. Of course, the better paid can also make other provision so it’s never going to be equal but at least spreading the load a bit to give everyone the same state pension goes some way towards that.

Hetty58 This seems to be (yet another) discussion about the 'deserving' (or 'undeserving') poor - and whether it's fair that people get differing benefits, whether they work hard for a long time - or not.

It seems to me that we should contribute what we can - and receive what we need. Some can save for a more comfortable retirement, but, surely, nobody should be poor in their old age - not in a rich country like the UK?

I think it's hard to discern what people 'need' in different circumstance to have a decent warm home, enough food.

It seems to me everyone in work should pay into SP at the same rate on their earned taxed income - and receive minimum £18,000 p.a. and maximum £40,000 p.a. (SP).

I believe numbers in that range should work for all needs.

I agree with that, Hetty. That's the basis of a fair system - the strong protect the weak. Anyone who is unable to work should be looked after without question. I agree that it’s easy to get into discussions about who ‘deserves’ to be looked after, and that can seem divisive, but the alternative is to let anyone just opt out and expect to be subsidised by everyone else. If nobody paid in there would be nothing to take out. I would rather see higher taxes paying for better pensions, and higher benefits for carers, the sick and other groups, but the default should be that we all pay in when ( and if) we can and take out when we need to - it’s only fair.

This seems to be (yet another) discussion about the 'deserving' (or 'undeserving') poor - and whether it's fair that people get differing benefits, whether they work hard for a long time - or not.

It seems to me that we should contribute what we can - and receive what we need. Some can save for a more comfortable retirement, but, surely, nobody should be poor in their old age - not in a rich country like the UK?

A good example would be my friend, who's only worked for a couple of years in her entire life. She is 'different', has learning disabilities, never diagnosed but I'd guess ADHD and autism. She can't organise herself, is unreliable, easily overwhelmed and shuts down with any perceived stress - so basically is unemployable. It's not her own fault!

She's been supported by 'us' (the taxpayers) along with her children, for decades - so has cost us dear. Now, she looks after her mother, saving us a fortune in social care. Her children work and pay tax - and it's them, the next generation, paying our pensions.

I think that everyone should pay the same rate and get the same benefit. The Pension credit system is there to top up the income, free of charge, of those on low incomes and those better off can payments into occupational and personal pensions, paid for from income, that will give extra money to the better off.

It seems to me to be the equivalent of building certain benefits into the pension and that pension would be paid to people above the threshold for claiming means tested benefits or who required no benefits (or even a state pension) at all.

Germanshepherdsmum

Why do you think this universal pension‘would cost less overall’ DaisyAnne? Surely it would be a higher pension than at present and it would be increased to a level that many people don’t need because they have other income and savings.

Good question.

Surely a universal pension would cost everyone who earns/pays/ receives even more. People whinge about SP as it stands.

I think that high earners should pay more but everyone should get the same state pension pro-rata to number (as opposed to size) of contributions. That is based on a political belief that the strong should support the weak - what's the point of a state pension otherwise? If it came down to everyone shifting for themselves we could all just pay into private schemes.

For the record, I paid higher rate tax, (but not additional rate), which dropped to basic rate when I left work. I have no objection to my extra contributions helping the pensions of those who worked for less money, and would have supported the cap on NI being removed.

My brother is here for Easter, lives in America. He told us of their system of state pension, says it works well.

They seem to pay a minimum of 10 years into their 'Social Security' and those payments can be in years spread all through their lives, not working for this/ that reason now and again (or never for no retirement payment). They may withdraw as early as 62 for less money, 70 being best. All based on what one actually 'deposits' with a minimum and maximum. He says this year the minimum is around $1000 and most (at 70) is around $4500.

High earners pay more, collect more, with an upper max payment.

His colleagues typically hate it, he likes it quite well.

paddyann54

I paid NI from 15 to 66 and a half ,never had time off for child rearing or any other reason .Thats one of the main gripes with the change of age ,they had all that extra NI and tax for those years plus the pension we should have received at 60 for the extra years .My accountant calculated they diddled me out of over 52K !!That amount of money lost will have really messed up some womens retirement plans .

It was just a form of taxation but you're made to think it goes towards your pension.

If that had been true and it was just a pension contribution, we would not have had to pay after 39 years of contributions.

What is paid into the pot now goes to pay for our pensions, of course.

It may not be fashionable now - but Istill believe the idealogy of 'To each according to their Needs From each according to their ability'.
Fashionable or not, I firmly believe in that maxim, which is why I don’t agree that those who don’t pay in should take out.

I don’t include carers in this, or parents of sick or disabled children, and in times of high unemployment I don’t include jobseekers. But people who don’t contribute financially should not take financially IMO. There is no sensible way to measure ‘other contributions to society’, and in any case plenty of people who work contribute in other ways too. Cleaning your own house and looking after your own school-age children is not a contribution to society at large - it’s just what people do.

I agree about those who are both on the old pension and had to wait to get it being disadvantaged- that is a disgrace - and forcing women to pay the smaller ‘stamp’ is wrong too. It will be difficult to prove though, and no doubt employers knew that.

I paid NI from 15 to 66 and a half ,never had time off for child rearing or any other reason .Thats one of the main gripes with the change of age ,they had all that extra NI and tax for those years plus the pension we should have received at 60 for the extra years .My accountant calculated they diddled me out of over 52K !!That amount of money lost will have really messed up some womens retirement plans .

Ask him to be sure to clean the cutlery drawer every week too.

Grannygrumps1

I paid 49 years worth….. so why the heck should someone who hasn’t contributed or contributed less years get the same… the system is immorally wrong.

I paid 49 years worth

With the old scheme a woman needed 39 years of contributions to get a full basic State Pension, a man 42 years, as far as I remember.

Many women were persuaded or made to pay the Married Woman's Stamp and/or had a few gap years when they had young children. They did not manage to pay 39 years of contributions so do not receive a full State Pension. There are many of us.

I think with the new scheme, the number of contribution years required is not as many, but I could be wrong.

It's the women who fall into the gap of having to wait longer and who will be on the old SP I feel most sorry for.

Grannygrumps1

I paid 49 years worth….. so why the heck should someone who hasn’t contributed or contributed less years get the same… the system is immorally wrong.

So gannygrumps1, what do you think should happen to people who for any reasons have 'contributed' less than you. Should we return to workhouse, and gruel, etc/

In any case is financial the ONLY contribution that should count? what about the people who did not have paid employment (so therefore 'contributed' little or nothing) but spent their adult lives as carers for relatives, etc. Or those whose long-term medical conditions made it impossible to get and stay in paid employment.

It may not be fashionable now - but Istill believe the idealogy of 'To each according to their Needs From each according to their ability'.