I just hope you never worked for a recruitment company Allira.
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The state pension will not be means-tested under Labour, and the triple lock is safe
(79 Posts)From the i.
inews.co.uk/inews-lifestyle/money/pensions-and-retirement/state-pension-means-tested-confirms-minister-triple-lock-3578607
The state pension will not be means-tested under Labour, Pensions Minister Torsten Bell has confirmed.
Speaking exclusively to The i Paper at the Pensions and Lifetime Savings Association (PLSA) conference in Edinburgh on Tuesday, Bell dismissed the idea of introducing means-testing when asked, stating: “No, only Kemi Badenoch thinks that’s a good idea.”
He also confirmed that he has no plans to scrap or amend the state pension triple-lock, which ensures pensions rise annually by the highest of inflation, average earnings, or 2.5 per cent.
Currently, the full new state pension is worth £221.20 per week (£11,502 per year), and under the triple-lock, this will rise by 4.1 per cent in April to £230.30 per week (£11,975 per year).
Asked whether reforming the triple-lock was being considered, or abandoning it all together as they are considering on the Isle of Man, Bell replied “no.”
His comments come amid renewed debate about the sustainability of the triple-lock, which was introduced by the coalition government in 2010, and whether means-testing the state pension could target resources more effectively.
Means-testing is a system where pension payments are assessed based on an individual’s income or savings, reducing payments for wealthier retirees.
Countries including Australia and Canada have adopted means-tested pension models, where state support is targeted at those most in need.
Conservative MP Kemi Badenoch previously suggested means-testing the state pension as a way to control spending, sparking backlash from some critics which argued that such a move would undermine the principle of universal support for retirees.
According to the Office for Budget Responsibility (OBR), the state pension system costs UK taxpayers £125bn a year – and that figure is set to rise significantly in the coming decades, which experts at RTS financial planning think “may force the Government into making tough decisions”.
A recent blog post from financial planners RTS touched on this. It read: “The rising costs are unsustainable.
“By 2045, the number of pensioners is projected to skyrocket, and the state pension could swallow an even larger chunk of national spending.”
Poor economy is harming people’s pensions, says former Labour expert
While the triple-lock has improved pensioner outcomes, it is costly and less targeted than some alternatives, it said.
The pledge costs an extra £11bn per year, the Institute for Fiscal Studies (IFS) previously said.
Recent IFS analysis warned that the triple-lock could make pension spending unpredictable and urged policymakers to consider linking pension rises to earnings growth alone.
The Organisation for Economic Co-operation and Development (OECD) has similarly called for reforms to ensure the UK’s pension system remains financially sustainable in the long term.
On the broader pensions landscape, Bell addressed ongoing responses to the inheritance tax (IHT) on pensions consultation.
When asked if there would be any changes to the Government’s approach following the feedback, he said: “We are not going to be changing the approach to the consultation on the detail.
“We’re going ahead with making sure that pensions are used for their intended purpose — the clue is in the title.”
Bell, who was appointed in January this year, described how the Noughties presented a challenge of ensuring that people continued to build up pension savings.
He said: “Policy provided the answer in the form of automatic enrolment.
“Solutions were found, and that should give us confidence for our own challenges today. But … we took too long to find innovation in the face of a chronic problem, rather than a crisis.”
Turning to the current landscape, Bell identified the primary challenge as ensuring pension savers get better returns on their investments.
“I agree the level of contributions is an issue, but … today’s problem is, how do we deliver better returns to savers so they can have a decent standard of living in retirement without asking any more that is necessary of their standard of living in the here and now?”
He stressed that ensuring strong returns is essential before focusing on raising contribution levels, adding: “That’s why phase one of the pension review on the landscape, and the pension bill, will help reduce costs in the system and put accumulation on a firm footing. This must come before phase two on adequacy.”
Warning that the damage caused by poor investment returns should not be underestimated, Bell described it as “just as destructive” as pension scheme failures.
He explained: “The damage done by poor returns, including during the accumulation phase, maybe feels less binary and catastrophic than the risk of Maxwell-style vanished promises. It is a mistake to underestimate its impact on savers.
“So that, for me, is today’s exam question. We’re making good progress, and I look forward to answering it with all of you over the months and years to come.”
I repeat the facts from his own website:
"Torsten Bell is the Labour MP for Swansea West, and has been an MP continually since 4 July 2024. He currently holds the Government posts of Parliamentary Secretary (HM Treasury), and Parliamentary Under-Secretary (Department for Work and Pensions)."
Torsten Bell has had a remarkable rise for a new MP.
He has hardly had any experience as an MP before his promotion.
Quite remarkable.
I’m a bit guilty of that here as it seems impossible to discuss any aspect of SP without someone coming along and repeating the fallacy that people on basic SP are so much worse off than those on new SP. I always feel duty bound to rebut. Apologies for derailing.
It is reassuring to hear that the triple lock will remain because Trump’s tariff wars are sure to create high inflation. We did see the triple lock suspended due to post-pandemic inflation though. I can’t see it happening this time around as there is such as surplus in the National Insurance Fund.
Means-testing may come in time but it would have to have a long lead of 10-15 years and, as I said upthread, it would be very risky when workplace pension funds are invested in the stock market and subject to the serious fluctations sometimes caused by government incompetence.
Pension funds would fail if Reform ever got near Number 11 with no mechanism to save them as it wants to abolish Quantitative Easing, that is, to stop the government creating new money in times of crisis as it did in 2008, 2020 and 2022.
I did watch the Torsten Bell video. He’s right about short-termism being at the root of so much that is wrong. Although not mentioned there, I believe he’s in favour of a smoothed earnings link rather than the triple lock. From the Resolution Foundation in 2020 (so the % quoted relate to then):
The policy answers to these challenges are to replace the triple lock, and pay more attention to the contrast with working-age benefits. A minimal and temporary fix would be to operate the triple lock over the coming two years as a whole, so that the State Pension would be likely to rise by 5 per cent (twice 2.5 per cent) over two years (given this should exceed two-year growth in earnings or prices).
A better approach would be to replace the triple lock with a smoothed earnings link, which maintains the peg to earnings over the medium term, but allows short-term deviations to protect the State Pension’s value during periods of weak wage growth, or fast price growth. If the Government wants the State Pension to continue to rise faster than earnings, it should in addition set a clear objective for the level of the State Pension relative to pay – as it does for the National Living Wage – and supplement the ‘smoothed earnings link’ with a fixed additional annual rise until that target value is reached.
www.resolutionfoundation.org/publications/locked-in/
FriedGreenTomatoes2
Good idea Doodledog.
😂
You didn’t need my suggestion to do that, FGT.
I really just meant that it is utterly tedious for every single thread to descend into a slagfest against the government, even when it is pointing out good things. I’m not surprised so many people are depressed these days.
Allira
PoliticsNerd
For those who aren't familiar with Torsten Bell, he was appointed Parliamentary Secretary in HM Treasury and Parliamentary Under Secretary of State in the Department for Work and Pensions on 14 January 2025.
This is a good introduction www.youtube.com/watch?v=O1fEc2hPrI8 It was recorded fife months ago be he got the job in the Treasury.He has hardly had any experience as an MP before his promotion.
Quite remarkable.
"Torsten Bell is the Labour MP for Swansea West, and has been an MP continually since 4 July 2024. He currently holds the Government posts of Parliamentary Secretary (HM Treasury), and Parliamentary Under-Secretary (Department for Work and Pensions)."
Did you even bother to look at what he did do before he became an MP? Your bias is there for all to see Allira your "let's not bother about the facts". Why quote my post when you obviously didn't watch to find out what it could tell you.
Good idea Doodledog.
From the Telegraph just now:
“Disability benefits ‘open to abuse’ as face-to-face checks collapse”
“Less than 2% of claims are evaluated in person, compared with 80pc before the pandemic.”
No s**t Sherlock. 🤷♀️
Anyway, Liz Kendall will outline a plan to reform disability and sickness benefits next week. Not before time.
Why not start a thread about the things the government is doing or not doing, instead of diverting from the fact that they are not going to means-test the pension or scrap the triple lock? We can't discuss everything on one thread, and heaven knows there are enough threads slagging off the things they do that people don't like - can't we have one that is reassuring to those worried about the propaganda from sections of the media?
The huge profits for MOTABILITY are under scrutiny. Plus the criteria for eligibility is under consideration by the government. The company apparently runs a £4 billion surplus. Enough, it’s said to completely run 4 hospitals for a whole year.
Taxpayers money needs to be more accountable. We expect value for money in these straightened times not profligacy.
Unfortunately, they're looking at cutting other "benefits", eg., for the disabled. Labour is no longer the working man's party, it's a carbon copy of the Tories. I personally would never vote for either of them.
If you believe all that then you need to think twice.
I do not imply anything and I do wish you would saying I have said things that I haven't.
Contracting out depended on the kind of pension scheme. If the entire scheme was contracted out then there was no individual choice but in some schemes there was choice.
Contracting out gave a Guaranteed Minimum Pension (GMP) which should have provided an occupational pension equivalent to the additional state pension that the employee would have received had they not been contracted out of SERPS.
Steve Webb explains all this is his paper:
Why is money being deducted from my state pension
The mysteries of CODs, COPEs and Contracting Out explained
www.lcp.com/media/1150050/why-is-money-being-deducted-from-my-state-pension.pdf
I was compulsorily contracted out whilst working in the public sector and that has certainly enhanced my occupational pension over and above the loss to my SP. When I moved to the private sector I took out a pension with Equitable Life, who advised me each year to contract out, which was beneficial - until EL’s problems came to light and they magically advised me to contract in again. We all know how that panned out.
MaggsMcG
They've said things like this before and gone back on their word. They should not target disabled people they should target the unemployed first.
Hopefully no reversal.
Disabled people and the unemployed weren't mentioned, were they?
Allira
Being contracted in or out was not a choice as you imply.
It wasn’t, but I can understand the rationale for contracting out in the public sector, because our pensions are more generous than the vast majority of private sector pensions, and that was taken into account.
Being contracted in or out was not a choice as you imply.
Pensioners on the old system lost out when they brought in the new system.
No they didn’t because under the new system, people can no longer build an additional state pension by paying SERPS/SSP.
Under the old system, at current rates, someone who was never contracted out of SERPS could have a basic pension of £169.50 plus £218.39 per week in additional state pension. That’s £387.89 per week.
Under the new system, the maximum pension someone can build at current rates is £221.20.
Whether anyone gets those amounts or not depends on their contribution record and other pension provision.
Which figure did I quote, *yellowfox'?
I posted an article from the i, and I don't think I have posted figures myself. I am fully aware that people on both systems get differing amounts, so it seems unlikely that I would quote figures for anyone other than myself.
Perhaps it is you who needs to get her facts right?
Doodledog, you need to get your facts right. Those pensioners on the old system lost out when they brought in the new system.
I receive 434 pounds less than the figure you quote.
Lucky you if you're on the new pension.
Anyway, lets face it - they give with one hand and take with the other.
Take off your rosy spectacles Doodledog
I understand now. I knew that Class 4 didn’t count. Just another tax.
I paid 50 years but only 35 count. However what the post 2016 contributions (i.e the post SERPS years) did was to “burn off” some of the contracted out years.
Though born after April 1953, my pension is calculated under basic SP rules. I don’t get a full SP due to COD/RDA and the GMP element of my occupation pensions doesn’t keep pace with the aSP I would have had had I not been. SERPS/SSP adjustments are a complicated mess. If anyone really wants their mind blown then ask for a Working Life Letter and try to understand the numbers.
I’m particulary disadvantaged as I was widowed young, my DH dying ten years before his 65 birthday. Had he lived to 65 and died after that I would have inherited 50% of a considerable amount of SERPS when I reached SP age. I just assumed I would get that 50% at 66 but I don’t as I was widowed before I was 55. It’s feels very unfair to have one’s husband die young and then be told you can’t inherit what has just been sitting in a pot that he paid into for years and didn’t live to benefit from. That doesn’t apply to widows who fall within the old SP system. So as well at “losing” £40,000 through equalisation, I’m set to lose a further £25,000 in inherited SERPS if I live to my eary 80s.
The rule changes between old and new State Pension is a lot more complex than people understand. As Paul Lewis says at the end of the i article:
The new state pension was invented in the 2010s by Liberal Democrat pensions minister Steve Webb. He wanted a simple flat-rate pension for all. The Treasury did not want to spend any more money. So the rate was fixed to ensure the new state pension would, in the long run, be slightly cheaper than the old one it replaced. So what appeared to be a rise was in fact a cut.
In all but 5 years of me paying Class 2 and Class 4 NI I had already paid Class 1 sufficient to qualify that year towards the State Pension so neither of those payments gave my ANY benefit at all. Class 4 actually never counted towards the pension anyway - it was effectively an extra amount of income tax for no reward.
In fact, in total I paid more NI than my DH did despite him earning more than me in most years and yet his SP is £100 a month more than mine.
Why are you quoting me as saying?
And I think it should be repeated as often as necessary.
I did not say that.
Yes, of course there are some people on small State Pensions, some less than £10 a week but that is because haven’t work the necessary years to get a larger one. The poorest will get support via Pension Credit which makes them better off than people on full new State Pension who have no occupational pension.
What does need repeating is that the new State Pension rules have removed a lot of the inhertance rights that people on old State Pension still have especially for young widow(er)s and surving civil partners. Young widow(ers) and surviving civil partners have been badly disadvantaged by the new State Pension rules.
Based on data extracted from Stat-Explore in May 2023 it shows that only 1.7 million of the 3.4 million pensioners who fall withing the nSP rules get the full amount. Some 300,000 received less than the rate of the old State Pension.
Perhaps you could use Stat-Explore to provide similar stats for people on old State Pension.
People with the largest earned or inherited pensions will be those born in the 1930s and 1940s particulary widows who have had their SPs topped up to 100% from their late husband’s contrubutions and inherited 100% of his SERPS. That cannot happen now. I volunteer at a help centre and regularly encounter elderly widows with State Pensions well in excess of £300 a week often around the £350 mark.
Silverbrooks - well observed. Wrong thread 😂
Barleyfields
So do I Allira. My old SP is considerably lower than the new SP, partly due to having been contracted out for many years - in theory that should have enhanced my private pension but sadly that was with Equitable Life …. And of course the gap between old and new widens each year.
I nearly picked Equitable life for the AVCs I paid for many years; there was a choice of two firms, luckily I chose the other one. Even so, that £59 per month isn't making me wealthy 😃
There were many cases of misselling of pensions and of mortgages, really quite scandalous.
I think some people on the new State Pension think that those of us on the old State Pension are living it up with all the add-ons we supposedly get!
Some old state pensioners get a total pension of more than £450 a week.
Some could mean three.
Many women would be glad to receive that amount in four weeks.
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