Will Labour Change the State Pension Age?

[@starsailor49]

Labour have already shown their utter distain for pensioners. They are far more likely to stop the pension altogether.

[@markegerton7764]

It makes me laugh when he talks about financial planning and ISA’s etc…. There are people who cannot afford to heat their home, how are they going to save more? 🤔

[@sid35gb]

Workplace pensions will plug the hole. The amount of contributions will rise and take up the slack until it replaces the state pension. Or give every child born £25,000 invested in a pension from day 1 for 65 years would provide a £3,200,000 pension pot.

[@Charles61284]

Don’t they need to give 10 years notice to any change in either state pension age or any change IE means testing

[@guyr7351]

Yes, to allow people to plan and act accordingly. So the soft proposals in place to raise to 68 in 2044 could easily be moved forward to 2036 if they make the decision in the next 2 years. However if Labour want to be in power for more than 1 parliament they would be mad to do this, certainly if they impose a reduction in tax free amount, reduce tax relief, make pensions liable for inheritance tax or other rumours going around prior to the budget. They would probably get a lot of brownie points if they did something to align the pension amount with the amount of NI the individual has paid. Not having a max value so that someone earning £25K a year gets the same pension as someone earning £100K, where the latter will have paid vastly more in NI, and potentially they get the same pension as someone who has been given NI “credits”

[@davidwebb4451]

​@@guyr7351Sorry, but I can't see them going back to an earnings related portion of the state pension (aka SERPS/S2P) after all the turmoil of getting rid of that in 2016 with the introduction of the New State Pension.

[@guyr7351]

@@davidwebb4451 no they won’t but the system we have is totally unfair as regards benefits paid out V contribution. To use Starmers’ words I would not class a salary of £30K to be the “broad shoulders” to carry the burden of their plans over the next few years. I suppose the problem is how to have a system that is not too costly and complex to administer. Salary sacrifice allows savings on NI contributions, maybe they should look at making companies have to offer this. The problem is too many people have no real appreciation of the benefits of saving into a pension, and prefer to have the cash in hand now. I wonder what % reach retirement and wish they had done things a bit different, I know I do. We live and learn

[@Benzknees]

The last govt committed to it, but it's something any new govt could ignore. More likely they'd introduce a stealth change, by withdrawing 10% of the state pension each year for anyone with other earnings/pension over a set sum (£30k has been mentioned by Sir Edward Troup, an adviser to Rachel Reeves). Effectively means testing spread over ten years, with the set sum also effectively reducing due to fiscal drag, so eventually the state pension will be all but eliminated.

[@tancreddehauteville764]

@@guyr7351 Not 2036. The recommendation was to change it to 68 on 2037, 2038 or 2039. The previous government would have opted for 2037, this was the intention.

[@jimrick52]

Trouble is, a lot of people that paid for private pensions years ago are now finding out they are not worth as much as they expected. I was in a workplace pension til I retired, but it only paid out £270.00 per annum. I decided on a lump sum withdrawal, and paid tax on it, then I had a tax increase in my wages too ( worked part time ) because my annual income increased due to the withdrawal.

[@PeterLawton-m3q]

Should of taken the tax free ammount

[@jimrick52]

@@PeterLawton-m3q my pension stated any sum I took was taxable. Only the first 25% of any withdrawal was tax free. No such thing as taking the tax free portion only. Each sum I took would be taxable. I was allowed three withdrawals within the lifetime of the pension.each independent withdrawal was taxable in its own right.

[@arthurdixon5890]

I’m 74 years old and work full time. I have always believed in the welfare state and never objected to paying for it through taxes. What does upset me is people who have paid very little into the system, getting full benefits out. I just do not believe that to be fair on those who have paid in all their lives (58 years of taxes )

[@porschecarreras992cabriole8]

@@arthurdixon5890 this upsets all of us actually. Stay healthy and enjoy long life!

[@Benzknees]

Given 56% of taxpayers get more in benefits than they pay in taxes, that's the majority.

[@arthurdixon5890]

@@Benzknees And if businesses are paying the minimum wage, the taxpayer is, effectively, supporting the businesses.

[@Benzknees]

@@arthurdixon5890 - The min wage is £11.44/hr or £20820 for 35hrs x 52wks. That sounds pretty good to me - my first job paid the modern day equivalent of £8340 (updated for inflation) for 40hrs a week.

[@tancreddehauteville764]

No idea what you are on about. You need 35 years of contributions to get the full state pension, so paying in very little will mean you get very little.

[@andypandy9931]

How could the majority maximise their ISA allowance , living expenses are far too high

[@kw8757]

Maximising for you personally means saving what ever you can afford. Unless you think you will need the money sooner than your retirement age your pension should be your first investment vehicle for the long term for the tax relief and any employer matching contributions.

[@porschecarreras992cabriole8]

Not just max the 20k ISA but also max the 60k pension as well. So save £80k + per year and live with whatever is left. Guarantees early retirement in several millions!!

[@guyr7351]

Easily done of course when the average national salary is £35K. This is one of the problems when systems like this are set up the lower to middle earners are not considered. One thing that needs to be done is raising the default payments for auto enrolled workers pensions, this should be 10-12% minimum, with employers paying more than the default 3%. There should also be employee match as part of these schemes say upto 8%, as well as salary sacrifice which saves both on NI contributions. This would help to ensure many have a decent pot to go alongside the state pension.

[@porschecarreras992cabriole8]

@@guyr7351 fully agree with you. But even 10-12% is not enough these days as a total contribution by employers and employees. We need to see more like 15-17% joined contributions going forward to manage to have enough in retirement. In my last job I used to have total contributions of 12% but wasn’t enough. Then moved to 15% but still wasn’t enough. Now I pay 55% to catch up and I have been saving for 30 years non stop.

[@guyr7351]

@@porschecarreras992cabriole8 totally agree but it has to remain affordable for both employee and employer. If you make it too high to soon then risk is they don’t join. Once they are in and can see the growth then it’s an easier sell to get people to add more. I was the same I had just started to salary sacrifice 30% of my wages for 2-3 months then was made redundant. If I could have stayed there for 3 more years would have had a massive impact on my pension pot.

[@tancreddehauteville764]

They have to give at least 10 years of notice to affected people - this is the accepted process. I imagine that the pension age will rise slightly faster than at present, so they'll bring the age 68 retirement age forward, probably to 2037 or 2038.

[@hannible1002]

They did it last time and they will do it again!

[@guyr7351]

Another good video Dominic, while the document mentioned some possibilities we can be assured Labour and or Tories in the next 5 years will make a big decision ref state pension age and how it’s paid and calculated. In their back pocket is compulsory work schemes that have effectively been in place since late 90’s although auto enrolment came later. We will soon be 30 years down that road with people hopefully having nice sized secondary pensions. It would be great if politics was taken out of the state provision ( multi party steering committee) so that the rules were not changed due to political beliefs and needs. If Labour were to announce in the budget £100K as the maximum TF amount as from April 5th that would potentially have large numbers asking for their 25% possibly causing selling of assets by the pension providers which could cause a massive slump in stock markets driving down the economy. Hopefully tax free status of ISA funds is not attacked we are already at a point where taxpayers are punished for saving money they have already paid tax on if they have over £20K in a building society. Cash ISA schemes allow reasonable speed of access to savings while keeping the tax man at bay. The state pension as is, is massively unjust. Miss a years payments of NI and gain the year back by paying £900 or less approx. Earn £30K that one years credit costs you over double that in NI deductions for the same benefit. Higher earners paying even more. We could be moving or maybe should be moving to a system based on their NI deductions being put into their auto enrolled company scheme. If the employee and employer NI deductions went into the employees pension pot they would be independent of the state system and have a much better return for the deductions. Again based on £30K salary(my last wage) nest deductions combined were £250 month, NI combined were £310. £560. Month going into your own pension account for 30 years @5% return would be close to £500K ignoring any rise in earnings ( and contributions) in that period. 40 years the average worker would be in easy street regarding a pension. Sorry it’s a long reply again, possibly shows I’m 64 with work and state pensions due in next 18 months

[@davidwebb4451]

The minimum amount being put into occupational DC pension schemes such as NEST (8% total including just 3% employer contribution) mean that such pensions won't be worth anything like enough for a happy retirement even with a full state pension. DB schemes often had employer contributions of 20% plus. and even a barely adequate occupational pension probably needs at least 15% in total contributions.

[@guyr7351]

@@davidwebb4451 totally agree more needs to be saved, but it is small steps that are required. If you make it too much initially then some may choose to opt out, the employer won’t mind as it saves them money. Once someone is in a scheme, then they should be contacted and advice/eduction given as to the benefits of increases in contributions and how a relatively small amount will grow due to compound interest over 30-40 years. Ideally get people away from having to throw large amounts in, in the last ten years. I through lack of knowledge and daft decisions lost over ten years worth of contributing into a pension. All I had was NI for the state pension that easily reduced my pension pot by about £60K

[@guyr7351]

@@davidwebb4451 totally agree David, but increasing the compulsory amount saved will need to be increased in steps, and maybe the opt out option removed to ensure every worker is saving something towards retirement above their NI contributions

[@philipgreen6085]

Perhaps they could get some of the 9 million who are economically inactive back to work

[@garycarder2694]

To maintain the balance of retirees and workers the government of the day must reduce inactive, sick and unemployed numbers.

[@guyr7351]

@@garycarder2694they need to make working pay, and not have a system where a part time worker gets crippled in loss of benefits if they go above 20 hours etc

[@davidwebb4451]

That figure of 9 million inactive includes full time students, those who are disabled or too ill to work and their family members who care for them, and those who are wealthy enough to have retired early. The previous government put the disabled and sick through the wringer with Work Capability Assessments (WCA) and Personal Independence Payment (PIP) assessments so it is doubtful that there is much scope for forcing them back to work. Family members caring for the disabled and sick save the government money so forcing them into the workforce probably isn't the best idea. And of course a well educated workforce is good for the country so probably not a good idea to target students. That just leaves those wealthy enough to have retired early but since they are wealthy they aren't reliant on benefits - you might force a few back into the workforce by raising taxes and causing a cost of living crisis but it will only be those who are just managing rather than those who retired with more savings. Hence the scope for reducing the number who are inactive is likely to be relatively small.

[@kinggeoffrey3801]

I bet they raise it to 70 by 2050. It's simple, I will just make sure I have enough money for a decade before. As long as the SIPP doesn't go above 60, that would ruin most people's plans.

[@guyr7351]

They do typically link the age to access a private pension with the state pension age e.g ten years less

[@davidwebb4451]

​@@guyr7351The problem is that even if life expectancy is rising, which I'm not sure is still the case, the period of healthy life isn't growing as much. At age 70 over half the population is too ill to work.

[@guyr7351]

@@davidwebb4451 David very true and one thing not mentioned is that there is an agreement ( across parties) that state pension age should allow a period approx 1/3rd of adult working life. 18 to 67 is 49 years, so 17 years max added to pension age is 84 years of age. Increase retirement age needs an increase of average life expectancy. Where I live there are areas where there is 14 years difference for the average mans life expectancy between the areas, some men are looking at less than 7 years!

[@porschecarreras992cabriole8]

@@guyr7351there is an argument that when state pension was introduced the retirement age was 60 and life expectancy was 61-63. So which argument we look at?

[@PeterLawton-m3q]

On the minimum wage how can you even think about being able to afford to think about your future this this just another person looking to get someone else to pay for his pension because they will no doubt charge for their advice

[@soniawoodley7805]

Pensioners pay for their final pension all through their working life. Starmer will offer pension increase frontier who work until 115 years old!! We have an obscene amount of money available for those other countries who hate our guts so let's use it where it should be used. No contest.

[@markhodson4763]

The state pension age is now 67 not 66

[@cameronjamespensiontransfer]

Hi Mark. It is currently 66. Moves to 67 between 2026 and 2028

[@markhodson4763]

@@cameronjamespensiontransfer just hope it doesn't effect me as should have retired 2026 got to do two more years now

[@cameronjamespensiontransfer]

@@markhodson4763 If it makes you feel a little better Mark, Jonathan refuses to add it to his financial cash flow plan, as he is convinced it won't exist by then! haha

[@pip1723]

More speculation.

[@cameronjamespensiontransfer]

Indeed! We'll know for sure on October 30th. We will keep you posted!

[@paulbrightwell3621]

Given the technological advancement of AI and its likely impact on healthcare and medicines - its very possible that by 2050 those people under state pension age - especially those under 50 will have much better health - including prolonged healthy years into what we currently view of old age. Alongside this - as AI progresses more and more jobs currently done by humans will be taken over by AI - people like Elon Musk see this as inevitable and that all countries will need to be bringing in some form of universal basic income - probably funded by taxing AI companies for the information that they use to develop their AI systems that originates from all of us. Alongside this - everything will get cheaper - energy, stuff, food etc - because not only will it beocme more efficient to produce everything - if AI is producing it for us - the wage costs currently paid to humans wont be needed - neither will holidays etc. The whole concept of 'pensions' will become obsolete. While we may choose to work - probably in jobs that dont look like proper jobs today - we may well not have to and instead focus on doing things that give us more satisfaction and value.

[@cameronjamespensiontransfer]

Such an interesting insight here, Paul. While the advancement of technology and the probabilities that comes with it is inevitable, in the coming future, whether we are replaced by technology or not, having a secured funds will remains important. The pension was invented centuries ago, and I believe the system will remains in the coming decades. Have you start planning for your future's finance?

[@paulbrightwell3621]

@@cameronjamespensiontransfer I'm pretty secure - I have a defined benefit pension, plus a growing workplace pension that combined with the new state pension will give me a higher income than I am on now! I agree - it makes sense to start a pension from as young an age as possible - but if the predictions about how AI will influence and change society then change is inevitable. Of course we could end up with a paper clip apocalypse scenario where a good meaning scientist asks AI to protect the climate and it concludes that Humans are it's primary threat and decides to wipe us all out.