I received this data from Hargreaves Lansdown, the financial advisor, in an email this morning:
- Only 17% of people think the state pension will still be using the triple lock by the time they retire.
- This falls to 11% of 35–54-year-olds.
- 22% think the state pension will still exist, but not with the triple lock.
- 15% of people think it will be means-tested by the time they retire.
- The remaining 46% either said they didn't think the state pension would exist by then or weren't sure.
Source: Survey of 1500 people carried out by Opinium on behalf of HL in April 2025.
In light of the vote that is taking place today in the House of Commons on reducing benefits for people with disabilities, this gloomy opinion that people have on the future of the basic state old age pension seemed to be worth sharing.
What do you think?
What do you think about the future of the state old age pension?
- It will eventually be replaced by enforced private pension arrangements (25%, 138 Votes)
- It will be means tested for new pensioners (20%, 112 Votes)
- We will get a new politics and it will be improved (16%, 92 Votes)
- It will survive (14%, 80 Votes)
- It will be means tested for everyone (13%, 73 Votes)
- It will be frozen and be allowed to fade away (12%, 65 Votes)
Total Voters: 560
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Pensions are already means tested, in that income tax is paid on them.
Why do people not realise that the tax system is a way of means testing, and no other system is needed? Tax rates and exemptions can be adjusted to bring about most desired results.
I am not sure that this is what means testing means
Means testing is pre-payment
Tax is post-payment
I would suggest that adjusting tax rates and exemptions is one of the reasons we have the current mess.
Means testing involves deciding whether someone should receive a state subsidy. An unpaid carer, earning 1p more than the limit on carers’ earnings loses the entire carer’s allowance. Means testing is exhorbitantly expensive if done properly or deeply unfair if done on the cheap (as is done now0.
Despite what we’re told, the state pension costs the government nothing. Pensioners spend their money into the economy where it is used until it is taxed out of existence.
Private pensions are a scam whereby money is extracted from pensioners as profit for the benefit of the well-off, reducing the pension, and the money spent into the economy. Based on insurance contribution, it favours those earning more than the underclasses.
Private pensions are also subject to pension fraud. Let’s not forget that Robert Maxwell plundered £800-million from his employees’ pension funds, and when BHS stopped trading, it left a huge pension deficit (but boss Philip Green was “sad and very sorry”), and there are others.
This is all down to neoliberalism, the market is always right.
Governments and commentators ignore that approximately 25 % of people in England and Wales die before pension age of 66. (Mens Health Foundation / Marie Curie / ONS for those good at stats – figures vary slightly from year to year and different sources
Plus they ignore that many people contribute far more than the 35 years of National Insurance contributions. Not counting credit for higher education I have paid 45 NI years and it is impossible for anyone to pay less than 44 years NI if they work full time or slightly reduced hours from ages 22 to 66 years. I paid into SERPS, foolishly thinking it was a good idea. SERPS are not subject to the triple lock and virtually disappear in tax and yes ,I have 2 small private pension on which I also pay tax. Ironically I am eligible for Housing Benefit.
Strange how we never hear about the amount of SERPS taken in tax.
Two suggestion for Labour occur to me. Currently National Insurance is 2% for earnings over £967 per month – why not raise this ? Maybe not to standard 8% but 5%? Seems reasonable to me. Second, if the tax earnings threshold was raised to ( say)£17000 I would not have to pay tax and I wouldn’t have to claim Housing Benefit, thus cutting down vast bureaucratic effort. Also If the tax level was raised some of the roughly 37% of people who currently work, pay tax and claim Universal Credit may ne able to stop claiming. Bettrr for them and another huge reduction im bureaucracy
https://www.gov.uk/government/statistics/universal-credit-statistics-29-april-2013-to-9-january-2025/universal-credit-statistics-29-april-2013-to-9-january-2025
I am clearly not an economist or politician and I expect people to pile on and tell me I am a fool but I cannot be the only who sees the way forward for the UK should not be the demonization of pensioners, UC claimants and those with disabilities.
.
I intend to make a video on some of the economics of this, soon
Apologies, amongst my other typos I should have written that the
current 2% National Insurance rate is for earnings over £967 a week.
More than one of those options could apply, depending on how far down the timeline we look. I think it likely that the ultimate destination is to replace public with private provision – that is the whole direction of travel of our neoliberal monopolitics. We have already lost so much public provision already to the ‘can’t afford it’ lie – it’s hard to remember all the travesties that have been visited upon us since the 1970s. Maybe after they’ve finished off the NHS the vultures will turn their attention to the pension. Younger generations have become accustomed to nothing, so they won’t be surprised if that’s what they get when the time comes. An early warning sign that pensions are heading down the slippery slope of attrition will be when the language around pensions changes so they become characterised as a ‘benefit’ rather than an entitlement.
They already are in many debates. Ministers include them in total bnenfit expediture all too often.
The gov has *always* considered the pension to be a benefit, from its beginning. I found that out 40 years ago while working for the then DHSS. Quite a shock.
The State Pension is officially a welfare benefit BUT as an income replacement it has always been taxable. The State Pension thus inflates the Welfare Budget.
The DWP system and the HMRC system are predicted to crash into each other in the tax year 2027-28 when, as a result of frozen tax bands, HMRC will actually have to claw back some of the New State Pension. At the moment they just deduct the whole amount from your tax allowance which works as long as the pensioner has other taxable income.
The State Pension IS considered an income replacement benefit. In fact, it is considered to ‘overlap’ with other benefits (income replacement) such as Carer’s Allowance and only the greater of the two is paid to carers… generally the state pension. The status of pension as a “benefit” in the welfare state is already a fact.
i’ve always been intrigued why consecutive governments have allowed property prices to spiral out of control. I genuinely believe the end-game has always been to try and make people asset rich so that they can be means tested against their assets!
This is capitalism – increasing the notional value of the wealth of some at cost to the rest
I don’t think private pensions will survive over the long term.
Once the global population starts shrinking the financial markets will collapse, bringing the private pension schemes down with them.
I see more and more primary schools being closed in London because people just aren’t having enough children.
This idea that the state pension as a kind of charitable stipend, entirely contingent on the largesse of the government of the time is one that has been carefully injected into public discourse over a long period of time. This is part of a wider erosion of the contributory principle and a blurring of the distinction between NI contributions and general taxation. It’s quite pervasive.
I recall being involved in a meeting about pensions policy around 7 or 8 years ago which included a very senior trade union official. In responding to a question about improving pension credit take-up, this middle-aged individual remarked that they ‘doubted that there would be a state pension by the time they retired.’
I was shocked by this, and politely asked what other historical gains for working people the union might concede so casually. I should have been less polite.
As far as I am aware, JSA and ESA are the last vestiges of contribution-based social security for working-age people. They are largely theatrical in that the claimant’s NI history has no relationship to the value of the payments made, and indeed, they also make life more difficult for those claiming them in that they do not ‘passport’ to other entitlements. But they allow the government to pretend that social security (other than the state pension) is based on the contributory principle.
In 2020, middle-class people were laid off and started finding out both that their contributions meant nothing, and also that benefits in the UK are beyond miserly. The scrounger myth, central to contemporary politics, was under real threat, and so the furlough scheme was hurriedly introduced.
Thanks
If the contributory principle has had its day, maybe a new principle of universal non-means tested entitlement based on citizenship could form the basis of at least the state pension, even if required income/NIC tax rates are seen as politically unfeasible for this to apply to social security as a whole.
Indeed benefits are beyond miserly and the ‘scrounger myth’ runs rampant.
JSA and ESA (New Style) will only “benefit” those who have other means (through a partner) or savings which prevents them to claim means-tested benefits. For the majority, they will need to claim Universal Credit (UC) if nothing else because of needing support with housing costs, or if they have children. These benefits are counted as income in Universal Credit and fully deductible to work out how much UC they will be paid.
Same with Carer’s Allowance which is my daily frustration as someone providing 35 hours care each week who has to claim UC are on the bread line, as this is fully deducted to calculate how much Universal Credit they will be paid. The only things that makes the difference for these valuable carers is the fact that UC includes a Carer Element in the baseline of the calculation (£201.68 / month) a pittance for what they save to the public purse, which means they are effectively caring for £1.32 / hour compared to someone on UC considered a jobseeker. Carer’s Allowance benefits the better off (e.g. if you have a substantial private or occupational pension – i.e. before state pension age or have significant savings in fact you could have a million pounds it wouldn’t’ make any difference) you get the full benefit of Carer’s Allowance.
As for the State Pension at a current rate of £230.25 / week (thanks to the triple lock) it is only marginally more than the single rate minimum income guarantee for Pension Credits of £227.10 / week, the minimum the law says someone should have to live on.
Thanks
Many moons ago, I worked for a small subsidiary of Lohnro that dealt with all the employee benefits (pensions, life insurance, etc.). Unusually, most firms within Lohnro did not offer conventional “final-salary” type pensions. Instead there was a large ‘pooled fund’, with segregated member accounts. However, employees were told that they would be given a guaranteed pension at retirement – bear with me!
Instead of paying pensions from the pooled fund, the member’s account was valued at retirement date. The pension was provided by ‘outsourcing’ to an annuity provider. If, say, the member’s account valuation was insufficient to buy the promised pension, the firm ‘topped-up’ the purchase price from cash. So’ let’s imagine that the cost of the pension was £230,000, but the member’s account was valued at only £175,000. The full fund would be used to buy an annuity, with a cash payment made at the same time to the annuity provider of £55,000.
I have simplified this (ignoring lump-sums, spouse’s pensions, etc.) here but the advantage to the member was that instead of relying on his or her former employer and scheme trustees to pay the pension for the rest of their life, Prudential or Legal & General (or whoever) did!
Why do I mention this?
Well, I have run some ‘real time’ annuity quotes from the full market just now to see what replicating the state pension would cost, were it ‘outsourced’. For someone attaining state pension age at age 68, and assuming a pension of £11,973 per annum – the maximum basic state pension for 2025/26, paid monthly, and indexed by RPI (note: not CPI), the cost is rather less than one may imagine.
For a healthy individual, the lowest price (from Standard Life) was £207,998.20.
If the individual had health or lifestyle (smoking, too much booze) issues than the price would be less, perhaps a lot less.
So, my question is, should the state pension be ‘outsourced’ – is it cheaper to pay a one-off lump sum to an annuity firm than to continue paying a state pension conventionally with an entirely unknown end date?
Mark
But why would we pay them to take the risk when the state is clearly big enough to insure itself?
And, what would they invest the proceeds in? The government bonds issued to take the liabilities off the governmenmt’s balance sheet (which it is not on, by the way: there is no accrial for the state old aged pension in the Whole of Government accounts)
But I like the figure, by the way.
I’ve voted that it will survive, but I think the qualifying age will go on increasing and the triple lock will soon be replaced by, at best, a double lock.
The triple lock should not be in place forever. It was introduced to bring UK pensions in line with other pensions in the EU. When that happens (and it seems to be taking a ridiculously long time) the state pension should rise in line with inflation only. When the state pension is at a liveable level there will be no need for pension credits and the winter fuel allowance. Unfortunately the non pensioner general public have forgotten this and get very upset at what looks like generous rises every year when their wages are not rising with inflation.
I agree with the sentiment in general, but I feel you’re also missing that the “non pensioner general public” have had a war actively been waged on them and called benefit scroungers. They have also seen cuts and policy decisions that have actively been harmful to them and caused a large amount of hardship while also seeing money effectively funnelled into that pensioner base either directly or indirectly.
There is a lot more to it than just seeing pensions going up faster than wages as to why people are upset.
There is a proportion of the population that will not be productive (disability, old age, still developing, poor health, lazy etc) but have to participate in the economy regardless. The better questions are what do we do about it? What level of lifestyle should they be allowed? How do we control inflation (who do we tax and how much) to allow for this and what limits do we place upon it?
This is a pensions topic but really we should be thinking of the above because the abstract idea affects more than pensioners.
That is quite confused, but I decided appropriate to post
I wull be doing a video on the economics of all this
Effectively pension credit only increases pensioner income to the level they would have received if they had been entitled to the full new basic state pension. Even when the full new basic state pension is liveable on, there will still be a need for pension credits for those whose contribtion history has gaps. It is the equivalent of income support for pensioners.
Interesting, though the cynic in me notes that Hargreaves Lansdown is not entirely disinterested having a nice line in private pensions to offer you.
The triple lock cannot persist for ever. It was quite a while ago now, but my memory is that one of the justifications was a well-publicised report at the time showing how the UK state pension had fallen well behind those of the obvious comparator economies. It was an astute political trick to create a mechanism that would correct the shortfall incrementally without a sudden shock to the government’s budget calculations, but not so astute in that the process didn’t define in advance when its purpose would be achieved and it could be ended. That could have been done in various ways, possibly by reference to those other countries but more sensibly as aiming for a pension some fraction of the median income in work, or of a worker on the government-defined living wage.
It is interesting to see this blog in proximity to another blog today complaining about the tax relief on occupational and personal pensions. The two are linked, if as a country we have a policy to have a minimal level of state pension then we need to incentivise people to supplement that with other pensions. And actually that other blog is somewhat unfair, it quotes the total value of tax incentives rather than the extra only available to the wealthy – the extra boost due to relief from higher rate tax. I think you estimated the value of this specific benefit to the wealthy in your Taxing Wealth Report, somewhere in the £10-15Bn range.
I don’t think the state pension will go away. Even Donald Trump in America, doing everything he can to make worse for ordinary people while favouring his billionaire mates, hasn’t dared suggest any reduction in state pension (called Social Security there). It would be too politically toxic.
“if as a country we have a policy to have a minimal level of state pension then we need to incentivise people to supplement that with other pensions”
Why? Only people with spare money can afford to supplement with other pensions. Why do they need incentives if they can afford it? What will you offer those whose income means they have no possibility of supplementing their state pension?
Perhaps I would have been clearer if I had laid out the extreme positions. In order for people to have a reasonable income in retirement, one possibility is for the state to provide that reasonable income, the polar opposite is to create a situation (e.g. tax incentives) such that everyone is enabled to build up their own pension fund.
What has happened is that successive governments have provided a state pension, but at a level which is hardly a living income. It needs supplementing, and the tax incentives and recent rules about employers having to offer membership of a pension scheme (to which they also add contributions) is the way the UK tries to ensure this. I doubt that anyone ever made a formal proposal for the two-fold approach to supporting retired people, but it is what has become the UK’s policy.
Of course contributions to a pension scheme means that money has to be “spare” in that it can’t be used for other things, and is more easily done by those with more money. However historically low paid workers have successfully been encouraged to contribute (e.g. council workers) and the tax benefit and employer contributions are presumably factors.
Personally I would prefer that the standard pension was higher and supported a tolerable quality of life in retirement, and maybe it once did in a time when low rent social housing was available. But as it is many with no other pension currently struggle and often need benefit support. In a situation where supplementing the state pension is so often necessary it is hard to say that encouraging people to contribute to pensions additional to the state pension isn’t justified. However the greater tax incentive to the wealthy (higher rate taxpayers) is unjust.
[Disclosure: I am retired and have an occupational pension as well as my state pension, but know others including relatives who don’t and struggle].
I have two or three videos coming that touch more or less on the eocnomics of pensions. No doubt fake actuaries, all claimng to be from Aon, will pile in to say I have it wrong, but I will ignore them. This is a really important issue and we are getting it profoundly wrong.
I’m under 40 and what I think isn’t in the list, so I will put it here.
I don’t think I will live long enough to claim the state pension or even my own. I think many also might think this.
2 of my main reasons:
Life expectancy is in decline for a variety of reasons, those under 40 are some of the poorest and the poorest tend to have poor health outcomes. Combine this with pension age increases, and you simply won’t live long enough to claim, something will unalive you beforehand. I have already had cancer, and it’s a 30% chance to come back.
If we continue to let humanity become effectively enslaved by the wealthy, enormous corporations and absurdly rich, this is going to cause a cataclysm on the scale of a world war, seeing humongous loss of life. It may not be a war but that can happen, it could be a consequence of not preparing for climate change, a break-down of infrastructure, government ceasing to function properly etc.
I am sorry about your cancer
I know about cancer in young people, having known too may with it. Most are still alive. Good luck with yours. Statistics are just odds, at best and you have a 70% chance of not dying of cancer. Mine are only 50/50 and I’ve never had it.
But I note your pessimism, and sympathise.
I am sorry to hear of your cancer. I too have had cancer. Two different kinds, one in 2016 and one in 2018. My attitude is they have both been dealt with and they will not come back. Statistics may say you have a 70% chance it will not come back. You need to live your life knowing it will not come back.
Take care
I’m in my early 40s and don’t expect to receive a state pension.
However to put an optimistic spin on it, its because I suspect medical advances that are currently either in development or undergoing early human trials will negate various aspects of the aging process, buying citizens of my generation significantly greater life spans by partially rejuvenating our body’s systems.
Provided tbe science keeps advancing, the gains will become more extensive until aging might not really a problem anymore, although that’s obviously the most optimistic scenario.
Moreover the treatments might end being
cheaper than the costs of letting people become elderly.
For example, there are 2 different approaches about to begin human trials that could potentially cure atherosclerosis. There’s also a vastly superior Alzheimers treatment that I think recently passed phase 2, that hopefully will allow my generation to one day be effectively vaccinated against Alzheimers so we don’t get it at all. There are also trials lined up for a new medication that might partially restore our mitochondria (the batteries iin our cells whose deterioration contributes to things like old age muscle deterioration).
In those kinds of circumstances I don’t see how the state pension would make sense (what would be the retirement age?).
Either we will all have UBI instead, or inequality will take on an even worse form than it already does. I would like to think that society won’t tolerate an inequality of (potentially) unending youthfulness versus deterioration and death. But perhaps I am over estimating my generation and gen z.
I live in hope.
Regards
I really don’t share your optimism in medicine, which wants to solve nothing at all. That way they don’t make money.
And there is ahyway already a cure for Alzheimer’s disease. It is a keto diet. We did not have that disease when we had one.
The same is completely true of restoring mitochondria.
Why not try it? You could start tonight. But you will have to learn how to give up cereals, rice and root veg (celeriac and turnip excepted) for a start. Are you willing to do that? Booze also has to go.
The principle of a triple lock is a sound one. Most pensioners are retirees and have a fixed income unless they have savings or investments. They all pay taxes on their income which removes 20% or more from any increase. The main point is that money has a variable value over time in terms of purchasing power. Pensioners need increases to protect the value of their income. By the time they receive their increase, the value of their pension has usually fallen further because of the inflation between September and the following April.
I understand that people are living much longer, but the gov can always extend the pension qualifying age to reflect this, as they’ve already done.
I don’t believe the UK state pension is ‘generous’ compared to EU countries. Of course, other countries may require higher contributions to provide better pensions.
Any citizen is always free to arrange a private pension to supplement their compulsory work pension and the state pension. If they can afford it- most can’t.
Its interesting to look at the experience of Timex in the UK & Australia
Timex was an early user of ‘defined contribution’ pensions meaning that staff were retiring with very different pensions for the same service.
Australia in the meanwhile privatised their pension system with similar results, poorer workers ending up in badly performing funds, lack of transparency about charges oh and the Australian Stock Market has never had a major fall – I wonder why?