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Pensions minister rules out means-tested state pension

Ros Altmann

Pensions minister Baroness Ros Altmann has ruled out the Government returning an element of means-testing to the state pension, warning it would “undermine” saving.

A recent survey of 208 advisers conducted by Aegon found only 4 per cent think the state pension will be in its current form in 30 years’ time.

In addition, two in five (39 per cent) think the Government will revert to means-testing and 41 per cent expect the triple lock will be scrapped.

But Altmann says: “Such speculation is irresponsible and unfounded. The new state pension will hugely reduce the reliance on means-testing ‎for future pensioners.

“Means-testing would undermine the important incentives to both save more or work longer for those who want a better later life income. We will keep our promise to protect the triple lock.”

From April 2016 new retirees will receive the single tier state pension of roughly £150 a week.

However, two thirds of people retiring next year are due to miss out on the full amount, mainly because they were contracted out of the state second pension.

The Government has also committed to the triple lock on the state pension for the life of this parliament. This means payments will rise by the highest of earnings, CPI inflation or 2.5 per cent.

Aegon managing director of retail Duncan Jarrett says: “It’s concerning to see such a resounding number of advisers foresee more uncertainty on the horizon.”

He adds: “We need to get better as an industry at highlighting to individuals how much they are due to receive, so they can then work out how much private pension they need to make up the gap between this and their aspirational income in retirement.

“If someone were to buy a state pension at retirement it would cost at least £273,000 as a one off payment to secure a weekly income of £151.25.”

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. “Such speculation is irresponsible and unfounded.” Absolute rot and Altmann should know better. Means-testing will be re-introduced some time in the next thirty years. At least ten years of that period, maybe fifteen, will be spent under a left-wing government, and one or more of those governments will reintroduce means-testing, because it’s what they do.

    We don’t know when, we don’t know how, all we know is that the odds are such that it will almost certainly happen at some point within 30 years. This isn’t speculation, it’s maths.

    To say that the current government has decreed it is not so, and so no future government in the next 30 years will decree it otherwise, is a lie so obvious that it insults the audience.

    You might as well say that it’s irresponsible and unfounded to say that a pair of dice, if thrown enough times, will come up snake eyes.

  2. I`m not sure how it can be regarded as “concerning” or “irresponsible” to expect adverse change to the pensions environment when the past has been characterised by just that. Pragmatic would be a more apt description.

  3. Planning for the worse case scenario is irresponsible and unfounded?

    I think not. Constant tinkering with pensions legislation and reduction in state benefits by the removal of the earnings related element shows that this is a very responsible viewpoint.

  4. “Aegon managing director of retail Duncan Jarrett says: “It’s concerning to see such a resounding number of advisers foresee more uncertainty on the horizon.”

    It’s simply born out of past experience.

  5. Won’t be any need to worry about means-testing in 30 years for the majority!

  6. @Sascha

    And for precisely that same reason the mooted abolition of tax relief at source should be torpedoed. That self same future government will probably then tax the pension in payment.

    Basically what we are saying and what Ros Altmann knows only too well from personal experience – government (any government) is just not to be trusted.

  7. I would be less than pleased after contributing for 50 years to find that I would be penalised for being prudent, just got to survive another six years and hope that the next Government does not get me.

  8. I fear the time is right to scrap it !

    Then lets see how important the general public think how important it is !!

    Its like my old motor bike at the back of the garage, its been tinkered, mended, new bits bolted on, but at the end of the day it just in to a, sad and sorry state

    Goodbye my old friend………

    • Sorry there is a lot of “importants” in that comment this morning !

      I will put it down to the coffee (I never have coffee first thing) I will return to the scotch tomorrow and all will be good with the world as normal !

  9. So Ros, you think it’s unwise to do the following?
    1.) Live in the real world, where things have to be paid for and there isn’t a never ending moneypit that government can dip into?
    2.) Not trust politicians?
    3.) Base our advise and pragmatism on a realistic assessment of what is likely to happen?

    And here was me thinking that you might be slightly different from the other Westminster spivs…

  10. History tells us that no UK Government can be trusted on the State Pension. To think otherwise is foolhardy. Enough said.

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