One in four could lose state pension under think tank suggestion
State pension: Pensioner asks ‘who’s going to pay?’
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A recent report by the Adam Smith Institute (ASI) has suggested a radical new approach to how the state pension is paid. The centre-right think tank argued retirees with assets worth more than £1million should not be entitled to a state pension, with the payment instead being means-tested.
Recent analysis by the Intergenerational Foundation claimed one in four pensioners were millionaires.
This is if the value of their property and pensions were taken into account.
The controversial report argues offering a state pension only to those with assets under £1million would be “fairly straightforward” to enact.
It asserts such a move could save the taxpayer roughly £25billion a year, at a time when the economy is already facing increased pressures.
The institute acknowledges a move towards a means-tested state pension would be “controversial”, explaining the reason behind this.
It added: “This is because voters associate National Insurance contributions with a ‘pot I paid into all my life’.
“That this is a misconception – National Insurance is effectively general income taxation on workers, and the state pension is paid from current spending, not based on an investment portfolio – does not avoid the difficult politics.”
The report also argued the state pension triple lock should be reformed, describing it as “inflexible by design” and “unfit for purpose”.
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It posed a solution of replacing the triple lock, which is set to deliver a 10.1 percent boost in April 2023, with a “smoothed earnings link”.
Express.co.uk readers made their opinions on the matter clear, by sharing their thoughts on the report.
Paul4 wrote: “The state pension is not a benefit, people pay into it for 50 years.
“To make it means-tested would be political suicide for any party making that decision.”
Excaspat said: “The state pension is a contract with the Government for people who worked. It’s not up for negotiation with the people who worked hard all their lives.
“This is not to be messed around with by this or any other Government. The grey vote will remove anyone who tries to do this.”
While nrob remarked: “The state pension is a pittance. They should try a year on the state pension, then they would be clamouring for a very hefty increase.”
However, not everyone was opposed to the ideas put forward by the institute.
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Coudenhove remarked: “What a brilliant idea. I have advocated for a long time pensions should be means-tested.
“Lots of people are property rich and don’t need a state pension. Removing them from the state benefit could allow an increase for those who genuinely need it.”
A DWP spokesperson recently told Express.co.uk: “The UK state pension continues to provide the foundation for retirement planning and financial security in older age, with the full yearly amount of the basic state pension now over £2,300 higher than in 2010.
“Alongside this, Automatic Enrolment has succeeded in transforming private pension saving, with latest figures showing more than 10.7 million workers have been enrolled into a workplace pension to date, and an additional £33billion, in real terms, saved in 2021 compared to 2012.”
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