Means Testing of pensions?

[mikealdren]

My query was: wouldn't it in fact be easy to sort out who very definitely didn't need it, rather than those who did? Would it amount to a significant amount or not? They know that the average wealth of 65-year-old retirees is £790,900 - but that might be distorted by the wealth of x billionaires, I suppose. In which case, quoting an 'average' is meaningless anyway.

Yes the average is meaningless, certainly those the the south east will have much more wealth in their housing than in other parts of the country to an extent that makes the £790,900 average totally ridiculous.

[oddoneout]

Yes the average is meaningless, certainly those the the south east will have much more wealth in their housing than in other parts of the country to an extent that makes the £790,900 average totally ridiculous.

This got trotted out during a discussion of the retirement housing model of leasehold flats with high service charges (a consumer issue with McCarthy and Stone). I was musing about how long companies could keep building and hoping to profit from such developments as more of the target market is going to be facing a less comfortable retirement financially. The "most wealth and increasing among the over 55s" was trotted out, together with an article from Savills about trends in the SouthEast(which as we all know is so representative of the rest of the country...). Another reply linked to a Resolution Foundation article about inheritance values, which actually supported my view, but presumably the commenter had just cherry picked the "value of inheritance rising" strapline, and ignored the rest. No thought seemed to be given to what proportion of the population comes into those categories now, nor whether in 10 years time the over 55s cohort will be in a similar position to the current cohort.
Figures mean nothing without context.

[gradus]

I hadn't come across the £790k average before, presumably it is inflated by ludicrous property prices and doesn't mean that the average pensioner is sitting on a £790k nest egg just waiting to be spent; not according to the figures from 'Individual-level results from the seventh round of the Wealth and Assets Survey covering the period April 2018 to March 2020. Median total wealth for individuals in Great Britain was estimated to be £125,000 between April 2018 and March 2020. The mean was higher at £305,000, reflecting the uneven distribution of wealth across the population.'
Whither £790k? Is it accounted for by the ever-ascending increase in property prices?

[french frank]

Figures mean nothing without context.

The average age of the UK population is 40.7 years. Most people in the UK are 40.7 years old, with others on either side.

Median or mode are more useful than mean/average..

[french frank]

Whither £790k? Is it accounted for by the ever-ascending increase in property prices?

Not only are property prices higher in the south-east: more people live there. Inequality in the UK is the problem.

It's not a question of whether junior doctors should be paid more than unqualified staff in care homes. It's how much more are they worth? How much less than a 50-year-old specialist consultant? (Examples not restricted of course to the healthcare sphere).

[gradus]

Not only are property prices higher in the south-east: more people live there. Inequality in the UK is the problem.

It's not a question of whether junior doctors should be paid more than unqualified staff in care homes. It's how much more are they worth? How much less than a 50-year-old specialist consultant? (Examples not restricted of course to the healthcare sphere).

We have the answer with public sector pay bodies who spend a great deal of time investigating worth and making recommendations, but they are usually only advisory and it is difficult to see how they could be otherwise given our system of government budgetting. I have no idea what research they carry out but it will undoubtedly involve comparisons - who designs them and who enquires about the design?
Large businesses in the private sector used to employ remuneration consultants , maybe still do, whose job was to tell boards how much they should pay themselves. The research was based on detailed questionnaires covering things like the scope and responsibilities of the job and the financial responsibilities and imv were simply cover for remuneration committees awarding generous pay increases, so that if shareholders kicked up, they could be blinded with stats proving that the remuneration package was only keeping up with the rest.
Needless to say the lower orders were given what the company 'could afford', never mind fancy statistical comparisons.

[akiralx]

Here in Australia the age pension is subject to both an assets and income test:

Assets test for Age Pension - Age Pension - Services Australia

Income test for Age Pension - Age Pension - Services Australia


The principal residence is excluded from the former, though a spouse/partner's income is included in the latter.

[mikealdren]

I hadn't come across the £790k average before, presumably it is inflated by ludicrous property prices and doesn't mean that the average pensioner is sitting on a £790k nest egg just waiting to be spent; not according to the figures from 'Individual-level results from the seventh round of the Wealth and Assets Survey covering the period April 2018 to March 2020. Median total wealth for individuals in Great Britain was estimated to be £125,000 between April 2018 and March 2020. The mean was higher at £305,000, reflecting the uneven distribution of wealth across the population.'
Whither £790k? Is it accounted for by the ever-ascending increase in property prices?

If the £790k includes the value of pension funds rather than just savings and material assets then it's much more easily understood. After all the state pension at £11.5k p.a.is worth £230k using the government calculation of 20* annual value at 65.

[Petrushka]

I can't help thinking that Reeves might have made a mistake in axing the winter fuel allowance without at least making some provision for those caught in the borderline of having or not having pension credit.

I'm been fiscally dragged into paying tax on my pensions and one of the smallest ones has been wiped out but otherwise I'm not likely to miss the WFA. One of my friends however, much wealthier than I, is spitting feathers at the loss which I find laughable as it's chicken feed to her.

[teamsaint]

All of this “ a quarter of the retired are millionaires “ is just statistical tosh, spouted by some in the media in the cause of inter- generational warfare.
Labour have made a serious error of judgement on the WFP if they think this has anything to do with fairness. But they have probably calculated, ( hopefully wrongly) that on balance their demographic will be broadly in favour.
A lot of people on very modest incomes will be noticably hit by the withdrawal, and some people really quite badly. Great move by the workers party.They should feel thoroughly ashamed, esp given their own comments on this when in opposition . But I don’t think they are likely to .

[french frank]

Labour have made a serious error of judgement on the WFP if they think this has anything to do with fairness.

An aggravating factor is that the number of those who will miss the fuel allowance most don't claim what they're already entitled to - which is the reason why they will be denied the fuel allowance. An alternative mechanism would be to ensure that they automatically receive their entitlements. We are given to understand that this can't be done cost effectively.

I once had a reply from the Chancellor of the Exchequer (then James Callaghan) in answer to a query: "The collection of tax cannot proceed on the basis of a minute enquiry into a multiplicty of personal details." So that was me told.

[oddoneout]

An aggravating factor is that the number of those who will miss the fuel allowance most don't claim what they're already entitled to - which is the reason why they will be denied the fuel allowance. An alternative mechanism would be to ensure that they automatically receive their entitlements. We are given to understand that this can't be done cost effectively.

I once had a reply from the Chancellor of the Exchequer (then James Callaghan) in answer to a query: "The collection of tax cannot proceed on the basis of a minute enquiry into a multiplicty of personal details." So that was me told.

The drastic reduction in services and support that would help such people get what they are eligible for exacerbates the problem; it is unreasonable and impractical IMO to expect the likes of AgeUK and other charities to fill the gap. I've just been looking at the information for who can claim and it isn't exactly easy to sort out if you aren't comfortable with "if A then B except if F" type information, not helped by needing to apply online (no surprise there!) or by phone.
It's reckoned that over 800,000 don't claim although eligible to do so, and that's bearing in mind that changes brought in in 2019 reduced the number of people who could claim, by excluding those with partners not of pension age. The other important aspect of that figure is that Pension Credit enables other benefits to be claimed, such as help with health and housing costs, so it isn't just the pension top-up that many will be missing out on. A pensioner can be eligible if living with other people such as family, which obviously can be positive for the whole household.
The problem of lack of uptake of benefits is longstanding and can't be blamed on the previous "government", although it certainly didn't do anything to improve matters. Unless the Pension Credit issue can be sorted I tend to agree that the decision regarding WFP is not a wise move.

[teamsaint]

An aggravating factor is that the number of those who will miss the fuel allowance most don't claim what they're already entitled to - which is the reason why they will be denied the fuel allowance. An alternative mechanism would be to ensure that they automatically receive their entitlements. We are given to understand that this can't be done cost effectively.

I once had a reply from the Chancellor of the Exchequer (then James Callaghan) in answer to a query: "The collection of tax cannot proceed on the basis of a minute enquiry into a multiplicty of personal details." So that was me told.

Isn’t that called a tax return ?!

[teamsaint]

The drastic reduction in services and support that would help such people get what they are eligible for exacerbates the problem; it is unreasonable and impractical IMO to expect the likes of AgeUK and other charities to fill the gap. I've just been looking at the information for who can claim and it isn't exactly easy to sort out if you aren't comfortable with "if A then B except if F" type information, not helped by needing to apply online (no surprise there!) or by phone.
It's reckoned that over 800,000 don't claim although eligible to do so, and that's bearing in mind that changes brought in in 2019 reduced the number of people who could claim, by excluding those with partners not of pension age. The other important aspect of that figure is that Pension Credit enables other benefits to be claimed, such as help with health and housing costs, so it isn't just the pension top-up that many will be missing out on. A pensioner can be eligible if living with other people such as family, which obviously can be positive for the whole household.
The problem of lack of uptake of benefits is longstanding and can't be blamed on the previous "government", although it certainly didn't do anything to improve matters. Unless the Pension Credit issue can be sorted I tend to agree that the decision regarding WFP is not a wise move.

This is such an important area, and the above is all very well described.
I wonder what is the position, which will increasingly be the case, for those who have full state pension, and little other income other than a modest drawdown pension pot.At the moment, I think, those with savings( presumably including small pension pots) between £10k and £25 are ascribed “ deemed income”, which I guess may take many people over the pension credit level.
Anyway, the cliff edge for losing or qualifying pension credit benefits really needs dealing with, both for practical help and for fairness in the system . But it is going to be tricky, and with the current political blame game around govt finance , unlikely to be addressed meaningfully, I suspect.

[Dave2002]

…..an article from Savills about trends in the SouthEast (which as we all know is so representative of the rest of the country...).

I love it when I have to put on my irony detector!