Analysts are warning that there is growing “uncertainty” over the future of the state pension as potential means-testing “rumours” continue to circulate following recent actions by the Government.
Research conducted by Hargreaves Lansdown has found that Britons are becoming increasingly unsure whether the retirement benefit will exist in its current form going forward.
A survey conducted by the firm found that around one in five Britons thought there might have to be form of means-testing put in place to ensure the state pension survives.
Means-testing refers to the practice when an individual or household’s income is taken into account to determine their eligibility for financial support from the Department for Work and Pensions (DWP).
Earlier this year, Chancellor Rachel Reeves confirmed that Winter Fuel Payments, a previously universal payment for pensioners that offer up to £300 in energy bill support, will now be means-tested.
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Going forward, older households will now need to be in receipt of certain benefits from the DWP to qualify, such as Pension Credit and other support for those on low income.
This decision by Labour has received significant backlash from MPs, charities and anti-poverty campaigners as it comes when energy bills are at their highest over the winter months.
Notably, the financial services firm’s survey found that only one in 10 people do not believe the state pension will exist by the time they reach retirement age, which is currently 66.
As it stands, the state pension age threshold will gradually increase to 67 for those born on or after April 1960 with a further hike to 68 likely to take place sometime between 2044 and 2046.
Furthermore, Hargreaves Lansdown’s poll of 1,600 Britons revealed that 21 per cent of respondents believe the benefit will still exist and that the triple lock pledge would remain in place.
Under the triple lock, state pension payment rates go up every year by either consumer price index (CPI) inflation, average earnings or 2.5 per cent; whichever is the highest.
Some 24 per cent of those polled admitted they think the some variation of the pension will remain in place but were less sure that the triple lock will continue to exist in the years to come.
More than a quarter of Britons remain unsure over what the future of the state pension will look like and whether it paid to them in retirement.
Currently, workers need to have 35 years of National Insurance contributions under their belt to get the full, new amount.
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Helen Morrisey, the head of Retirement Analysis at Hargreaves Lansdown, outlined the dilemma the country finds itself in when it comes to administering the state pension.
Morrisey explained: “There’s ongoing debate as to whether the triple lock should remain as the measure used to uprate the state pension or whether it’s too expensive.
“Other rumours centre on whether the State Pension age will need to rise in a bid to manage costs or if state pension should actually be means-tested. It’s certainty that people need if they’re to plan for the long-term.
“The state pension and the triple lock’s role within it needs to be at the heart of the government’s ongoing pension review to make sure it’s put on a sustainable footing. That way people can plan for their future without fear of major change.”
