According to the Organisation for Economic Co-operation and Development think tank the answer is definitely yes. They are suggesting government drops pension payments to the wealthiest 5% to 10% in order to give more to those who need it most (1).
Under the UK’s current pension system anyone who has paid national insurance for 30 years is eligible for the state pension, regardless of their financial circumstances (2).
Mark Pearson, deputy director of employment, labour and social affairs with the Paris based think tank described the UK as facing the rising costs of an ageing population, with more pensioners and fewer people of working age.
“Faced with these pressures, are you going to ask people of working age to pay more, or people to work longer before they can claim their pension?”
“Or another way to ensure an adequate pension is to think about whether the pension should only be paid to those who really need it, to ease the tyranny of the maths. Giving less [pension] to the people at the top would free up resources to increase general benefits.” (1)
Pearson described the UK’s current pension provision as among the least generous of the OECD’s 35 member countries. The basic state pension is worth £6,360 a year, and the full new state pension introduced in 2016 is worth £8,297 a year (3).
Tom McPhail, from Hargreaves Lansdown dismissed the OCED idea, “It sounds like a pretty bad idea. If you want to take money away from the rich, the tax system is usually a better place to go.”
“It has the potential to be quite socially divisive and one of the essential and valuable elements of the state pension is the reasonably clear and simple entitlement structure – if you pay your national insurance, you will qualify for it.” (3)
The debate over means testing is the second pension topic to feature heavily in the general election campaign following Theresa May refusing to rule that a re-elected Conservative government could scrap the “triple lock” on state pensions (3). The “triple lock” ensures that the basic state pension increases each year by the same as average earnings, the inflation rate or 2.5% – whichever is the highest.
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.