UK State Pension - Is it really enough?

Cossy. I think you are starting from a faulty assumption:

[ Quote] I am assuming minimum wage is calculated based on what our government believes is the minimum amount of money the average person requires to live.

It isn’t. It’s a pay floor - designed to protect as many low-paid workers as possible without hurting jobs or the economy.

Guidelines are:

• It should not fall below two-thirds of median hourly earnings

• It should take take into account increased costs of living over the previous year and/

• Considers the impacts on businesses and the wider economy.

It’s the third one that’s problematic.

In short, people could and should be paid more, Union leaders such as Mick Lynch repeated call for a proper living wage but employers don’t like it, whether they would be able to pay it or not. Heaven forbid that the CEOs and other directors of some of our largest employers should be paid less than £5 million a year and often much more. But then if these employers paid their employees more how would small businesses compete for staff?

We know that wage growth leads to inflation because employers push the increased costs of providing goods and services to consumers. In addition, consumers with more money tend spend it chasing a limited supply of goods and services and that causes inflation too. It’s a vicious circle.

We know that the discussion about removing the triple lock is to uncouple it from earnings growth but that would leave pensioners unable to keep up with the cost of inflation caused by earnings growth - which would be unfair.

Again, as I said in my first post, the way to deal with this is to control the costs of life’s essentials, the things we have to spend most of our money on: food, water, energy and the biggest one, housing (including the taxation of housing through council tax). Tackle those, especially extortionate private rents and we would need far fewer safety nets.

And the real big one overarching all of those is the cost of adult social care. Nationalise that and remove the moneymen creaming off the top and we would all have to pay far less council tax.

All that said, I could live on my SP alone which would be full but for contracted-out deductions as I paid NIC for 50 years. I do live very simply though. However, without savings to fall back on, it would leave very little for any luxuries, for larger household maintenance costs or to replace my ageing car which is just scraping through its MOT each year and other emergencies.

My biggest outgoing is council tax even with 25% single occupancy discount but if I had only full SP I would qualify for enough Council Tax Support to bring my income up to the £15,000 mark - as you have suggested as a benchmark.

But do we want to pay more in tax as in other countries to fund an increase in SP?

Is the UK State Pension really enough?

No, not in my opinion.

If I didn’t have my ex husbands added pension my state pension is £800 per month. I don’t see how I could possibly live on that. My monthly outgoings are £200 and then there are things like car tax, mot, boiler maintenance. I wouldn’t be able to put money into my crisis fund or save up to replace my old car.

valdali

I'm fine on £10, 600 per year my occupational pension.
I sell a few things on Ebay & have savings I could use till I get my state pension in 18 months time at 67.
DH works & pays our council tax & most utilities, but I buy 95%
of food & household items, pay half tradesmen's bills, pay for our holidays, run a car, pay all the vets bills.
We're in an "expensive" area. I thought I would be dipping in to my savings, but so far I seem to have enough for what I want.

I can't see the logic in the state paying people the same p.a. whether they're top earners & single, or unemployed with 2 children & additional costs associated with disability, Cossy? Is this what you meant? I might be missing something....

If you mean my para on UBI, that’s how UBI works. Every individual is paid a flat rate and what they then choose to do to generate more income, which is taxed from the first penny earned, is up to them.

I don’t think any country has ever fully adopted it but there have been “trials”

We even trialled it here, for a year believe, but with a very small group of careleavers.

It’s clearly very innovative and entirely different from any welfare or benefits system we’ve ever had, but some agonists seem to believe it would actually work.

The UK bill for all benefits and SP in 2025 was £215 billion, so I can see how some believe this might be a better route.

If I had to live on just my own earned State Pension, it would not be enough, but it has increased since my husband died. Still not enough, as neither of us had complete contribution records because of time out for training / children.
So my SP would need to be topped up.

But I have my own occupational teachers’ pension, albeit from only 22 years contributions, and now half of my late husband’s occupational pension. Altogether this is more than some people earn.
I would not expect my State Pension to be increased now to the equivalent of minimum wage. The country cannot afford it and I don’t need it.

But surely the money we get in our state pension goes back into the economy anyway. Thankfully, when my marriage ended 25 years ago, my solicitor negotiated one of my husbands pensions as part of the settlement. Retirement was such a long way ahead back then and I was too stressed to even think so far ahead. The pension from my NHS job is @£80 a month and I’d been a stay at home mum prior to that. If I was on just a state pension I would not have been able to help my children with child care as I couldn’t afford to run my ancient car. Couldn’t afford to move house. Couldn’t buy anything apart from essentials. Growing up and growing older I always thought I lived in a country that would indeed look after me ‘from the cradle to the grave’.

Shinamae

I have the old rate state Pension and I also work 18 hours a week. I usually pay about £160 a month, tax
So with my wages and state pension I have about £18,000 a year, when I read on here some peoples Pension pots I can’t believe how much they’ve go 😵‍💫I never had a workplace Pension and actually I do manage well enough(I don’t drink drive or smoke)
I was able to buy my council house outright 23 years ago so I have not got the burden of rent Or Mortgage…

I think you do extremely well.

My husband and I are both fully retired, both have new SP and very modest private pensions.

I'm fine on £10, 600 per year my occupational pension.
I sell a few things on Ebay & have savings I could use till I get my state pension in 18 months time at 67.
DH works & pays our council tax & most utilities, but I buy 95%
of food & household items, pay half tradesmen's bills, pay for our holidays, run a car, pay all the vets bills.
We're in an "expensive" area. I thought I would be dipping in to my savings, but so far I seem to have enough for what I want.

I can't see the logic in the state paying people the same p.a. whether they're top earners & single, or unemployed with 2 children & additional costs associated with disability, Cossy? Is this what you meant? I might be missing something....

Btw I’m not suggesting that SP and MW are in any way linked. I’m simply pointing out that this is (presumably) linked to how much someone somewhere decided was the “minimum” required amount to live on.

Many many people working don’t have children, so using this as an example as to why we shouldn’t get a “living amount” to live on is not really relevant. (imo)

Actually, as many of you’ll be aware I actually favour getting rid of all welfare payments, including SP and paying a UBI (Universal Basic Income) of say ) £15,000 per person, irrespective of their situation from age 18-death.

If you actually total up every single benefit paid, including state pension, child benefit, YC, free school meals, pupil premium etc etc etc then it would probably cost less.

Most people, I truly believe, would choose to still work, some full time, some part time, to top that up so housing etc etc could be enhanced. It also gives those with children (and indeed without) the opportunity to retrain or attend higher education.

I’ll st back and eat my popcorn …..

Remember, only imo

Cossy

I absolutely don’t agree that if SP was raised to a sensible amount that anyone with a workplace/private pension should be penalised by means testing.

I do, because there would be justified claims of unfairness from working age people who would be paying higher tax to pay for higher pensions, when the income divide between them and pensioners with high private pensions as well became greater than they already are.

I have the old rate state Pension and I also work 18 hours a week. I usually pay about £160 a month, tax
So with my wages and state pension I have about £18,000 a year, when I read on here some peoples Pension pots I can’t believe how much they’ve go 😵‍💫I never had a workplace Pension and actually I do manage well enough(I don’t drink drive or smoke)
I was able to buy my council house outright 23 years ago so I have not got the burden of rent Or Mortgage…

I absolutely don’t agree that if SP was raised to a sensible amount that anyone with a workplace/private pension should be penalised by means testing.

silverlining48

Yes most pensioners would love to get the minimum wage because it’s twice as much as we are expected to live on.

Some people are still unaware there are two state pension rates, the old rate is £50or £60 lower per week if retired before 2016 than the new state pension paid if retirement was post 2016. It makes a huge difference.

I worked snd contributed for 45 years ( the new pension only requires 30 years ). Each time there is percentage increase the gap between the two pensions widens. What message does that send,
Our pensions in this country are snd always have been , much lower than the rest of Western Europe. Yet we are or were the 5 th wealthiest nation.

I understand why the new SP is higher.

But it’s not fair and the old SP should be brought up to the level of new SP so we are all getting the same amount.

Don’t forget some of us had to wait til we were 66 and most of us worked til then and paid in an additional 6 years of NI.

I would imagine many of us did pay in the 45 years, regardless of whether we are paid new or old SP.

Thank you for pointing out that not everyone on the old pension is worse off than those on the full new pension, Graphite. Many are a lot better off, and many on the new pension don't get the full amount, yet posts on here so rarely acknowledge that.

I think it would be very wrong to means-test the SP, as it is (for most) a contributory benefit. It would be a slap in the face to penalise people for making arrangements to enhance it via occupational pensions so that those who haven't made them get more.

If a level of 'enough' is set we will soon find that that is all older people will get, with everything else means-tested away to give to those who have never contributed, or who have paid in too little to get 'enough'. It would become a race to the bottom, with those who have worked all their lives getting the same as those who haven't bothered.

I'm not sure that pensions can be linked to NMW (although it would be lovely to get as much as that in SP), as I think it's more important to increase the MW to a genuine Living Wage so that families can manage without having to claim benefits. If we prioritise that, and cut rents to an affordable level, more people will be able to work and pay into occupational pensions so they won't need subsidies in later life.

In the meantime, the deal was always that SP would be based on number of contributions (and level when there was a choice to pay in less), so IMO that should continue. I think it would be very unjust to cut the pensions of current claimants who made retirement plans based on that model.

There is no way I could live on my SP even though mortgage and rent free. I am lucky to have small occupational pensions from both my payments and my late OH's. But they really are only small as OH had to retire through ill health at age 42. I almost scrape into min wage annual total figure.

There are of course pension credit and other benefits, all of which are costly to administer.

I sometimes think it might be better to increase the SP to something more acceptable and cut out the mish mash of top up benefits with all their associated admin costs, poor uptake through ignorance of the rules and perceived stigma. People with loads of private pension would still be taxed on their overall income in the same way so net cost would stay the same in their case.

I am sure someone has done the maths on this one - at least I hope so!

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Cabbie21

Yes, but the point is that it is considered to be the amount needed to live on, so why should any pensioner be worse off, is the question.

I was surprised to find by how much my State Pension increased when I was widowed. I know that is not the case for the NSP.

No, the point is that the minimum wage is nothing to do with the state pension, it is the minimum amount an employer should have to pay an employee to reflect the added value that they bring to the business.

Yes, but the point is that it is considered to be the amount needed to live on, so why should any pensioner be worse off, is the question.

I was surprised to find by how much my State Pension increased when I was widowed. I know that is not the case for the NSP.

The minimum wage is an hourly figure not an annual one, so it would depend on how many hours you work. The clus is also in the name, it is a wage that people earn and pensioners don't pay national insurance.

I agree with you KCAC.

In August 2025, 1.39 million households in Great Britain were receiving Pension Credit, of whom 1.22 million were single pensioners and only 165,200 were pensioner couples.

researchbriefings.files.parliament.uk/documents/CBP-10139/CBP-10139.pdf

In 2025 the average pensioner couple income after housing costs (AHC) was £650 pw while for single pensioners it was £332.

Single male pensioners tend to have a slightly higher income than single female pensioners, £25 a week but it's enough to make a difference between being able to heat a home adequately or not.

AHC is derived by subtracting rent, water rates and charges, structural insurance premiums, mortgage interest payments, ground rent and service charges.

www.gov.uk/government/statistics/pensioners-incomes-financial-years-ending-1995-to-2025/pensioners-incomes-financial-years-ending-1995-to-2025

I've long thought there ought to be a ' Single on State Pension Only' premium. Bills such as heating, electric, water & home maintenance don't halve for one occupant at all.
So much about managing depends on mitagating factors though, someone in a well insulated smallish home, easily accessed healthcare, shops, activities and supportive close community/family will fare better than not having those things.
I often speak to a lady in the park ,non driving who moved to a small village and within a couple of months the only shop closed and the bus route cancelled. She has to spend a good deal of her pension on taxis, a single 'top up' would help with these circumstances

And that’s why we have to have Universal Credit to top up the minimum wage and Pension Credit to top up the incomes for older people plus housing benefit, council tax relief and so on.

If all you have is SP, then you will almost certainly qualify for housing benefit if you rent and council tax benefit whether you are a tenant or owner occupier.

Some would argue that the minimum wage has been a bad thing because it has become what very profitable employees can get away with paying when they could pay more.

If someone works a 40 hour week, after tax and NIC they will take home just under £1,900 a month. Depends where you live but here in the South East most of that will go on rent. It’s impossible for a single person working full time on minimum wage to live independently without claiming top up benefits.

The thing we need, and I hope Burnham will do something about it, is rent control because what we have at the moment is a system where the majority of housing benefit is being paid to enrich greedy landlords so they can accrue both excessive income and large capital gains.

Over the last say 50 years or more, the ground has been shifting on a move away from State Pension provision to workplace pension provision - hence all the complications of contracted-out deductions, where SERPS was introduced to help people build a bigger State Pension but many employees didn’t want to, or couldn’t afford to, contribute to both.

Bear in mind that it’s possible for the old State Pension, currently £184.90, to be enhanced by another £230.54 pw of Additional State Pension (aSP/SERPS) to a total of over £415 a week - a total of £21,540 pa before tax.

Few people receive that amount, Currently around 9,000 people receive over £400 a week, but around 820,000 do receive over £300 a week.

People who fall within the new State Pension system but whose NIC straddles 2016 may have a protected payment from SERPS so they are not worse off under the new system where SERPS has been abolished.

If someone was contracted out of SERPS, they should have a Guaranteed Minimum Pension (GMP) from their employer equivalent to the SERPS pension they would have had.

The abolition of SERPS and the introduction of the new single-tier State Pension was partly to simplify the system but also to make it cheaper per capita to pay as older people with expensive SERPS/aSP die.

The rate of the new State Pension was set at roughly what the average person could enhance their pension by with SERPS, around 25%. As I said, getting the full amount of aSP is exceptional. When SERPS was abolished, the rate of NIC that had included SERPS was not decreased.

The danger is that while government ministers are talking about there being too many pensioners, downgrading SP, abolishing triple lock, means testing etc, more and more young people are opting out of workplace pension schemes while at the same time saying they don’t think the SP will exist but they time they get old. It’s a ticking time bomb.

We need a top down approach. We need government to look at the essentials of life: food, water, warmth and shelter and make those more affordable. Everything else flows from that.

A good deal will surely depend on whether you need to pay rent, or have paid off a mortgage. Not to mention the rate of council tax - around here it’s one of the very highest in the country.
Obviously it’s never going to feel remotely generous, though.

Perhaps the real question is whether the state pension should be ‘enough’, with 70% of pensioners also receiving private pensions? Perhaps it should be that a level of ‘enough’ is set, and state plus private pension are taken into account, so that people whose income is below that threshold receive more from the state to ensure everybody has ‘enough’?