People of State Pension age currently receive £230.25 a week regardless of any other income they might have
Means testing the state pension might be the solution to tackling the growing problem of how to fund the retirement benefit, it has been warned. Ex-MP Lord Mackinlay of Richborough, writing in the Telegraph, questioned whether the current system was sustainable with today’s ageing population.
He said the main questions today were about affordability and “inter-generational fairness”. And he said while poverty had “significantly reduced” as a result of the triple lock system along with the post-2016 state pension he asked if it could continue in its current form.
The former MP for South Thanet, who is now a member of the House of Lords, asked: “Can the increasingly top-heavy population age pyramid – which is heading towards two workers per pensioner (vs 4:1 in the 1960s) – generate enough tax to support the retired? Is the current plan for a retirement age of 68 beyond 2046 enough? What about the escalating cost of healthcare across an ageing population?
“So what will Rachel Reeves do? She’s currently facing the conundrum of what to do about tax from April 2027 when the state pension will exceed the frozen personal allowance of £12,570 a year.
“After 100 years of universality, perhaps means-testing will be her wizard solution. Doing so could become another uniquely bad British incentive to drop out and rely on the state.”
Lord Mackinlay of Richborough previously served on the DWP and Public Accounts Select Committees. He is also a chartered accountant and tax adviser.
He underwent a quadruple amputation following an infection of sepsis in 2023 before standing down as an MP at the 2024 general election. He was then appointed to the House of Lords.
The peere said he had his own answer to the problem of funding the pension saying: “My solution was a “less for longer” system that would give early access to the state pension but at a lower level, based on actuarial life expectancy.”
Entitlement to the State Pension currently depends on someone’s National Insurance payments. At present State pensioners are paid £230.25 a week.
Under the triple lock system, which guarantees the pension will increase each April by the highest of three measures: inflation (CPI), average earnings growth, or 2.5%, this will rise to £241.30 a week for those on the full new State Pension. Those receiving the basic State Pension will get £184.90 a week.
