Martin Lewis confirms government could scrap the state pension | Personal Finance | Finance

Money expert Martin Lewis has confirmed that the government has the power to abolish the state pension entirely, as well as introduce means testing or scrap the Triple Lock. While Martin called it ‘virtually unthinkable’ that the benefit for retirees could be axed, he said that ‘who knows’ how the future could look.

Speaking on the latest episode of The Martin Lewis Podcast on BBC Sounds, Spotify and Apple Music released on Monday, September 15, Martin was asked by a caller if it’s possible that the government could entirely axe the state pension – to which Martin confirmed that it is indeed within government’s powers.

Martin Lewis was asked by John in Hyde: “Is it possible that our UK government could remove the state pension? If it was possible, how likely do you think that would be?”

Martin then replied: “OK. Technical answer: yes. It is possible. So parliament is what’s called omnicompetent, a technical term meaning parliament can legislate anything it chooses to. Just to take this to an absurd level, parliament could legislate that the United States was part of Great Britain, and under UK law the United States would be part of Great Britain. Clearly it would be a nonsense, but technically it could do it. So when you ask me about possibility, I can’t answer anything other than yes. Do I think it’s likely? No.

“So what do I think is more likely? I think the most likely eventuality with the state pension is that the age at which you get it is increased. And I certainly think by the time someone who’s 18 now retires, it’s probably gonna be in their 70s when they get their state pension, not in their late 60s.

“That would be the most likely risk. The next most likely risk, the first one is probable, so I think that is likely to happen. This next one I think is unlikely to happen, but not improbable.

“Limited odds but I wouldn’t be bowled off my chair if it happened at some point in the next 20 to 30 years… is a means testing of the state pension.

“The state pension is already taxable, many people don’t know it is, but it is. The income you get from the state pension counts towards your taxable income. Now if you only get state pension income, at the moment, it’s under your Personal Allowance, the amount you can earn tax free each year, so you won’t be taxed on it.

“But if you have state pension income and other income both are added together and it counts as taxable income.

“Means testing could be the amount you’re going to get depends on how much other income you have.

“It would be hugely contested, certainly if you were a government and wanted to do something unpopular that would be hugely unpopular

“It would be less unpopular to get rid of the Triple Lock.”

Martin added that he thinks it’s more likely that we’d see the end of the Triple Lock “before we’d see means testing”.

But Martin reassured listeners: “But getting rid of the state pension in its entirety, I mean, that would be ‘fall off a chair, gobsmacked, protest in the streets’ stuff.”

Martin added: “Virtually unthinkable getting rid of the state pension. But you know what, I’m saying that with a 2025 head on, maybe you’d ask me in 2040 and the whole world is different and who knows.”

According to financial firm Boring Money, the chances of the state pension ending aren’t totally zero.

It says that the government’s own Government Actuary’s Department’s estimates show the UK state pension fund could “run dry” by as early as 2033.

It said: “The money for the State Pension comes mostly from National Insurance contributions, and at the time the GAD released their 2022 report, there were 1,000 contributing workers to every 270 claiming pensioners. They estimated that by 2086 this would rise to 1,000 workers to every 430 pensioners. If we were already overdrawn five years ago, it’s not difficult to imagine that this could be the straw that breaks the Treasury camel’s back!

“Indeed, it appears that many of us are already anticipating a future without the State Pension in it. A 2023 report by thinktank Phoenix Insights estimates that half of Brits under the age of 50 believe that there probably won’t be a State Pension by the time they retire. Worryingly, almost one in five (19%) of people aged between 50 and 64 (just years away from retirement) agree with this statement too.”