Future of the state pension
Discussion
Thinking about pensions has got me wondering about the state pension and the future of it. With big data / analytics etc it can’t be long before the government, even with their woeful IT record, will have a real time single view of everyone’s financial position. Assets, liabilities, property, shareholdings, pension funds, income, expenditure etc. It’s all there, a P&L and balance sheet for everyone.
When this can be reliably produced, it will completely change the whole tax and benefit system. A simple example would be winter fuel payments. Pensioners with a certain level of income or net worth won’t get it. I can see a point in the future when everything will be automatically and accurately means tested via technology, including state pensions. If you have a certain net worth, you’re not getting it and can look after yourself, simple as that. I know many will simply laugh at the governments ability to do this but I believe at some point it will happen. Google could probably build it now if they were given access to the raw data. What do we think, pie in the sky or a future reality?
When this can be reliably produced, it will completely change the whole tax and benefit system. A simple example would be winter fuel payments. Pensioners with a certain level of income or net worth won’t get it. I can see a point in the future when everything will be automatically and accurately means tested via technology, including state pensions. If you have a certain net worth, you’re not getting it and can look after yourself, simple as that. I know many will simply laugh at the governments ability to do this but I believe at some point it will happen. Google could probably build it now if they were given access to the raw data. What do we think, pie in the sky or a future reality?
red_slr said:
A little tip, don't take this the wrong way, but in all areas of data surveillance if you think someone is not doing it they almost certainly are!
I’ve no doubt that’s the case but I’m thinking about technology shaping government tax / benefit policy based on real time data around people’s financial positions.The first paragraph of your post is already accurate for Norway, government have all at the touch of a key and then when you do your yearly tax return its all there for you laid out, how much you earn, what assets you have, how much your assets are worth and how much interest you have paid on debt.
Welshbeef said:
Were moving to a universal income to every man woman and child which will remove pension and benefits.
How we pay for it is the challenge - then again before the NHS the ideal of free at the point of need was bonkers expensive..... and yet we did it.
Yes, lots of talk of a basic income but like the state pension, many will not need it, so why pay it to those with sufficient means when they are easy to identify and filter out?How we pay for it is the challenge - then again before the NHS the ideal of free at the point of need was bonkers expensive..... and yet we did it.
NordicCrankShaft said:
The first paragraph of your post is already accurate for Norway, government have all at the touch of a key and then when you do your yearly tax return its all there for you laid out, how much you earn, what assets you have, how much your assets are worth and how much interest you have paid on debt.
I guess Norway are ahead of the UK in this area, not difficult I suppose! troika said:
Yes, lots of talk of a basic income but like the state pension, many will not need it, so why pay it to those with sufficient means when they are easy to identify and filter out?
Because it has to be universal - just like the NHS free to all. Taking your point specifically let’s say two brothers are equally successful in their working careers one chooses to invest hard into company pension and private savings on top of that, lives a modest lifestyle to ensure that happens.
The other hey he doesn’t do pensions or savings he lives off the seat of his pants one pay chq to another. He frequently goes to Bali Gstaad and Banff for skiing he loves the BMW M5 competition pack and Merc E63S’s all on PCP f
k it why not live a little. Come pension time one brother has put aside enough for a reasonable retirement the other has nothing.
Both earned the same total salary in their lifetimes.
Now you’d say the one who doesn’t have a pension NEEDS this state pension whilst at the same time the other gets nothing / in fact there are only 2 workers in the entire country in this weird example so the brother who was living modestly has paid for and continues to pay for his brother who has chosen a different lifestyle.
That is why it can only be universal - make it not universal mr modest brother realised that all his hard savings will mean he gets no state pension to the point that his personal pension oddly then equals what his state pension his brother gets.
Guess what happens next.... people don’t bother to save for pensions/retirement or stop working years/decades early spending all their life savings and then let he state pension take over as they then “need it”.
Universal only just like he NHS no ifs no buts.
troika said:
Yes, lots of talk of a basic income but like the state pension, many will not need it, so why pay it to those with sufficient means when they are easy to identify and filter out?
Because it has to be universal - just like the NHS free to all. Taking your point specifically let’s say two brothers are equally successful in their working careers one chooses to invest hard into company pension and private savings on top of that, lives a modest lifestyle to ensure that happens.
The other hey he doesn’t do pensions or savings he lives off the seat of his pants one pay chq to another. He frequently goes to Bali Gstaad and Banff for skiing he loves the BMW M5 competition pack and Merc E63S’s all on PCP f
k it why not live a little. Come pension time one brother has put aside enough for a reasonable retirement the other has nothing.
Both earned the same total salary in their lifetimes.
Now you’d say the one who doesn’t have a pension NEEDS this state pension whilst at the same time the other gets nothing / in fact there are only 2 workers in the entire country in this weird example so the brother who was living modestly has paid for and continues to pay for his brother who has chosen a different lifestyle.
That is why it can only be universal - make it not universal mr modest brother realised that all his hard savings will mean he gets no state pension to the point that his personal pension oddly then equals what his state pension his brother gets.
Guess what happens next.... people don’t bother to save for pensions/retirement or stop working years/decades early spending all their life savings and then let he state pension take over as they then “need it”.
Universal only just like he NHS no ifs no buts.
Welshbeef said:
Were moving to a universal income to every man woman and child which will remove pension and benefits.
How we pay for it is the challenge - then again before the NHS the ideal of free at the point of need was bonkers expensive..... and yet we did it.
Paying for it is one of the easiest challenges. Most people will simply pay more in additional tax than they receive in Universal Income.How we pay for it is the challenge - then again before the NHS the ideal of free at the point of need was bonkers expensive..... and yet we did it.
There are far greater challenges to its implementation such as what benefits will need to be retained, what the level is set at and what eligibility rules are required.
troika said:
Yes, lots of talk of a basic income but like the state pension, many will not need it, so why pay it to those with sufficient means when they are easy to identify and filter out?
That would be the common sense approach. Why give someone money with one hand and then take it off of them with the other.However, if you are the Government you want as many people as possible in your pocket. Universal Income makes vast swathes of the voting population dependent on the Govt. Who is going to vote for a change of Govt when you are reliant on government policy for a significant amount of your income?
Welshbeef said:
Because it has to be universal - just like the NHS free to all.
Taking your point specifically let’s say two brothers are equally successful in their working careers one chooses to invest hard into company pension and private savings on top of that, lives a modest lifestyle to ensure that happens.
The other hey he doesn’t do pensions or savings he lives off the seat of his pants one pay chq to another. He frequently goes to Bali Gstaad and Banff for skiing he loves the BMW M5 competition pack and Merc E63S’s all on PCP fk it why not live a little.
Come pension time one brother has put aside enough for a reasonable retirement the other has nothing.
Both earned the same total salary in their lifetimes.
Now you’d say the one who doesn’t have a pension NEEDS this state pension whilst at the same time the other gets nothing / in fact there are only 2 workers in the entire country in this weird example so the brother who was living modestly has paid for and continues to pay for his brother who has chosen a different lifestyle.
That is why it can only be universal - make it not universal mr modest brother realised that all his hard savings will mean he gets no state pension to the point that his personal pension oddly then equals what his state pension his brother gets.
Guess what happens next.... people don’t bother to save for pensions/retirement or stop working years/decades early spending all their life savings and then let he state pension take over as they then “need it”.
Universal only just like he NHS no ifs no buts.
Doesn’t mean that politicians wouldn’t use such capabilities. For example, Corbyn and McDonnell get in and start a tax grab on anyone they consider ‘rich’. If they have the tools to accurately select their target groups, they will be like kids in a sweet shop. Anyone over a certain net worth / income will have to pay for services they didn’t previously, like the NHS (or go private), social care etc and won’t get other benefits like state pensions. We’ve already seen the thin end of the wedge with things like reduction in child benefit over certain income, loss of personal allowance, councils charging extra for stuff which has always been covered by council tax eg. green waste, recycling etc. I’m not supporting it but think future technology will give governments previously unimaginable powers to target and control taxes and benefit spending. Taking your point specifically let’s say two brothers are equally successful in their working careers one chooses to invest hard into company pension and private savings on top of that, lives a modest lifestyle to ensure that happens.
The other hey he doesn’t do pensions or savings he lives off the seat of his pants one pay chq to another. He frequently goes to Bali Gstaad and Banff for skiing he loves the BMW M5 competition pack and Merc E63S’s all on PCP f
k it why not live a little. Come pension time one brother has put aside enough for a reasonable retirement the other has nothing.
Both earned the same total salary in their lifetimes.
Now you’d say the one who doesn’t have a pension NEEDS this state pension whilst at the same time the other gets nothing / in fact there are only 2 workers in the entire country in this weird example so the brother who was living modestly has paid for and continues to pay for his brother who has chosen a different lifestyle.
That is why it can only be universal - make it not universal mr modest brother realised that all his hard savings will mean he gets no state pension to the point that his personal pension oddly then equals what his state pension his brother gets.
Guess what happens next.... people don’t bother to save for pensions/retirement or stop working years/decades early spending all their life savings and then let he state pension take over as they then “need it”.
Universal only just like he NHS no ifs no buts.
CzechItOut said:
troika said:
Yes, lots of talk of a basic income but like the state pension, many will not need it, so why pay it to those with sufficient means when they are easy to identify and filter out?
That would be the common sense approach. Why give someone money with one hand and then take it off of them with the other.However, if you are the Government you want as many people as possible in your pocket. Universal Income makes vast swathes of the voting population dependent on the Govt. Who is going to vote for a change of Govt when you are reliant on government policy for a significant amount of your income?
troika said:
Thinking about pensions has got me wondering about the state pension and the future of it. With big data / analytics etc it can’t be long before the government, even with their woeful IT record, will have a real time single view of everyone’s financial position. Assets, liabilities, property, shareholdings, pension funds, income, expenditure etc. It’s all there, a P&L and balance sheet for everyone.
When this can be reliably produced, it will completely change the whole tax and benefit system. A simple example would be winter fuel payments. Pensioners with a certain level of income or net worth won’t get it. I can see a point in the future when everything will be automatically and accurately means tested via technology, including state pensions. If you have a certain net worth, you’re not getting it and can look after yourself, simple as that. I know many will simply laugh at the governments ability to do this but I believe at some point it will happen. Google could probably build it now if they were given access to the raw data. What do we think, pie in the sky or a future reality?
I think you are right to a point, and people would be naïve to think otherwise. They'll just need a clever way of doing it. As already mentioned, it needs to be universal and with everyone paying National Insurance, to suddenly lose state pension allowance is quite simply, very very unfair. When this can be reliably produced, it will completely change the whole tax and benefit system. A simple example would be winter fuel payments. Pensioners with a certain level of income or net worth won’t get it. I can see a point in the future when everything will be automatically and accurately means tested via technology, including state pensions. If you have a certain net worth, you’re not getting it and can look after yourself, simple as that. I know many will simply laugh at the governments ability to do this but I believe at some point it will happen. Google could probably build it now if they were given access to the raw data. What do we think, pie in the sky or a future reality?
I think in years to come, what we'll see perhaps, is quite a low 'base' pension which is universal, and then some additional means tested supplements, similar to the winter fuel allowance. That allows them to still give everyone a state pension (albeit, not very big) and those with nothing else, will get additional support.
I'm still over 25 years away from receiving state pension so I'm working to the view that I won't get anything of note from the state pension and if I do, happy days. I certainly don't want to put my retirement plans too firmly in the hands of the government - the more I can control it myself, the better. With that said, how confident can we be that our own personal plans are 'safe' from Mr Tax?!!!!
oyster said:
Why is it common sense to give someone money when they choose not to have sufficient means (for example pissing it up the wall), yet not give money to someone who has not pissed that same money away?
It is common sense to only give money to those who need it (as we do with welfare today) rather than give money to everyone and then take it away through higher taxes from the people who don't need it (as is proposed by a "universal" income).Welshbeef said:
troika said:
Yes, lots of talk of a basic income but like the state pension, many will not need it, so why pay it to those with sufficient means when they are easy to identify and filter out?
Because it has to be universal - just like the NHS free to all. Taking your point specifically let’s say two brothers are equally successful in their working careers one chooses to invest hard into company pension and private savings on top of that, lives a modest lifestyle to ensure that happens.
The other hey he doesn’t do pensions or savings he lives off the seat of his pants one pay chq to another. He frequently goes to Bali Gstaad and Banff for skiing he loves the BMW M5 competition pack and Merc E63S’s all on PCP f
k it why not live a little. Come pension time one brother has put aside enough for a reasonable retirement the other has nothing.
Both earned the same total salary in their lifetimes.
Now you’d say the one who doesn’t have a pension NEEDS this state pension whilst at the same time the other gets nothing / in fact there are only 2 workers in the entire country in this weird example so the brother who was living modestly has paid for and continues to pay for his brother who has chosen a different lifestyle.
That is why it can only be universal - make it not universal mr modest brother realised that all his hard savings will mean he gets no state pension to the point that his personal pension oddly then equals what his state pension his brother gets.
Guess what happens next.... people don’t bother to save for pensions/retirement or stop working years/decades early spending all their life savings and then let he state pension take over as they then “need it”.
Universal only just like he NHS no ifs no buts.
There are times I get so infuriated by it all but feel helpless to put it right.
Welshbeef said:
troika said:
Yes, lots of talk of a basic income but like the state pension, many will not need it, so why pay it to those with sufficient means when they are easy to identify and filter out?
Because it has to be universal - just like the NHS free to all. Taking your point specifically let’s say two brothers are equally successful in their working careers one chooses to invest hard into company pension and private savings on top of that, lives a modest lifestyle to ensure that happens.
The other hey he doesn’t do pensions or savings he lives off the seat of his pants one pay chq to another. He frequently goes to Bali Gstaad and Banff for skiing he loves the BMW M5 competition pack and Merc E63S’s all on PCP f
k it why not live a little. Come pension time one brother has put aside enough for a reasonable retirement the other has nothing.
Both earned the same total salary in their lifetimes.
Now you’d say the one who doesn’t have a pension NEEDS this state pension whilst at the same time the other gets nothing / in fact there are only 2 workers in the entire country in this weird example so the brother who was living modestly has paid for and continues to pay for his brother who has chosen a different lifestyle.
That is why it can only be universal - make it not universal mr modest brother realised that all his hard savings will mean he gets no state pension to the point that his personal pension oddly then equals what his state pension his brother gets.
Guess what happens next.... people don’t bother to save for pensions/retirement or stop working years/decades early spending all their life savings and then let he state pension take over as they then “need it”.
Universal only just like he NHS no ifs no buts.
State pension is around 8.5k, so say 17k for a couple per year. To fund that sort of guaranteed for life pension you would need a pot of about 340k (based on a 5% return).
That's not good enough though, because you need to protect from inflation. That means you need a pot closer to 5-600k so that it can keep up with inflation. That's a lot of money to save so why bother when the state give you the same return for saving absolutely nothing?
People are also saving into pensions based on it being a top up. if you suddenly withdraw the state part then that person now has to work many more years, and/or save a lot harder. That s a lot of voters you've suddenly pissed off. All the next government has to do it promise to return state pensions, and the next election is a done deal.
I've effectively contributed 40 years into my NI, and every government (of all colours) have told me I will get a pension at the end of it. When it comes to collecting it, it had better be there!
Edited by 98elise on Friday 10th August 13:11
98elise said:
....then consider this. It takes a big pot of money to fund a similar private pension.
State pension is around 8.5k, so say 17k for a couple per year. To fund that sort of guaranteed for life pension you would need a pot of about 340k (based on a 5% return).
That's not good enough though, because you need to protect from inflation. That means you need a pot closer to 5-600k so that it can keep up with inflation. That's a lot of money to save so why bother when the state give you the same return for saving absolutely nothing?
People are also saving into pensions based on it being a top up. if you suddenly withdraw the state part then that person now has to work many more years, and/or save a lot harder. That s a lot of voters you've suddenly pissed off. All the next government has to do it promise to return state pensions, and the next election is a done deal.
I've effectively contributed 40 years into my NI, and every government (of all colours) have told me I will get a pension at the end of it. When it comes to collecting it, it had better be there!
Why did you reply to me with the above? State pension is around 8.5k, so say 17k for a couple per year. To fund that sort of guaranteed for life pension you would need a pot of about 340k (based on a 5% return).
That's not good enough though, because you need to protect from inflation. That means you need a pot closer to 5-600k so that it can keep up with inflation. That's a lot of money to save so why bother when the state give you the same return for saving absolutely nothing?
People are also saving into pensions based on it being a top up. if you suddenly withdraw the state part then that person now has to work many more years, and/or save a lot harder. That s a lot of voters you've suddenly pissed off. All the next government has to do it promise to return state pensions, and the next election is a done deal.
I've effectively contributed 40 years into my NI, and every government (of all colours) have told me I will get a pension at the end of it. When it comes to collecting it, it had better be there!
Edited by 98elise on Friday 10th August 13:11
Welshbeef said:
98elise said:
....then consider this. It takes a big pot of money to fund a similar private pension.
State pension is around 8.5k, so say 17k for a couple per year. To fund that sort of guaranteed for life pension you would need a pot of about 340k (based on a 5% return).
That's not good enough though, because you need to protect from inflation. That means you need a pot closer to 5-600k so that it can keep up with inflation. That's a lot of money to save so why bother when the state give you the same return for saving absolutely nothing?
People are also saving into pensions based on it being a top up. if you suddenly withdraw the state part then that person now has to work many more years, and/or save a lot harder. That s a lot of voters you've suddenly pissed off. All the next government has to do it promise to return state pensions, and the next election is a done deal.
I've effectively contributed 40 years into my NI, and every government (of all colours) have told me I will get a pension at the end of it. When it comes to collecting it, it had better be there!
Why did you reply to me with the above? State pension is around 8.5k, so say 17k for a couple per year. To fund that sort of guaranteed for life pension you would need a pot of about 340k (based on a 5% return).
That's not good enough though, because you need to protect from inflation. That means you need a pot closer to 5-600k so that it can keep up with inflation. That's a lot of money to save so why bother when the state give you the same return for saving absolutely nothing?
People are also saving into pensions based on it being a top up. if you suddenly withdraw the state part then that person now has to work many more years, and/or save a lot harder. That s a lot of voters you've suddenly pissed off. All the next government has to do it promise to return state pensions, and the next election is a done deal.
I've effectively contributed 40 years into my NI, and every government (of all colours) have told me I will get a pension at the end of it. When it comes to collecting it, it had better be there!
Edited by 98elise on Friday 10th August 13:11
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