Pensions triple lock - doomed ?

[gothatway]

pim said:

Rates have shot up and cost of living.

Really ? Any numbers to back that up ... "shot up" ??

[economicpygmy]

BigMon said:

Looks like he's had a powerfully built company director overhaul.

I particularly admired the 'as long as I'm OK fk the rest of them' sentiment.

And the comment about younger generations not caring. I was speaking to a friend who works in the NHS and they were telling me how unsustainable elderly care is. At some point, inheritance tax will have to skyrocket to cover the 2030 liabilities via assets (unless the other equally unpopular solutions are used).

[V8 Fettler]

economicpygmy said:

And the comment about younger generations not caring. I was speaking to a friend who works in the NHS and they were telling me how unsustainable elderly care is. At some point, inheritance tax will have to skyrocket to cover the 2030 liabilities via assets (unless the other equally unpopular solutions are used).

The biggest issue with funding care for the elderly is inefficient management.

[Murph7355]

V8 Fettler said:

The biggest issue with funding care for the elderly is inefficient management.

I'm seriously doubtful about that.

I strongly suspect the biggest issue we have is an ageing population. So the volume of incumbents outstrips what people are prepared to pay (either directly or through taxes).

I'm quite sure there is waste in the system. Any large system has it, and government run institutes in this country aren't renowned for efficiency. But the ever present elephants in the room are the demographics of the users and an increasing list of expectations put upon the system.

[superkartracer]

Murph7355 said:

sidicks said:

ATG said:

(Also what fraction of NI are you allocating to the virtual fund given that people also think of it as being a contribution to the NHS, unemployment benefits, etc)

With wages increasing at 3% p.a. (And a current average wage at £27k), growth of 5% p.a. would require a contribution rate of 30.5% to get you to £600k after 45 years...

Ah but everyone worked hard all their lives and deserve it....

NI on 27k is around £2400 PA ( TAX is around £3200 ( the bit that covers the NHS ((from the general Tax fund ))) , so lets take the NI amount which is around £200 month and stick it into an account for 45 years , set the growth @ a modest 5.5% and increase the payments by 1.5% each year , gives you fagpack 600k . Yep not all of NI goes into this Virtual Pot but the bulk of it should/could ( gets pissed up the wall ) .

Use 8% ( a decent-isn growth rate ) and you get 1.4 million.

[sidicks]

superkartracer said:

NI on 27k is around £2400 PA ( TAX is around £3200 ( the bit that covers the NHS ((from the general Tax fund ))) , so lets take the NI amount which is around £200 month and stick it into an account for 45 years , set the growth @ a modest 5.5% and increase the payments by 1.5% each year , gives you fagpack 600k . Yep not all of NI goes into this Virtual Pot but the bulk of it should/could ( gets pissed up the wall ) .

Use 8% ( a decent-isn growth rate ) and you get 1.4 million.

1. You're comparing apples and pears - the current value of a pension payable now versus the accumulated value of contributions 45 years into the future

2. The pension is guaranteed (is not affected by investment markets) so it makes no sense to use a risky accumulation rate, 4% would be much more realistic than 5.5% (you claimed 5% previously). 8% is 'pie in the sky' as far as a relevant comparison is concerned.

3. Consistency of assumptions is also important - a 1.5% salary growth rate but a 5.5% investment growth rate doesn't really make sense.

As I outlined earlier, the value of the pension is circa £250k. The realistic value of the accumulated contributions (accumulated in the past to the current day) is less than £250k.

Edited by sidicks on Wednesday 26th April 09:34

[superkartracer]

Some fair comments BUT it's still abused/pissed up wall and most are not getting that full amount anyway due to tinkering .

Here's another for you -

Take that 250k and use a drawdown pension with a growth rate of 4% , take your £150 and @ 85 you still have £380k left in the pot ( based on payments from age 57 ) .

Bargain indeed.

Edited by superkartracer on Wednesday 26th April 09:15

[sidicks]

superkartracer said:

Some fair comments BUT it's still abused/pissed up wall and most are not getting that full amount anyway due to tinkering .

Here's another for you -

Take that 250k and use a drawdown pension with a growth rate of 4% , take your £150 and @ 85 you still have £380k left in the pot ( based on payments from age 57 ) .

Bargain indeed.

Except you are ignoring that the payments increase with inflation.
And you are ignoring that long-dated risk free bonds are offering yields of under 2% not 4% meaning that you are eating into your capital (or else facing signifcinat mark-to-Market Risk).

Either way it's another fundamentally flawed comparison.

[superkartracer]

Not at all , it was just a quick post without going into details ( as busy ) , even taking the 250k without growth and a small increase each year of your £150/week , that pot lasts 30 years + till running dry . Many people are dead a few years after retirement at 67 ( or whatever they make it ) , even so the pot lasts till you're 90+ .

[sidicks]

superkartracer said:

Not at all , it was just a quick post without going into details ( as busy ) , even taking the 250k without growth and a small increase each year of your £150/week , that pot lasts 30 years + till running dry . Many people are dead a few years after retirement at 67 ( or whatever they make it ) , even so the pot lasts till you're 90+ .

Except it doesn't, as outlined above.
And there isn't a pot.
And most people pay in less than the 'average'.
Etc

Edited by sidicks on Wednesday 26th April 09:43

[turbobloke]

Possibly not doomed after all...the DT an hour or so ago published an online piece claiming that May is considering keeping the triple lock guarantee, under pressure it says, so a reasonable chance

http://www.telegraph.co.uk/news/2017/04/26/theresa...

[superkartracer]

But many people pay far more than the below average so the balance is covered ( more than ) and the pot is there in the form of the NI fund ( some billions ) which is raided and abused and a bit of a con.

[sidicks]

superkartracer said:

But many people pay far more than the below average so the balance is covered ( more than ) and the pot is there in the form of the NI fund ( some billions ) which is raided and abused and a bit of a con.

You keep making claims that aren't supported by reality!

Because of the shape of the income distribution (and the structure of NIC, most people pay less). Of course those higher earners will pay more and receive 'poor value' for money - that's the nature of a progressive tax system.

There is no NI pot / fund, not sure why you keep suggesting there is?

Edited by sidicks on Wednesday 26th April 10:07

Edited by sidicks on Wednesday 26th April 10:09

[Moonhawk]

superkartracer said:

Not at all , it was just a quick post without going into details ( as busy ) , even taking the 250k without growth and a small increase each year of your £150/week , that pot lasts 30 years + till running dry . Many people are dead a few years after retirement at 67 ( or whatever they make it ) , even so the pot lasts till you're 90+ .

There is no NI pension pot though. The state pension doesn't work like a traditional contributory pension.

Your NI contributions aren't going into your pension pot ready for when you retire - they are paying the pensions of those who are already drawing theirs.

When you retire and start drawing state pension - you will be relying on the assumption that there will be enough people of working age paying enough NI to fund your generation's state pension.

Hence why it keeps getting compared to a ponzi scheme.

[superkartracer]

It's a theoretical pot from the 125 billion odd collected each year , and yes i now how it works and I'm certainly not hanging hopes on getting anything in 30 years time.

[crankedup]

sidicks said:

pim said:

I've had a few quid a week pension rise this year the state pension.Rates have shot up and cost of living.It makes no sense? Balks to you started work at 16 I deserve my few pounds.

You may well deserve the pension - why do you think that you deserve an additional uplift that a) wasn't factored into your contributions, b) wasn't part of your initial pension promise and c) is more generous than the wage increases that many hardworking people are facing?

I would like to offer my thoughts on this question.

Pensioners certainly deserved the triple lock application, it was introduced for the simple reason of lifting the pension payment to what the Government feels is a fair and proportionate sum of money to pensioners. That level has now been reached, thus the possible removal of all or some of the triple lock.

[crankedup]

turbobloke said:

Possibly not doomed after all...the DT an hour or so ago published an online piece claiming that May is considering keeping the triple lock guarantee, under pressure it says, so a reasonable chance

http://www.telegraph.co.uk/news/2017/04/26/theresa...

I heard a snippet, the triple lock may be downgraded to a double lock. Having opened this thread using the voting of pensioners may be directed to other political parties it's possible that the advisors have took note.

[Dr Jekyll]

crankedup said:

I would like to offer my thoughts on this question.

Pensioners certainly deserved the triple lock application, it was introduced for the simple reason of lifting the pension payment to what the Government feels is a fair and proportionate sum of money to pensioners. That level has now been reached, thus the possible removal of all or some of the triple lock.

If the pension had been raised in line with prices since it's inception, it would now be around £25 a week.

[crankedup]

economicpygmy said:

BigMon said:

Looks like he's had a powerfully built company director overhaul.

I particularly admired the 'as long as I'm OK fk the rest of them' sentiment.

And the comment about younger generations not caring. I was speaking to a friend who works in the NHS and they were telling me how unsustainable elderly care is. At some point, inheritance tax will have to skyrocket to cover the 2030 liabilities via assets (unless the other equally unpopular solutions are used).

Guy's, as I mentioned in this thread a little earlier, my change in
political attitude has come about as a result of the displays of public responses directed at fellow citizens regarding brexit. Not particularly posts in here, although that is partly the case, but in the wider media arena.
Just struck me that people in general are out for themselves, it's taken me a lifetime to understand that number one comes first.

[crankedup]

Dr Jekyll said:

crankedup said:

I would like to offer my thoughts on this question.

Pensioners certainly deserved the triple lock application, it was introduced for the simple reason of lifting the pension payment to what the Government feels is a fair and proportionate sum of money to pensioners. That level has now been reached, thus the possible removal of all or some of the triple lock.

If the pension had been raised in line with prices since it's inception, it would now be around £25 a week.

Since it's inception!