Triple Lock

[JagLover]

InitialDave said:

Assuming it's sustainable.

If it's not sustainable, it won't build up to providing that, it'll have to be restricted. Paying an unsustainable annual increase now robs future pensioners of a decent provision.

So, is it sustainable like this for another 3-4 decades?

Pre Covid/lockdown the state pension was still reasonably affordable. It was forecast to rise from 4.4% of GDP to 5.5% in 2040. Which is why I was always a little surprised when people claimed the state pension wouldn't be around by the time they retired. There weren't any reasons on cost grounds why it wouldn't be.

https://www.pensionspolicyinstitute.org.uk/media/3...

Given the economic and fiscal consequences of lockdown this is now more uncertain and we will have to see where the economy recovers too, in what state government finances are in by then, and how much is being spent on servicing the debt.

[alfaspecial]

InitialDave said:

alfaspecial said:

To youngsters I point this out:
Remember, if the state pension goes up by 6% for current retirees it will also go up 6% for future retirees (you youngsters)
And, this will be a cumulative increase, in real terms, in YOUR future state pension
Put simply, if we had nil inflation and nil wage rises then for every year YOUR future pension will go up 21/2%.
Thus in real terms the £179.60 pw that a pensioner gets now would rise to £230 pw in (say) ten years time, £294 in 20 years time and £377pw in 30 years time. Not so bad is it?

Assuming it's sustainable.

If it's not sustainable, it won't build up to providing that, it'll have to be restricted. Paying an unsustainable annual increase now robs future pensioners of a decent provision.

So, is it sustainable like this for another 3-4 decades?

The 2 1/2 %, in real terms, is the maximum it can grow by (in real terms) - and is likely to be, in real terms, less than this.
As I suggested remove the tax relief on all pension contributions ( and make ALL state employee pension benefits taxable ie Civil Servants, Police, Army etc etc)

All you should expect from the state is the state pension (£179.60) ... if you want more it's down to YOU to make contributions from YOUR net income.
It's only 'unfair' to those who are foregoing tax relief on their own ability to save for a better retirement than those on more modest income.
World's smallest and all that.

[55palfers]

No one has mentioned the pensioner's Christmas bonus yet.

[Ntv]

alfaspecial said:

InitialDave said:

alfaspecial said:

To youngsters I point this out:
Remember, if the state pension goes up by 6% for current retirees it will also go up 6% for future retirees (you youngsters)
And, this will be a cumulative increase, in real terms, in YOUR future state pension
Put simply, if we had nil inflation and nil wage rises then for every year YOUR future pension will go up 21/2%.
Thus in real terms the £179.60 pw that a pensioner gets now would rise to £230 pw in (say) ten years time, £294 in 20 years time and £377pw in 30 years time. Not so bad is it?

Assuming it's sustainable.

If it's not sustainable, it won't build up to providing that, it'll have to be restricted. Paying an unsustainable annual increase now robs future pensioners of a decent provision.

So, is it sustainable like this for another 3-4 decades?

The 2 1/2 %, in real terms, is the maximum it can grow by (in real terms) - and is likely to be, in real terms, less than this.
As I suggested remove the tax relief on all pension contributions ( and make ALL state employee pension benefits taxable ie Civil Servants, Police, Army etc etc)

All you should expect from the state is the state pension (£179.60) ... if you want more it's down to YOU to make contributions from YOUR net income.
It's only 'unfair' to those who are foregoing tax relief on their own ability to save for a better retirement than those on more modest income.
World's smallest and all that.

I don't agree with this.

We need people to save for retirement. Otherwise taxpayers end up paying even more.

Either:

- we have compulsory contributions (from employer / employee or both, doesn't matter in a sense)

or

- we have tax relief and automatic enrolment with an employer contribution (for most) as per now

But to have no mandation or incentivisation would be crazy and against everything that is known on saving behaviour (hyperbolic discounting etc etc)

[alfaspecial]

Ntv said:

alfaspecial said:

InitialDave said:

alfaspecial said:

To youngsters I point this out:
Remember, if the state pension goes up by 6% for current retirees it will also go up 6% for future retirees (you youngsters)
And, this will be a cumulative increase, in real terms, in YOUR future state pension
Put simply, if we had nil inflation and nil wage rises then for every year YOUR future pension will go up 21/2%.
Thus in real terms the £179.60 pw that a pensioner gets now would rise to £230 pw in (say) ten years time, £294 in 20 years time and £377pw in 30 years time. Not so bad is it?

Assuming it's sustainable.

If it's not sustainable, it won't build up to providing that, it'll have to be restricted. Paying an unsustainable annual increase now robs future pensioners of a decent provision.

So, is it sustainable like this for another 3-4 decades?

The 2 1/2 %, in real terms, is the maximum it can grow by (in real terms) - and is likely to be, in real terms, less than this.
As I suggested remove the tax relief on all pension contributions ( and make ALL state employee pension benefits taxable ie Civil Servants, Police, Army etc etc)

All you should expect from the state is the state pension (£179.60) ... if you want more it's down to YOU to make contributions from YOUR net income.
It's only 'unfair' to those who are foregoing tax relief on their own ability to save for a better retirement than those on more modest income.
World's smallest and all that.

I don't agree with this.

We need people to save for retirement. Otherwise taxpayers end up paying even more.

Either:

- we have compulsory contributions (from employer / employee or both, doesn't matter in a sense)

or

- we have tax relief and automatic enrolment with an employer contribution (for most) as per now

But to have no mandation or incentivisation would be crazy and against everything that is known on saving behaviour (hyperbolic discounting etc etc)

I note that many people mow have a mix of employment / self employment / part time working / gig-economy employment compared to previous generations - very few employers offer final salary schemes.

Problem is most 'young' people can't afford to save for retirement. Surely the best 'pension' would be an affordable house? But the 'older' generation have robbed them of any possibility of that. As the graph of housing affordability shows.

If people know the most they will get is £179.60 pw then surely that is all the incentive they need to save more? If you don't think you can live on that then save - or work longer. My suggestion is that the simple and least costly option is a 'survivable state pension and your own savings for any more than that.

Come a generation down the line former 'youngsters' who have been unable to buy will be expecting the 'state' to pay their rent......

[oyster]

alfaspecial said:

To youngsters I point this out:
Remember, if the state pension goes up by 6% for current retirees it will also go up 6% for future retirees (you youngsters)
And, this will be a cumulative increase, in real terms, in YOUR future state pension
Put simply, if we had nil inflation and nil wage rises then for every year YOUR future pension will go up 21/2%.
Thus in real terms the £179.60 pw that a pensioner gets now would rise to £230 pw in (say) ten years time, £294 in 20 years time and £377pw in 30 years time. Not so bad is it?

Why not make the pension go up by 100% a year then, and then sell that argument to the young?

Oh hang on …… it needs paying for. Who will pay that? Oh yes, the young.

You sound like one of those money tree growers.

[Nickgnome]

Would somebody like to create a breakdown of how this £180 per week will be spent?

Single person living on their own.

Why would it be much difference from an 18-22 year old single independent person.

What is minimum wage now?

[Evanivitch]

alfaspecial said:

To youngsters I point this out:
Remember, if the state pension goes up by 6% for current retirees it will also go up 6% for future retirees (you youngsters)
And, this will be a cumulative increase, in real terms, in YOUR future state pension
Put simply, if we had nil inflation and nil wage rises then for every year YOUR future pension will go up 21/2%.
Thus in real terms the £179.60 pw that a pensioner gets now would rise to £230 pw in (say) ten years time, £294 in 20 years time and £377pw in 30 years time. Not so bad is it?

A week is a long time in politics, so you expect "youngsters" to believe that a decision made now will be consistent in 30-50 years time? The state retirement age has moved, and continues to move. The absolute ******** of your suggestion that future retirees will benefit from this is astounding.

[richardxjr]

Why are you asking stupid questions?

[Nickgnome]

richardxjr said:

Why are you asking stupid questions?

Why are you talking to yourself?

Not a good sign.

[InitialDave]

Nickgnome said:

Why would it be much difference from an 18-22 year old single independent person.

What is minimum wage now?

£6.56 for 18-20, £8.36 for 21 to 22, £8.91 thereafter.

So £12,792, £16,302, and £17,374.50 if working full time.

[Nickgnome]

InitialDave said:

Nickgnome said:

Why would it be much difference from an 18-22 year old single independent person.

What is minimum wage now?

£6.56 for 18-20, £8.36 for 21 to 22, £8.91 thereafter.

So £12,792, £16,302, and £17,374.50 if working full time.

Thank you so as I see it a single 20s person would have not dissimilar out going to a retired person. Rented accommodation, stat services clothes etc.

Incidentally i think minimum wage is too low.

I'm not of advocate of complicated means testing and other allowances. The system could be much simplified which would reduce administration costs substantially.

I also think the burden for pensions must over time be moved to the individual.

[Evanivitch]

InitialDave said:

Nickgnome said:

Why would it be much difference from an 18-22 year old single independent person.

What is minimum wage now?

£6.56 for 18-20, £8.36 for 21 to 22, £8.91 thereafter.

So £12,792, £16,302, and £17,374.50 if working full time.

Apprenticeship £4.30 an hour age 16-18, and first year for 19+. Then minimum wage applies.

[Evanivitch]

Nickgnome said:

Thank you so as I see it a single 20s person would have not dissimilar out going to a retired person. Rented accommodation, stat services clothes etc.

There is a cost to employment too, for example commuting costs or IT or clothing appropriate to your workplace.

That's not to say pensioners don't have specific needs too, but many can be met through specific grants from councils.

[alfaspecial]

Evanivitch said:

A week is a long time in politics, so you expect "youngsters" to believe that a decision made now will be consistent in 30-50 years time? The state retirement age has moved, and continues to move. The absolute ******** of your suggestion that future retirees will benefit from this is astounding.

I was just trying to point out that there is a benefit to future retirees of an increase to state pensions (in real terms) now. A cumulative benefit.
Provided those benefits are maintained, of course!

But trying to be pragmatic about it, we are a rich country and a decent retirement (rightly) should be seen as a right (think of 'Boxer' in Animal Farm).


For the record tax relief (and NI relief) on pensions costs the state £40 bn pa (£21.2 tax, £19bn NI),
source https://www.ftadviser.com/pensions/2019/10/10/cost...
If that tax and NI relief was NOT given then the 'take' from NI contributions would go up from £150bn pa to £190bn pa ie over 1/3
And a decent pension would be possibly affordable. (2019 £95bn https://www.ftadviser.com/pensions/2019/10/16/stat... ) NI pays for things other than just pensions)

Too many of us (including myself!) argue these matters from in their own perceived best interests.....
I think the fairest way is the full state pension (£9339 pa) plus your own savings on your NET income (no tax incentives)

If you don't agree please don't just 'knock' but actually make a suggestion as how to fund pensions - I'm all ears.

[Abdul Abulbul Amir]

Increase retirement age to 70
Cap pension increases to inflation
Stop giving NI credits to all and sundry
Encourage youngsters to save into pensions
Means testing will just deincentivise people

[Evanivitch]

Abdul Abulbul Amir said:

Encourage youngsters to save into pensions

Employers are already legally required to default employees into a pension scheme.

[Abdul Abulbul Amir]

Evanivitch said:

Abdul Abulbul Amir said:

Encourage youngsters to save into pensions

Employers are already legally required to default employees into a pension scheme.

Correct, but you can opt out.

I see people opting out and losing Employer matched contributions.

We need to educate young people better. Personal finance should be on the curriculum.

[Evanivitch]

alfaspecial said:

For the record tax relief (and NI relief) on pensions costs the state £40 bn pa (£21.2 tax, £19bn NI),
source https://www.ftadviser.com/pensions/2019/10/10/cost...
If that tax and NI relief was NOT given then the 'take' from NI contributions would go up from £150bn pa to £190bn pa ie over 1/3
And a decent pension would be possibly affordable. (2019 £95bn https://www.ftadviser.com/pensions/2019/10/16/stat... ) NI pays for things other than just pensions)

So would you then remove the income tax applied when receiving pension? Otherwise you end up in a position of being taxed on both ends, which would be a huge disincentive to save via the pensions mechanism, which ultimately provides the government with some assurance that people will be able to provide for themselves in retirement.

Ultimately the pension should be brought into a universal income stream, with the system streamlined to provide everyone with a basic income and if further income is required to to disability or dependents then so be it.

The issue I see is that we have an perceived entitlement at retirement to be treated differently because the perception is you've paid into a state pension pot. You haven't. Let's stop differentiating people based on age alone, and actually look at their circumstances.

[chemistry]

alfaspecial said:

But trying to be pragmatic about it, we are a rich country and a decent retirement (rightly) should be seen as a right (think of 'Boxer' in Animal Farm).

Only for those who have made a contribution (or been genuinely unable to do so due to health etc.). I don't see why the state owes a decent retirement to folks who choose not to work a day in their lives.