You seriously believe the triple lock will still be in place in the medium term? The triple lock is unsustainable.
Today's pensioners are, as a group, far better off than their parents were in retirement. And far better off than their children and grandchildren will be.
You seriously believe the triple lock will still be in place in the medium term? The triple lock is unsustainable.
Today's pensioners are, as a group, far better off than their parents were in retirement. And far better off than their children and grandchildren will be.
I dont know how long the triple lock will stay in place. I suppose the sustainability will depend very much on inflation. As for your other point, that will depend very much on what those that you are comparing us to, did, or do, for a living, unless you are comparing state benefit only, in which case I am sure you are right.
You seriously believe the triple lock will still be in place in the medium term? The triple lock is unsustainable.
Today's pensioners are, as a group, far better off than their parents were in retirement. And far better off than their children and grandchildren will be.
I dont know how long the triple lock will stay in place. I suppose the sustainability will depend very much on inflation. As for your other point, that will depend very much on what those that you are comparing us to, did, or do, for a living, unless you are comparing state benefit only, in which case I am sure you are right.
"As a group" obviously includes a lot of people who were not better off. But a lot of today's pensioners have pension wealth that younger people can only dream of.
For the last 30 years, workforces have been split between the older, final salary workers, and the younger ones denied access.
The first generation where buying your own home became the norm. Something beyond the pocket of today's young. Where the average age of a first time buyer is approaching 40.
Every time the retirement age goes up by 1 year, that is a £10,000 pension tax on every worker.
You seriously believe the triple lock will still be in place in the medium term? The triple lock is unsustainable.
Today's pensioners are, as a group, far better off than their parents were in retirement. And far better off than their children and grandchildren will be.
I dont know how long the triple lock will stay in place. I suppose the sustainability will depend very much on inflation. As for your other point, that will depend very much on what those that you are comparing us to, did, or do, for a living, unless you are comparing state benefit only, in which case I am sure you are right.
"As a group" obviously includes a lot of people who were not better off. But a lot of today's pensioners have pension wealth that younger people can only dream of.
For the last 30 years, workforces have been split between the older, final salary workers, and the younger ones denied access.
The first generation where buying your own home became the norm. Something beyond the pocket of today's young. Where the average age of a first time buyer is approaching 40.
Every time the retirement age goes up by 1 year, that is a £10,000 pension tax on every worker.
I am not disagreeing. Although they seem to have brought in legislation to cover the next two increases in age. I dont know what the answer is. If you stopped the final salary pension schemes tomorrow, it would take years to see any benefit. This is while people will continue to live longer, and the state pension becomes less affordable. What do you think the answer is?
What I would say is that the burden appears to be falling entirely on today's workers. To support today's pensioners. But not tomorrow's.
There seems to be a feeling in this country that pensioners are exempt from the financial problems of this country. Which is just plain wrong, in my view.
Pensioners can easily be split into 2 groups. Those that have assets and/or income. And those that do not. And yet both are treated the same.
For someone who relies purely on the Old Age Pension, protections need to continue. Whereas people with additional sources of capital and/or income need to pay their share. Whether via Inheritance Tax on capital, or some form of tax/reduced pension.
Because otherwise we have the situation where today's workers are funding today's pensioners (including massive care home costs) to their own detriment as future pensioners.
It is easy to point to mega-rich Pensioners living tax-tree at other's expense.
So let's use a much more common example. A Pensioner. Living alone. In the average London home. No Mortgage. With a 10k a year state pension and a 10k a year from his former final salary pension. From which he took the 25% tax free option.
At the moment he has an income of £20k a year. And pays about 1500 a year in tax on that income. His tax free lump sum would be about £60,000. His house is worth about £520,000-yes, that really is the average London house price. He pays no tax on his £520,000 asset, although there may currently be IHT of about £75,000 on death. So his kids will still split just under £450,000 after tax.
Compare/contrast to the way working people are taxed. No £60,000 tax-free lump sum. No other tax breaks.
And this Government's solution? Make every worker work longer. And scrap that £75,000 IHT, so the kids get it all tax free.
The average working man. Subsidising the wealthy. Wrong way round.
Today's workers and other taxpayers fund everything, they fund the pensioners, they fund the sick, they fund the education system, they fund those reliant on benefits and the workshy, they fund it all.
Pensioners with assets and additional income are not treated the same way as pensioners who rely solely on the state pension. Pensioners who have been prudent and saved towards their own retirement will often continue to pay tax until they die and then may well pay inheritance tax too. The personal allowance is £12,570, the basic state pension is £10,600 per annum, so anyone with additional income of more than £1,970 per annum is going to still be paying income tax.
The argument about the young not being able to afford to buy houses and my generation being 'lucky' with respect to housing irks me somewhat. People of my generation and older generally made huge sacrifices to be able to afford to buy a house and often started with a flat and then traded up over the years, many have been paying mortgages for over 40 years. Some of the younger generation wouldn't dream of giving up their leased BMWs or £5 daily coffees to be able to better afford a house and they certainly wouldn't stoop to only buying a flat as a first time buyer, no but they'll moan about how unfair it is.
This is the same generation that is likely to inherit property and wealth from their 'lucky' parents. Don't see them complaining about that either.
I absolutely agree that final salary pensions should be scrapped by the way, especially those funded by the taxpayer. Many years ago I remember a sales technique was to ask younger clients how much they were paying into pensions, if the answer was nothing you simply answered that they were indeed paying at least £100 per month into pensions from their tax deductions, sadly none of it was paying into their pensions but was paying into the NHS, Teachers etc pensions, how about paying something into one for yourself? And you want to penalise those that did pay into their own pensions (over and above the tax deductions)?
Life often isn't fair but the general standard of living of virtually everybody in this country is far, far better than it was for generations gone by.
It is easy to point to mega-rich Pensioners living tax-tree at other's expense.
So let's use a much more common example. A Pensioner. Living alone. In the average London home. No Mortgage. With a 10k a year state pension and a 10k a year from his former final salary pension. From which he took the 25% tax free option.
At the moment he has an income of £20k a year. And pays about 1500 a year in tax on that income. His tax free lump sum would be about £60,000. His house is worth about £520,000-yes, that really is the average London house price. He pays no tax on his £520,000 asset, although there may currently be IHT of about £75,000 on death. So his kids will still split just under £450,000 after tax.
Compare/contrast to the way working people are taxed. No £60,000 tax-free lump sum. No other tax breaks.
And this Government's solution? Make every worker work longer. And scrap that £75,000 IHT, so the kids get it all tax free.
The average working man. Subsidising the wealthy. Wrong way round.
This is a huge topic. I would say that the example you quote is not tremendously well off. Although he is making a contribution, albeit a small one. Take a married couple that have paid all their stamps. They will also get 20k per annum, and pay no tax. Some people downsize, and use the capital to subsidise their retirement. Others do a bit of equity release. Both of which mean less money for their kids.
Unless someone comes up with a solution then governments will probably just extend the age at which you are entitled to the state pension.
The very, very rich dont need it.
During my working life, I came across people that regularly bought a bigger house, or more houses, invested in ISAs, pensions, and thought about their later life, others with similar incomes were more concerned about drinking every day, or taking drugs, or gambling, or buying flash cars, or all four, and lived from week to week, without any thought for the future, and often asked for a draw in the case of a bad week. Having said that, I also appreciate that people with very low incomes dont have the opportunity to set aside funds with retirement in mind.
I suppose the simple answer already exists. You could retire at 40, or younger, if you had the money to support yourself. If not you will have to work longer.
You seriously believe the triple lock will still be in place in the medium term? The triple lock is unsustainable.
Today's pensioners are, as a group, far better off than their parents were in retirement. And far better off than their children and grandchildren will be.
Sir Robert John Devereux, KCB (/ˈdɛvəˌruː/; born 15 January 1957) is a retired senior British civil servant, who served as Permanent Secretary for the Department for Transport from 2007 to 2011,[1] and oversaw a new policy increasing the UK retirement age to 67 at the Department for Work and Pensions from 2011 until his retirement at 61 in January 2018.
£85,000 pa pension and a lump sum of £245,000.......
Sir Robert John Devereux, KCB (/ˈdɛvəˌruː/; born 15 January 1957) is a retired senior British civil servant, who served as Permanent Secretary for the Department for Transport from 2007 to 2011,[1] and oversaw a new policy increasing the UK retirement age to 67 at the Department for Work and Pensions from 2011 until his retirement at 61 in January 2018.
£85,000 pa pension and a lump sum of £245,000.......</blockquote
Sir Robert John Devereux, KCB (/ˈdɛvəˌruː/; born 15 January 1957) is a retired senior British civil servant, who served as Permanent Secretary for the Department for Transport from 2007 to 2011,[1] and oversaw a new policy increasing the UK retirement age to 67 at the Department for Work and Pensions from 2011 until his retirement at 61 in January 2018.
£85,000 pa pension and a lump sum of £245,000.......
So what exactly are you accusing him of? Doing something he would have been told to do. Or having a good pension, like many other civil servants.
Man says old age pension should be delayed until 67 and beyond. That people who have paid in for their state pension should have to pay 2+ years' longer for 2+ years' less benefits.
While his Final Salary Pension Scheme's benefits have increased in value by a far bigger factor. And remained untouched. And enabled him to retire far earlier.
I had the benefit of a similar Final Salary Scheme in private industry.
On the basis of cost, the Scheme was withdrawn for new entrants in the early 1990s. My contributions trebled. My then-employer provided figures that showed the cost to them of my Pension had quadrupled. Which still made it a great deal
Compare/contrast with Civil Servants. Still largely unaffected. Try finding the cost to the taxpayer of this-it is not published anywhere I can see.
Man says old age pension should be delayed until 67 and beyond. That people who have paid in for their state pension should have to pay 2+ years' longer for 2+ years' less benefits.
While his Final Salary Pension Scheme's benefits have increased in value by a far bigger factor. And remained untouched. And enabled him to retire far earlier.
Or another way.
As people are living longer, our government is choosing to increase the state pension age in an effort to balance the books.
Civil service pensions have undergone reform.
We could have all chosen to become civil servants, assuming we were qualified. The pension aspect was a huge reason for doing so. But we didnt.
The triple lock that many of us are glad of, is making the situation worse. How many of us would vote to discontinue the triple lock, and return lets say the last couple of years increases, if it meant that the state pension age remained as is?
So civil servants pensions have been reformed, the Tories, and Labour, are both promising to maintain the triple lock, as least for a minute. Neither of them seem to be offering alternative solutions. Therefore the state pension age is likely to continue to rise.
Civil Service Pensions have been reformed in a totally different way.
Firstly, the reductions in benefits have been far smaller. And the gains, due to actuarial changes, far greater-because a Civil Servant typically retires at under 65. Not 67. With a 25% tax free lump sum (which was never originally envisaged for Final Salary Pensions, and is now available to every pension except the old age pension)
Secondly, the benefits changes only affect future years' benefits. Not past years. Unlike the State Pension.
Political Parties tend to care only about winning elections and the next 5 years.
And keeping their own Final Salary Pension schemes, naturally.
In short, Governments claim they cannot afford universal pensions. While continuing to provide massive fiscal support for Final Salary Pensions, that only exist in State Employment.
Civil Service Pensions have been reformed in a totally different way.
Firstly, the reductions in benefits have been far smaller. And the gains, due to actuarial changes, far greater-because a Civil Servant typically retires at under 65. Not 67. With a 25% tax free lump sum (which was never originally envisaged for Final Salary Pensions, and is now available to every pension except the old age pension)
Secondly, the benefits changes only affect future years' benefits. Not past years. Unlike the State Pension.
Political Parties tend to care only about winning elections and the next 5 years.
And keeping their own Final Salary Pension schemes, naturally.
I am not disagreeing with that, but you surely cant blame one civil servant. He didnt arrange his own pension scheme. Nor did he have the final say on the state pension scheme.
Comments
Today's pensioners are, as a group, far better off than their parents were in retirement. And far better off than their children and grandchildren will be.
I suppose the sustainability will depend very much on inflation.
As for your other point, that will depend very much on what those that you are comparing us to, did, or do, for a living, unless you are comparing state benefit only, in which case I am sure you are right.
For the last 30 years, workforces have been split between the older, final salary workers, and the younger ones denied access.
The first generation where buying your own home became the norm. Something beyond the pocket of today's young. Where the average age of a first time buyer is approaching 40.
Every time the retirement age goes up by 1 year, that is a £10,000 pension tax on every worker.
Although they seem to have brought in legislation to cover the next two increases in age.
I dont know what the answer is.
If you stopped the final salary pension schemes tomorrow, it would take years to see any benefit.
This is while people will continue to live longer, and the state pension becomes less affordable.
What do you think the answer is?
What I would say is that the burden appears to be falling entirely on today's workers. To support today's pensioners. But not tomorrow's.
There seems to be a feeling in this country that pensioners are exempt from the financial problems of this country. Which is just plain wrong, in my view.
Pensioners can easily be split into 2 groups. Those that have assets and/or income. And those that do not. And yet both are treated the same.
For someone who relies purely on the Old Age Pension, protections need to continue. Whereas people with additional sources of capital and/or income need to pay their share. Whether via Inheritance Tax on capital, or some form of tax/reduced pension.
Because otherwise we have the situation where today's workers are funding today's pensioners (including massive care home costs) to their own detriment as future pensioners.
So let's use a much more common example. A Pensioner. Living alone. In the average London home. No Mortgage. With a 10k a year state pension and a 10k a year from his former final salary pension. From which he took the 25% tax free option.
At the moment he has an income of £20k a year. And pays about 1500 a year in tax on that income. His tax free lump sum would be about £60,000. His house is worth about £520,000-yes, that really is the average London house price. He pays no tax on his £520,000 asset, although there may currently be IHT of about £75,000 on death. So his kids will still split just under £450,000 after tax.
Compare/contrast to the way working people are taxed. No £60,000 tax-free lump sum. No other tax breaks.
And this Government's solution? Make every worker work longer. And scrap that £75,000 IHT, so the kids get it all tax free.
The average working man. Subsidising the wealthy. Wrong way round.
Pensioners with assets and additional income are not treated the same way as pensioners who rely solely on the state pension. Pensioners who have been prudent and saved towards their own retirement will often continue to pay tax until they die and then may well pay inheritance tax too. The personal allowance is £12,570, the basic state pension is £10,600 per annum, so anyone with additional income of more than £1,970 per annum is going to still be paying income tax.
The argument about the young not being able to afford to buy houses and my generation being 'lucky' with respect to housing irks me somewhat. People of my generation and older generally made huge sacrifices to be able to afford to buy a house and often started with a flat and then traded up over the years, many have been paying mortgages for over 40 years. Some of the younger generation wouldn't dream of giving up their leased BMWs or £5 daily coffees to be able to better afford a house and they certainly wouldn't stoop to only buying a flat as a first time buyer, no but they'll moan about how unfair it is.
This is the same generation that is likely to inherit property and wealth from their 'lucky' parents. Don't see them complaining about that either.
I absolutely agree that final salary pensions should be scrapped by the way, especially those funded by the taxpayer. Many years ago I remember a sales technique was to ask younger clients how much they were paying into pensions, if the answer was nothing you simply answered that they were indeed paying at least £100 per month into pensions from their tax deductions, sadly none of it was paying into their pensions but was paying into the NHS, Teachers etc pensions, how about paying something into one for yourself? And you want to penalise those that did pay into their own pensions (over and above the tax deductions)?
Life often isn't fair but the general standard of living of virtually everybody in this country is far, far better than it was for generations gone by.
That's a terrific post by @Enut
So much to agree with, especially the final sentence.
I would say that the example you quote is not tremendously well off.
Although he is making a contribution, albeit a small one.
Take a married couple that have paid all their stamps.
They will also get 20k per annum, and pay no tax.
Some people downsize, and use the capital to subsidise their retirement.
Others do a bit of equity release.
Both of which mean less money for their kids.
Unless someone comes up with a solution then governments will probably just extend the age at which you are entitled to the state pension.
The very, very rich dont need it.
During my working life, I came across people that regularly bought a bigger house, or more houses, invested in ISAs, pensions, and thought about their later life, others with similar incomes were more concerned about drinking every day, or taking drugs, or gambling, or buying flash cars, or all four, and lived from week to week, without any thought for the future, and often asked for a draw in the case of a bad week.
Having said that, I also appreciate that people with very low incomes dont have the opportunity to set aside funds with retirement in mind.
I suppose the simple answer already exists.
You could retire at 40, or younger, if you had the money to support yourself.
If not you will have to work longer.
Sir Robert John Devereux, KCB (/ˈdɛvəˌruː/; born 15 January 1957) is a retired senior British civil servant, who served as Permanent Secretary for the Department for Transport from 2007 to 2011,[1] and oversaw a new policy increasing the UK retirement age to 67 at the Department for Work and Pensions from 2011 until his retirement at 61 in January 2018.
£85,000 pa pension and a lump sum of £245,000.......
Doing something he would have been told to do.
Or having a good pension, like many other civil servants.
Man says old age pension should be delayed until 67 and beyond. That people who have paid in for their state pension should have to pay 2+ years' longer for 2+ years' less benefits.
While his Final Salary Pension Scheme's benefits have increased in value by a far bigger factor. And remained untouched. And enabled him to retire far earlier.
On the basis of cost, the Scheme was withdrawn for new entrants in the early 1990s. My contributions trebled. My then-employer provided figures that showed the cost to them of my Pension had quadrupled. Which still made it a great deal
Compare/contrast with Civil Servants. Still largely unaffected. Try finding the cost to the taxpayer of this-it is not published anywhere I can see.
https://iea.org.uk/media/public-sector-pensions-cost-57bn-per-year-more-than-is-declared-finds-new-iea-research/
Here is something 2 years' old. Saying the cost is underdeclared by £57 Billion a year.
No extra 2 years payments/2 years later on benefits here.
As people are living longer, our government is choosing to increase the state pension age in an effort to balance the books.
Civil service pensions have undergone reform.
We could have all chosen to become civil servants, assuming we were qualified.
The pension aspect was a huge reason for doing so.
But we didnt.
The triple lock that many of us are glad of, is making the situation worse.
How many of us would vote to discontinue the triple lock, and return lets say the last couple of years increases, if it meant that the state pension age remained as is?
So civil servants pensions have been reformed, the Tories, and Labour, are both promising to maintain the triple lock, as least for a minute.
Neither of them seem to be offering alternative solutions.
Therefore the state pension age is likely to continue to rise.
Firstly, the reductions in benefits have been far smaller. And the gains, due to actuarial changes, far greater-because a Civil Servant typically retires at under 65. Not 67. With a 25% tax free lump sum (which was never originally envisaged for Final Salary Pensions, and is now available to every pension except the old age pension)
Secondly, the benefits changes only affect future years' benefits. Not past years. Unlike the State Pension.
Political Parties tend to care only about winning elections and the next 5 years.
And keeping their own Final Salary Pension schemes, naturally.
In short, Governments claim they cannot afford universal pensions. While continuing to provide massive fiscal support for Final Salary Pensions, that only exist in State Employment.
He didnt arrange his own pension scheme.
Nor did he have the final say on the state pension scheme.