The State Pension

Including Financial Independence and Retiring Early (FIRE)
hiriskpaul
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Re: The State Pension

Postby hiriskpaul » December 12th, 2016, 9:32 pm

Lootman wrote:
hiriskpaul wrote:We might see some tinkering of the tax system and various reliefs to increase the burden of tax on those pensioners with larger incomes. One possibility I can see on the horizon is to limit in some way the the tax relief being handed to people who have accumulated significant investment portfolios in ISAs. Perhaps even going so far as to abolish ISAs for those over state pension age and tax income/capital gains from that point as unsheltered investments are. A change like that would be an easy sell to many voters.

It's possible but, as with pensions, it would be undermining decisions made by thousands of people over several decades. For instance I made a conscious decision years ago to favour contributing to ISAs (and PEPS before them) rather than contribute to a SIPP. In fact I don't have a SIPP at all. I reckoned that in the long term the tax benefits of tax-free income and gains would outweigh the upfront tax benefit of a SIPP. And so far that has been proven the correct choice. But if my existing ISA investments were not grandfathered into the existing tax treatment, that would all fall apart and I would have the worst of both worlds - no tax breaks at either end.

I'm not saying the voters would care if a few fairly well off old codgers like me got fleeced like that, but it would be very unjust on that minority. Instead I'd argue for a "new ISA" going forward where the new tax rules would apply. Or no new ISA at all but existing accounts retained on current terms.


I take your point. This could be unfair on those who took a conscious decision to invest in an ISA rather than a SIPP. However, that decision was likely to have been made when SIPPs were far more restrictive than they are now, e.g. with compulsory annuitisation, so it could be argued that decision might still have been made at the time even if it was known that ISAs would become taxable in retirement.

There would undoubtedly be a lot of losers should ISAs lose their tax status, or have some other kind of cap on tax relief and I would be one of them. But the current system of totally unlimited tax relief strikes me as a very convenient target for a chancellor. It is very easy to spin an argument against unlimited tax relief along the lines of "The richer you are, the more tax relief you get. How can that be fair?". I agree a phased arrangement would be fairer and typically has been done with the various pension changes, so might happen with ISA rule changes. Personally I would hope it did!

wyndrum
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Re: The State Pension

Postby wyndrum » December 12th, 2016, 10:04 pm

Trouble is the state pension is already unsustainable with the ridiculous argument that you need more people working now to pay for the present retireree's.

So it therefore has to change the way its funded. The argument which I think is fair, is that it is too important for people to opt out means the state has to carry on in its present trajectory is true but cannot continue, (imo)

You have to give people responsibility, you have to. If they mess it up then they mess it up. Otherwise whats the alternative? (given that we can't go on like this?)

State pension is a very new thing. Its only taken 3 generations to effectively collapse.

The only alternative I see if the state insists on staying with the present system is that it has to payout when you are about 78/80 and have completed a minimum of 50 years contributions. And that, I think could work if it was put in place right now but its no good being introduced in say another 20 years.

People have a tremendous capacity to achieve things. The state, with its good intentions is not helping people go forward. We now have a huge welfare state with lots of work being done by poorer (relatively) immigrants. How is that possible? How would those younger, UK welfare recipients cope without the welfare net to look after them? Would they take that was on offer if there was no alternative? What would you do?

And if you would work a low paid job to have something rather than nothing then again why don't others?

I am not blaming anyone in this piece. we are where we are, but that does not mean nothand can't be changed or indeed should not be changed.

It is neither progressive or helpful to insist a bankrupt system be kept going, slowly impoverishing the many as they grow old

Lootman
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Re: The State Pension

Postby Lootman » December 12th, 2016, 10:43 pm

hiriskpaul wrote:There would undoubtedly be a lot of losers should ISAs lose their tax status, or have some other kind of cap on tax relief and I would be one of them. But the current system of totally unlimited tax relief strikes me as a very convenient target for a chancellor. It is very easy to spin an argument against unlimited tax relief along the lines of "The richer you are, the more tax relief you get. How can that be fair?". I agree a phased arrangement would be fairer and typically has been done with the various pension changes, so might happen with ISA rule changes. Personally I would hope it did!

There are some back-door ways that ISAs could be taxed without directly taxing them. Examples:

1) Higher indirect taxes like VAT and lower direct taxes like income tax. We've already seen this with the lowering of CGT to 10% and ending the ability of ISAs to reclaim tax credits.

2) Have some form of "Alternative Minimum Tax" such as the US has, meaning that if you have a high tax-free income, then you have to pay a minimum amount of tax anyway.

3) ISA income is not taxed but the income from the ISA counts towards the phasing out of other tax allowances and exemptions, and may accelerate your liability for higher-rate tax on your taxable income

hiriskpaul
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Re: The State Pension

Postby hiriskpaul » December 13th, 2016, 4:44 pm

wyndrum wrote:Trouble is the state pension is already unsustainable with the ridiculous argument that you need more people working now to pay for the present retireree's.

So it therefore has to change the way its funded. The argument which I think is fair, is that it is too important for people to opt out means the state has to carry on in its present trajectory is true but cannot continue, (imo)

You have to give people responsibility, you have to. If they mess it up then they mess it up. Otherwise whats the alternative? (given that we can't go on like this?)

State pension is a very new thing. Its only taken 3 generations to effectively collapse.

The only alternative I see if the state insists on staying with the present system is that it has to payout when you are about 78/80 and have completed a minimum of 50 years contributions. And that, I think could work if it was put in place right now but its no good being introduced in say another 20 years.

People have a tremendous capacity to achieve things. The state, with its good intentions is not helping people go forward. We now have a huge welfare state with lots of work being done by poorer (relatively) immigrants. How is that possible? How would those younger, UK welfare recipients cope without the welfare net to look after them? Would they take that was on offer if there was no alternative? What would you do?

And if you would work a low paid job to have something rather than nothing then again why don't others?

I am not blaming anyone in this piece. we are where we are, but that does not mean nothand can't be changed or indeed should not be changed.

It is neither progressive or helpful to insist a bankrupt system be kept going, slowly impoverishing the many as they grow old


What is the source of your assertion that "the state pension is already unsustainable". I know this is a view held by many, but I would really like to see some up to date factual evidence and projections to back it up. And what is meant by "sustainable" anyway?

It has been a few years since I last looked at this (before the new 35 year contribution system), but from what I can remember we were heading for a difficult period in the 2030s, as the UK working age population was set to go into decline, so there could be insufficient NI/income tax receipts to fund pensions (and everything else), but eventually there would be fewer pensions to fund as fewer people would be retiring. But the whole thing is dependent on assumptions made about things like the level of economic growth and net immigration. Recent changes, such as requiring 35 years of NI credits instead of 30 and increases in state pension age were supposed to have alleviated some of the difficulties. Like I said though, I am way out of date.

tjh290633
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Re: The State Pension

Postby tjh290633 » December 13th, 2016, 6:34 pm

hriskpaul wrote:
It has been a few years since I last looked at this (before the new 35 year contribution system), but from what I can remember we were heading for a difficult period in the 2030s, as the UK working age population was set to go into decline, so there could be insufficient NI/income tax receipts to fund pensions (and everything else), but eventually there would be fewer pensions to fund as fewer people would be retiring. But the whole thing is dependent on assumptions made about things like the level of economic growth and net immigration. Recent changes, such as requiring 35 years of NI credits instead of 30 and increases in state pension age were supposed to have alleviated some of the difficulties. Like I said though, I am way out of date.


I think too many people assume that the State Pension is funded by NICs. It isn't, it comes out of the tax pot as a whole, of which NICs are just a part.

My view about benefits and entitlements, like the State Pension, is that their receipt should never coincide with income tax. In other words, nobody who receives benefits should pay income tax, but that all benefits and entitlements should be taxable. There ought to be clear water between the top limit of benefits and the onset of income tax. Once upon a time this was achieved by tax allowances for being married, having children, etc. Nowadays there is far too much overlap.

TJH

scrumpyjack
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Re: The State Pension

Postby scrumpyjack » December 13th, 2016, 7:22 pm

Our State Pension may be difficult to sustain, but most countries are in a far far worse position. Among developed countries ours is one of the lowest!

https://conversation.which.co.uk/money/ ... son-serps/

The collapse will happen in other countries before it happens here.

hiriskpaul
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Re: The State Pension

Postby hiriskpaul » December 13th, 2016, 8:52 pm

tjh290633 wrote:
hriskpaul wrote:
It has been a few years since I last looked at this (before the new 35 year contribution system), but from what I can remember we were heading for a difficult period in the 2030s, as the UK working age population was set to go into decline, so there could be insufficient NI/income tax receipts to fund pensions (and everything else), but eventually there would be fewer pensions to fund as fewer people would be retiring. But the whole thing is dependent on assumptions made about things like the level of economic growth and net immigration. Recent changes, such as requiring 35 years of NI credits instead of 30 and increases in state pension age were supposed to have alleviated some of the difficulties. Like I said though, I am way out of date.


I think too many people assume that the State Pension is funded by NICs. It isn't, it comes out of the tax pot as a whole, of which NICs are just a part.
TJH


Yes, I realise the state pension system is completely unfunded. What goes out to pensioners in any year is balanced by what comes in, other outgoings and borrowing. So to work out the sustainability of the pension system, actuaries/economists, etc. build a model to predict exchequer cash flows. There are of course huge uncertainties in the predictions of what goes into the model, hence what is available for pensioners. I was asking for some up to date information, following the recent changes in the state pension, as to what current model(s) were actually predicting. Just because someone asserts that the system is unsustainable does not necessarily make it so.

Lootman
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Re: The State Pension

Postby Lootman » December 13th, 2016, 9:30 pm

hiriskpaul wrote:Just because someone asserts that the system is unsustainable does not necessarily make it so.

I agree. If we had more of a closed system, like the US SSN system, then we could look at the projections for contributions and payouts, make some assumptions and projections about the future, and compute any potential future shortfall.

But the UK system has been so messed about with, and so conflated with general tax revenues and liabilities, then I think any statement that it is sustainable or not simply begs the question of how such a concept is defined.

In theory at least it is absolutely sustainable, in the sense that the government can just raise taxes to cover the cost. As long as the government has taxing power and a good credit rating, it can just throw money at pensions.

The real question then is whether at some point that becomes politically or economically impossible.

saechunu
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Re: The State Pension

Postby saechunu » December 14th, 2016, 6:25 pm

It's hard to envision the abolition of the state pension when the slow motion of travel is seemingly towards a universal basic income - with the state pension as a demographically-targeted precursor to this.

The remorseless twin technology-driven trends of automation and winner-takes-all digital business models are causing the economic spoils to be concentrated in ever fewer hands. While obviously presenting a threat to the many, this also presents a threat to the fortunate few: (i) aggregate demand growth would eventually be limited or even disappear if the many do not also enjoy a share of the spoils; (ii) civil disorder or even revolution would follow if the inequality was allowed to continue unchecked.

"If something cannot go on forever, it will stop". It feels like the balance between capital and labour has tipped too far in favour of the former. While this may resolve itself organically without drastic policy measures it's hard to envision how from today's vantage point. The question is would a universal basic income be a method of resolving this and how would it operate and be funded?

What I'm saying is that there is an enormous elephant in the room that encompasses and dwarves the issue of state pension sustainability. Today's well-meaning Chancellors attempting to balance budgets and reduce deficits are in danger of fiddling while Rome burns.

XFool
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Re: The State Pension

Postby XFool » December 26th, 2016, 6:41 pm

TedSwippet wrote:Well, there's this, published by the (Left Of?) Centre for Policy Studies a mere three days ago:
http://www.cps.org.uk/publications/repo ... e-pension/


Surely you don't think the Centre for Policy Studies is "Left" wing? :lol:

https://en.wikipedia.org/wiki/Centre_for_Policy_Studies

dougal60
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Re: The State Pension

Postby dougal60 » December 28th, 2016, 7:55 pm

Will the Senior Citizens Pension proposed by CPS end up like the extra State Pension paid to over 80s currently , which has never been increased since about 1950 and is currently 25p per week ( converted from 5 bob).

The pension deficit amount pales beside the annual deficit in NHI which is well over £30 billion and rising steadily. Politicians aren't doing much about that either?They seem to have increased the retirement age but NI contributions still cease at 60?

1nv35t
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Re: The State Pension

Postby 1nv35t » December 29th, 2016, 1:35 pm

saechunu wrote:It's hard to envision the abolition of the state pension when the slow motion of travel is seemingly towards a universal basic income - with the state pension as a demographically-targeted precursor to this.

The remorseless twin technology-driven trends of automation and winner-takes-all digital business models are causing the economic spoils to be concentrated in ever fewer hands. While obviously presenting a threat to the many, this also presents a threat to the fortunate few: (i) aggregate demand growth would eventually be limited or even disappear if the many do not also enjoy a share of the spoils; (ii) civil disorder or even revolution would follow if the inequality was allowed to continue unchecked.

"If something cannot go on forever, it will stop". It feels like the balance between capital and labour has tipped too far in favour of the former. While this may resolve itself organically without drastic policy measures it's hard to envision how from today's vantage point. The question is would a universal basic income be a method of resolving this and how would it operate and be funded?

What I'm saying is that there is an enormous elephant in the room that encompasses and dwarves the issue of state pension sustainability. Today's well-meaning Chancellors attempting to balance budgets and reduce deficits are in danger of fiddling while Rome burns.

Brexit is a step in the right direction. The Swiss voted for around a £1750/month universal credit type amount (around third to half of that for children), but withdrew/declined, perhaps in anticipation of that being a massive migration magnet (their vote to contain EU migration was overturned by the EU).

Providing spending of sums paid is contained to be within the country then funding isn't that much of a issue, allocation, taxed spending = source of another persons wage that is taxed and spent ... dual/multiple layers of taxation of the same money. Credits could be electronic with conditions, only spendable on certain things within the UK, perhaps with a spend it or lose it time criteria (top up of account to the monthly amount after discounting any surplus still remaining in the account at month end).

Could double up the UK GDP, liability of 100% of GDP but in turn seeing spending and tax revenues double-up (back of napkin calculation assuming a less generous credit (around half) compared to the Swiss offer), such that it became 50% of GDP. With wider spending power (having a couple of hundred/week disposable instead of being in poverty/out of work), shops/entertainment etc. businesses would flourish more (reduce predominance of closed/charity/betting shops along high streets) that added to the overall tax-take/GDP-per-capita above and beyond the proportional uplift (perhaps reducing it to a third of GDP or less). Enabling proceeds from actual work/business activities to be saved/invested and be more inclined for the older generations funding more of their own retirement/care.

Its something where the UK could be a world leader ... and envy, in a similar manner to how in the past our NHS was the envy of the world. Might even promote more firms wanting to be listed/registered in the UK in order to have their products/services being listed as a 'permissible universal credit spend' item (Marmite being manufactured in UK = permissible spend, Vegemite being manufactured in Australia isn't, so Vegemite more tempted to manufacture/list in the UK).

gbjbaanb
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Re: The State Pension

Postby gbjbaanb » December 31st, 2016, 6:28 pm

UBI is very expensive - for example, in the UK we spend £150bn on welfare alone (not including pensions) and we have 40m people of working age (16-64), which means if we divvied up the current welfare bill, we'd give everyone £3750 a year to live on. That's a lot less than the £14500 you'd get on minimum wage.

Now, we could up that a little by considering it as income and thus subject to income taxation - so we'd have £3750 to the richest, and then claw back 40% of that, so the overall amount could be increased (30m taxpayers, 25m paying basic rate, 4m paying higher rate) to end up with roughly £4300 each per year.

We'd could restrict the people it could be paid to in order to bump it up, remove any first-generation immigrants (5.5m) from the rolls, and maybe increase the starting age to 21 (6.5m), that'd bring the amount up to roughly £6300. Increasing the basic and upper rate by 5% to consider those taken over the thresholds with their extra UBI payments would increase the amount - to £6500.

It doesn't count disability payments, but I suppose that could be countered by making any disabled requirements part of the NHS rather than direct payments - or something along those lines, but if we removed current disability payments from these calculations (£41bn for 18% of the pop!!), it'd result in £4600 a year.

Still not that much really, and not so much to show for fully 25% of our tax spend. Shame, as it seems like a utopian ideal that would let everyone work as needed without the restrictions of claiming. No doubt we could increase that number by sacking all the civil servants and bureaucracy who used to handle benefits but as all of them put together cost us £11bn, it wouldn't make much difference, maybe up to £6700.

That in itself might make all the difference though, as was seen on that TV prog where they gave a full years' worth of unemployment benefit to couples in one go, all of them got work or set up self-employment, so maybe it'd work from that perspective boosting the economy as a whole as everyone would see work directly benefit them.

Incidentally, if we added pensions from welfare here so pensioners were included, we'd all get £5600. Less than the £8k a year state pension currently (though if we gave pensioners half as much again, that'd drop the amount everyone else gets to £4500).

URRZZ
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Re: The State Pension

Postby URRZZ » December 31st, 2016, 11:52 pm

dougal60 wrote: They seem to have increased the retirement age but NI contributions still cease at 60?


No, NI contributions continue until State Pension Age.
https://www.gov.uk/national-insurance/overview

bionichamster
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Re: The State Pension

Postby bionichamster » January 1st, 2017, 1:39 pm

Given the complexity of the various issues affecting (or likely to affect) both pension funding and the economy and society at large then it is possible to make the case for pretty much any change to pensions, the only thing that is really predictable is that there will have to be more changes.

We have perhaps reached or indeed passed 'peak pension' i.e. the time when the greatest proportion of retirees are recieving a decent amount of pension when all sources of income are counted (e.g. state pension, final salary pensions, personal pensions and the cumulation of around 30 years of ISA's and PEP's that have spanned some fairly good times for equities. It very much looks like it's all downhill from here:
For example you will have to wait longer for the state pension.
Final salary pensions are becoming much rarer, schemes are closing.
Existing final salary schemes that remain are moving to increase retirement ages
The pension triple lock is looking under threat
And of course the biggie: most people looking to retire 20 to 40 years from now aren't saving enough for their future in defined contribution schemes. This is due to a culmination of bad press from a variety of financial scandals putting them off, it's the difficulty in getting a decent full-time job that enables one to free up cash for a pension as many do not come with one built in that is sufficient to provide, it's the excessive cost of housing (rent or buy), it's the university education and the debt it now brings even though it doesn't bring a guarantee of a good job in many subjects, it is also partly lifestyle, so much stuff and many people want it now so they are spending more (including that which could fund a pension) and even borrowing to get it.

Granted these don't apply to everyone but I think they apply to enough people in combination to suggest that any attempt to scrap the state pension would be met with one hell of a resistance since a majority of voters are likely to either have that as their only source of income in retirement or as a significant and important chunk of their retirement income, the older people get the more they will realise this, the average age of the population is increasing and older people tend to vote more. From all of this I suggest that any fundamental attempt to cut state pension payouts to anyone other than the significantly well off would be suicidal for a government, but slight of hand might be employed (break the triple lock and allow inflation to erode the real value).

Means testing is possible but setting the bar low enough to make a difference to affordability might encompass a huge section of society that has scrimped and saved a modest personal and/or final salary entitlement only to find that the changed goalposts are depriving them of income as punishment for trying to do the right thing. Thus I suspect that the means testing limit will have to be high enough that only the wealthiest few are significantly affected, That might save a fair bit, but whether it is enough to acheive what it needs to is anyone's guess.

BH

TheRIT
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Re: The State Pension

Postby TheRIT » January 1st, 2017, 3:17 pm

bionichamster wrote:Given the complexity of the various issues affecting (or likely to affect) both pension funding and the economy and society at large then it is possible to make the case for pretty much any change to pensions, the only thing that is really predictable is that there will have to be more changes.

We have perhaps reached or indeed passed 'peak pension' i.e. the time when the greatest proportion of retirees are recieving a decent amount of pension when all sources of income are counted (e.g. state pension, final salary pensions, personal pensions and the cumulation of around 30 years of ISA's and PEP's that have spanned some fairly good times for equities. It very much looks like it's all downhill from here:
...


I would think it's worse than that and remove the perhaps. There's another pensions consultation running right now and I can't see things being made more favourable on that front. Anecdotally, I also look at all the early retirees I physically know and they are using very generous DB schemes to go early. I'm of the non-DB generation and I also want to FIRE. To do it I've had to show real determination including savings rates >50% of earnings. How many people are doing that in the UK today given 'average savings' according to the ONS is only 5.1%. The majority of the population will be retiring when the government allows them to with early retirement fast heading the way of the dodo IMHO.

bionichamster
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Re: The State Pension

Postby bionichamster » January 1st, 2017, 6:22 pm

To do it I've had to show real determination including savings rates >50% of earnings. How many people are doing that in the UK today given 'average savings' according to the ONS is only 5.1%


Hardly anyone, even those on above average incomes, is able to save >50% of their earnings, either because most of it is used up just paying for neccessities and normal expenditure, or because their lifestyles have inflated to match their income, (I suspect few people on 50-60k are prepared to live like they earn 25k).
The average rate may be 5.1% but I can only say I wish that was the actual rate, but in reality it is likely that it involves a small minority of large savers being balanced out by a huge number of people saving next to nothing. I wonder what the median rate is?

BH

TheRIT
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Re: The State Pension

Postby TheRIT » January 1st, 2017, 9:10 pm

bionichamster wrote:Hardly anyone, even those on above average incomes, is able to save >50% of their earnings, either because most of it is used up just paying for neccessities and normal expenditure, or because their lifestyles have inflated to match their income, (I suspect few people on 50-60k are prepared to live like they earn 25k).
The average rate may be 5.1% but I can only say I wish that was the actual rate, but in reality it is likely that it involves a small minority of large savers being balanced out by a huge number of people saving next to nothing. I wonder what the median rate is?

BH


For some I'm sure it is 'able' but for many I suspect it's either 'choose not to' or 'don't know what's actually possible if you put your mind to it'. If only more knew what was possible enabling choice. I look back at myself 9 years ago with a token savings rate and looking for 'experts' to manage my token wealth. I had to figure out was possible myself and then I chose to. The best thing I've ever done.

bionichamster
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Re: The State Pension

Postby bionichamster » January 2nd, 2017, 8:47 am

For some I'm sure it is 'able' but for many I suspect it's either 'choose not to' or 'don't know what's actually possible if you put your mind to it'. If only more knew what was possible enabling choice. I look back at myself 9 years ago with a token savings rate and looking for 'experts' to manage my token wealth. I had to figure out was possible myself and then I chose to. The best thing I've ever done.


I choose the word 'able' because while I recongnise that with substantial sacrifice many people could save significant percentages of income, most people are just not able to commit to such sacrifice, either because of their commitments OR their lifestyle choice.
I have probably managed to save around 50% of income in a few distant past years but it was done by living in a flat that was less than I would ideally have wanted and taking years to DIY it to an acceptable standard and doing the work myself, by having a cheap car that I maintained myself, or for one year no car at all, by not taking foreign, or indeed any, holidays, by rarely buying new clothes unless something wore out, by mainly purchasing stuff on special offer or reduced at supermarkets, by not having a TV, by running a completely out of date computer and putting up with its limitations and frustrations, by not having a mobile phone, by not going out to restaraunts and pubs more than once in a blue moon, by generally not buying things I wanted as opposed to actually needed. It didn't particularly bother me and I could do it again but I suspect for many people that's not a particularly enticing lifestyle and it's one that would make many people miserable if it had to be adhered to for long.

I would agree that most people would do well to try and do at least some of those things but it is unrealistic to expect the majority in this consumer society to make significant inroads into saving, not going to happen, and fundamentally even if it did many people wouldn't be able to reach 50% (in some areas rent alone is close to 50% for the low paid before all other living costs are attached) also the spending of the masses is what keeps our economy going if they all started squirreling it away we'd be screwed!
What is needed is a move to incentivise moderate degrees of saving by people with modest incomes but as far as I can see the incentivisation to save has been muddied in recent years by the slow conversion of ISA's to a way for the well-off to put large chunks of cash out of the taxman's reach rather than offering a headline grabbing rate of return on modest amounts (no matter what the sacrifice, nobody on average earings can save 15k a year without either an additional windfall or support/sharing costs from or with a partner or parents. If we can't even get people to save, you have even less chance of getting them to invest those savings.

Furthermore the idea that a pension offered an incentive to the individual of a tax free input, on condition it was used upon retirement to produce an income for life and thus help to reduce the chance that the retiree would become an excessive burden on the state was holed below the water by the last government when Osbourne allowed people to just take the whole lot out and spend it. Again this disproportionally benefits the well off who can now enjoy having paid in tax free, quite possibly at a higher rate, and can now carefully manage the withdrawl at basic rate and potentially have other sources of funding (ISA's, buy to let, final salary schemes, downsizing from a big house etc) the benefits for society at large are questionable, a short term boost for spending (I suspect Osbourne's real reason was an attempt to help boost the economy short-term so to meeet his deficit reduction targets) and some fun or useful cash for individuals but at the potential cost of many people with modest amounts of pension savings blowing most of it and becoming almost totally state reliant for the remainder of their lives. If the government is going to offer an incentive to save in a pension then it should expect something in return otherwise why bother, if people want to spend all their money at 60 just shove it in an ISA and wait until you retire assuming you have the will power...

The compulsory workplace pension is a start but doesn't seem to go far enough, the creation of a state retirement fund sounds like a good idea, but given the deficit we'd just be borrowing to create it. Having said that maybe if we can currently borrow at next to nothing but can invest in stockmarkets around the world for a significantly greater return then the government might as well spend a few billion a month investing in a pension fund? Is that workable?

BH

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Re: The State Pension

Postby FredBloggs » January 2nd, 2017, 10:28 am

Interesting thoughts. What you're suggesting for state pension funding would be a bit like the sovereign wealth funds of Norway, Singapore, Qatar etc.... The reasons we don't have such a thing are - 1 The significant North Sea oil/gas windfall was mainly squandered by paying people who lost their jobs in the 80's disability benefit. It kept them off the dole numbers. 2 We have a voracious and out of control public sector expenditure system. 3 Governments of all colours just kick the finance can down the road believing tomorrow will never arrive on their watch. 4 By stealing future wealth to spend today, the people you are stealing from either don't realise it or aren't born yet so they cannot complain at the ballot box.


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