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  • FIRST POST
    • Cardew
    • By Cardew 21st Sep 16, 6:06 PM
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    Cardew
    Pensioner's 'perks' under review.
    • #1
    • 21st Sep 16, 6:06 PM
    Pensioner's 'perks' under review. 21st Sep 16 at 6:06 PM
    http://home.bt.com/lifestyle/money/investing-pensions/state-pension-and-other-pensioner-benefits-under-review-11364097761631
Page 1
    • dunstonh
    • By dunstonh 21st Sep 16, 6:12 PM
    • 84,046 Posts
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    dunstonh
    • #2
    • 21st Sep 16, 6:12 PM
    • #2
    • 21st Sep 16, 6:12 PM
    That seems to be fair. Pensioners have largely got away with the direct impact of austerity than other groups in society. The triple lock is unsustainable and just creates unfairness. It has served its required purpose.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • brewerdave
    • By brewerdave 21st Sep 16, 6:16 PM
    • 3,876 Posts
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    brewerdave
    • #3
    • 21st Sep 16, 6:16 PM
    • #3
    • 21st Sep 16, 6:16 PM
    ...but means testing of the other "benefits" ? Thought it was more money to manage a restriction on the WFA than it would save??
    • Silvertabby
    • By Silvertabby 21st Sep 16, 6:21 PM
    • 91 Posts
    • 98 Thanks
    Silvertabby
    • #4
    • 21st Sep 16, 6:21 PM
    • #4
    • 21st Sep 16, 6:21 PM
    I'll probably get shouted down for this, but I just don't understand why everyone gets 'free' prescriptions from 60. At the very least, it should be linked to Pension Credit age, rising to State Pension age.

    Spoken as a 60 year old who, unlike some people, doesn't abuse the system. I used to work with a couple of 60+ ladies who boasted that they went to their Drs for 'free' paracetamol, cough linctus, hay fever tablets, etc, which they then doled out to their families.

    The triple lock is only guaranteed for the life of this Parliament. I can't see it going on beyond 2020.
    Last edited by Silvertabby; 21-09-2016 at 6:22 PM. Reason: add
    • Cardew
    • By Cardew 21st Sep 16, 6:51 PM
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    Cardew
    • #5
    • 21st Sep 16, 6:51 PM
    • #5
    • 21st Sep 16, 6:51 PM
    ...but means testing of the other "benefits" ? Thought it was more money to manage a restriction on the WFA than it would save??
    Originally posted by brewerdave
    That was certainly stated in Parliament some years ago.

    Much has been made of the undoubted fact that current pensioners are much better off in recent years; and some of the perks are indefensible.

    However having been encouraged all through their working lives to save, save, save, over the last few years the dramatic drop in interest rates has hit those with savings.

    Some friends of mine intended to buy a smaller cheaper house and they expected to pocket £100k from the move. A few years ago that might have produced an income of around £6k pa - now about £1k.
    • nickcc
    • By nickcc 21st Sep 16, 7:00 PM
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    nickcc
    • #6
    • 21st Sep 16, 7:00 PM
    • #6
    • 21st Sep 16, 7:00 PM
    Seems a good idea to me as long as they increase interest rates to the same as we paid back in the eighties, I'd be more than happy to lose all of my so called pensioner perks as long as interest rates were 13%.
    • elsien
    • By elsien 21st Sep 16, 7:05 PM
    • 13,125 Posts
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    elsien
    • #7
    • 21st Sep 16, 7:05 PM
    • #7
    • 21st Sep 16, 7:05 PM
    I wouldn't call the state pension a benefit. It's an entitlement I'll have well and truly earned. If it's not been abolished or risen to the age most of us are dead by, by the time I get there.
    All shall be well, and all shall be well, and all manner of things shall be well.

    Pedant alert - it's could have, not could of.
    • LHW99
    • By LHW99 21st Sep 16, 8:45 PM
    • 433 Posts
    • 279 Thanks
    LHW99
    • #8
    • 21st Sep 16, 8:45 PM
    • #8
    • 21st Sep 16, 8:45 PM
    or risen to the age most of us are dead by
    That is, after all, where the state pension started from.
    • Silvertabby
    • By Silvertabby 21st Sep 16, 8:53 PM
    • 91 Posts
    • 98 Thanks
    Silvertabby
    • #9
    • 21st Sep 16, 8:53 PM
    • #9
    • 21st Sep 16, 8:53 PM
    “ or risen to the age most of us are dead by

    That is, after all, where the state pension started from.
    70 for both men and women. Not only that, but it was means tested, so only the destitute qualified for payment - so as very few really poor people survived to that 'grand old age', the pensions bill must have been miniscule.
    Last edited by Silvertabby; 21-09-2016 at 8:54 PM. Reason: add
    • missbiggles1
    • By missbiggles1 21st Sep 16, 8:57 PM
    • 14,564 Posts
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    missbiggles1
    I wouldn't call the state pension a benefit. It's an entitlement I'll have well and truly earned. If it's not been abolished or risen to the age most of us are dead by, by the time I get there.
    Originally posted by elsien
    I have as well but not everybody has.
    • dunstonh
    • By dunstonh 21st Sep 16, 9:21 PM
    • 84,046 Posts
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    dunstonh
    Some friends of mine intended to buy a smaller cheaper house and they expected to pocket £100k from the move. A few years ago that might have produced an income of around £6k pa - now about £1k.
    Using savings for income has always been higher risk and not usually a good idea for all the money. You can still get more with investments.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • Cardew
    • By Cardew 21st Sep 16, 10:33 PM
    • 25,738 Posts
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    Cardew
    Using savings for income has always been higher risk and not usually a good idea for all the money. You can still get more with investments.
    Originally posted by dunstonh
    Agreed on balance investments have out performed cash savings.

    However why do you consider saving for income 'higher risk'. The reason Mr and Mrs Average in UK save in banks/Building societies/ISAs is that it has always been low risk.

    The high risk has been investments, with shares in some blue chip companies decimated virtually overnight.

    They also have seen the disaster of investments in pension funds and endowment policies. My 25 year with profits endowment policy with a major insurance firm was such a disaster, and left a huge shortfall on my mortgage - and my payout was apparently well above average. Had I taken out term insurance(as a young man) and put the endowment payments into a Building society/ISAs instead I would have been vastly better off.

    I am fully aware of having a balanced portfolio etc etc - but that is what the experts at the major insurance firms do!
    Last edited by Cardew; 21-09-2016 at 10:36 PM.
    • dunstonh
    • By dunstonh 21st Sep 16, 11:25 PM
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    dunstonh
    However why do you consider saving for income 'higher risk'. The reason Mr and Mrs Average in UK save in banks/Building societies/ISAs is that it has always been low risk.
    When taking an income, no option is risk free. Cash suffers inflation risk and shortfall risk. £100k will have the spending power of around £65k in 10 years time. The interest generated will suffer inflation erosion as well. So, it is guaranteed to suffer real terms loss which will inevitably lead to capital erosion when the person needs to start using capital to make up those shortfalls and that will leader to even quicker erosion which in the end results in the money running out.

    Investing can suffer shortfall risk and inflation risk. So, its a case of can vs guaranteed to do so. hence why taking a sensible level of investment risk can actually be lower risk than going 100% into cash.

    The high risk has been investments, with shares in some blue chip companies decimated virtually overnight.
    Risk is not on/off. it is a sliding scale. Jumping to the top end of the scale and badly investing like that is not the answer.

    They also have seen the disaster of investments in pension funds
    What disasters?

    and endowment policies.
    Endowments suffered as they were a product that priced and built for a different type of economy. They were inflexible and obsolete but continued to be sold too long rather than keep up with modern options. The main problem though was not the investments within the endowments. They continued to do better than cash. It was the target growth rates required to hit target that was the problem.

    My 25 year with profits endowment policy with a major insurance firm was such a disaster, and left a huge shortfall on my mortgage - and my payout was apparently well above average
    And no doubt the target growth rate was set too high and you were paying too little.

    Plus, remember that the investment fund used by most endowments was crippled by the regulator which changed the focus to financial solvency rather than investment returns. So, funds had to start investing much lower risk and that meant lower returns. An issue that doesnt apply to modern investing.

    Had I taken out term insurance(as a young man) and put the endowment payments into a Building society/ISAs instead I would have been vastly better off.
    Not necessarily. A typical endowment mortgage was around £25pm cheaper than a repayment mortgage. Over 25 years that is £6000 difference. Not dissimilar to a typical shortfall.

    However, comparing endowments with income provision in the 2000s is like comparing a black and white TV with a widescreen ultra HD set.

    I am fully aware of having a balanced portfolio etc etc - but that is what the experts at the major insurance firms do!
    Insurance companies are rarely good at balanced portfolios. They tend to be good on the fixed interest and property side but rubbish on equities.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • Cardew
    • By Cardew 21st Sep 16, 11:41 PM
    • 25,738 Posts
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    Cardew
    I don't want to get into an argument with you Dunstonh as I appreciate both your knowledge and advice you have given over the years.

    I still think that your statement 'Using savings for income has always been higher risk ' is incorrect; and your post above accurately details the reasons why some investments have been poor. e.g. 'Insurance companies are rarely good at balanced portfolios' 'Growth rate set too high' etc etc.

    Anyway the such discussions detract from the main point of the thread which is the 'threat' to 'pensioner's perks'.
    • Thrugelmir
    • By Thrugelmir 21st Sep 16, 11:55 PM
    • 49,917 Posts
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    Thrugelmir
    Some friends of mine intended to buy a smaller cheaper house and they expected to pocket £100k from the move. A few years ago that might have produced an income of around £6k pa - now about £1k.
    Originally posted by Cardew
    £100k for absolutely nothing. Next generation is paying the cost. Saving for retirement is an individuals choice.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • Sapphire
    • By Sapphire 22nd Sep 16, 12:40 AM
    • 1,745 Posts
    • 3,035 Thanks
    Sapphire
    I think that limitations to state pensions could be introduced – but that it should be for higher rate taxpayers only. There are certainly wealthy pensioners in those brackets who don't even need a state pension – including retired politicians.
    • ffacoffipawb
    • By ffacoffipawb 22nd Sep 16, 5:32 AM
    • 2,253 Posts
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    ffacoffipawb
    70 for both men and women. Not only that, but it was means tested, so only the destitute qualified for payment - so as very few really poor people survived to that 'grand old age', the pensions bill must have been miniscule.
    Originally posted by Silvertabby
    No it wouldn't, it would have been minuscule. 😄😄😄😄
    • missbiggles1
    • By missbiggles1 22nd Sep 16, 9:54 AM
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    missbiggles1
    I think that limitations to state pensions could be introduced – but that it should be for higher rate taxpayers only. There are certainly wealthy pensioners in those brackets who don't even need a state pension – including retired politicians.
    Originally posted by Sapphire
    I take your point but it would be the start of a very slippery slope.
    • Malthusian
    • By Malthusian 22nd Sep 16, 10:18 AM
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    Malthusian
    I still think that your statement 'Using savings for income has always been higher risk ' is incorrect; and your post above accurately details the reasons why some investments have been poor. e.g. 'Insurance companies are rarely good at balanced portfolios' 'Growth rate set too high' etc etc.
    Originally posted by Cardew
    In the context of the saver we were talking about - someone who has released a large lump sum from their downsizing, which they intend to provide income to meet their needs in retirement (so the timeframe is anything from 10+ to 30+ years) the shortfall and inflation risks of stuffing it under the mattress clearly outweigh investment risk, so DunstonH is correct.

    The problems of endowments have nothing to do with pensioners investing for income. You might as well bring up PPI or a hundred other things that have gone wrong with banks and say this shows you shouldn't put your money in cash because the banks can't be trusted.

    Anyway the such discussions detract from the main point of the thread which is the 'threat' to 'pensioner's perks'.
    Going off topic is part of what makes Internet forums interesting. The starting point of the thread is not very interesting. All State benefits are always under review. They may be cut or they may not be, or they may be increased if an election looms. The State giveth and the State taketh away again.
    • Malthusian
    • By Malthusian 22nd Sep 16, 10:20 AM
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    Malthusian
    I think that limitations to state pensions could be introduced – but that it should be for higher rate taxpayers only.
    Originally posted by Sapphire
    Higher rate taxpayers already have their State Pension withdrawn at a rate of 40p for every £1 they receive over the threshold. What do you think the rate should be?
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