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  • FIRST POST
    • Mortgagefreeman
    • By Mortgagefreeman 11th Oct 16, 8:35 AM
    • 179Posts
    • 347Thanks
    Mortgagefreeman
    Triple lock - how much longer can it last?
    • #1
    • 11th Oct 16, 8:35 AM
    Triple lock - how much longer can it last? 11th Oct 16 at 8:35 AM
    Continuing from Fraser Nelson's documentary on Dispatches last night.

    http://blogs.spectator.co.uk/2016/10/revealed-one-young-older-vote-worth-three-younger-voters/
    Project Fear = Project Porkies
Page 1
    • northbob
    • By northbob 11th Oct 16, 9:58 AM
    • 53 Posts
    • 7 Thanks
    northbob
    • #2
    • 11th Oct 16, 9:58 AM
    • #2
    • 11th Oct 16, 9:58 AM
    I wonder how long before the state pension for all is scrapped. At some point a future government will move the goal posts and make it means tested even if you have paid your NI contributions. If you have your own savings or assets over whatever then no state pension.
    • hugheskevi
    • By hugheskevi 11th Oct 16, 10:53 AM
    • 1,834 Posts
    • 2,156 Thanks
    hugheskevi
    • #3
    • 11th Oct 16, 10:53 AM
    • #3
    • 11th Oct 16, 10:53 AM
    Damian Green, DWP Secretary of State recently stated at Conservative Conference (full speech at this link)

    We committed in our manifesto to help older people. That means protecting pensioner benefits and up-rating the State Pension by the Triple Lock, because our parents and grandparents deserve to have a secure retirement.
    Whilst not precisely an endorsement of the Triple Lock, referencing it suggests there is no indication of moving away from it. That may suggest the Triple Lock will be around until at least 2020, subject to any elections before then.

    Removing it in the run up to an election is unlikely, given it will be perceived by all parties as a vote loser. So removal after a 2020 election would be more likely from this perspective too.

    However, the value of the Triple Lock may become less significant in the short to medium term, if CPI heads up toward 2.5%, and earnings growth isn't much above 2.5%. With sterling decline and likely lower growth this is quite probable.
  • jamesd
    • #4
    • 11th Oct 16, 2:00 PM
    • #4
    • 11th Oct 16, 2:00 PM
    Back in 1979 the state pension was about 26% of average earnings. In 2013 it was about 18% of average earnings. (direct link for FT subscribers). The task of the state pension system is not just to keep people out of poverty.

    Prior to the 1980 Social Security Act the state pensions increased with earnings. That's about 1% higher than RPI inflation on average. The 1980 Act broke that link, leading to a roughly 1% a year drop compared to earnings until the triple lock was put in place in 2011.

    The fixed increase is what will very gradually recover the pre-1980 situation by having the state pension gradually rise back to the previous level in relation to earnings in years when earnings and inflation are both low.

    The issue, of course, is that it's very expensive to do. And the boomer generation hasn't been paying for that for those who were retired while they were working but would end up getting it when their relatively larger generation has retired.
    • JezR
    • By JezR 11th Oct 16, 3:45 PM
    • 1,433 Posts
    • 1,020 Thanks
    JezR
    • #5
    • 11th Oct 16, 3:45 PM
    • #5
    • 11th Oct 16, 3:45 PM
    State pensions somewhat changed their rationale after 1978 with SERPS etc and looking at just the basic pension component as that graph does is therefore not really telling the whole story.

    Arguably though the new state pension and other legislation has turned the clock back to the pre-1978 way of looking at what a state pension is for.

    The legal link is now back to earnings. Anything above that is gravy.

    The 2.5% part of the triple lock comes from a rough approximation of the UK trend growth rate, which may now be on the high side.
    • SandLake
    • By SandLake 12th Oct 16, 1:20 PM
    • 454 Posts
    • 79 Thanks
    SandLake
    • #6
    • 12th Oct 16, 1:20 PM
    • #6
    • 12th Oct 16, 1:20 PM
    Does anyone know the values the SP was at, over roughly the last 10 years. I have no clue but I suspect it will not be a steady increase due to changes in pensions but interested to know anyway.
    • hugheskevi
    • By hugheskevi 12th Oct 16, 1:30 PM
    • 1,834 Posts
    • 2,156 Thanks
    hugheskevi
    • #7
    • 12th Oct 16, 1:30 PM
    • #7
    • 12th Oct 16, 1:30 PM
    Does anyone know the values the SP was at, over roughly the last 10 years.
    History is at this link.
    • marlot
    • By marlot 12th Oct 16, 8:09 PM
    • 2,821 Posts
    • 1,949 Thanks
    marlot
    • #8
    • 12th Oct 16, 8:09 PM
    • #8
    • 12th Oct 16, 8:09 PM
    A more subtle way of changing the balance would be to merge NI and tax.

    Pension payments currently escape NI, and this would essentially allow that to be changed.
    • Silvertabby
    • By Silvertabby 12th Oct 16, 8:19 PM
    • 375 Posts
    • 403 Thanks
    Silvertabby
    • #9
    • 12th Oct 16, 8:19 PM
    • #9
    • 12th Oct 16, 8:19 PM
    A more subtle way of changing the balance would be to merge NI and tax.

    Pension payments currently escape NI, and this would essentially allow that to be changed.
    marlot - when this was discussed some time ago, it was on the understanding that pension income would continue to be taxed at 20%.

    Any Government who suddenly hit pensioners with an extra 12% tax would do so on the understanding that they would never be elected again.
    • Moby_Tide
    • By Moby_Tide 13th Oct 16, 11:29 PM
    • 126 Posts
    • 81 Thanks
    Moby_Tide
    marlot - when this was discussed some time ago, it was on the understanding that pension income would continue to be taxed at 20%.

    Any Government who suddenly hit pensioners with an extra 12% tax would do so on the understanding that they would never be elected again.
    Originally posted by Silvertabby
    Any Government that finally touched the untouchables might actually galvanise the missing vote in the younger generation that they were actually interested in them rather than just bowing to those pensioners. It's not a binary call, the elder generations hold the vote card for now for various reasons. If those missing younger voters suddenly come out then the entire mix could change. Disillusionment though is hard to break
    • badmemory
    • By badmemory 14th Oct 16, 1:03 AM
    • 228 Posts
    • 199 Thanks
    badmemory
    If they actually turned their brains on before hitting the yes button then I would take the financial hit. Unfortunately too many seem not to be a**** as to what happens next. Which could well be why the Brexit vote won. Time to stop believing the "exit polls" on that one too.
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