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  • FIRST POST
    • Sapphire
    • By Sapphire 8th Jan 17, 3:16 PM
    • 2,002Posts
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    Sapphire
    Are pensioners about to be shafted again?
    • #1
    • 8th Jan 17, 3:16 PM
    Are pensioners about to be shafted again? 8th Jan 17 at 3:16 PM
    In Mrs May's article in the Sunday Telegraph, right at the end it states that 'she hints at a willingness to scale back pensioner benefits'.

    Now, while I would have nothing against 'pensioner benefits' being 'scaled back' for higher rate taxpayers like MPs, civil servants and high earners from the business world who amass large private pensions and don't even need state pension 'benefits', I think doing this for lower rate taxpayers, say those who earn less than about 38,000, would be grossly unfair.

    Many of these people have worked for 40 years or more, paid in, and planned their futures carefully to ensure that they have enough to live on when they finally stop working. They've done this with the premise that the promises made to them would be kept. Many now provide support to children, grandchildren and/or ageing, helpless parents who cannot support themselves, this despite having to cope with their own health and other problems. In my family alone, there is one 90-year-old with dementia who has minimal savings and pension, and who has been waiting for six months to be paid a carer's benefit to which she is entitled (in Chukka Umuna's consistency, so Lambeth Council). The person who is trying to deal with this in the family, herself a pensioner, is chronically ill. Pensioners also still pay taxes, and spend in the economy. The last thing that should be done would be to somehow penalise such people. It would show a great callousness towards and/or lack of understanding by government of this part of society.

    There are plenty of other ways for the government to gain money, such as cutting down the massive amounts of foreign aid (much of which is wasted), preventing benefit seekers from outside and inside Europe from coming here and benefitting from taxpayers (a better thing for a government to do would be to tighten border controls massively, have the right people in place who wouldn't just wave everyone into our country, and make sure that the NHS is used as it should be, by our citizens).

    Given that our pensions are lower than those of other European countries, any British government that ruthlessly penalises lower rate tax-paying pensioners as suggested is not going to be looked on favourably by many.
Page 4
    • antrobus
    • By antrobus 9th Jan 17, 12:35 PM
    • 14,917 Posts
    • 21,131 Thanks
    antrobus
    The late Margaret Thatcher began her pension reforms with the Social Security Act of 1980. This saw the correlation between average earnings and state pension increases severed, with the aim to reduce public spending.

    Pensioners have only started "catching up" with what they would have received had the link not been severed.
    Originally posted by xylophone

    The link between pensions and average earnings was only introduced in 1975. (The basic state pension wasn't even subject to regular uprating until 1973.)

    The History of the State Pension.
    https://www.ifs.org.uk/bns/bn105.pdf

    So that 'double lock' was only in place for about five years. The current 'triple lock' came in April 2011 and will last until 2020, which is a bit longer.

    ...The full new state pension is still below what a basic state pension would have been had the earnings link not been severed?
    Originally posted by xylophone
    It's not a freebie you know. You can pick any level of basic state pension you like, but somebody has to pay for it.
    • brewerdave
    • By brewerdave 9th Jan 17, 12:43 PM
    • 4,362 Posts
    • 1,774 Thanks
    brewerdave
    This thread seems to have gone a long way off track!
    As a moderately well off pensioner, I'd not have any complaints if the triple lock went as long as the annual increase was linked to CPI. Also wouldn't object if the WFA was restricted to pensioners claiming other benefits.
    HOWEVER, free prescriptions should be maintained -I remember reading an article some time ago that suggested removing the benefit would be counter productive as people would end up not taking medication with a resultant increase in load on the hospitals.
    Also -bus passes -as I understand it, they only cost if they are used. I use mine on average once a month to travel to the local town -where parking is almost impossible -if it was taken away I'd use my car with an increase in pollution and congestion in the local roads -further our local bus service appears to be almost entirely used by pensioners/other pass holders during the day - take a significant no. of customers away and the service would cease to exist outside "rush hours" so the poorest pensioners would end up losing out.
    Free TV license is now out of the equation as the BBC are carrying the cost.
    • JezR
    • By JezR 9th Jan 17, 12:53 PM
    • 1,493 Posts
    • 1,053 Thanks
    JezR
    It sounded like what you were saying was that triple lock hasn't helped pensioners in last couple of years as increases followed earnings, but they did benefit from it in earlier years because "...the flat 2.5% was used for several years before that".
    Originally posted by bowlhead99
    True. Although it might be a few rather than several.
    Then it also sounded like you thought that there was an unwarranted/unfair decrease from use of CPI replacing RPI... I inferred this because in reference to the benefit of getting a flat 2.5% despite low inflation and earnings, you said, "this has to be balanced against against the reduced rise in other years from the change to CPI rather than RPI for the inflation measure".
    Initially when introduced the triple lock did in some years result in a lower rise than if the previous RPI system had still been in force. I haven't had a chance to go back through each year comparing the triple lock to the previous RPI system; from memory it was pretty much a wash overall to around 2013 or 14 and beneficial thereafter. I'm sure I posted here about it at the time in response to a question but can't find it at the moment.
    The implication of your comment was that the change to CPI was wrong and detrimental to pensioners trying to maintain their real terms value, which is why you were seeking to 'balance' the clearly beneficial impact of boosting their real terms value with the 2.5% lock.
    No such implication I think. I made no comment about what inflation measure might be the most appropriate, either as a single valorisation, or within a compound formula. As you have raised the matter personally I think this is CPIH and this may happen eventually after the latest version of this is fully established as the preferred measure of consumer price inflation by ONS in March.

    There is also a question whether KAC3 is the most appropriate measure of earnings growth since it includes bonuses. I'll leave that as a hanging thought ...
    Last edited by JezR; 09-01-2017 at 1:02 PM.
    • JezR
    • By JezR 9th Jan 17, 12:56 PM
    • 1,493 Posts
    • 1,053 Thanks
    JezR
    The link between pensions and average earnings was only introduced in 1975. (The basic state pension wasn't even subject to regular uprating until 1973.)
    Originally posted by antrobus
    And the graduated pension scheme wasn't valorised against anything between 1961 and 1979.

    The Christmas bonus and extra 25p at 80 years were some ad hoc enhancements belonging to this era that have persisted.
    Last edited by JezR; 09-01-2017 at 12:58 PM.
    • rpc
    • By rpc 9th Jan 17, 2:11 PM
    • 2,285 Posts
    • 3,479 Thanks
    rpc
    However, many in the public sector do have enviable pension benefits that seem unfair when viewed from the private sector. Most people in the private sector have defined benefit pensions, with a modest contribution from the employer, and they go through many jobs, usually not through choice, often starting again on a lower salary. Those I know in the public sector have well defined career paths, yearly pay reviews, promotions, good security and excellent pension benefits.
    Originally posted by BananaRepublic
    If you want to discuss bringing generous, unfunded DB schemes into line then I'm all ears.

    OP was suggesting removing the state pension (the NI funded one, not the contractual one) from civil servants just because they are civil servants. I suggest that is some less polite version of nonsense.
    • rpc
    • By rpc 9th Jan 17, 2:20 PM
    • 2,285 Posts
    • 3,479 Thanks
    rpc
    The link between pensions and average earnings was only introduced in 1975. (The basic state pension wasn't even subject to regular uprating until 1973.)
    Originally posted by antrobus
    Perhaps all of the "give us what we were promised" campaigners should be offered exactly that? WASPI, I'm looking at you...
    • steampowered
    • By steampowered 9th Jan 17, 2:39 PM
    • 1,398 Posts
    • 1,383 Thanks
    steampowered
    I'm sure pensioners who you no doubt think are very wealthy and should subsist on the amount you suggest (which would give them little enjoyment and a miserable existence and terrible standards of care) after a lifetime of hard work would be delighted with your view.
    Originally posted by Sapphire
    I think that people should be expected to save for their retirement during their working life. If you want an enjoyable retirement, you should pay for it rather than expecting everyone else to pay for it through the government.

    It is exactly the same principle as people needing to earn a salary during their working life. People who are living on benefits can't complain that a life on benefits gives them little enjoyment and a miserable existence. If you want a good living standard you need to pay for it yourself by working.

    Young people living on JSA need only do so for a short period, and have every opportunity of removing themselves from their position. Retired people do not, though of course with your obvious dislike of older people, you'd not mind if they ended up in the gutter – or better still, in some Soylent Green scenario. Lovely. One can only hope the same thing happens to you one day.
    The point is that young people can and do live on 57.90 a week. I don't see why the government should be paying for people to have anything more than that to be honest.

    I won't be in the position of being in poverty when I retire, because I am doing the sensible thing and paying a good 15% of my salary into a private pension my entire working life, although I may need to increase that.

    What you say in your first paragraph may be true for the last decade or so, but no one dreamt that their pensions would be messed around with in future before that. People were given to understand that they would contribute a certain amount, then get an assured return for that.
    This is the one part of your argument which I do agree with. People should be able to know roughly what their state pension might be, so that they can plan accordingly.

    What I don't agree with is the suggestion that pensioners have been "messed around". To the contrary, I think pensioners have done very well in recent years.

    The state pension has been increased over time broadly in line with inflation; while other benefits such as winter fuel allowances have been added. And at a time of swathing spending cuts across the entire public sector, services and benefits given to pensioners have been an anomaly and been largely protected. I think pensioners have been treated very generously.

    Something like getting rid of the triple lock and instead linking the state pension to inflation would be most sensible and nothing compared to the cuts which everyone else has had to deal with.
    Last edited by steampowered; 09-01-2017 at 2:48 PM.
    • Jackieboy
    • By Jackieboy 9th Jan 17, 4:16 PM
    • 910 Posts
    • 1,559 Thanks
    Jackieboy
    This thread seems to have gone a long way off track!
    As a moderately well off pensioner, I'd not have any complaints if the triple lock went as long as the annual increase was linked to CPI. Also wouldn't object if the WFA was restricted to pensioners claiming other benefits.
    HOWEVER, free prescriptions should be maintained -I remember reading an article some time ago that suggested removing the benefit would be counter productive as people would end up not taking medication with a resultant increase in load on the hospitals.
    Also -bus passes -as I understand it, they only cost if they are used. I use mine on average once a month to travel to the local town -where parking is almost impossible -if it was taken away I'd use my car with an increase in pollution and congestion in the local roads -further our local bus service appears to be almost entirely used by pensioners/other pass holders during the day - take a significant no. of customers away and the service would cease to exist outside "rush hours" so the poorest pensioners would end up losing out.
    Free TV license is now out of the equation as the BBC are carrying the cost.
    Originally posted by brewerdave
    Don't forget that, with an annual prescription payment certificate, nobody need pay more than 9pcm, no matter how many medications they need.
    • Teaandscones
    • By Teaandscones 9th Jan 17, 8:50 PM
    • 111 Posts
    • 82 Thanks
    Teaandscones
    Also -bus passes -as I understand it, they only cost if they are used. I use mine on average once a month to travel to the local town -where parking is almost impossible -if it was taken away I'd use my car with an increase in pollution and congestion in the local roads -further our local bus service appears to be almost entirely used by pensioners/other pass holders during the day - take a significant no. of customers away and the service would cease to exist outside "rush hours" so the poorest pensioners would end up losing out.
    Free TV license is now out of the equation as the BBC are carrying the cost.
    Originally posted by brewerdave
    Another factor to bear in mind is that the existence of free bus travel is helpful when trying to persuade relatives in their 80's or 90's that it really is time to give up driving.
    • whattochoose
    • By whattochoose 19th Apr 17, 8:54 AM
    • 276 Posts
    • 72 Thanks
    whattochoose
    Triple Lock guarantee on State Pension in jeopardy?
    Various announcements have suggested that come the next election, it's likely any successful government will end the commitment to the "triple lock" guarantee where the State Pension is concerned.
    Well, now that we are going to have a General Election earlier than expected, do members think we can expect the triple lock provision to be done away with sooner than we expected?
    Thank you.
    • le loup
    • By le loup 19th Apr 17, 9:12 AM
    • 3,534 Posts
    • 3,339 Thanks
    le loup
    I suspect that no politician will answer that question. I also suspect that they will not tie themselves to silly policies like "no increase in tax, NI, VAT etc.
    At least, let's hope so - we appoint a government to make decisions as they see necessary.
    • JoeCrystal
    • By JoeCrystal 19th Apr 17, 9:29 AM
    • 1,233 Posts
    • 695 Thanks
    JoeCrystal
    I will be most interested to see the electoral manifesto for Tories since they will expect to win the General Election so the policies will be more carefully thought out rather than the previous one which are assuming the potential coalition between parties which can give them an excuse to ditch few of these manifesto pledges. No doubt it will include tax rises and so on, a necessity I think.
    • PeacefulWaters
    • By PeacefulWaters 19th Apr 17, 9:46 AM
    • 6,590 Posts
    • 8,085 Thanks
    PeacefulWaters
    The sooner the better for the good of the nation.
    • BLB53
    • By BLB53 19th Apr 17, 9:59 AM
    • 1,050 Posts
    • 853 Thanks
    BLB53
    The triple lock with a minimum uplift of 2.5% is not fair when many young workers have been limited to 1% so sooner or later the fairest policy would be to change to keep state pension rises in line with average wages or inflation.

    The DWP new policy on state pensions was due to be announced early May but may be delayed until after the election.
    "A low-cost index tracker is going to beat a majority of the amateur-managed money or professionally managed money" Warren Buffett
    • JoeCrystal
    • By JoeCrystal 19th Apr 17, 10:00 AM
    • 1,233 Posts
    • 695 Thanks
    JoeCrystal
    The DWP new policy on state pensions was due to be announced early May but may be delayed until after the election.
    Originally posted by BLB53
    Come to think of it, is there an review on Pension Auto-enrolment due soon as well?
    • Malthusian
    • By Malthusian 19th Apr 17, 10:01 AM
    • 2,416 Posts
    • 3,367 Thanks
    Malthusian
    It won't be in anybody's manifesto for obvious reasons.

    I doubt it makes much difference. The two things the Chancellor needs to abolish it are a) a year of reasonably high inflation (2%+) which makes the triple lock seem superfluous, and a sweetener to compensate for its removal.

    Compared to the public sector pension bill the impact of the triple lock is peanuts. We need 2%+ inflation anyway to reduce the debt, so the actual cost of the triple lock (2.5% minus the higher of wage or price inflation) is measured in pennies a week per pensioner. The main reason it has had so much focus is because intergenerational warfare sells newspapers.
    • antrobus
    • By antrobus 19th Apr 17, 10:06 AM
    • 14,917 Posts
    • 21,131 Thanks
    antrobus
    Various announcements have suggested that come the next election, it's likely any successful government will end the commitment to the "triple lock" guarantee where the State Pension is concerned.
    Originally posted by whattochoose
    The Conservatives were committed to keeping the triple lock until 2020, Labour has committed themselves to keeping it until 2025.

    ...Well, now that we are going to have a General Election earlier than expected, do members think we can expect the triple lock provision to be done away with sooner than we expected? Thank you.
    Originally posted by whattochoose
    I'd expect them to repeat the existing commitments. The over 65s tend to actually vote. No one wants to upset them.
    • antrobus
    • By antrobus 19th Apr 17, 10:19 AM
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    antrobus
    ..I doubt it makes much difference. The two things the Chancellor needs to abolish it are a) a year of reasonably high inflation (2%+) which makes the triple lock seem superfluous, and a sweetener to compensate for its removal....
    Originally posted by Malthusian
    It hasn't made that much difference so far. It's only kicked in once since 2010, compared to the previous double lock. How much it has cost depends on what alternative is proposed, but is somewhere in the region of 1 bn to 4 bn a year.

    The concern is more of what effect it has in the future; given that the pension bill is rising anyway.
    • steampowered
    • By steampowered 19th Apr 17, 12:25 PM
    • 1,398 Posts
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    steampowered
    Compared to the public sector pension bill the impact of the triple lock is peanuts. We need 2%+ inflation anyway to reduce the debt, so the actual cost of the triple lock (2.5% minus the higher of wage or price inflation) is measured in pennies a week per pensioner.
    Originally posted by Malthusian
    The cost of any increase is going to be minimal when you look at it over only one year.

    But the triple lock increase accumulates and compounds. The cost is phenomenal when you look at it over time. If you keep adding an extra 0.5% above inflation each year, added on top of the last year's 0.5%, that adds up.

    The figures I could find on a quick search for "cost of triple lock" suggest it is costing 6bn a year. If you keep adding 6bn a year, and the next year 12bn, and the next year ... etc. etc., that eventually adds up into an enormous cost. I don't see how that is sustainable long term.

    There is an interesting article about it here. It models that keeping the triple lock - alone - for the next 50 years would increase the national debt by 26% of GDP.
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