The Truth About The State Pension

jamesd

roddydogs wrote: »

But thne your drawing it for 3-5 years less, excatly how does this "increase" the amount you get, how do you know how long your going to live?.
another thing, if pensions are based on earnings, whet will happen if Inflation is more than earnings, you will all be saying "It should be linked to Inflation"

It's simply a comparison of years collecting one level of pension with years of collecting the higher level. The calculation of better off is based on life expectancies and those give a range from three to five years. An individual can do better if they know their own health and other risks. Good health suggests the longer end, poor health the shorter end or no delay at all.

I'm not advocating linking with either inflation or wages. Just presenting data and what the Pensions Commission recommended so we see how the costs of those things compare and whether we think that's a price worth paying.

marklv wrote: »

So what? Most other countries in Europe contribute around 12% of GDP to the state pension;

Come on, I've provided you with the data source, you can do better than that. See Figure D.8 in Appendix D of the First Report of the Pensions Commission Total Pension Expenditure as a Percentage of GDP: Very Imperfect Estimates:

Country Public Private
Ireland 3.2% no data
New Zealand 4.8% no data
Australia 4.3% 3.3%
Canada 5.3% 3.4%
Spain 8.7% no data
Netherlands 6.4% 3.7%
USA 6.1% 4.7%
UK 8.3% 3.2%
Germany 11.2% 0.06%
France 11.9% 0.03%

As you can see the UK compares very well with other countries even without the changes that the Pensions Commission recommended. It simply does it with a different mixture, tax-advantaged private pensions that increase individual freedom to make choices compared to compelling a higher level of state pension.

So, I've given numbers there for some significant European and no-European countries, please provide some data to support your claim that "Most other countries in Europe contribute around 12% of GDP to the state pension".

marklv wrote: »

Why is there so much obsession with preventing increases in state spending on retirement provision?

It's not so much about preventing increases but getting those who advocate changes to provide proper numbers for the cost of what they are proposing. Then we can have a properly informed discussion about whether that's a proper burden to place on the generation that follows us and has to be taxed to pay for those pensions. Or we can, as the Pensions Commission recommended, try to split the burden between the generations.

Beyond that, though, higher mandatory taxes and higher state pensions reduce individual freedom of choice. Remember that bit about one of my parents that could substantially harm my own chances of living long enough to collect a state pension, even at age 65. Forcing me to contribute to a state pension system for benefits I might not live to collect would be in part depriving me and others of the option to use private investing to retire earlier and have a higher chance of getting a retirement.

Paul_Herring

marklv wrote:

Exactly - that's why your suggestion of getting rid of public sector pensions is insane.

The suggestion that everyone be allowed to retire at 62, wasn't entirely realistic.

Old_Slaphead

marklv wrote: »

Exactly - that's why your suggestion of getting rid of public sector pensions is insane.

Slightly more sensible and feasible than many of your demented ramblings.

marklv

jamesd wrote: »

It's simply a comparison of years collecting one level of pension with years of collecting the higher level. The calculation of better off is based on life expectancies and those give a range from three to five years. An individual can do better if they know their own health and other risks. Good health suggests the longer end, poor health the shorter end or no delay at all.

I'm not advocating linking with either inflation or wages. Just presenting data and what the Pensions Commission recommended so we see how the costs of those things compare and whether we think that's a price worth paying.


Come on, I've provided you with the data source, you can do better than that. See Figure D.8 in Appendix D of the First Report of the Pensions Commission Total Pension Expenditure as a Percentage of GDP: Very Imperfect Estimates:

Country Public Private
Ireland 3.2% no data
New Zealand 4.8% no data
Australia 4.3% 3.3%
Canada 5.3% 3.4%
Spain 8.7% no data
Netherlands 6.4% 3.7%
USA 6.1% 4.7%
UK 8.3% 3.2%
Germany 11.2% 0.06%
France 11.9% 0.03%

As you can see the UK compares very well with other countries even without the changes that the Pensions Commission recommended. It simply does it with a different mixture, tax-advantaged private pensions that increase individual freedom to make choices compared to compelling a higher level of state pension.

So, I've given numbers there for some significant European and no-European countries, please provide some data to support your claim that "Most other countries in Europe contribute around 12% of GDP to the state pension".


It's not so much about preventing increases but getting those who advocate changes to provide proper numbers for the cost of what they are proposing. Then we can have a properly informed discussion about whether that's a proper burden to place on the generation that follows us and has to be taxed to pay for those pensions. Or we can, as the Pensions Commission recommended, try to split the burden between the generations.

Beyond that, though, higher mandatory taxes and higher state pensions reduce individual freedom of choice. Remember that bit about one of my parents that could substantially harm my own chances of living long enough to collect a state pension, even at age 65. Forcing me to contribute to a state pension system for benefits I might not live to collect would be in part depriving me and others of the option to use private investing to retire earlier and have a higher chance of getting a retirement.

Thanks for your interesting post. Looking at the figures for France and Germany I wasn't far off my estimate. I also notice that Italy is missing from the list, as are the Scandinavian countries - you can be sure that they contribute generous proportions of their GDP to the state pension.

The dichotomy is between the continental approach and the Anglo-Saxon one; the latter exemplified by the systems in place in the UK, USA, Canada, Australia and New Zealand. These rely heavily on private provision. I can see the logic and advantages of private provision, but the freedom gained in terms of choice also entails a huge amount of risk. Investment equals risk - and risk is not good when you are investing in order to provide a livelihood for yourself in old age. You need certainty, not risk. The state systems, with all their faults, at least provide guarantees, so that you can plan accordingly. Stockmarket investments are highly volatile, thereby making it impossible to plan anything, and gilts yield far too little growth to be worthwhile investment vehicles. Personally, I prefer certainty.

bendix

What I love about marklv's posts is his shamelessly self-interested position on everything. We have a go at public sector pensions, and he defends them fiercely, largely because he has just moved across to the public sector.

He can defend them on the basis of his claim that people in the public sector earn less than those in the private sector, despite the Office of National Statistics says otherwise.

He also defends them on the basis that as public sector people have been led to expect them, they should remain. They have made their planning on them. This is despite the fact that Unison - the public sector union who so vociferously backs such pension rights - is scrapping its own final salary pension for its own staff.

Of course, marklv refuses to deal with that issue, despite being asked to many times.

And now that public sector pensions are under the spotlight after Gordon Brown finally conceded cuts need to be made, marklv turns his slightly panicking attention to state pensions and says he's happy for public sector pensions to be scrapped, if state pensions are increased substantially.

You have to admire this guy.

marklv

Bendix - maybe you should explain why you, and others such as Slaphead, are so psychopathically obsessed with the issue of public sector pensions. Sure they are expensive, but in which other country in EU are public sector workers on money purchase schemes? Please tell me, I'm keen to know. And are you aware of the scale of strikes and anger that would be triggered by scrapping the public sector pension schemes? Gordon Brown is not stupid enough to advocate attacking public sector pensions and I very much doubt Cameron would either.

Andy_L

bendix wrote: »

This is despite the fact that Unison - the public sector union who so vociferously backs such pension rights - is scrapping its own final salary pension for its own staff.

Of course, marklv refuses to deal with that issue, despite being asked to many times.

Perhaps that's because Unison isn't scrapping it's final salary scheme but bring it in line with the public sector by raising retiremt age to 65?

"confidential proposals to curb costs sent to senior Unison officials are to be discussed by pensions trustees next week, .....The papers show that Unison is looking at raising retirement age from 60 to 65, possibly even for current members"

http://www.timesonline.co.uk/tol/money/pensions/article6824024.ece

bendix

Obsessed? No, not really. Just concerned that we can no longer afford them. The private sector has woken up to that, and the public sector is starting to realise it too.

And not before time. They are a luxury too far and any lingering justifications for them (private sector employees earn more blah blah blah) have been shot out the water by the ONS.

Again, you skirt around the issue of the biggest public sector union - Unison - who are fiercely supportive of the final salary pensions for public sector workers, yet have decided to scrap its own for its own staff as unaffordable.

So what we have here is the union deciding its too expensive when IT has to pay, but such pensions are compulsory and much needed and affordable when the taxpayer has to pay.

bendix

Andy_L wrote: »

Perhaps that's because Unison isn't scrapping it's final salary scheme but bring it in line with the public sector by raising retiremt age to 65?

"confidential proposals to curb costs sent to senior Unison officials are to be discussed by pensions trustees next week, .....The papers show that Unison is looking at raising retirement age from 60 to 65, possibly even for current members"

http://www.timesonline.co.uk/tol/money/pensions/article6824024.ece

You're quite right. They have not scrapped it. Forgive my hyperbole.

Notwithstanding that, it is obvious they have decided the financial burden is currently too great for their own staff.

And yet - hypocritically - it's not too great for UK taxpayer.

http://www.timesonline.co.uk/tol/money/pensions/article6831064.ece

marklv

bendix wrote: »

Obsessed? No, not really. Just concerned that we can no longer afford them. The private sector has woken up to that, and the public sector is starting to realise it too.

And not before time. They are a luxury too far and any lingering justifications for them (private sector employees earn more blah blah blah) have been shot out the water by the ONS.

Again, you skirt around the issue of the biggest public sector union - Unison - who are fiercely supportive of the final salary pensions for public sector workers, yet have decided to scrap its own for its own staff as unaffordable.

So what we have here is the union deciding its too expensive when IT has to pay, but such pensions are compulsory and much needed and affordable when the taxpayer has to pay.

What has Unison got to do with it? Unison is funded by its members - it is not a public sector organisation!

And yes we can afford public sector pensions; it just takes careful planning and allocation of resources. Other countries can do it, so can we. The retirement age in most of the public sector has already moved to 65, and this has been effective in reducing the financial burden of the various schemes; the next step will be to replace full indexation with limited indexation (max 5% increase a year). These cost cutting measures are all that is needed to keep the public sector schemes in control.