State pension age rise needed to balance books

Generali

marklv wrote: »

The state pension will require a bigger slice of the government spending pie, simple as that.

The British Government is already spending in excess of 50% of GDP. What will they cut to pay for it or do you really think that the Government can keep on taking more and more of national output with no impact on the economy that supports this taxation.

IveSeenTheLight

marklv wrote: »

The government is not an insurance company, it takes money through tax, not premium payments. Obviously there will be a need to increase NI contributions to cover things like higher life expectancy for pension payments - we need to accept this. NI will need to rise to 15% - I can't see any way of avoiding this and the government needs to accept it as well. The state pension will require a bigger slice of the government spending pie, simple as that.

Alternatively, they could increase the retirement age thus reducing the average time spent in retirement

Procrastinator333

Reading the posts, it appears I gave the impression I'm suggesting we should cut the pension or get rid of it. That is not what I'm suggesting. Simply that the age should rise. 75 is probably more sensible, but really the exact number would come from crunching the numbers.

The pension as it stands today gives a pretty basic level of support. That is fine, imo that is what the state should do, give a basic level of support to everyone. I don't think the value should either rise or fall, just the age at which it is given.

A question never answered - People live longer, why shouldn't they work longer? It just doesn't seem unreasonable?

Seperately to this I was criticising both the older generation and the younger generation for not doing enough to save for themselves. There are a few who really can't and I will comment on that in a minute, but the vast majority could save. There are also company schemes in place for the vast majority of employees. Again, not all, but most. Yet how many actually start a pension when they are young? Very few.

Again, the best example or sample size I can give is the company I work for. I see the pension schedules etc. 300 employees. A reasonably generous scheme. Yet only about 40% of people use the pension option. There are many many staff who could afford it, but chose to buy clothes, eat out, new phone, go on holiday etc. They would only need to cut back ever so slightly to make a huge difference to their pension. But they don't - and they are idiots.

People don't bother when they start, "Oh, it is so far away, what is the point". Then they get a bit older and get married, then have a kid, then get a house etc etc. They then only think about it maybe when they hit 40. By that time, a useful pension starts to become a mountain to climb.

If you decline company contributions this year, you have to make them up yourself. So not only does the money have less time to grow, but you also have to pay in a greater proportion of it yourself.

So many people just don't bother and would rather have £40 in their pocket to spend on fags or booze or some other cr*p today than have over a £100 for when they retire.

Pensions are not expensive if you just start young. Few do.

There are then a very small minority who just don't have a choice. The first group - as Pastures new illustrates with her example are those on extremely low incomes. Personally, I don't see why you would stay on such a low wage all your life. I would move, retrain, learn something new etc, but that is a different point. Those on extremely low incomes will be able to maintain their spending in to retirement. I tried that entitled to website and if I have used it correctly it told me a 65 year old with no savings, no income etc gets about £7,600. That is pretty much al tax free. That is just over £600 a month. You don't need the commute cost, so that left you with £757 expenses. A shortfall of £157 a month. Well, if you really have lived on min wage your whole life and not had any savings or winfalls then you will need to cut that rent and food back a bit. I think elsewhere you have commented that you have a large pot of money from a house sale. So rent would not be that high as you will probably buy, or you can draw on that to increase your monthly income.

When you retired PN, why could you not have worked for a few more years? You also say you have continued to work here and there, you have the pot of money, you get the state pension, so what is the problem?

Olly - I'm happy to be corrected if you have any stats for the country, but in my experience the vast majority of employers do. Also, I live in Surrey, so not a cheap are compared to the rest of the country.

Procrastinator333

marklv wrote: »

LOL!!! Yeah, with bank deposit interest rates below CPI let alone RPI, you'll probably receive a fraction of what you put in. Reverse compound interest!

You really don't have a clue do you.

Procrastinator333

marklv wrote: »

There is no 'alternative investment' that can be relied on. The state has an obligation to support its elderly citizen with an adequate pension, and it's already disgrace that the British pension is so low. By delaying it continuously they are making this essential safety net virtually non-existent.

Let me guess, we should maybe have a 70% tax rate for the top earners to pay for this.

vivatifosi

Procrastinator333 wrote: »

Again, the best example or sample size I can give is the company I work for. I see the pension schedules etc. 300 employees. A reasonably generous scheme. Yet only about 40% of people use the pension option. There are many many staff who could afford it, but chose to buy clothes, eat out, new phone, go on holiday etc. They would only need to cut back ever so slightly to make a huge difference to their pension. But they don't - and they are idiots.

People don't bother when they start, "Oh, it is so far away, what is the point". Then they get a bit older and get married, then have a kid, then get a house etc etc. They then only think about it maybe when they hit 40. By that time, a useful pension starts to become a mountain to climb.

I wouldn't call people idiots, but I do agree with what you are saying about pension schemes and people not opting in. The one thing I will never get my head round is that people routinely turn down deferred free money from their company - which is effectively what a pension is - because they don't want to put in a contribution themselves.

When I've asked people why they didn't, for the most part they fall into two categories. The first doesn't want the tie to the company, then five years or ten even later they find themselves still working there and having missed out on all those years of contributions and are kicking themselves - particularly if the door has been closed in the interim on joining a final salary scheme. The second group see it as something you do when you are older.

We absolutely have to do something to grab people younger as the amounts needed are significantly smaller than starting in their 40s.

Procrastinator333

vivatifosi wrote: »

I wouldn't call people idiots, but I do agree with what you are saying about pension schemes and people not opting in. The one thing I will never get my head round is that people routinely turn down deferred free money from their company - which is effectively what a pension is - because they don't want to put in a contribution themselves.

When I've asked people why they didn't, for the most part they fall into two categories. The first doesn't want the tie to the company, then five years or ten even later they find themselves still working there and having missed out on all those years of contributions and are kicking themselves - particularly if the door has been closed in the interim on joining a final salary scheme. The second group see it as something you do when you are older.

We absolutely have to do something to grab people younger as the amounts needed are significantly smaller than starting in their 40s.

Good point - idiots is not a fair comment.

A lot of it is education I suppose. Many don't realise what they are turning down. Many don't understand that the mole hill they have in front of them on day 1 will grow ever year they wait until it is a mountain they can't climb later in life.

This kind of thing really should be built in to basic school education. It doesn't need to be a lot. Perhaps part of the wider financial education they should be giving to students. I only came out of education 6 years ago. Not once in all that time, school, or uni did anyone ever even tell me what a pension is or how to get one.

Finance 101: The dangers of debt and the importance of a pension.


I personally dislike the state forcing decisions on people, so can't decide if I would be in favour or not, but compulsary pension contributions should at least be considered too.

Sapphire

Procrastinator333 wrote: »

Why can't people extend their working life? My proposal of 6 months for every year that goes by? So if you are 64, you now have to work to 65.5. So what, that 6 months makes no difference.

See post 25 – I can't be bothered to repeat the message.

Sapphire

neverdespairgirl wrote: »

I know lots of solicitors and barristers who work over 50 (and over 60, for that matter)

My Dad's 61, and earning more per hour than ever.

Yes – see my post 32. I can't be bothered to repeat the message. :cool:

Procrastinator333

Sapphire wrote: »

See post 25 – I can't be bothered to repeat the message.

There are many many 60-65 year olds in employment who stop working when they hit retirement age because they start to get the state pension and that is enough to let them retire.

If you have statistis on the number of 60-65 year olds who are unemployed I would be curious. But there are many in employment who chose to retire at that age. Unless you have saved enough it should not be an option.

There is then a seperate question over unemployed people who are just shy of the retirement age. Granted they are going to struggle to get a job at that age, but there are opportunities out there and if they can't get a job there are still other benefits they receive.