Something that doesn't seem to get mentioned

vivatifosi

kabayiri wrote: »

So if I understand this, in the future we will have :-
- a large percentage of pensioners in poverty
- a government keen to attract votes
- pensioners outnumbering the young
- pensioners twice as likely as the young to vote (as was the case last election).

It can only spell trouble! Best hide the Werthers Originals.

Yep, that's what we are moving towards AIUI: a higher basic state pension but no enhancements, meaning the majority who qualify currently for means testing will be worse off and those that wouldn't normally apply for means tested bens (but would qualify for them) would be better off.

There are also changes afoot in terms of voting that make the young and transient populations less likely to vote (to do with voter registration). This will potentially exacerbate the last point.

This could also at some point bump into pensioners no longer qualifying for social housing for life. Imagine HMOs full of pensioners who can only afford to rent a room.

The social landscape will likely be very different in the future.

pqrdef

BobQ wrote: »

How we make the younger generation trust the financial services sector to deliver good pensions in the future

It can't. It can't even guarantee the amount, let alone the value. The whole concept of paying for your own pension is a crock, invented by the City to pull in loads of money to play with.

The reality is that whatever you've got in your retirement pot, what it's worth will be determined by the state of the economy at the time. Your pension will be paid by those who're working, because they pay the taxes and generate the dividends, and one way or another you won't get a lifestyle that they can't afford.

pqrdef

vivatifosi wrote: »

This could also at some point bump into pensioners no longer qualifying for social housing for life. Imagine HMOs full of pensioners who can only afford to rent a room.

At some point the value of a house will enter the means-testing equation, on the basis that you can sell it - and not only generate an income from the capital, but spend the capital as well. There's no compelling reason why capital should be protected from means-testing by being ploughed into excess accommodation.

And let's face it a major factor in HPI and the "housing crisis" is the absurdly low occupancy of our housing (not just empty houses, but small households).

chucknorris

Prudent wrote: »

As long as you take it with your existing pension from teaching that is fine. Worth looking at the calculators that are showing the impact of pension changes on teacher's pensions though. There is one on the EIS website.

I've just found out that most of my income is not 'relevant income' for the purpose of claiming tax reief on pension contributions, so my whole plan is scuppered.

I work part time as a university lecturer and only earn just below the 40% tax band, because I cannot count my main income this means that I could only claim 20% (not 40%) tax relief. This IMO no longer represents value.

BobQ

pqrdef wrote: »

It can't. It can't even guarantee the amount, let alone the value. The whole concept of paying for your own pension is a crock, invented by the City to pull in loads of money to play with.

The reality is that whatever you've got in your retirement pot, what it's worth will be determined by the state of the economy at the time. Your pension will be paid by those who're working, because they pay the taxes and generate the dividends, and one way or another you won't get a lifestyle that they can't afford.

You are right that the financial services industry has let people down but alternative options need to be identified for the future. One issue is the vehicle for holding the contributions people do make and the risks they are allowed to take in investing it. Many people have seen what has happened to their parents pension pots and decided not to bother. Even some people who have become self employed where they have better control over their options have made a choice not to invest in a pension fund. This trend needs to be reversed otherwise the future will mean nobody retiring until they are unfit to do any job or a dependecy culture in which the old burden the young with their very presence.

vivatifosi

BobQ wrote: »

You are right that the financial services industry has let people down but alternative options need to be identified for the future. One issue is the vehicle for holding the contributions people do make and the risks they are allowed to take in investing it. Many people have seen what has happened to their parents pension pots and decided not to bother. Even some people who have become self employed where they have better control over their options have made a choice not to invest in a pension fund. This trend needs to be reversed otherwise the future will mean nobody retiring until they are unfit to do any job or a dependecy culture in which the old burden the young with their very presence.

I agree. Whether or not we have pensions as we traditionally think of them, we definitely need to have a long terms saving/investment culture. As far as I can see we have nothing of the sort. FWIW I think the third alternative is that old people will face greater poverty. There's also a chance that some kids will abandon their parents if they see nothing in it for them - for example if the situation forces them to equity release. I may not agree with gold and silver bugs, but at least they will go into old age with something put aside.

pqrdef

BobQ wrote: »

This trend needs to be reversed otherwise the future will mean nobody retiring until they are unfit to do any job or a dependecy culture in which the old burden the young with their very presence.

It's inevitable that the old will burden the young with their very presence. In round numbers, if only half the population works, but the other half wants a similar lifestyle, those working will have to produce enough for two.

Capital assets don't make the old independent. The income they can produce, and their sale value, are both a function of what the workers are producing.

It was always the same. Wealth used to mean mostly land. Land was useless without workers to work it, as the landowners found out after the Black Death. The poor had to work the land for their food, but they certainly felt the burden of the surplus they had to grow for the landowners.

Capital can be invested to make workers more productive. Unfortunately, pension funds like to buy gilts, and when governments borrow, they don't invest the money in the future, they just spend it. So a lot of the "capital assets" that are theoretically in our "funded" pension pots consist of no more than the assumed ability of future governments to lift money out of future taxpayers' pay packets.

Linton

pqrdef wrote: »

It's inevitable that the old will burden the young with their very presence. In round numbers, if only half the population works, but the other half wants a similar lifestyle, those working will have to produce enough for two.

Capital assets don't make the old independent. The income they can produce, and their sale value, are both a function of what the workers are producing.

It was always the same. Wealth used to mean mostly land. Land was useless without workers to work it, as the landowners found out after the Black Death. The poor had to work the land for their food, but they certainly felt the burden of the surplus they had to grow for the landowners.

Capital can be invested to make workers more productive. Unfortunately, pension funds like to buy gilts, and when governments borrow, they don't invest the money in the future, they just spend it. So a lot of the "capital assets" that are theoretically in our "funded" pension pots consist of no more than the assumed ability of future governments to lift money out of future taxpayers' pay packets.

Its not just the old of course, it is also the very young and the sick etc. But I believe the basic thrust of the argument is correct.

The key point is that at any point of time 100% of the population consume but a lesser % produce. The pension and tax system determines how much of the total production each group consume. Anything else is an secondary detail.

So for example whether pensions are 100% government funded or 100% privately funded doesnt fundamentally matter, it just shifts the consumption marginally from one group of people to another. Similarly the distinction between public sector and private sector is essentially irrelevent.