MP's want compensation for pensioners suffering low interest rates

kabayiri

chewmylegoff wrote: »

There is no real reason why pensioners should be protected from the effects of a recession. The minimum income guarantee is in place, to ensure a basic standard of living for pensioners. Housing benefit etc is available if needed, specific benefits e.g. winter fuel allowance, free travel also exist.

I don't see why in addition to the benefits system that exists to protect pensioners, the government would need to specifically compensate pensioners for loss of interest due to economic conditions.

There is a very good PR reason why the government should be 'seen' to be aware of the issue, and sympathetic towards the cause.

Pensioners seeing their retirement plans unravel due to conditions beyond their control or foresight is not exactly good PR. It doesn't exactly encourage long term planning for the next generation of upcoming pensioners does it?

Graham_Devon

Some good comments here...(by good I mean, quite a few are well thought out)
http://www.guardian.co.uk/money/2012/apr/18/compensate-pensioners-savings-qe

Itismehonest

There is a problem for many pensioners particularly those on basic pension; or those who have small private pensions, been self-employed & saved for their old age; or who are asset rich but cash poor. If they have never had debts, have paid off mortgages etc. then almost none of the measures taken to prop up the rest of the population have helped them.

Over the last 5 years or more their pot has been eroded enormously - stock market hitting pension funds, interest rates falling to zilch, concentration by politicians on the younger end of the scale (remember the 50p pension increase?) & last but not least the same increase in fuel, food, heating, insurances & living costs as everyone else without the ability in many cases to increase their income.
For many this means that their pension income (which looked totally credible 20+ years ago) does not cover basic bills & any savings they had made are being used up at a much faster rate than planned.

While those who live in areas where there is free transport can benefit there are very many who don't.
For those who can sell their properties then that is one way out but there are many, for all sorts of reasons, who can't.

Trying to give the impression that all boomers or pensioners are rolling in it is as narrow-minded as saying that all youngsters are lazy, time-wasters. Yes, there are some but there are many who have tried to do the right thing but circumstances beyond their control have left them in real problems.

McKneff

Itismehonest wrote: »

There is a problem for many pensioners particularly those on basic pension; or those who have small private pensions, been self-employed & saved for their old age; or who are asset rich but cash poor. If they have never had debts, have paid off mortgages etc. then almost none of the measures taken to prop up the rest of the population have helped them.

Over the last 5 years or more their pot has been eroded enormously - stock market hitting pension funds, interest rates falling to zilch, concentration by politicians on the younger end of the scale (remember the 50p pension increase?) & last but not least the same increase in fuel, food, heating, insurances & living costs as everyone else without the ability in many cases to increase their income.
For many this means that their pension income (which looked totally credible 20+ years ago) does not cover basic bills & any savings they had made are being used up at a much faster rate than planned.

While those who live in areas where there is free transport can benefit there are very many who don't.
For those who can sell their properties then that is one way out but there are many, for all sorts of reasons, who can't.

Trying to give the impression that all boomers or pensioners are rolling in it is as narrow-minded as saying that all youngsters are lazy, time-wasters. Yes, there are some but there are many who have tried to do the right thing but circumstances beyond their control have left them in real problems.

Excellent, excellent post. :T:T:T

chewmylegoff

Itismehonest wrote: »

There is a problem for many pensioners particularly those on basic pension; or those who have small private pensions, been self-employed & saved for their old age; or who are asset rich but cash poor. If they have never had debts, have paid off mortgages etc. then almost none of the measures taken to prop up the rest of the population have helped them.

Over the last 5 years or more their pot has been eroded enormously - stock market hitting pension funds, interest rates falling to zilch, concentration by politicians on the younger end of the scale (remember the 50p pension increase?) & last but not least the same increase in fuel, food, heating, insurances & living costs as everyone else without the ability in many cases to increase their income.
For many this means that their pension income (which looked totally credible 20+ years ago) does not cover basic bills & any savings they had made are being used up at a much faster rate than planned.

While those who live in areas where there is free transport can benefit there are very many who don't.
For those who can sell their properties then that is one way out but there are many, for all sorts of reasons, who can't.

Trying to give the impression that all boomers or pensioners are rolling in it is as narrow-minded as saying that all youngsters are lazy, time-wasters. Yes, there are some but there are many who have tried to do the right thing but circumstances beyond their control have left them in real problems.

everything you say is right (although i would point out that there was actually nothing really wrong with the 50p increase in the basic pension, which was directly related to RPI at the time - there isn't really any reason why pensions should increase faster than inflation, unless they need to be rebased because they are not fit for purpose), but i don't see why this means the government should compensate pensioners due to adverse economic conditions.

surely the state provides a safety net of benefits for the precisely this sort of eventuality. if the safety net is set at too low a level that is one thing, but i cannot see any logical argument for ignoring the fact that there is a safety net and paying people "compensation" to put them into some hypothetical situation that they might have otherwise have been in.

that would amount to a state guarantee of private sector pension performance, which sounds like crazy talk to me.

Graham_Devon

chewmylegoff wrote: »

everything you say is right (although i would point out that there was actually nothing really wrong with the 50p increase in the basic pension, which was directly related to RPI at the time - there isn't really any reason why pensions should increase faster than inflation, unless they need to be rebased because they are not fit for purpose), but i don't see why this means the government should compensate pensioners due to adverse economic conditions.

surely the state provides a safety net of benefits for the precisely this sort of eventuality. if the safety net is set at too low a level that is one thing, but i cannot see any logical argument for ignoring the fact that there is a safety net and paying people "compensation" to put them into some hypothetical situation that they might have otherwise have been in.

that would amount to a state guarantee of private sector pension performance, which sounds like crazy talk to me.

I know the two are seperate things, I only use them to create an analogy.

But in regard to the safety net, could you not say that to so many things? Why should employers pay redundancy, theres a welfare safety net. Why shouldn't employers simply be able to cut wages 50%, theres a safety net etc.

It's not so much savings, it's the issue that QE directly reduced pensions. I'm sure workers wouldn't be best pleased if their pension pot was cut 40% overnight and were told "but theres always welfare".

Itismehonest

chewmylegoff wrote: »

everything you say is right (although i would point out that there was actually nothing really wrong with the 50p increase in the basic pension, which was directly related to RPI at the time - there isn't really any reason why pensions should increase faster than inflation, unless they need to be rebased because they are not fit for purpose), but i don't see why this means the government should compensate pensioners due to adverse economic conditions.

surely the state provides a safety net of benefits for the precisely this sort of eventuality. if the safety net is set at too low a level that is one thing, but i cannot see any logical argument for ignoring the fact that there is a safety net and paying people "compensation" to put them into some hypothetical situation that they might have otherwise have been in.

that would amount to a state guarantee of private sector pension performance, which sounds like crazy talk to me.

Yes & no.
People possibly forget that many pensioners worked & looked after families in an age where there were very few benefits. Working Tax Credits, Child Tax Credits didn't exist. Child Benefit was at a much lower rate. Throughout their working lives they had to manage on the wages they brought in & to plan for their futures as best they could.

There comes a time when there is little or no flexibility in increasing their incomes. Age, quite sensibly, rules out options like playing around with IO mortgages etc. They gradually become completely reliant on savings/pensions. In order that the country didn't go completely down the drain pensioners have taken a large part of the brunt of measures which have made life slightly easier for others.

Many pensioners neither want nor qualify to claim benefits over & above the pensions that they have worked their whole life to be entitled to. They had, mistakenly, believed that they were going to be self-sufficient in their old age.
The idea of going into debt is abhorrent to many - it is not the way they have lived & don't wish to find themselves in debt in their latter years. However, more & more are finding themselves slipping into that position.

While compensation may seem an odd way of tackling the problem I can't think another way.

grizzly1911

chewmylegoff wrote: »

everything you say is right (although i would point out that there was actually nothing really wrong with the 50p increase in the basic pension, which was directly related to RPI at the time - there isn't really any reason why pensions should increase faster than inflation, unless they need to be rebased because they are not fit for purpose), but i don't see why this means the government should compensate pensioners due to adverse economic conditions.

surely the state provides a safety net of benefits for the precisely this sort of eventuality. if the safety net is set at too low a level that is one thing, but i cannot see any logical argument for ignoring the fact that there is a safety net and paying people "compensation" to put them into some hypothetical situation that they might have otherwise have been in.

that would amount to a state guarantee of private sector pension performance, which sounds like crazy talk to me.

No where near being a pensioner but that would make me just blow the lot and live on the safety net.

On the basis I couldn't subsidise the safety net from my own provision then the safety net would have to rebased and increased.

Many pensioners do not claim the current safety net, they live off their own, mediocre means an do without.

grizzly1911

chewmylegoff wrote: »

There is no real reason why pensioners should be protected from the effects of a recession. The minimum income guarantee is in place, to ensure a basic standard of living for pensioners. Housing benefit etc is available if needed, specific benefits e.g. winter fuel allowance, free travel also exist.

I don't see why in addition to the benefits system that exists to protect pensioners, the government would need to specifically compensate pensioners for loss of interest due to economic conditions.

It has a disproportionate affect on pensioners on fixed income and savings income wiped out?

grizzly1911

mjm3346 wrote: »

What about compensation for borrowers when interest rates were high then? Swings and roundabouts.

Simples don't borrow if you can't afford it.