Should automatic benefits be cut for those who "don't need them"?

chewmylegoff

CLAPTON wrote: »

1. what is the pensions time bomb?

large and growing unfunded liabilities to future pensioners combined with a likely need to make additional payments to them because they haven't saved enough of their own money.

2. why is it an issue?

because you have to tax people to pay it

3. who benefits if there is high pension provision?

theoretically everyone does, but the question is what do you have to sacrifice in order to give everyone that high pension provision. would you like to scrap the NHS to ensure that high pensions are paid?

4. who suffers if there is high pension provision

see answer to #3 above...everyone

5. does it matter (for any level of overall pension provision) whether pensions are 'funded' or paid out of taxation ?

yes, because investments grow over time.

ukcarper

N1AK wrote: »

The vast majority of pensioners were better off after the budget than before and yet the 'granny tax' was about the only pensioner related story told. It hurt the government and the conservative image as caring to pensioners, even though they gave them more in total.

By the time the government is done increasing the income tax threshold to £10k for everyone those same pensioners will be even better off. Yet that isn't the story told or people's recollection of what happens.

They will not be better off but the point is it was storm in a tea cup and did no long term damage to the tories

CLAPTON

chewmylegoff wrote: »

large and growing unfunded liabilities to future pensioners combined with a likely need to make additional payments to them because they haven't saved enough of their own money.



because you have to tax people to pay it



theoretically everyone does, but the question is what do you have to sacrifice in order to give everyone that high pension provision. would you like to scrap the NHS to ensure that high pensions are paid?



see answer to #3 above...everyone



yes, because investments grow over time.

Thank you for your answers

My answers are as follows

1. the problem of the pension timebomb is that in future there will be fewer working people to produce the goods and services (gdp) that are needed to support both themselves and retired people

2. it's an issue because those workers might not be able (or willing) to produce those goods and services (gdp) in sufficient amounts to maintain our current standard of living (i.e. we might all be poorer)

3. pensioners obviously benefit if a large proportion of gdp is allocated to them

4. the working people who produce those goods and services obvioulsy suffer if they have to work hard but have to 'give' a high proportion of their production (gdp) to pensioners

5. if the pensions are paid out of 'funded' schemes that means that the working people have to produce high profits for companies to pay dividends to pension funds and hence to pensioners:
if they are unfunded then it means that the working people have to produce a lot to pay high taxes so this can be given to pensioners

for any level of pension provision the working people have to either forgo potential income to fund profits or to fund taxes;
in other words it makes no difference to them at the time of delivery.

the some what unknown difference is whether or not funded scheme provide a source of investment money that in the longer term leads to higher productivity and hence increases gdp over

CLAPTON

N1AK wrote: »

The vast majority of pensioners were better off after the budget than before and yet the 'granny tax' was about the only pensioner related story told. It hurt the government and the conservative image as caring to pensioners, even though they gave them more in total.

By the time the government is done increasing the income tax threshold to £10k for everyone those same pensioners will be even better off. Yet that isn't the story told or people's recollection of what happens.

state pensioners got an inflation linked pension rise; how does that make them better off?

chewmylegoff

CLAPTON wrote: »

in other words it makes no difference to them at the time of delivery.

as a concept i understand what you are saying, but is there actually any mathematical proof. it's easy to say it, but it doesn't logically follow to me, at least, not least because of your final paragraph.

silverchair

Removing the following would be a start:
MATERNITY GRANT
2012/13 amount: One-off £500 payment. A one-off payment if you've had a baby, or adopted in the last three months, to help pay for baby equipment.

This wouldn't have a huge affect on the budget, but then getting rid of it wouldnt have a huge affect on the person either. They can just buy cheaper kids stuff or secondhand

Was going to say get rid of the Health in Pregnancy Grant, but see this is now ended.

Healthy Start Vouchers should also be ended in my opinion
"With Healthy Start you can get:
coupons to exchange for free vitamins
weekly vouchers to buy milk, fresh or plain frozen fruit and vegetables, or infant formula milk"
Go to the market or LIDLs to buy them instead.

I know these aren't automatic benefits, but I also don't think people would fall into hardship if they were removed either.

CLAPTON

chewmylegoff wrote: »

as a concept i understand what you are saying, but is there actually any mathematical proof. it's easy to say it, but it doesn't logically follow to me, at least, not least because of your final paragraph.

the mathematics of paying pensions at the point of delivery is a mathematic identity

i.e. if we are going to 'give' pensioners 10billion per year out of gdp then that means that other people have 10 billion per year less (i.e if pensioners are going to consume 10 billion of goods and services that have been produced by other people, then there is 10 billion worth of G&S less for the people that produced them)

now whether that is expressed as money from taxes or money from profits (or a combination) the maths is the same

the issue of whether pensions funds encourage investment over and above that which would happen anyway is another question to which I don't know the answer.

I'm saying nothing new or original, it's something that every economist knows but rather difficult to explain as we are all more comfortable talking about 'money' and savings and tax.

Loanranger

Pensioners were not better off after the last budget!
Pension increases are directly linked to inflation index hence we have already paid out more on energy, fuel and food costs which the increase is designed to meet so in fact we're lagging behind.
Can those who think it's OK to pour vitriol on the heads of pensioners reflect on why you think it's OK to do this?

Pensioners are just an easy target here. I would not dream of bashing people with disabilities, unemployed, black people, asylum seekers etc yet this is what many here are doing and it's offensive.

N1AK

CLAPTON wrote: »

state pensioners got an inflation linked pension rise; how does that make them better off?

You're right that in real terms (accounting for inflation) they aren't better off. However, given that pay increases have on average been well below inflation they done well relatively speaking. I'm normally a big advocate of considering finances in 'real' terms so I'd be a massive hypocrite not to accept your point here.

N1AK

silverchair wrote: »

Healthy Start Vouchers should also be ended in my opinion

I know these aren't automatic benefits, but I also don't think people would fall into hardship if they were removed either.

I'm not going to defend healthy start specifically because I'm not necessarily in favour however the whole point of the vouchers is to give low income parents something that they can't spend on anything but healthy stuff for the kid (rather than a benefit they might waste on booze etc).

Simply saying they could shop in Lidl to save a few pennies instead is pretty ignorant. It'd be like me saying we can drop the pension down, remove heating allowances and bus passes if old people bought own brand rather than Worther's original, wore a thicker coat inside and walked