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

grizzly1911

chewmylegoff wrote: »

Yes, that's what the government tells you and how it restricts the amount it pays to some people (notwithstanding pension credit top up, and that it looks like we are going to get a flat rate pension payable to all), but you can't escape from the fact that employee national insurance receipts are only about £45 billion a year and state pension payments are about £70 billion a year (and that's before you take into account all the other things allegedly funded by national insurance).

You are correct they are just notional bckets with one being the key to the door.

Which of course is one of the reasons for public sector anger when being taxed an extra ~3% now for some spurious promise further down the line.

grizzly1911

N1AK wrote: »

No we wouldn't and certainly not to the same extent. Firstly, the scheme requires auto-enrollment but you can still opt out, which I would if I was a higher rate tax payer and didn't get tax relief. Secondly, many of the people who are paying higher rate tax will be contributing noticably more than 6% of income into their scheme (heck I'm contributing 10% inc contribution matching) which is the legal limit.

Where would you put it if not in the scheme - just curious?

Could argue that 10% on the average wage would be a legitimate tax avoidance of £520 pa.

As we have moved from a nation of savers to one of debtors perhaps we can't as a society afford that any more?

Prudence seems to be a rude word these days.

N1AK

grizzly1911 wrote: »

Where would you put it if not in the scheme - just curious?

Could argue that 10% on the average wage would be a legitimate tax avoidance of £520 pa.

As we have moved from a nation of savers to one of debtors perhaps we can't as a society afford that any more?

Prudence seems to be a rude word these days.

The simplest like for like change would be ISAs but I'd likely already be maxing that and frankly I doubt the tax breaks will last another decade. Property wouldn't be a bad investment, likely combined with stocks. My intention would be to have an income in retirement, just not via a pension scheme.

I'm actually coming round to the idea of using capital to fund acquaintances business ideas. A couple of thousand pounds can be the difference between starting a business that could make a lot of money and not. It's far too early to say whether it'll be a cost to me or not yet though.

grizzly1911

N1AK wrote: »

My intention would be to have an income in retirement, just not via a pension scheme.

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Good idea IMO but perhaps edge your bets and have a mixture of both perhaps, at least while the relief remains.

chewmylegoff

grizzly1911 wrote: »

You are correct they are just notional bckets with one being the key to the door.

Which of course is one of the reasons for public sector anger when being taxed an extra ~3% now for some spurious promise further down the line.

Just another misconception really isn't it. What has really happened is that public sector workers have been given a 3% pay cut which applies to all future pay rises.

BigAunty

How about canning child benefit for all and putting the money into child services, such as the Sure Start centres?

That way the money is targetted to specific needy groups for particular purposes rather than getting spent on fags and gin (that's how my mother spent my child benefit..)

N1AK

grizzly1911 wrote: »

Good idea IMO but perhaps edge your bets and have a mixture of both perhaps, at least while the relief remains.

I currently pay into a pension scheme and have since shortly after I started working. I would continue to do so should I become a higher rate tax payer with tax relief as allowed by the current system. The moment I start losing tax relief I'd look at other options which would be likely to better or at least more flexible.

BobQ

N1AK wrote: »

If some parents decided to borrow £500,000 and blow it everything on holidays and then passed the debt on to their kids and told them that they were obligated to pay it back and that was fair because their 'earlier generation' did what they told themselves to do we'd probably think that urine was being taken.

They voted for governments that built up unfunded liabilities; it was either ignorance or selfishness. They used the nation as a ponzi scheme to fund a lifestyle they couldn't otherwise afford and most didn't even realise they were doing it.

You have every right to criticise past government decisions but successive governments have had the chance to change things and chose not to do so. Like most voters I do not claim to be an expert economist, we rely on politicians to do the right thing. The idea that we (voters) knew that we were part of a ponzi scheme and did nothing is nonsence. They may have been wrong but successive governments have taken the view that unfunded approaches cost less to administer than funded ones.

Civil Serive pensions are a good example. Put aside whether the contribution rates are correct (that's a separate argument). My brother had no say over what they did with his contributions or what they did with the employer contributions. The Givernment chose to use the money for other things in return for a promise they would pay his pension. During his working career they used the contributions to pay current pensions, some years they made a profit and spent it on other things, other years they made up a shortfall. This was nothing to do with my brother. Their argument was always that if they had a fund it would cost a lot to administer so they saved this cost. Now that my brother has retired, why should he be blamed for things he did not control?

grizzly1911

BobQ wrote: »

The Givernment chose to use the money for other things in return for a promise they would pay his pension. During his working career they used the contributions to pay current pensions, some years they made a profit and spent it on other things, other years they made up a shortfall. This was nothing to do with my brother. Their argument was always that if they had a fund it would cost a lot to administer so they saved this cost. Now that my brother has retired, why should he be blamed for things he did not control?

Effectively the government is "self insuring" itself because it is big enough.

The cost of providing the pension scheme should be lower because they spread the risk over a very large base of employees and hence get a very good spread as life expectancy will be very mixed.

Part of the problem is that as increasing numbers of the lower paid jobs get put into private hands that risk isn't being spread so wide.

BobQ

grizzly1911 wrote: »

Effectively the government is "self insuring" itself because it is big enough.

The cost of providing the pension scheme should be lower because they spread the risk over a very large base of employees and hence get a very good spread as life expectancy will be very mixed.

Part of the problem is that as increasing numbers of the lower paid jobs get put into private hands that risk isn't being spread so wide.

True. As I understand it they did make a decision to reduce their risks in 2008 by changing away from a FS pension for new entrants and increasing the retirement age. Its arguable that this was too late/not enough but I maintain its not the fault of individuals that previous governments made no changes. Also, where there is a funded scheme (Local Government) they still got it wrong if the anti-public sector hysteria is to be believed.