New flat rate pension

N1AK

Graham_Devon wrote: »

For once, it actually benefits the young, and those already on a pension or taking it before 2017 will not qualify.

It benefits people retiring in the next ~30 years and disadvantages those retiring ~45+ years from now which is hardly benefiting the young. It also only benefits the young on the basis that they'll get more money back from government having paid in considerably more to balance the cost of providing that benefit.

Furthermore it yet again stuffs those who actually behaved prudently and were entitled the the enhanced pension (rather than not working and/or opting out) because they paid more for a benefit they would have received regardless. Lesson to take away from this: There's no point in long term saving for pensions because the rules, benefits, costs etc can be completely changed at virtually no notice and there's nothing you can do to avoid it.

N1AK

grizzly1911 wrote: »

They didn't do it deliberately and no one told them.. It wasn't there fault. They didn't invent inflation.

It was there fault if not knowingly then for being incompetent or ignorant. There is no new information now that wasn't available in 1960, 1970 or 1980 that means it was impossible to tell then that life expectancy was increasing notably and the cost of providing care was increasing massively.

The fact that pensioners and near pensioners now are massively in favour of increased government spending (bigger pensions and pensioner benefit) shows that even if they weren't ignorant they would still have had no issue with loading future generations with debt.

grizzly1911

N1AK wrote: »

It was there fault if not knowingly then for being incompetent or ignorant. There is no new information now that wasn't available in 1960, 1970 or 1980 that means it was impossible to tell then that life expectancy was increasing notably and the cost of providing care was increasing massively.

The fact that pensioners and near pensioners now are massively in favour of increased government spending (bigger pensions and pensioner benefit) shows that even if they weren't ignorant they would still have had no issue with loading future generations with debt.

In the last decade possibly you are right. In the 60/70/80s it wasn't in the open as it is now. So for the vast majority of the population I don't believe they were ignorant or incompetent, successive governments definitely but that is a different issue.

I.m not sure that pensioners are advocating large scale increases in their pensions. The changing demopgraphic and the failing of governments to plan for it adequately isn't their fault. Pension reform has to be phased to mitigate impact. Pension should be subject to more progressive taxation perhaps with lower higher rate threshold maybe, reflecting lower overall needs and universal benefits should be taxed at the prevailing rate. Perhaps a harmonised rate of high/low rates but with a higher personal allowance, say £20K as a starter for 10?

If you expect wholesale cuts in pension provision to reduce you future tax burden prepare to be disillusioned.

kabayiri

N1AK wrote: »

It benefits people retiring in the next ~30 years and disadvantages those retiring ~45+ years from now which is hardly benefiting the young. It also only benefits the young on the basis that they'll get more money back from government having paid in considerably more to balance the cost of providing that benefit.

Furthermore it yet again stuffs those who actually behaved prudently and were entitled the the enhanced pension (rather than not working and/or opting out) because they paid more for a benefit they would have received regardless. Lesson to take away from this: There's no point in long term saving for pensions because the rules, benefits, costs etc can be completely changed at virtually no notice and there's nothing you can do to avoid it.

Pensions are based on long term promises, and situations change. Some of us will see much lower private pensions than were projected, because of GB's pension raid and lower annuity returns.

I'd suggest a revision to the lesson. Don't put all your eggs in the one basket. The person who invested in both a private pension in the mid 90s and a BTL property will have seen perhaps the pension fund underperform, but the property will have cost less to service potentially and be worth more. Balancing the risk is key.

N1AK

grizzly1911 wrote: »

In the last decade possibly you are right. In the 60/70/80s it wasn't in the open as it is now. So for the vast majority of the population I don't believe they were ignorant or incompetent, successive governments definitely but that is a different issue.

I.m not sure that pensioners are advocating large scale increases in their pensions. The changing demopgraphic and the failing of governments to plan for it adequately isn't their fault. Pension reform has to be phased to mitigate impact. Pension should be subject to more progressive taxation perhaps with lower higher rate threshold maybe, reflecting lower overall needs and universal benefits should be taxed at the prevailing rate. Perhaps a harmonised rate of high/low rates but with a higher personal allowance, say £20K as a starter for 10?

If you expect wholesale cuts in pension provision to reduce you future tax burden prepare to be disillusioned.

1/ The information was available if no one looked at it to consider whether spending plans were sustainable is by definition incompetence or ignorance.

2/ The failings of government are largely the failure of the electorate. Perhaps the electorate now are no better but that doesn't negate the failure of those who supported prior financial mismanagement.

Personally I would replace the inheritance tax threshold with a lifetime inheritance allowance of ~£100,000 per person. I would also use assets like property to pay for care etc (on the basis that they would be transferred to government ownership on the owners death).

I see no compelling reason why someone who hasn't saved for retirement and the care they will need should be provided with everything while keeping their property, which they couldn't do with cash, and hand it on to others who haven't done anything to earn it. However, as with any policy that takes anything from the retired or near retired those groups would fight it vehemently because their sense of entitlement greatly outweighs any concerns for the country's and other people's future.

N1AK

kabayiri wrote: »

I'd suggest a revision to the lesson. Don't put all your eggs in the one basket. The person who invested in both a private pension in the mid 90s and a BTL property will have seen perhaps the pension fund underperform, but the property will have cost less to service potentially and be worth more. Balancing the risk is key.

Good advice Kabayiri. My only slight amendment would be to say that I would personally strongly suggest anyone not receiving substantial benefit from their employer for making pension contributions should stop (some personal situations aside).

Pensions are incredibly inflexible and you can't go back. Who knows if the government will put a levy on private pensions or some such in the future.

Unless you're getting matched contributions from your employer or better then stop the pension and put the money in savings or investments instead. That way you can move it, diversify it etc whatever happens.

grizzly1911

N1AK wrote: »

1/ The information was available if no one looked at it to consider whether spending plans were sustainable is by definition incompetence or ignorance.

It may have been available in the corridors of NSO or in a few corners of Whitehall. It wasn't widely disseminated though. The working population were spoon fed through 25 minute news snip its and red tops.

There was no internet search with banks of data, analysis and discussion to be had at the tip of your fingertips.

Governments tend to deal with the crisis of the moment and are not particular adept at forward planning.


Personally I would replace the inheritance tax threshold with a lifetime inheritance allowance of ~£100,000 per person. I would also use assets like property to pay for care etc (on the basis that they would be transferred to government ownership on the owners death).

Is that a version of communism/socialism?

I see no compelling reason why someone who hasn't saved for retirement and the care they will need should be provided with everything while keeping their property, which they couldn't do with cash, and hand it on to others who haven't done anything to earn it.

AIUI <10% of people will actually end up in a departure lounge, of those that do the majority will be boxed and out relatively quickly. What you are proposing would therefore penalise the majority of homeoners and provident.

Why should they and their family be forced to pay for the care of others who have haven't provided. That is the reason a cap, at a sensible level, is a reasonable idea.

However, as with any policy that takes anything from the retired or near retired those groups would fight it vehemently because their sense of entitlement greatly outweighs any concerns for the country's and other people's future.

I would suggest such a policy wouldn't go down well with the ruling elite let alone those with relatively modest assets.

It would just make people even more resistant to taxation and they would simply filter their wealth away before it could be attached.

As an edit to my earlier post:- If you expect the benefits of wholesale cuts in pension provision to reduce you future tax burden prepare to be disillusioned.

N1AK

grizzly1911 wrote: »

Is that a version of communism/socialism?

No it's a form of taxation there's nothing inherently socialist about it although it would make it harder for future generations to live off of the produce of their ancestors.

grizzly1911 wrote: »

Why should they and their family be forced to pay for the care of others who have haven't provided.

Most people haven't provided enough over the past 40 years so we need to get the money from somewhere. Currently it's being borrowed and/or loaded onto future generations in tax and cuts; dropping the inheritance tax threshold and protection of property from care expenses is just taking off of them on their death rather than off their children after inheritance in higher tax, longer working lives etc.

As to people deciding to waste money I'm not sure it'll happen. If you had a £500k estate now with 2 children you'd be able to give it all away to them with no tax. What I'm suggesting would mean a £150k tax bill (still £175k post tax). Most parents would still want to leave children something.

It would make nominal difference to the ruling elite as the difference between £325k and £100k if you've got £20 million is nominal. They already dodge the vast majority entirely which is obviously an issue in and of itself.

CLAPTON

The 'burden' of pensions for the retired is paid for by the people who are working and producing goods and services at that time.


If we lived in a society with only state pensions, then the workers of the time would have to forgo a lot of their own production to provide goods and service for the retired.
This would be done via taxation which means that working people would have lower take home salaries that otherwise.


If we lived in a society with only funded private pensions, the the workers of the time would have to forgo a lot of their own production to provide goods and service for the retired.
This would be done via company profits which would mean that working people have lower salaries than otherwise.


For pensioners to consume goods and services they don't produce means that the people who do produce them must go without.
Whether that is done via high taxation or via high company profits makes no difference to the 'burden' on the working people who do the actual production.

Sadly only a few people understand this.


Of course there are other arguments for funded or unfunded schemes.

StevieJ

grizzly1911 wrote: »

Those that do undertake lower skilled work will be working just as hard, if not harder, in and with pretty poor conditions. If they earn enough they w ill pay their fair share of taxation under PAYE.

I understand that unemployment, whilst unwelcome, is a lever against inflation, fuller employment fueling it.

That was the theory but seemed not to happen in the early to mid noughties, had the economists scratching their heads, must have been those cheap imports from China.