Pensions Pyramid scheme

Jack_Griffin

Assuming it comes in April 2017 then anyone born before 6 July 1953 will be on the old scheme.

magpiecottage

Clifford_Pope wrote: »

if we all exercised our right to go to the Isle of Wight at the same time millions would have to be forcibly turned away.

I think we might all fit in if the tide was out.:)

hugheskevi

They don't claim that the new plan is cost neutral. The final plan turns out to have a 1-2% of GDB increase in spending, even though the initial objective was to be cost neutral.

Can you elaborate on this?

My understanding is that the new plan is a slight reduction in spending compared to the current system, with expenditure being about 0.4% of GDP lower by 2060 but with almost no difference until after 2040. That figure excludes National Insurance contracted out rebates so is a slight underestimate.

That leads to expenditure being about 1% higher in 2060 than today, but relative to the existing system the change is cost neutral. I am not aware of a policy intention to reduce long term expenditure to the same rate of GDP as today?

Information taken from Chart 2.4 on page 35 of the White Paper.

Separately, I think there is a policy inconsistency between the treatment of contracted-out people and the self-employed. Many contracted-out people (those in DB schemes) paid less NICs in return for building up less State Second Pension (so the term rebate is a little misleading - they paid less than the full rate, rather than actively receiving a rebate from the Exchequer). The self-employed did the same - paid a lower rate of NI in return for not building up State Second Pension, yet the self-employed will not have a contracted-out deduction applied to their single-tier pension calculation. Probably a reasonable simplification I guess, as applying another notional contracted out deduction to self-employed periods would be complicated.

StevieJ

Linton wrote: »

About a quarter of the first postwar generation, those born before 1952, wont be getting the new higher pensions because they will have retired by 2017 and many born afterwards wont benefit as they would have already earned enough in SERPs to exceed the new threshold.

Or were contracted out so will have a clawback applied.

jamesd

Linton wrote: »

What money "given to non-employees not on benefits who have made a lifestyle choice not to work" had you in mind??

Any money paid out as a pension (distinct from means tested pension credit and other benefits) to those who chose not to work. Such people - or those choosing to support them in their lifestyle - should have to pay an appropriate NI rate for the pension they'd eventually get, just like those who are doing it while working.

Linton wrote: »

As a non-employee not on benefits having made a lifestyle choice not to work am I missing out on a source of income? Or were you thinking that pensioners should pay NI??

I assume that you're no longer within the normal working age range, so would not be affected in any way.

Linton wrote: »

But as to your complaint about wealth transfer from the young to people born 1945-1970, the subsequent generation will soon enough get all the loot and then have to put up with the complaints of those born since 1995.

There isn't any requirement for the loot to be spread out among the following generations. Normally, most of it remains within a relatively small percentage of families, while the costs of this change are spread over the whole population of those who have a fairly full working life, however much or little they get paid.

Linton wrote: »

About a quarter of the first postwar generation, those born before 1952, wont be getting the new higher pensions because they will have retired by 2017

Agreed.

Linton wrote: »

and many born afterwards wont benefit as they would have already earned enough in SERPs to exceed the new threshold.

Yes, this is one of the groups that gets a benefit compared to the later generations because they will get the higher amount. But the ones who had a fairly full working life will be losers also because of the way the amount over £144 is affected by lower inflation-linked increases. This sort of thing is why it ends up to a large extent being a gift to the baby boomer generation, which gets the benefits but doesn't have so much of the reduced accrual rate effect.

Whether I benefit or not will depend on how long I work. In general, the less you work, the more you'll gain from the proposed new system.

jamesd

hugheskevi wrote: »

Information taken from Chart 2.4 on page 35 of the White Paper.

That chart is for the combined cost of state pensions and means tested or other benefits paid to pensioners, not just the state pensions.

A big part of this change is to shift costs from means tested welfare benefits like pension credit and council tax credit to the state pension system, taking the money from one nominal pot - NI for worker benefits - to replace money from another pot, general taxation.

Discussing not just pensions but also the welfare benefits, the current combination of the two is expected to rise from 6.9% of GDP in 2012/13 to 8.5% in 2060/61 and this change - mainly the large reduction in state pension payments to employees - is expected to reduce that to 8.1%. That's from paragraphs 28 and 29 on page 13.

For both philosophical and accountability reasons I'm not at all happy to see NI money used to replace means tested benefits for those not of working age. I'm happy to pay for those means tested benefits, but not out of NI money and particularly not by reducing the state pensions paid to low and average earning employees, as this change does. I think that means tested benefits for those unable to provide for themselves - as distinct from those who have paid into the pension system - is properly part of general taxation, not NI.

hugheskevi wrote: »

Separately, I think there is a policy inconsistency between the treatment of contracted-out people and the self-employed. Many contracted-out people (those in DB schemes) paid less NICs in return for building up less State Second Pension (so the term rebate is a little misleading - they paid less than the full rate, rather than actively receiving a rebate from the Exchequer). The self-employed did the same - paid a lower rate of NI in return for not building up State Second Pension, yet the self-employed will not have a contracted-out deduction applied to their single-tier pension calculation. Probably a reasonable simplification I guess, as applying another notional contracted out deduction to self-employed periods would be complicated.

I agree that it has this effect but I think it was more likely to be a political decision by Conservative representatives so they could claim to be helping small businesses.

Linton

jamesd wrote: »

Any money paid out as a pension (distinct from means tested pension credit and other benefits) to those who chose not to work. Such people - or those choosing to support them in their lifestyle - should have to pay an appropriate NI rate for the pension they'd eventually get, just like those who are doing it while working.
[/QOUTE]

I am still baffled. If you dont work the 30 or 35 years you dont get the full pension. If you havent reached SPA, you dont get a pension. Or are you talking about people receiving private pensions prior to SPA??? Then they can live off ISA savings. Perhaps you mean families where one partner doesnt work. But they dont get a pension unless it is covered by the NI credit during child rearing. Who are you talking about?

jamesd wrote: »

I assume that you're no longer within the normal working age range, so would not be affected in any way.
[\QUOTE]

Havent reached SPA yet!! I am taking a private pension (amongst other income sources) and have chosen not to work. So do you want to tax me?

jamesd wrote: »

There isn't any requirement for the loot to be spread out among the following generations. Normally, most of it remains within a relatively small percentage of families, while the costs of this change are spread over the whole population of those who have a fairly full working life, however much or little they get paid.
[\QUOTE]

Dont think so - surely all of your generation have evil boomer parents who will leave their stolen wealth to their desperate but deserving offspring and so the money will be pretty evenly spread, well about as evenly spread as it is now.

jamesd

Linton wrote: »

Then they can live off ISA savings. Perhaps you mean families where one partner doesnt work. But they dont get a pension unless it is covered by the NI credit during child rearing. Who are you talking about?

That's one group, couples where one spouse chooses not to work. probably the largest single group.

Linton wrote: »

Havent reached SPA yet!! I am taking a private pension (amongst other income sources) and have chosen not to work. So do you want to tax me?

Yes, at least if you don't have 35 years yet. And me, later, because I plan to be in the same situation.

Linton wrote: »

Dont think so - surely all of your generation have evil boomer parents who will leave their stolen wealth to their desperate but deserving offspring and so the money will be pretty evenly spread, well about as evenly spread as it is now.

Inherited wealth in this country isn't remotely close to being evenly spread. Your speculations about the generation to which my parents belonged and I belong are both wrong. I'm one of the potential winners from this change, though not one of the boomers who's so far received much enrichment from either past subsequent generations.

toomsie

I see pensions as a joint bank(Credit card) account.Would you have a joint bank account with your family. How would it effect your incentives to withdrew money and deposit money. When pay day comes would you be waiting at the ATM machine for the deposit before another member of family gets it.

Public pensions is tragedy of the commons. Everything about the government is like this. The government is socialist.

atush

that made no sense to me?