Blue Labour 2

Conrad

MILIBAND TOUCHING CLOTH;

“If we’re pledging to spend the same as the Tories, cap welfare the same as the Tories and the economy is recovering then people are going to start asking what difference we would make. That would be a disaster.



http://www.thedailymash.co.uk/politics/politics-headlines/miliband-touching-cloth-2013061271887

grizzly1911

N1AK wrote: »

That may be your presumption, but that says more about you not being informed about pensions than anything else. We have a 'triple lock' on pensions meaning they increase by the largest of:

• The rise in average UK earnings.
• The rise in inflation (as measured by the Consumer Price Index).
• A standard rise of 2.5 per cent.

So as you can see the best case if we have average economic growth (1.25% tops) is that pensions will increase by twice that rate. If we have any periods of high inflation then it'd be an even larger difference.

The triple lock effectively shows the lengths politicians will go to to get the elderly vote, and the selfishness of many of the elderly. If the minimum wage for 16-17 year olds increased by the same formula it would have gone from £3 in 2003 to £4.54 now but it's £3.68 and the rate for 18-20 year olds would be 5% higher; however who cares about young workers right...

I am fully aware what the triple lock is. I have also been around long enough to realise that the world is full of constant change.

In the same way the triple lock was brought in it can be withdrawn.

I am fairly sure that if we see zero GDP growth for a couple of years that triple lock will be unwound.

When it was put together GDP was forecast at something like 3% so in essence they were trying to under shoot it. The same reason they adopted CPI not RPI. Locking down the public sector to 0-1% will also ensure that average earnings are held lower.

The fact they inconveniently got hit with the biggest increase in pension was a bit of an own goal. They have managed to polish the t**d to boast how they were the ones to presided over it. Bless those spin doctors.

N1AK

CLAPTON wrote: »

my apologies; I think I posted the wrong reference

No problem. I was sure you had a source I just wanted to see it. Thanks for finding it.

N1AK

antrobus wrote: »

By my calculations UK GDP growth in the years 1980-2010 was an average 2.59%; GDP increased by a factor of 2.15. Hence it is not entirely unreasonable to assume that GDP will double again in the period 2010-2040.

Major error on my part. You're absolutely right and my earlier figures were wrong (should have trusted my gut when it didn't feel right rather than wanting to believe them because they suited my case )

It isn't 'entirely unreasonable' although I would disagree with 2.5% being given that the 00s was ~40% lower than in any other post war decade and the previous 5 years is the worst period for GDP (-2.9% total) by far; the previous worst was 4.4% between 1977 and 1982!

N1AK

grizzly1911 wrote: »

I am fully aware what the triple lock is. I have also been around long enough to realise that the world is full of constant change.

In the same way the triple lock was brought in it can be withdrawn.

I am fairly sure that if we see zero GDP growth for a couple of years that triple lock will be unwound.

When it was put together GDP was forecast at something like 3% so in essence they were trying to under shoot it. The same reason they adopted CPI not RPI. Locking down the public sector to 0-1% will also ensure that average earnings are held lower.

The fact they inconveniently got hit with the biggest increase in pension was a bit of an own goal. They have managed to polish the t**d to boast how they were the ones to presided over it. Bless those spin doctors.

All true. Although that kind of makes the point I'm going for. The triple lock is a nonsense because it isn't sustainable; anyone who can count should be able to work out that it won't last. The problem is it suits so many people to keep it for as long as possible and that will just make the correction even harsher and more painful when it happens.

2.5% pa beats economic growth for any period up to the end of 2012, even 1967-2012 (and the end of the 60s was high growth). Just promising pensioners 2.5% was effectively guaranteeing them increases comparative to the country as a whole.

I really don't see any compelling reason for why pensions shouldn't be tied directly to income. It makes no sense for pensions to be increasing in spending power when wages are decreasing, especially as the people paying for the higher pensions are the ones who are suffering from wage decline.

N1AK

CLAPTON wrote: »

click 'pension trends chapter 5' which opens a pdf file

and then table 5.14

Really interesting document well worth reading. Sadly it uses the 'standard' expected earnings growth, inflation rates, life expectancy etc but doesn't include them (which is fair enough but makes evaluating it harder).

One issue I take particularly large issue with is their assumption that most years wage inflation will exceed 2.5% and CPI. I'd love for it to be accurate but I don't think we should be planning for it.

CLAPTON

N1AK wrote: »

Really interesting document well worth reading. Sadly it uses the 'standard' expected earnings growth, inflation rates, life expectancy etc but doesn't include them (which is fair enough but makes evaluating it harder).

One issue I take particularly large issue with is their assumption that most years wage inflation will exceed 2.5% and CPI. I'd love for it to be accurate but I don't think we should be planning for it.

Forecasting the future is difficult;

Nearly all the debates about pensions, house prices, gdp, NHS etc are all based on not-very-documented quite complex assumptions.

Assuming 2.5% wage inflation 10 years ago would seem reasonable; today many would seriously doubt it.

grizzly1911

N1AK wrote: »

I really don't see any compelling reason for why pensions shouldn't be tied directly to income. It makes no sense for pensions to be increasing in spending power when wages are decreasing, especially as the people paying for the higher pensions are the ones who are suffering from wage decline.

It suited them for many years because it trailed income growth.

Pensioners, certainly the elderly ones have less options, they will often have downsized, already used up the bulk of the fat and their purchasing power will have been severely eroded. It is a difficult balance as those that can't keep up will simply fall into the benefit system. Most elderly pensioners tend to be single.

Tying work pension schemes to CPI increases will also cause as many problems going forward as it solves.

The basic state pension is not a kings ransom. £110 per week. A £2.75 rise won't go very far with the kind of imported levels of energy and food inflation we are seeing.

N1AK

grizzly1911 wrote: »

The basic state pension is not a kings ransom. £110 per week. A £2.75 rise won't go very far with the kind of imported levels of energy and food inflation we are seeing.

And yet it is still more than we can afford to maintain for future pensioners and costs more than those claiming it paid in when they were working.

I'd love it if money grew on trees and we could give pensioners masses of money without any consequence but we can't; the current government policy is to bribe pensioners (and people who think decent pensions today mean decent pensions when they retire) and have no way to provide the same level of support to future pensioners; which isn't a policy I support.

CLAPTON

N1AK wrote: »

And yet it is still more than we can afford to maintain for future pensioners and costs more than those claiming it paid in when they were working.

I'd love it if money grew on trees and we could give pensioners masses of money without any consequence but we can't; the current government policy is to bribe pensioners (and people who think decent pensions today mean decent pensions when they retire) and have no way to provide the same level of support to future pensioners; which isn't a policy I support.

One needs to begin to understand that non working people of all sorts are a 'burden' on those that work.

Whilst I understand why people do not understand, people will eventually have to understand that some-one with a private pension is exactly the same 'burden' on the working population as some-one with a state pension.


The only difference is that some-one receiving a 'private ' pension requires the working popluation to forgo gross income so that profits can be paid to private pensioners, whilst state pensioners require the working population to forgo net income in the form on tax.

So the proper debate is what proportion of the cake (GDP) should pensioners receive and how should this be presented (reduced gross wages or reduced net wages?).

The figures of 6-7% for the state pensioners seems both modest and completely affordable given they constitiute a higher proportion of the population than that.