Raising the pension age in order to pay for pensions

Graham_Devon

George Osbourne is today likely to announce the raising of the pension age to 69/70.

It was stated last night on Newsnight that it's likely that 30 years olds today will face a pension age of around 74 based on projections.

Anyone born today could see the pension age rise to 78+.

Which is all interesting. They say this is because people are living longer. Which is true. But that doesn't avoid the fact that disease such as arthritis etc still takes hold at the same point in life that it always has done.

So, in terms of the pension age, how are builders, plumbers etc supposed to work until they are 70? I can understand a desk job will probably be viable, but plumbers won't suddenly be taken on as desk clerks when they hit 60. Plus it means less jobs for everyone else.

So is this pension age viable? Or do we need to start acknowleding the elephant in the room and look at increasing taxation?

I would like to avoid the argument over saving for personal pensions if possible as that always leads to a generational type argument, and focus on the state pension.

My personal opinion, looking at my own dad who has not reached 70, is that he would be in dire circumstances now, unable to work, no experience of anything other than the building industy, riddled with arthritis. If these are the sort of people Osbourne is expecting to work until 70, I just don't see it as possible for many people.

IveSeenTheLight

The older I get, the more I wonder the value of pensions.
Sure, one must provide for ones self in retirement.

That said some other countries models are for families to be more communal, meaning that three or four generations live in the same household.

This aids childcare as the older generations can support that, whilst the younger generations support their elders in retirement.

I'm not saying this is an ideal model, but it is one that works for others and may support the issue you describe above

Graham_Devon

IveSeenTheLight wrote: »

The older I get, the more I wonder the value of pensions.
Sure, one must provide for ones self in retirement.

That said some other countries models are for families to be more communal, meaning that three or four generations live in the same household.

This aids childcare as the older generations can support that, whilst the younger generations support their elders in retirement.

I'm not saying this is an ideal model, but it is one that works for others and may support the issue you describe above

Yes, true, it's certainly something we could think about and control ourselves, leaving the politics out of it.

I would question if we build enough homes to support such living, as we seem focused on building smaller homes. Indeed, many new homes built today still don't even have space for two cars, so having multiple generations in these houses could be difficult.

Certainly in older style victorian housing with space to renovate and extend (going up the loft for example) this could be a plan for individual families.

Or maybe we could start seeing people buying up multiple flats and converting them back to one house again!

Road_Hog

Graham_Devon wrote: »

So is this pension age viable? Or do we need to start acknowleding the elephant in the room and look at increasing taxation?

personally, I think we pay too much tax already. Here's a thought, why don't we make all those tax avowing multi national corporations pay tax?


Oh I know, because we live in a plutocracy.

Loughton_Monkey

Rightly or wrongly, most people accrue rights to state pension.

A lot of us also make provision on top either privately, or more likely through schemes partly funded by employers.

The latter group has been heavily influenced by a mixture of much higher longevity (lower annuity rates) and low interest rates (even lower annuity rates).

In its wisdom, the government has chosen to mitigate the taxpayer cost [as it must] in the form of deferring the age at which we receive state pension. That's fine. Personally I would have frozen them in 2010 as well, and increased them only if/when tax revenues supported them.

But I do not like the concept of government 'telling' us when to retire. I have no problems with a "Normal Retirement Date" against which the amount is benchmarked. I would, however, strongly recommend government to introduce flexibility such that you can retire, by default, at age 68 with £9,000. Or, if you wish, at age 65 with £7,500 [or whatever is calculated as cost neutral to the taxpayer].

They have introduced flexibility one way [i.e. we can defer and get higher amount]. So why not the other way?

IveSeenTheLight

Graham_Devon wrote: »

Yes, true, it's certainly something we could think about and control ourselves, leaving the politics out of it.

I would question if we build enough homes to support such living, as we seem focused on building smaller homes. Indeed, many new homes built today still don't even have space for two cars, so having multiple generations in these houses could be difficult.

Certainly in older style victorian housing with space to renovate and extend (going up the loft for example) this could be a plan for individual families.

Or maybe we could start seeing people buying up multiple flats and converting them back to one house again!

We have to be careful, as we are already on a tangent regarding houses as opposed to your OP about pensions.

With regards housing, there may be a provision for each generation to pool together their financial resources to secure a larger home.

Alternatively, if you feel that not enough large houses are being built, you could go down the route of building to meet your personal desires (I am finding it better value as well)

Of course you can as you suggest convert flats into homes.
The reverse had happened previously where homes were split into flats

Road_Hog

Loughton_Monkey wrote: »

They have introduced flexibility one way [i.e. we can defer and get higher amount]. So why not the other way?

Because the idea is that you will die before you get to take it.

chucknorris

Graham_Devon wrote: »

If these are the sort of people Osbourne is expecting to work until 70, I just don't see it as possible for many people.

People are living longer and most likely are generally healthier to an older age too, so it isn't aimed or expected of your dad's generation. Surely you must agree that it is better to live longer and get the pension later in life, than die earlier but also receive the pension earlier. I am no expert on the exact calculations and maybe there is a bit of non pro-rata claw back on the increased life span versus later pension receipt, but if the money isn't there for pensions then something has to be done. It isn't as if people are not being given plenty of notice. I see these changes as very necessary responsible financial management.

michaels

I think the funding question is a bit of a red herring - in reality the question is what share of productive output goes to support those not working. Thus changign the retirement age as a real impact as it can potentially change the dependency ratio. I also wonder whether pushing up the age may move the burden on to employers who end up ppaying more sick pay potentially when people get to decrepit to do their job every day.

They did come up with a solution in the 70s - anyone else remember the movie 'Logan's Run'?

Graham_Devon

chucknorris wrote: »

People are living longer and most likely are generally healthier to an older age too, so it isn't aimed or expected of your dad's generation. Surely you must agree that it is better to live longer and get the pension later in life, than die earlier but also receive the pension earlier. I am no expert on the exact calculations and maybe there is a bit of non pro-rata claw back on the increased life span versus later pension receipt, but if the money isn't there for pensions then something has to be done. It isn't as if people are not being given plenty of notice. I see these changes as very necessary responsible financial management.

As I stated, yes, we are living longer, but the age at which older age diseases take hold of the body is not increasing.

Arthritis, as an example, is hitting people at the same age, regardless of whether we are living longer.

While not everyone will get arthritis, many will, and whether you live until 80 or 100, it makes no difference to when arthritis generally sets in.

Hips are being replaced all over the shop around 60 years of age. Your hip isn't going to last longer just because your heart does.

An interesting one came up on the radio earlier. Would you really like a HGV driver on the road aged 70 with his dodgy hips giving him agro and early arthritic wrists causing his reaction time to fall? The answer is apparently that he would just do a desk job. But what desk job?

Hell, some are fighting dementia at age 70.

BigAunty

Put up taxes rather than keep pushing the pension age up. Both are vote killers, though - I wonder which is worse?.