Raising the pension age in order to pay for pensions

CLAPTON

MFW_ASAP wrote: »

And we're investing overseas, often people paying into company pensions are not even aware that their savings are invested in emerging markets and global funds.

My pension money is invested in the same Chinese, Indian, German, Japanese, French, US companies that are investing in the UK.

Looks like you're coming around to the (correct) viewpoint that fully funded private pensions and fully funded state and public sector pensions (Sovereign funds) solve the demographic problem of having more retired people per tax payer.

If the total of UK investment overseas exceeds the investment from overseas then yes, there is a net benefit for the future usage.

However I do not know the figures but believe the net is very close to zero.


In addition for reasons already partly given, I'm unconvinced that it is practical to greatly increase pension savings


Certainly in a global sense (of a closed system) it is clearly the case that at the time of payment, there is little difference between funded and unfunded schemes.

Loughton_Monkey

CLAPTON wrote: »

no, not really


we can only all be rich (or at least a little richer) if we produce more goods and services in the future)

if we all simply have more money chasing the existing level of goods and services then that simply leads to price inflation (as countless countries have discovered)


there is no specific evidence that 'saving' more (i.e.not spending) now will provide the capacity to product more in the future


the dilemma is how to produce more per capita in the future and not about taxation levels

obviously from an individuals point of view the more you have saved the more (relative to those that haven't saved) you will be able to consume.

Seems you have a different view of the economy from most.

Yes, we get 'richer' by producing goods. But we are not in the old industrial world of the early 1900's where all working men slave away producing goods, which someone then tries to sell.

We have moved on. It's a consumer society. A demand-led society in which we demonstrate what we want by laying our £1 notes on the table, and someone will be there to give you what you want. Sadly, that's probably a foreigner, but that's another matter.

I sense you perceive a vast body of 18 to 65 year olds sweating away, producing vast amounts of consumer goods, all of which are bought by... er... 18 to 65 year olds. For their children, and for their old parents.... While all the oldies sit around their one-bar fires using their state handouts to feed the electricity meter and buy a few slices of bread and beans....

This model simply cannot be sustained, almost whatever the ratio between young/working/old.

Workers cannot get paid well when the product they make is not selling. Do you want them to beaver away making thousands of Stannah Stairlifts (and get paid for it) to be stored for 30 years until they are 75 and need to buy one themselves?

In an ideal world, you beaver away and get paid. Yes you pay a modicum of tax to build roads, provide schools & hospitals, defend the country, and throw a bit of bread at needy people (af all ages). Yes you need enough to feed your kids too. And after this, you need a few more shillings for yourself and even more shillings to fund your retirement.

This is only possible if there are people outside the fraternity of working people [like rich oldies] who can provide you with more orders, more work, and a few more shillings in your pocket.

I, and a few million other 'boomers', slaved away producing wealth. We got a good share of it in our wage packet. The government took oodles away to honour the national and welfare obligations, we made enough 'stuff' to meet demand. In addition, a lot of us stuffed some away, too, so that we could have a 'good' retirement and [although admittedly not our main motive] become as minimum a drain on taxpayer resources when retired.

Had we not done that, we would have fuelled more spending, and bigger riches for ourselves and other workers. But boy would we have become an unsustainable load on the next generation.

CLAPTON

Loughton_Monkey wrote: »

Seems you have a different view of the economy from most.

Yes, we get 'richer' by producing goods. But we are not in the old industrial world of the early 1900's where all working men slave away producing goods, which someone then tries to sell.

We have moved on. It's a consumer society. A demand-led society in which we demonstrate what we want by laying our £1 notes on the table, and someone will be there to give you what you want. Sadly, that's probably a foreigner, but that's another matter.

I sense you perceive a vast body of 18 to 65 year olds sweating away, producing vast amounts of consumer goods, all of which are bought by... er... 18 to 65 year olds. For their children, and for their old parents.... While all the oldies sit around their one-bar fires using their state handouts to feed the electricity meter and buy a few slices of bread and beans....

This model simply cannot be sustained, almost whatever the ratio between young/working/old.

Workers cannot get paid well when the product they make is not selling. Do you want them to beaver away making thousands of Stannah Stairlifts (and get paid for it) to be stored for 30 years until they are 75 and need to buy one themselves?

In an ideal world, you beaver away and get paid. Yes you pay a modicum of tax to build roads, provide schools & hospitals, defend the country, and throw a bit of bread at needy people (af all ages). Yes you need enough to feed your kids too. And after this, you need a few more shillings for yourself and even more shillings to fund your retirement.

This is only possible if there are people outside the fraternity of working people [like rich oldies] who can provide you with more orders, more work, and a few more shillings in your pocket.

I, and a few million other 'boomers', slaved away producing wealth. We got a good share of it in our wage packet. The government took oodles away to honour the national and welfare obligations, we made enough 'stuff' to meet demand. In addition, a lot of us stuffed some away, too, so that we could have a 'good' retirement and [although admittedly not our main motive] become as minimum a drain on taxpayer resources when retired.

Had we not done that, we would have fuelled more spending, and bigger riches for ourselves and other workers. But boy would we have become an unsustainable load on the next generation.

It is true that my view is the standard economics textbook model (goods and services) and not the accountant's short term model (money in the bank.

One can only marvel why all the people of the world haven't developed the consumer society and aren't all equally rich.

Sadly money, without the production of adaquate goods and services is of little value.



just a note : the use of the words 'goods and services' is the standard usage of economics and has no connotation of a particular type of production or of a particular era.

Tancred

CLAPTON wrote: »

there are indeed many wealthy pensioners largely untouched just as there are many wealthy people below retiring age equally untouched.

and it's not just people over 65 that don't pay NI, it's anyone without an earned income (so a young rich man living off dividends / interest doesn't pay NI ).

some might draw attention to the record low annuity rates, the record low saving rates, a stock market still less that 13 years ago as things that might affect wealthy pensioners adversely.

Well, the issue of whether NI should be integrated into income tax is a different one altogether. Investment income is taxed differently and I don't see any reason why that should change. Quite simply, what I would like to see is tax breaks to be directed in favour of middle and low income pensioners, not the wealthier ones (retired company directors, judges, doctors, senior police officers, airline pilots etc). I don't believe NI should apply to over 65s in the same way as it applies to the under 65s, however the shortfall in the revenue should be made up by the 40% rate kicking in earlier. If that hits workers over 65, so be it - you can't please everyone all the time.

CLAPTON

Tancred wrote: »

Well, the issue of whether NI should be integrated into income tax is a different one altogether. Investment income is taxed differently and I don't see any reason why that should change. Quite simply, what I would like to see is tax breaks to be directed in favour of middle and low income pensioners, not the wealthier ones (retired company directors, judges, doctors, senior police officers, airline pilots etc). I don't believe NI should apply to over 65s in the same way as it applies to the under 65s, however the shortfall in the revenue should be made up by the 40% rate kicking in earlier. If that hits workers over 65, so be it - you can't please everyone all the time.

yes it seems reasonable to tax the richer more than the less rich: however that's broadly what we do already.

If we really want to tax the non-working richer people (i.e. pensioners or idle rich ) more it would seem reasonable to combine NI and tax thus simplifying the system rather than have yet another taxation band just for these sorts of people.

in any event the current system does seems rather odd and obviously dates from when NI was seem as an 'insurance policy' rather than just another tax

Tancred

CLAPTON wrote: »

yes it seems reasonable to tax the richer more than the less rich: however that's broadly what we do already.

If we really want to tax the non-working richer people (i.e. pensioners or idle rich ) more it would seem reasonable to combine NI and tax thus simplifying the system rather than have yet another taxation band just for these sorts of people.

in any event the current system does seems rather odd and obviously dates from when NI was seem as an 'insurance policy' rather than just another tax

Combining tax and NI might work, but it needs to be carefully calibrated so that poorer people relying on investment income don't lose out.

grizzly1911

CLAPTON wrote: »

yes it seems reasonable to tax the richer more than the less rich: however that's broadly what we do already.

If we really want to tax the non-working richer people (i.e. pensioners or idle rich ) more it would seem reasonable to combine NI and tax thus simplifying the system rather than have yet another taxation band just for these sorts of people.

in any event the current system does seems rather odd and obviously dates from when NI was seem as an 'insurance policy' rather than just another tax

Isn't NI contribution used to define entitlement to certain benefits and the accrual rate used to determine state pension entitlement? Not sure it was ever meant to fully fund your own pot.

Continuing to pay NI or an increased tax to include when you are officially drawing against it at stse pension age seems a little like chasing wooden dollars.

Loughton_Monkey

CLAPTON wrote: »

yes it seems reasonable to tax the richer more than the less rich: however that's broadly what we do already.

If we really want to tax the non-working richer people (i.e. pensioners or idle rich ) more it would seem reasonable to combine NI and tax thus simplifying the system rather than have yet another taxation band just for these sorts of people.

in any event the current system does seems rather odd and obviously dates from when NI was seem as an 'insurance policy' rather than just another tax

We could solve this by... er... introducing death duties...

.. large gin & tonics all round...:)

N1AK

Loughton_Monkey wrote: »

Sad, but true.

So we're back to the concept - perhaps - of keeping state pension low (as now), but introduce a compulsory funded scheme on top, for about the same (or even more) than state pension.

Would take 40 years to 'come through' properly. Since no politician can 'think' any longer than the 5 years life of a parliament, any idea such as this is dead in the water!

We've already started to see this kind of thing. The government brought in mandatory opt-out pension schemes after all and the proportion of people on pensions rocketed.

Even if it does take 40 years to fully come through we'll still see partial benefits sooner and we've solved the problem 40 years from now :T

grizzly1911

N1AK wrote: »

We've already started to see this kind of thing. The government brought in mandatory opt-out pension schemes after all and the proportion of people on pensions rocketed.

Even if it does take 40 years to fully come through we'll still see partial benefits sooner and we've solved the problem 40 years from now :T

I doubt I will be here in 40 years time but something tells me the position won't have altered materially.

Those with half decent jobs and careers have usually participated in pension schemes.

For those in the lower paid, temporary, part time jobs it will always be more difficult to make any meaningful provision.


Add that to the loss of public sector pension entitlement through privatisations and poorer employment terms (where the savings are largely made) and for many the position could be even worse.