Raising the pension age in order to pay for pensions

MFW_ASAP

CLAPTON wrote: »

NO

economically active mean people who produce the goods and services whilst taxpayers are people who pay tax

Do the people who produce the goods and services not pay tax?

CLAPTON

Loughton_Monkey wrote: »

Whilst from an accounting point of view this may be largely correct, you don't seem to realise the implications.

Had State Pension, and the unfunded public sector schemes, been funded from the start, then do you realise the sheer scale of those accounts? If the UK total national debt, now, is £1.4 trillion, then as a pure wild guess I would estimate we would be talking of Pension Fund = £16 trillion, National Debt £17.4 Trillion.

On the balance sheet, this is the same, but that's not the point. It's the revenue. Had the government recognised the cost year on year (Payments out, less payments in, plus net increase in o/s liabilities) then any pensions problems we have now would have been identified and quantified year by year, and something done about it far earlier.

What do you want to do about the pension problem?
Slash the state pension? raise the state pension age? means test the state pension?
there is absolutely nothing stopping the government from doing those things now: in fact they seem to be doing that now.

Using your own example, but exaggerating, you have a mortgage of £350K and cash of £50K. I have a mortgage of £2 million and equity of £1.7 million. We both earn £50K. Our revenue accounts would show that you can afford your position. I cannot.

I was using the example to illustrate the nonsense of having two pots rather than one.

I'm not entirely sure of the point you are making but you seem to be saying having two pots is actually worse than having one; that would depend in practice on whether the 1.7m was interest/divi bearing etc etc.

CLAPTON

MFW_ASAP wrote: »

Do the people who produce the goods and services not pay tax?

yes indeed and what I wrote was

In general the economically active will also be taxpayers but so will the retired and some young people and even people on JSA etc.

CLAPTON

MFW_ASAP wrote: »

The Norwegian 'Government Pension Fund' currently stands at $1tn. The California Public Employees' Retirement System (CalPERS) currently stands at $247bn. The Civil Service Retirement System (CSRS) stands at $832bn.

As I have already said (and LM has said above), had the UK government been paying into a sovereign fund right from the start, they would have realised just how unaffordable FS pensions were and would have gently adjusted the payouts over a longer time frame, instead of hitting the breaks hard.

we seem to be agreeing on the economics and that funded and unfunded scheme with equal payouts have similar economic consequences.

on the political point that if the figures were more readily available the government might have acted differently then maybe yes or maybe no.

The government has always had access to the forward projections.

In the event, for public sector pensions have been adjusted (downwards) and are now projected to require a little over 1% of GDP after 2020 (I think).

MFW_ASAP

CLAPTON wrote: »

yes indeed and what I wrote was

How will economically inactive young people and even people on JSA pay tax?

CLAPTON

MFW_ASAP wrote: »

How will economically inactive young people and even people on JSA pay tax?

people can have substantial savings interest or investment dividends but they are not actually producing goods and services

Loughton_Monkey

CLAPTON wrote: »

What do you want to do about the pension problem?
Slash the state pension? raise the state pension age? means test the state pension?
there is absolutely nothing stopping the government from doing those things now: in fact they seem to be doing that now.
.....

My point was that accounting for as 'funded' would have quantified problems years and years ago.

Even as early as the 80's or 90's, I would have wanted to see a mixture of (a) recognising the growing annual cost and compensating cuts made in other expenditures, (b) raising pension age much earlier than was done, (c) signalling lower than CPI pension uplifts with stronger urges to 'fund your own retirement', (d) NI income of the higher paid not being put into Serps/S2P but used to strengthen the 'reserves' for minimum pension.

All of these could/would have been done on a very incremental basis over the years. That's exactly why today, we can only talk about things like "slashing", but more importantly (and something I would have thought you'd agree with) match the 'benefits' and liabilities far more closely to the 'tax bill' of each cohort of working men.

As a comparison, look at those Generation X people in their first 15/25 years of their life. They worked. They took home 50%/70% more in real terms than predecessors, and saved somewhat less. When they ultimately retire, they may well be poor in which case a future generation is going to subsidise them more than today's pensioners. That's not 'right'.

CLAPTON

Loughton_Monkey wrote: »

My point was that accounting for as 'funded' would have quantified problems years and years ago.

Even as early as the 80's or 90's, I would have wanted to see a mixture of (a) recognising the growing annual cost and compensating cuts made in other expenditures, (b) raising pension age much earlier than was done, (c) signalling lower than CPI pension uplifts with stronger urges to 'fund your own retirement', (d) NI income of the higher paid not being put into Serps/S2P but used to strengthen the 'reserves' for minimum pension.

All of these could/would have been done on a very incremental basis over the years. That's exactly why today, we can only talk about things like "slashing", but more importantly (and something I would have thought you'd agree with) match the 'benefits' and liabilities far more closely to the 'tax bill' of each cohort of working men.

As a comparison, look at those Generation X people in their first 15/25 years of their life. They worked. They took home 50%/70% more in real terms than predecessors, and saved somewhat less. When they ultimately retire, they may well be poor in which case a future generation is going to subsidise them more than today's pensioners. That's not 'right'.

the main problem; if there is a problem is whether we can produce enough

the secondary issue is how we distribute the goods and services

pension rules and funded/unfunded schemes affect the distribution of GDP but not in general the total of the good and services (GDP) produced.

MFW_ASAP

CLAPTON wrote: »

people can have substantial savings interest or investment dividends but they are not actually producing goods and services

You're not allowed to claim JSA if you have more than £6k in savings, and the interest on £6k in savings (especially these days) won't come close to the £9k threshold.

Economically inactive young people would have to have savings of £450k (assuming 2% interest rates) before they paid tax.

Given the above facts, aren't taxpayers and 'economically active people' one and the same?

CLAPTON

MFW_ASAP wrote: »

You're not allowed to claim JSA if you have more than £6k in savings, and the interest on £6k in savings (especially these days) won't come close to the £9k threshold.

Economically inactive young people would have to have savings of £450k (assuming 2% interest rates) before they paid tax.

Given the above facts, aren't taxpayers and 'economically active people' one and the same?

I don't really want to debate the details of the tax or benefits system as they aren't relevant to the macro-economic issues of funded and unfunded pension schemes.


however economic inactive include all people who do not work


- retired people (many of whom pay tax but some don't)
-JSA may well pay tax as JSA is a taxable benefit e.g. if they worked in a well paid job for part of a tax year that might have used their total tax free allowance i.e. more than £9440 so their JSA, interest on savings and dividends would then be taxable
-people (young, old and in between) may have an inheritance of millions and so pay tax on their interest even if they have no earned income
-I believe income contingency JSA has no saving limit applied but in truth I am not sure


so no, taxpayers and the economically active are not one and the same