Raising the pension age in order to pay for pensions

Tancred

CLAPTON wrote: »

a great many older people are fully capable of working:

in any event if one sees the problem as a tax issue rather than a GDP issues then taxing the richer more whether they be over or under 65 will solve the problem;
if the problem will be a shortage of people contributing to the income of the country (GDP) then tax changes of themselves won't help much.

Given the large number of immigrants and the relatively healthy birth rate there isn't a big problem with any shortage of workers. Countries like Germany, Italy and Japan are in a much worse position. What I'm trying to say is that there is an increasing number of wealthy pensioners who have been untouchable so far, and that needs to change. I'm all in favour of people over 65 not paying NI, but that needs to be offset by the higher tax rate biting much lower in the income scale.

JWF

coastline wrote: »

What happens if the trend in private renting ends up at 50% private renting and 50% ownership.
Only 20%..?? were owner occupied in the early 1900's.
Whos going to pay the £500-£1,000 a month rents on these homes....the government are happy to do it now even with a £25,000 a year benefit cap.
We could end up with a situation where monthly rent is higher than the state pension for millions of people...benefits through the roof.

If there is a large proportion of property rented in an area, and a large proportion of that is paid for by HB, the surely there comes a point where the level of HB paid effectively sets the market price for property - unless investors/BTLers are willing to take increasingly small returns, or the renters are able to magically produce money from elsewhere to make up the difference??

CLAPTON

Tancred wrote: »

Given the large number of immigrants and the relatively healthy birth rate there isn't a big problem with any shortage of workers. Countries like Germany, Italy and Japan are in a much worse position. What I'm trying to say is that there is an increasing number of wealthy pensioners who have been untouchable so far, and that needs to change. I'm all in favour of people over 65 not paying NI, but that needs to be offset by the higher tax rate biting much lower in the income scale.

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.

grizzly1911

CLAPTON wrote: »

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

.

The young rich man wouldn't accrue a future state pension.

N1AK

Graham_Devon wrote: »

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.

Sounds about right but perhaps I'm in the minority in thinking that if I want to have an extended retirement I should be expected to pay for it myself?

Instead of increasing taxation I would much prefer that the government set a fixed, affordable, expectation for the public pension. x% of median income from x% of life expectancy with the option to pull forward or delay by changing payments to keep same average cost.

If you work in a profession where working to 70 may be difficult (at best) then there are already two options:
1/ Put enough aside to fund an early retirement.
2/ Expect to move to a less physically demanding role in later life.

Now the biggest issue with this is that people don't think long term enough to value pensions until it is too late. I'm not confident this can be solved by education unfortunately, and I don't like the idea of everyone paying more tax to make up the pensions of people who spend everything during their younger life; an alternative would be that the government mandates saving for retirement.

You could meet with a government advisor every 5 years who would look at your long term financial 'plan' and if it isn't sufficient (you won't be able to afford to live in retirement at the likely date you need to retire) they could mandate that you must save x% of income until your next session.
I wouldn't be entirely against allowing people to opt-out of the process in return for accepting you will get no additional help. My concern there is that people will do what they currently do and stick their head in the sand and try and forget about it.

N1AK

Had a slightly different idea.

How about instead of obfuscating the state pension so much we make it more personal and teach people about it. When someone is born they get a state pension account. Each year the government would increase the balance by some amount (probably about £2,500 adjusted for inflation) and people could use it like a normal pension to state the age they want to retire and expected pension. The balance would earn 'interest' based on a measure (a sustainable one).

This would mean everyone would have their own pension from the start and understand the idea of planning for retirement. It could be covered in school etc. Balances from other pensions could be pulled in via APIs to show how they are increasing your potential pension.

Loughton_Monkey

N1AK wrote: »

Had a slightly different idea.

How about instead of obfuscating the state pension so much we make it more personal and teach people about it...

Our "Nanny State" has been trying for years to "teach" us what's best for us. Apart from being (often) contradictory, the main problem is it doesn't work.

I have long advocated, for pensions, a more rigorous and common sense approach. It is based upon "joining up" relevant government departments to issue annual statements to every tax payer. It requires little or no information more than they already have.....

1. A statement of number of NI payments/years entitlement towards the 30 you need. E.g. "you have 12 years qualifying contribution years, meaning you have accrued 40% entitlement to state pension currently valued at £5,728.....

2. A statement of total earnings to date, together with a statutory minimum %age that would be assumed to have been invested in pensions for calculation of benefits. E.g. "Over 12 years, you have earned £213,187. Based upon an assumed 8% payment to private pensions, and 5% cumulative growth, we would nominally expect that you have accrued pension rights to the value of £17,425......

Your very last statement before retiring would essentially give you the exact annual state pension, and the exact private pension that you could have accrued based upon nominal, conservative, reasonable contributions for your salary profile. The 'killer' words would be..... "We will assume, therefore, that your annual income, for the purposes of calculating any benefits entitlement, is the higher of (a) £24,975 or (b) what you are actually receiving."

Such an approach melds in with "Nest" where every opportunity has now been made to "educate" people that they should be making their own provision together with their employer. This is hardly draconian given that every individual would have had about 40 written 'notices' and 40 'opportunities' to do the right thing and avoid poverty in retirement. What more 'education' do they need?

N1AK

Loughton_Monkey wrote: »

Such an approach melds in with "Nest" where every opportunity has now been made to "educate" people that they should be making their own provision together with their employer. This is hardly draconian given that every individual would have had about 40 written 'notices' and 40 'opportunities' to do the right thing and avoid poverty in retirement. What more 'education' do they need?

As I said, ultimately the issue is that we think the issue can be solved by education and what people 'should' do. We know, no matter how much information we give people there is a proportion who won't save for retirement.

One answer is something like you are proposing, the "you made your bed now sleep in it" answer. The issue with that answer is that a considerable proportion of the population will invariably end up in that position and some, myself included, don't believe it is right to allow people to starve or freeze to death even when it is largely their past actions that have led to it. It is also extremely unpopular politically because so many people will not save enough or be friends or family of people left in poverty, thus it won't happen and even if it did it would quickly be repealed.

We're going to wind up providing the elderly with enough cash to live off regardless of how !!!!less they were, so the only effective option left is to 'force' people to save for retirement so the rest of us don't have to pay for it instead.

New_and_Improved_Me

It’s simple concept 'Plan your retirement'.

Decide what age you want to retire and work/save for it.

BUT (and there is always a but J )

What happens to:-

All those that are on the dole?

All those that live hand to mouth?

All those that are too stupid to plan?

The ‘State’ will always be used as a ‘Free meal’ by some, you cannot change that.

Thus the hard working or just working class will always have to keep paying more and more tax.

I firmly believe that each individual should be responsible for planning their own retirement.

Unfortunately, most are incapable of doing this for one of the reasons mentioned above.

EDIT - If I had a time machine, I would stop all state pensions, educate EVERY young person at the age of 20 that they need to save for retirement.

let the individual reach pension age, if they did not save enough, let them suffer for 1/2 year, then send them back to when they were 20. J

If only J

Loughton_Monkey

New_and_Improved_Me wrote: »

It’s simple concept 'Plan your retirement'.

Decide what age you want to retire and work/save for it.

BUT (and there is always a but J )

What happens to:-

All those that are on the dole?

All those that live hand to mouth?

All those that are too stupid to plan?

The ‘State’ will always be used as a ‘Free meal’ by some, you cannot change that.

Thus the hard working or just working class will always have to keep paying more and more tax.

I firmly believe that each individual should be responsible for planning their own retirement.

Unfortunately, most are incapable of doing this for one of the reasons mentioned above.

I guess the taxpayer needs to pick up basic state pension.

Charities should pick up any balance. We all [well some I suppose] give money to charity. Helps us to target our benevolence to those we feel are "worthy causes". A sort of 'ongoing referendum' to determine where sympathies lie. There must be some who have sympathy with the above, even though you and I don't....