Huge cuts or tax rises needed to pay for ageing population

Bantex_2

smartn wrote: »

Currently I see no reason not to retire early, blow my pension fund, pass my money on to the kids and make sure the state picks up the tab for me in my later stages of life.....

Take out a few loans as well. Seems to be what our leaders wish us to do.

wotsthat

smartn wrote: »

Currently I see no reason not to retire early, blow my pension fund, pass my money on to the kids and make sure the state picks up the tab for me in my later stages of life.....

...but you won't do that though will you?

That's because the thought of being reliant on the state for your every need probably fills you with dread.

People who put themselves in this god-awful position are playing Russian Roulette and hoping that the future taxpayer is a) willing to fund them and b) has the money even if they're willing.

mystic_trev

wotsthat wrote: »

...but you won't do that though will you?

That's because the thought of being reliant on the state for your every need probably fills you with dread.

People who put themselves in this god-awful position are playing Russian Roulette and hoping that the future taxpayer is a) willing to fund them and b) has the money even if they're willing.

Indeed. As this article says…

As we head towards the 2014 Budget, some commentators are worried that we will need a few years more austerity. They are wrong: we will need decades more austerity.

Government after government in almost every country in the world has piled up future commitments without setting aside any funds to meet those commitments. This is the characteristic of so-called pay-as-you-go pensions and health provision. The working generation goes to the ballot box to vote itself pensions and health entitlements without putting any money aside to meet these future obligations. Instead, the next generation of workers is expected to meet the cost, just as today’s elderly expected to receive their pensions and healthcare from the taxes of the working generation that followed.

This Ponzi scheme works as long as the birth rate is high enough to produce enough taxpayers, life expectation does not increase and the cost of providing healthcare does not continually outpace economic growth. Unfortunately, none of those three conditions have been met and we are in deep trouble.

http://www.telegraph.co.uk/finance/comment/10694647/We-will-need-decades-of-austerity-not-years.html

Generali

mystic_trev wrote: »

Indeed. As this article says…

This Ponzi scheme works as long as the birth rate is high enough to produce enough taxpayers, life expectation does not increase and the cost of providing healthcare does not continually outpace economic growth. Unfortunately, none of those three conditions have been met and we are in deep trouble.

This of course is the problem that we see in Japan now.

A depressed economy and a rapidly aging population has made it very hard for the economy to recover from the doldrums. As a result, young people don't feel safe in their jobs and so don't have so many kids or, perhaps, any kids at all. That makes the problem even worse and self perpetuating.

Countries like Italy and Germany in Europe may well be staring down the barrel of this gun. Luckily the UK has a birth rate at about replacement, mostly due to immigrants having more kids than locals.

the_flying_pig

longer-term we need to move towards stronger acceptance that 'ordinary' people [who by definition in their livetimes have already taken more out of the state than they've put in, whatever nonsense to the contrary that they might think] should have to use housing equity to pay for their own care.

there's no moral case for someone who's already taken more out of the state than they've put in to get another huge handout just to ensure their kids' inheritance remains fully intact.

CLAPTON

Generali wrote: »

Australia was amazingly forward looking in setting up the Super scheme so liabilities aren't accruing at anything like the rate seen in other countries and the Future Fund to pay for existing liabilities. The Future Fund isn't there yet but it is getting there. The average Australian that invests with the company I work for should have a super pot equivalent to about 10x their final salary or thereabouts. That's our target for them. That means the average Australian couple would retire with a pot of $500,000 which is pretty good.

Of course the idiot Labor Government couldn't help but raid it when a combination of tax rises and borrowing wasn't enough to fund their profligacy and corruption (e.g. link, link, link, link, link) but thankfully most of it remains.

do you see the future problem of the aging population as a monetary problem that can be solved by more saving now

or a resource problem that there wouldn't be enough people of working age to produce the goods and services needed? (that can of course can be solved by immigration)?

bugslet

michaels wrote: »

Of course the reality is that the state pension will be means tested so those who have .made their own provision will lose out.

smartn wrote: »

It's an interesting prospect. It wont go down well if those that have been paying NI contributions for 40+ years end up with nothing because they saved and the ones who have wasted all there cash end up with a state pension.......

I also inhabit a forum which is basically comprised of middle-aged ladies, I'm guessing mostly white middle ish class.

Following on from the death of yet another friend who failed to make it to pension age, I posed the question of spend now or save for later. I'm in the latter camp usually ( 7 holidays in 30 years is the clue;)), but recent events had me pondering on the wisdom of the approach.

The thread moved around to the subject of pensions and savings for old age, there was very much a theme running through that said, spend it now because people forsee that if they save, they will be penalised. Along with the perception that the goal posts keep moving and promises made have not been kept, it became clear that a lot of the ladies had pretty much given up on thinking about pensions.

I think they represent an average person that doesn't have a great interest in personal finance. Coming on here and the pensions board has made me an 'expert' on the other forum, whereas here I more of a numpty.

princeofpounds

Countries like Italy and Germany in Europe may well be staring down the barrel of this gun. Luckily the UK has a birth rate at about replacement, mostly due to immigrants having more kids than locals.

I'd also contend that one of the major things that suppresses the birth rate of british people is insecurity of tenure (ASTs) and the high cost of housing generally. Many people only feel secure enough to have a family when they own a property. If your average buyer is doing that in their 30s rather than their 20s you simply have less time and less chances to have children.

cells

It isn't that huge or that new a problem

every sigle year the old grow in number so it is a gradual process. Generally what pays for it is improvements in productivity meaning lesa persons and less hours to do other tasks.

Growing food went from about 50% of the workforce to now closer to 1%
Manufacturing has gone from over 20% to 10% now and this woll continue to fall
Existing services also get more productive


having said that, of course we would be even more wealthy as a nation with a lower fogure of old to young but it isn't the difference between ubtold riches and abject poverty

lostinrates

wotsthat wrote: »

...but you won't do that though will you?

That's because the thought of being reliant on the state for your every need probably fills you with dread.

People who put themselves in this god-awful position are playing Russian Roulette and hoping that the future taxpayer is a) willing to fund them and b) has the money even if they're willing.

There is a current thread on marriages forum where some one is essentially asking for advice on how to deprive himself of assets for the future.


These crop up fairly regularly. People are brave and see what they are doing as justifiable. No one wants to accept what they are doing is not right......its all something to do with it being the fault of some posh geezers duck house or moat.