MSE News: State pension to rise by at least 2.5% next April

greenglide

bigfreddiel wrote: »

Actually the increase will be 2.9% the growth in earnings figure.

Cheers fj

Unless the government forgets about that part of the triple lock? It is the bit that many people seem to forget
!

Pincher

1.025 ^ 10 = 1.28
1.025 ^ 20 = 1.64

It's not too bad, I suppose.

Safer to lock the pension liability to a percentage of GDP.

If the world economy nose dives, we will need to ask for volunteers to jump off a cliff. Monty Python was right.

kidmugsy

bigfreddiel wrote: »

Actually the increase will be 2.9% the growth in earnings figure.

Cheers fj

Thanks for that. If we went back to when the triple lock was introduced, and compared triple-lock increases with the alternative of earnings-inflation increases, what would we see? The latter would necessarily be smaller and, in my view, perhaps more reasonable. One problem with triple lock is that at some stage a government will take stock of its cost since introduction, and decide to bin it as just too expensive.

Linking additional pension to earnings inflation would also, in my view, be more defensible than using CPI, though over the years it would presumably negate part of the savings from replacing triple-lock.

hugheskevi

One thing that is never mentioned is that the Basic State Pension would be higher under the uprating policy of Labour (RPI increases with minimum 2.5% as well as various ad hoc increases) compared to Triple Lock.

I calculate that in April 2016 the Basic State Pension will be £119.30. If it had been up-rated by September RPI with a 2.5% minimum it would be £120.00. On that basis, the policy is a fantastic political success, being the holy grail of both politically popular and also being a small saving compared to the baseline.

It would be expected that as earnings increase the level under the Triple Lock would accelerate past the RPI uprated amount, although that assumes the policy will remain.

brewerdave

xylophone wrote: »

People with RPI linked pensions can also lose out if they are receiving their state pension and have GMP.

A relative has RPI linked scheme pension but the GMP part thereof is linked to CPI - there will be no increase to the pre 88 GMP (paid by the state) because CPI is negative and no increase to post 88 GMP through the scheme because CPI is negative.

...as is mine - the overall pension increase that I have just been "awarded" calculates out as 0.44% before tax :eek:- what am I going to do with all that extra cash every month??:rotfl:

JezR

bigfreddiel wrote: »

Actually the increase will be 2.9% the growth in earnings figure.

Yes the final figure for KAC3 (May to July) published today confirms 2.9%. However, there is always some wriggle room on changing the appropriate measure of earnings.

JezR

greenglide wrote: »

It is formally "new State Pension" (nSP) to be precise.

The full nSP rate cannot be less than the Pension Credit single person guarantee which is currently £151.20. Should this increase in the autumn statement then the nSP would have to follow (at least) this rate.

After that the assumption is that the nSP rate would increase by the triple lock, whether the PC rate would do as well is anyones guess.

In law the Pension Credit guarantee figure is related to earnings.

In recent years however it has been set as the same cash figure as the increase in the basic pension, which has been a more generous uprating than the earnings increase would have been. Such an approach this year would be less than the earnings increase, and require a law change somewhere along the line.

N1AK

kidmugsy wrote: »

This may be an unpopular thing to say on this forum, but wouldn't it be more defensible to increase basic (and additional) pension by the inflation in earnings?

I'd happily agree with you, but I'm not a pensioner or soon to be pensioner which appears to be the demographic the Tories focus their vote buying efforts on.

Anyone who supports the triple logic is either financially ignorant or selfish; they either have no idea about how unaffordable and unsustainable it is, or know but don't care because their benefiting from the system before it falls apart.

zagfles

N1AK wrote: »

I'd happily agree with you, but I'm not a pensioner or soon to be pensioner which appears to be the demographic the Tories focus their vote buying efforts on.

Anyone who supports the triple logic is either financially ignorant or selfish; they either have no idea about how unaffordable and unsustainable it is, or know but don't care because their benefiting from the system before it falls apart.

Who says it's not sustainable? We have one of the lowest state pensions in Europe, the pension age is being increased, and state pensions are (in general) being lowered by the new state pension replacing S2P. The Turner report recommended basically what we have now. The IFS haven't sounded alarm bells. They both analysed the figures, do you have a better analysis?

Tax receipts obviously increase roughly in line with earnings, since most are levied on earnings or on spending which rises about in line with earnings.

The stupid, and purely political, part of the triple lock is the 2.5% minimum. The only reason for it is to avoid "peanuts" headlines in the Sun when inflation is low, and so the rise is only enough to buy a bag of peanuts!

The thing brain-dead Sun readers don't seem to comprehend is that increases to the state pension aren't supposed to enable you to buy anything extra, even a bag of peanuts. They're supposed to keep your standard of living the same as last year by increasing the cash value to make up for cash being worth a bit less than this time last year.

But rather than the govt trying to explain this, they pandered to the idiots and set a 2.5% minimum. So when inflation is low, pensioners get a real terms rise, when it's high they don't. There's no logic whatsoever to that.

kidmugsy

zagfles wrote: »

The stupid, and purely political, part of the triple lock is the 2.5% minimum. The only reason for it is to avoid "peanuts" headlines in the Sun when inflation is low, and so the rise is only enough to buy a bag of peanuts!

The thing brain-dead Sun readers don't seem to comprehend ....

That's part of the price of universal franchise democracy, old fruit.