Inter generational fairness

BobQ

steampowered wrote: »

I am sure this is a factor for some first time buyers, but university and gap years lasting until people are 30? ...............................

If future home buyers take gap years, spend longer at university, take post graduate courses more often and choose to save less for a deposit, spend more on discretionary items it is blindingly obvious that the first time buyers average age will rise.

In defined benefit pension schemes, the employer/sponsor promises a specified payment determined by a formula depending on the employee's earning history and length of employment. The payment has nothing to do with investment returns.

Not in the public sector (which is the model that successive Governments chose). Private sector DB schemes when they exist are pension funds that are invested to fund the pensions. If they are insufficient to fund pensions the employer is required to top make up the shortfall. That is why in the past having DB funds in surplus was a good idea and allowing employers to take contribution holidays was bad.

This type of arrangement has become unsustainable because people are living longer. .

That is an excuse. DB schemes can work if adequately funded. The fact that the ageing demographic requires more funding and employers have chosen not to keep/fund them is the reason for their demise. Not that they are inherently unaffordable.

The payments made to pensioners in a DB scheme is not linked to investment returns. .

I never said they were. The issue is the contributions by employees and employers being enough to fund the obligations.

GreatApe

ukcarper wrote: »

What I don't agree with is that central London is the only place where property is unaffordable.

But central London is affordable so is Kensington. Its not affordable by me or you but it is affordable by others probably primarily people bidding with intergenerational wealth or business wealth rather than you and me with income wealth.

So if central London and Kensington are affordable (which they are) how is anywhere else not affordable?

I do realise this is simply stating if people are buying its affordable which seems simplistic but why does it have to be more complex than that?


Even in your area you cite £300k for a house and that it is unaffordable. How do you come to that conclusion? There is intergenerational and business wealth outside of Kensington too

Thinking fundamentally all existing homes are affordable they can not be unaffordable. Only the allocation of the homes moves about.
New builds on the other hand can be unaffordable (unviable) but second home stock can't.

GreatApe

autumn2012 wrote: »

Im 23 - self employed (tiny income) homeowner, worked since I was 15. We struggle. Got ourselves into debt at age 18 and paying for it now. I dont think some older people realise just how hard it is! By the time you pay for your car, petrol, insurance, childcare, higher housing costs etc your both working full time for practically nothing at the end of it. No pensions etc - cant even think that far ahead. The young (<25) have it tough, no state support (or very little) - get screwed by governments as we dont vote (apparently). Then we hear it - we didnt have it easy in our day... Where 1 wage would keep a family. Modern families have hardly any family time and demanding jobs - work work work all the time and its incredibly stressful. Im not saying that in the 70s80s things were fantastic but atleast boomers benefitted from cheap housing - my MIL house was 17k now worth 140K.. Thats a nice little retirement pot - todays housing you couldnt get that return.

If homes were so cheap in the 1970s why were home ownership levels lower?

The nominal price might have been lower but that did not mean homes were more affordable. Virtually everything else was more expensive in real terms and sometimes even in nominal terms.

Thinking logically the most affordable time for property in the UK was in 2004 which is when homeownership peaked at a little over 70%. Anytime before 2004 might have been cheaper but it was less affordable and this clearly shows in the lower ownership levels before 2004.

Between 2004-2007 things were pretty flat and post 2008 ownership started to fall rapidly primarily because the regulators baned self certified mortgages so prleople who could previously buy with self cert no longer could.

Also I don't mean this in a negative way but you might not be as representative of your age group as you think. Huge sums are flowing from the old to the young to the time of some £200 billion annually on top of incomes they earn.

GreatApe

Houseplant26 wrote: »

I do think the rental market is damaging to the available house stock. I do feel a bit sad about the fact there are lots of buy to let landlords who own multiple properties. If I was in charge I wouldn't allow people to own more than 2 or 3 properties but that's just me. We pay a LOT in rent to a buy to let landlord who owns a significant chunk of my city and this does impact on my and my partners ability to get on the property ladder. This won't be for some time but I'd be happy with a flat as a starter home, and or a love more north. I don't feel I need a lot of 'space' or a lot of stuff, we don't need more than 2 bedrooms and only then is that so we could accommodate a child one day, if we decide to, without having to move.

If the market were truely free I would say you were wrong but there are problems in the planning system and moreso on mortgage regulations.

To that end BTL quantity should be regulated by the tax system. If BTL gets over 20% the second home stamp duty should be increased every 6 months until the private rental sector falls below 20%. Likewise if the sector fell below 10% the second home stamp duty should be reduced to 0% to keep the sector above 10% of the stock as some rentals are vital. In between 10-20% the rate should be set so its neutral.

Right now I feel the additional 3% was a good idea and it will reduce private rentals towards 20% of the stock. The other event change to interest was silly

GreatApe

autumn2012 wrote: »

There is laws against that nowadays. Standard of Living? Having nothing left at the end of the month? Watching what shopping you buy and buying cheap food constantly? Yes some of us have the high life! Whilst some people are paying over inflated rents filling the boomers pension pots. Its common knowledge that boomers have had it better than millenials yet they just wont accept it.

There is a huge spectrum at all ages from very poor to very rich.

The problem I find is that people who think they are perhaps average earners with average families are in fact lower earners will less support than the average. So they don't realise they are in the lowest quarter and think there are in the middle so want the average which is not possible if you are in the lowest quarter. Thus they feel aggrieved when they can't attain the average thinking they are earning average wages when they are not

For instence the average full time male earnings in Birmingham are £592pw and the full time females are £473pw. Combine the two in a household and you have £55,400 annual income. That would be the benchmark on what is an want isn't affordable in Birmingham such a household probably finds life very reasonable maybe even comfortable in brum and can probably afford a decent house. This is before you even consider inheritences gifts and possible years before today when they were saving


I suppose its difficult for some people to accept that they are lower in the wage/asset/intergenerational-wealth than they would have guessed. Personally when I realise this myself I realised why I could probably never afford to buy a house in Kensington or Holland park or Chelsea or even Islington. Even if I have a high wage I simply can't compete with someone with 200 years of intergenerational wealth behind them (even if they have a !!!! job or work for a charity earning nothing they will easily outbid me). It's not the end of the world I just have to buy somewhere else.

BobQ

ruggedtoast wrote: »

No one is saying that boomers had it easy or didn't work for that they have. .........

But.

I agree with much of what you said in the above.

But I think all generations can see the advantages of other generations and wish why not them.

No most boomers didnt go to university but they entered the labour market in a time when most jobs didn't need a degree.

An example in point. Many boomers, however well they did were denied a university education because it was not affordable. I was lucky because I had the ability to pass the academic hurdles, despite the inbuilt disadvantages of a working class upbringing that meant I did not get the support that others did.

Many of my friends had to accept that they started work at 16 or 18. These days most people can go if they want. Jobs did not need degrees, true but many of them were labouring jobs or shop jobs. Others enjoyed some employer training (bank clerks, nursing), but relatively few guaranteed a job in another industry. Some more enlightened employers offered training leading to recognised qualifications.

I felt really privileged to go to uni, but today I see little benefit in doing so, apart for some specialised degrees (medicine, law, science, engineering).

To provide a case in point, there are plenty of older people working at a senior level in the machinery of state and business that ensure that a degree is the minimum requirement for most jobs, who don;t have one themselves.

There is some truth in this, but in many cases it is because employers need properly trained staff but no longer provide the training. Nursing is a good example. Also, many of these people may have entered with A levels into what they then saw as a job for life, and spent two years in a company training scheme, involving college day release. Not a degree but often better than a non-descript degree today. Same is true of the quality apprenticeships that employers once proved, British Gas once trained thousands of them and a 5 year(?) apprenticeship meant that you were a good gas plumber. Not a degree but it set you up for life.

Previously if you wanted to sell a house and get hundreds of thousands of pounds for it, you had to buy a house that cost hundreds of thousands of pounds. But many boomers are quite pleased that the mid terrace they bought as a second rung home in the 80s is worth a quarter of a million, but aren't exactly filling their MPs post bag with angry letters that young couples in exactly the same position as they were, now can't afford anywhere secure to live unless more houses are built.

Also true for some people. But consider that many young people today are quite picky. They have no manual skills and want new houses or fully refurbished ones. My first house was one that I was capable of improving and adding value to.

What they are mostly doing is paying a fortune for education, working in insecure jobs and paying 2/3 of their take home to multiple property owning landlords.

Certainly true for many of them

It would be nice if you could all get behind them a bit more rather than voting in governments that just give them the middle finger every 5 years.

I agree it would be nice. But you need to help these well meaning souls who would never vote Tory or who do so reluctantly. Offer them a party that is well lead, credible and electable.

Cakeguts

autumn2012 wrote: »

Im 23 - self employed (tiny income) homeowner, worked since I was 15. We struggle. Got ourselves into debt at age 18 and paying for it now. I dont think some older people realise just how hard it is! By the time you pay for your car, petrol, insurance, childcare, higher housing costs etc your both working full time for practically nothing at the end of it. No pensions etc - cant even think that far ahead. The young (<25) have it tough, no state support (or very little) - get screwed by governments as we dont vote (apparently). Then we hear it - we didnt have it easy in our day... Where 1 wage would keep a family. Modern families have hardly any family time and demanding jobs - work work work all the time and its incredibly stressful. Im not saying that in the 70s80s things were fantastic but atleast boomers benefitted from cheap housing - my MIL house was 17k now worth 140K.. Thats a nice little retirement pot - todays housing you couldnt get that return.

I don't think you realise that in the 60s and 70s many people could not afford to buy a car and had to use public transport or walk or cycle. You are trying to compare your lifestyle with a car, fridge, washing machine, colour television, with people who couldn't afford to buy these things. Cars, televisions, fridges, freezers, washing machines have got cheaper compared to what people earn. Lots of people didn't own a house and they still couldn't afford to buy anything. They were working to eat.

Ask your MIL how much she earned. It is only a retirement pot if you sell it and then where will she live?

BobQ

autumn2012 wrote: »

Im 23 - self employed (tiny income) homeowner, worked since I was 15. We struggle. Got ourselves into debt at age 18 and paying for it now. I dont think some older people realise just how hard it is! By the time you pay for your car, petrol, insurance, childcare, higher housing costs etc your both working full time for practically nothing at the end of it. No pensions etc - cant even think that far ahead. The young (<25) have it tough, no state support (or very little) - get screwed by governments as we dont vote (apparently). Then we hear it - we didnt have it easy in our day... Where 1 wage would keep a family. Modern families have hardly any family time and demanding jobs - work work work all the time and its incredibly stressful. Im not saying that in the 70s80s things were fantastic but atleast boomers benefitted from cheap housing - my MIL house was 17k now worth 140K.. Thats a nice little retirement pot - todays housing you couldnt get that return.

I can see that the pressure of modern life is stressful and I am not judging you, but questions that come to my mind are....

I could not afford a car until I was 23 and that was an old wreck. Glad you could afford one before then but was it essential.

If you own a home how badly are you really doing, no rent to pay. How are you having higher housing costs? Higher than what?

How did you get into debt at 18 (mortgage?, car loan? credit card?)?

If you have a tiny income why are you paying childcare costs?

I am not sure what help I got at 18 from the state (apart from free university tuition fees). I worked my university vacations in what would now be called minimum wage.

Hosing was not cheap when I was 21, but I could still not afford to buy one, I still had to save for a deposit and interest rates were much higher (albeit tax relief was available). I accept prices and deposits are higher but interest rates are lower. If you have a house I assume you are benefiting from these rates.

You are assuming that because houses are higher than when I was your age, they will not be even higher when you are my age.

All generations can see differences that other generations enjoy and say unfair. But individuals do not control events, economies determine these things. I look at your generation and I think how lucky you that most of you will live past 80 and many past 100 and be in good health. Your working life will be longer and you will be able to build up a pension over a longer time. I never travelled abroad until I was 30 and that was paid for by my employer. I could not afford a washing machine in my first house and had a second hand fridge. I do not think many young people really understand what boomers really had.

GreatApe

Cakeguts wrote: »

They were working to eat.

So few people now understand this. My grandfather would often tell me about how poor they and most working class people were in the 1930s-50s. He would often say 'it is hard to imagine how poor we were and how little we had but no one complained as everyone you knew was just as poor'. He would often tell me about how little they had as a children and always start and finish it with 'it's hard to imagine now'.

many of his stories/memories were about food or the lack of food. And he was right even to this day I'm sure I can't imagine his experiences. I do know that many of his generation were about a foot shorter than my generation so they must have been by modern standards under nourished.

People also seem to forget about quality as well. He had 4 brothers and one sister and they only had a two bedroom house so it was parents in one bedroom 5 children in the other. No gas electric or hot water either (well they probably did have some hot water but a copper bath heated by coal probably only used once a week) due to the difficulty/cost. Mostly hand me downs

This is just two generations ago. Of course their lives did get better as they got older especially for most people in the 1950-1980 period where there was massive improvements in Productivity of factories which meant the poor could finally start to buy stuff like TVs fridges heating cars etc

ess0two

autumn2012 wrote: »

Im 23 - self employed (tiny income) homeowner, worked since I was 15. We struggle. Got ourselves into debt at age 18 and paying for it now. I dont think some older people realise just how hard it is! By the time you pay for your car, petrol, insurance, childcare, higher housing costs etc your both working full time for practically nothing at the end of it. No pensions etc - cant even think that far ahead. The young (<25) have it tough, no state support (or very little) - get screwed by governments as we dont vote (apparently). Then we hear it - we didnt have it easy in our day... Where 1 wage would keep a family. Modern families have hardly any family time and demanding jobs - work work work all the time and its incredibly stressful. Im not saying that in the 70s80s things were fantastic but atleast boomers benefitted from cheap housing - my MIL house was 17k now worth 140K.. Thats a nice little retirement pot - todays housing you couldnt get that return.

Blah,Blah in other words I want straight away what my parents took years to achieve.