Can the UK afford the state pension?

michaels

Edit: Existing thread on this topic is HERE

AnotherJoe

IMO this should be in the "debate the economy" forum.

MODs?

michaels

AnotherJoe wrote: »

IMO this should be in the "debate the economy" forum.

MODs?

I did think about that and then also about posting it there as well but stuck with posting it here as I am more interested in people's specific thoughts on whether (how) we should be managing our pension provision on the basis that the state pension is uncertain rather than the political/macro-economic issues that they (we) love to discuss on that board.

Lokolo

This is why I don't think the state pension will be much when I eventually get to that age (currently late 20s). I am not relying on it.

However I think the public DB pensions are just as unaffordable (if not more so) and should be stopped ASAP.

Life expectancy's have dramatically changed in the last 100 years, has the tax system changed to keep up with this?

AnotherJoe

If its about managing your pension provision its irrelevant what the government might do in future, you do the best you can and let that be a bonus if you dont believe it will be there when you retire yet it is.

But as has been pointed out here recently when TM had the temerity to sugegst removing the triple lock to a double and means testing fuel payments she was soundly spanked, so politically the only way to manage the issue is to push the dates out, which is alreday underway more than needs be done on the basis of life expectancy.

Anything else is pointless speculation about what might happen in 30+ years time.

A_T

It should have been obvious for a long time that government pensions (by which I mean SP and public sector pensions) were paying out way more than anyone had ever paid in through contributions. But there has always been a reluctance to change things due to political repercussions. Changes should have been made 30+ years ago.

bigadaj

Changes should have started in the nineties or more probably teh eighties.

Politically it's impossible to remove so it's the methodology of reducing financial impact that is up for debate, currently this is purely by raising qualifying age rather than any reduction in benefits, in fact the opposite is occurring whereby pensions are growing more rapidly than wages.

These things are always missed or delayed until it is too late, the next big issue not being addressed is how to deal with large numbers of elderly with care needs, which may or may not include a medical dimension. Paying for this may well put other elderly issues into the shade.

Marine_life

In its current form the UK cannot afford the state pension based on national insurance contributions alone. This means that currently the cost of pensions needs to be subsidised from taxes which of course deprives other areas of funds (e.g. the NHS).

The situation will only get worse as demographic change and increasing life expectancy will continue to increase the cost.

The choices therefore involve some combination of increasing taxes / decreasing cost all of which are politically difficult.

The other solution is to change the demographic mix (e.g. through net immigration) ........ but Brexit has messed that up.

The most likely outcome will be a combination of (A) continual push back of qualifying age (B) Increasing push of auto enrolment (C) Removal of triple lock

Expect there to be a pension in the future but expect its relative value to continue to decline.

tacpot12

Clearly the UK can afford to pay a state pension at a reasonable level because it is already doing so.

Reducing the state pension below a certain level will make it a pointless benefit. It has to provide a living 'wage' to those who cannot work due to age.

The key question is whether the state pension should be a universal benefit paid to all at a common age. Some people retire due to ill health many years before the state retirement age, some due to self-inflicted conditions and others due to bad luck. Some people are fit to do some work after the 'retirement' age. So what is to be done, especially when the majority of citizens are willing and able to make their own provision?

My feeling is that the current solution is a very good one, and that we should not change it. It should remain universal, and the age at which it is paid should be fixed at two/thirds of the common retirement age, e.g. if the common retirement age is 67, then the age it will be paid to 45 years olds will be set (to the value the government actuarial department decides is sustainable) and will not change after this point.

The amount of the pension should be fixed to the cost of living so that it always provides enough to live on, based on the average cost of living across the UK.

Ricardo1980

I don't know the answer to that question, but IMHO, any country that does not take care of its elderly (or teach them how to do it), it's a third world country or a country that should not be classified as rich or first world country.

norsefox

The UK already pays quite a lot less than many other comparable countries, and as such it is clearly affordable. That we choose to spend taxpayers money on HS2 and other white elephants is perhaps a different question.

The ratio of taxpayers to pensioners is clearly going to change over the next few decades and so funding may need to be reviewed.

I suspect that the further automation of jobs, not helped by economic vandalism such as Brexit, will doubtless be a bigger factor which then has an impact on pensions funding.

If only we had some natural resources to sell that allowed us to invest in our futures...