Can the UK afford the state pension?

greenglide

... like north sea gas!

Norway built up a sovereign wealth fund with much of their north sea income. Did we do the same? Of course not, we used it to continue putting off hard decisions needed to fix dying industries. We failed spectacularly at that and look where we are now.

Zola.

Yes clearly - if the UK afford to spend Billions on Trident?

We are taxed to death and ripped off for everything in the UK.

spadoosh

tacpot12 wrote: »

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.

It depends what you mean by afford. I can afford a ferrari, ok a not good one, i wouldnt be able to eat much and i would probably default on my house but technically i can afford one.

The UK can afford state pensions because it borrows a lot of money. You see the people claiming state pensions are unlikely to have ever been close to putting in what they get out. So thats a shortfall or unfunded aspect (around the £5 trillion mark in unfunded pension provisions for just those working now). The government borrows money to pay this. It hopes those not currently recieving pensions can pay enough to offset the difference. A the moment it seems borderline as to how successful this is.

So whilst i believe it can be affordable. The way it is managed at the moment seems to suggest it is far from affordable. If it was affordable and could be funded. I woudlnt have any doubt at what age iwill retire and how much i will recieve. That information has changed twice in the last few years.

antrobus

greenglide wrote: »

... like north sea gas!

Norway built up a sovereign wealth fund with much of their north sea income. Did we do the same? Of course not, we used it to continue putting off hard decisions needed to fix dying industries. We failed spectacularly at that and look where we are now.

Norway has (or had) twice as much oil and gas as the UK. Norway has a population of 5 million, the UK has a population of 65 million. Some basic arithmetic tells you that this means that Norway would have received 25 times more oil and gas revenues per capita. That is a very big difference.

Norway could build up a sovereign wealth fund because its government has run a fiscal surplus of about 10% of GDP in recent years. The UK government has almost always run a fiscal deficit. You can only invest money in a sovereign wealth fund when you have more cash coming in than you are spending.

It helps to know these sort of things.:)

LHW99

Norway built up a sovereign wealth fund with much of their north sea income. Did we do the same? Of course not, we used it to continue putting off hard decisions needed to fix dying industries.

Some dying industries cannot be fixed, for a reason.
Think of the home-based textile industry before the advent of mills, think the UK coal industry.
Many industries die because of changes in what is acceptable socially, what is economic in a wider context, what is environmentally appropriate.
Unfortunately many people are affected by this, and the reactions can be brutal on both sides. Nevertheless, it does not mean those industries could or should be "fixed", rather than replaced by newer industries.

lisyloo

I started work in 1991 and was told not to expect a state pension.
Perhaps not everyone had good advisors but that was 26 years ago, so I'm surprised that others are only just coming round to realise this.

spadoosh

lisyloo wrote: »

I started work in 1991 and was told not to expect a state pension.
Perhaps not everyone had good advisors but that was 26 years ago, so I'm surprised that others are only just coming round to realise this.

Thats great and everything. My issue is can you show me anything on this link https://www.gov.uk/new-state-pension where it says i may not get a state pension. Because thats the advice from the current government.

So right now the advice from the government is that i pay NI contributions in order for me to get a state pension and be able to retire at 67. Are you saying that advice is wrong? If it is wrong should the government be allowed to issue such advice?

At what point do i be miffed that im paying for someone elses pension whilst not getting one myself? How much do i have to pay for other people pensions before its decided they cant take any more money from me especially considering i do not recieve the same benefit?

A_T

lisyloo wrote: »

I started work in 1991 and was told not to expect a state pension.
Perhaps not everyone had good advisors but that was 26 years ago, so I'm surprised that others are only just coming round to realise this.

Who told you not to expect a state pension?

michaels

Interesting there is another piece on the BBC today with startling conclusions such as pensioner households who have made private pension provision on average have higher incomes than those who rely entirely on state pensions.

http://www.bbc.co.uk/news/business-40861225

This is looking like an orchestrated campaign now which begs the question of who is running it and to what end? Obviously it reflects the Labour line re 'inter-generational unfairness' but surely attacking 'rich' pensioners is too close to the political live wire which the Tories tripped in the electoral campaign with their paying for care 'dementia tax' proposals?

With Hammond in charge and looking for an immediate boost to the economy to help with the Brexit slowdown I wold not rule out an announcement on pension provision being switched to pension ISAs this autumn.

Marine_life

LHW99 wrote: »

Some dying industries cannot be fixed, for a reason.
Think of the home-based textile industry before the advent of mills, think the UK coal industry.
Many industries die because of changes in what is acceptable socially, what is economic in a wider context, what is environmentally appropriate.
Unfortunately many people are affected by this, and the reactions can be brutal on both sides. Nevertheless, it does not mean those industries could or should be "fixed", rather than replaced by newer industries.

Doesn't necessarily have to be that way. There needs to be cooperation rather than conflict between the government, those who own the industries and those who work in them. The UK went down the conflict route, Germany went down the cooperation route. We all know how that turned out.