The economics of pensions - what should the country do?

michaels

ilovehouses wrote: »

You can't invest your way to a decent retirement if everyone else is doing the same. Doesn't matter if every pensioner has £200k or £500k - they're all still trying consume whatever productive members of society are producing. If more money is chasing the same resource the price goes up.

It's a competition - I save because I'll be wanting to out compete my retired peers. It's in my interest for them to save just enough to keep themselves off benefits.

You end up in the same place. If you're non productive you're reliant on the productive for your consumption. Currently the productive are more generous than they've ever been - I doubt the welfare burden has ever been so high.

Pots don't pay state pensions - the generosity of the young does. As always.

Only in a closed economy, in an open economy you can invest abroad and thus have a claim over what some foreign country produces in the future.

kinger101

ilovehouses wrote: »

You can't invest your way to a decent retirement if everyone else is doing the same. Doesn't matter if every pensioner has £200k or £500k - they're all still trying consume whatever productive members of society are producing. If more money is chasing the same resource the price goes up.

It's a competition - I save because I'll be wanting to out compete my retired peers. It's in my interest for them to save just enough to keep themselves off benefits.

You end up in the same place. If you're non productive you're reliant on the productive for your consumption. Currently the productive are more generous than they've ever been - I doubt the welfare burden has ever been so high.

Pots don't pay state pensions - the generosity of the young does. As always.

I'm sorry, but this is essentially nonsense.

Sapphire

michaels wrote: »

Problem is that it appears that a small subset may have gamed the system with free university education and db pensions that turned out to be very generous given increasing life expectancy. So probably there is not intergenerational unfairness in aggregate but there is for some.

The fact is that most people didn't go to university when current pensioners were young, and most do not have DB pensions. I know many pensioners who are very badly off, and not wealthy, as is commonly portrayed (the 'early retirees' visiting these forums are probably exceptions to the rule rather than the norm). However, they do not complain as do younger people, partly because they are made of sterner stuff than the current young, and partly because they are trying to survive under difficult circumstances and do not have the power to stand up for themselves. Because of that, they are being attacked with impunity as a group by various factions, often taken advantage of, and not being given the care that they should be given in a society that perceives itself as 'caring' about all sorts of trendy 'causes'.

As discussed earlier, the trend to portray the elderly as in some way 'evil' and to be discarded (in many instances after a long and productive life) is pure evil in itself. Because the old are largely defenceless (many of them are frail and ill), they are considered fair game for money grabbers of all kinds, and are often not provided with adequate care. It is shameful. A society that won't help vulnerable and frail people, and appears to value its old less than any (generally much poorer) generations before this one, doesn't deserve to survive, in my view. :mad:

For information, a person with dementia, for example, is not a 'thing'. The one person who has dementia in our family has lost memories and continuity of thought. She mistakes her long-dead father for her more recently dead son, for example. However, all the demons that have plagued her throughout her life (mostly due to traumas sustained during the war) have largely dissipated, and she is more at peace now than she has ever been. She can't do anything for herself, but she is still a being who feels emotions and deserves to be treated decently by society, not least for what she has put into it in general.

lisyloo

The only flaw in the state pension system is expectation. We've gone from expecting society to prevent starvation for a handful of years for those fortunate enough to live to retirement age to expecting to spend 30% of our lifespan in relative comfort on the output of the productive.

Agree with the thrust but if your a man with retirement age of 67 and life extancy of 79 then I'd make that 15% of lifespan.(19% for women).
Still an increase in both lifestyle, span and number of people acheiving it.

Thrugelmir

michaels wrote: »

Only in a closed economy, in an open economy you can invest abroad and thus have a claim over what some foreign country produces in the future.

There's a very good easy read.

How an economy grows and why it crashes. (Schiff and Schiff).

A reflection of post war Keynesian economic policy. Using inflation as a major political tool.

kabayiri

MPD wrote: »

...
If the average worker is paying more to fund PS DB pensions than they are into their own pension then that is poor planning on the part of the average worker.

I know some young people who are grads. They have the student debt to pay; most are renting; and salaries in the team leader roles are 22K - 25K at best really up here.

I'm not sure planning features at this level, or is more about priorities?

With house deposits in the tens of thousands, do you devote most savings to trying to get a house over a pension?

The returns on the private sector schemes at the lower levels have been pretty poor.

If you earn the national average wage does this change the equation that much?

I'm trying to look at the situation going forward, rather than back.

kabayiri

ilovehouses wrote: »

...
The taxpayer has never looked after unproductive members of society so well.

https://www.parliament.uk/business/publications/research/olympic-britain/incomes-and-poverty/cheaper-in-those-days/

http://www.web40571.clarahost.co.uk/statepensionage/SPA_history.htm

I would agree that today's pensioner has a lot of support, but are we at the stage of a peak?

System

kinger101 wrote: »

I'm sorry, but this is essentially nonsense.

No, it's spot on and at the heart of any meaningful debate about how to provide pensions.


Imagine a small self-contained island economy entirely managed by a committee of the islanders.
They are self-sufficient in fish and coconuts and yams, and have no imports or exports.
When a person reaches 70 he retires, and then contributes nothing to the economy until he dies aged 80.


The question is how to provide for the old people.
There needs to be a way of securing each old person's entitlement to a contribution of food etc from the working population, regardless of any family attachments. This is in essence a pension.


How you make that binding is immaterial. You could do it purely by moral persuasion, or you could have a system of "contributions" over working years resulting in a "pot" of accumulated intitlements, "invested" in the village plots or the fishing boats, and then at age 70 the "investments" would pay out food etc.


There is no need for the economy to grow for that to be sustainable, but if it did, eg fish became more abundant, or they invented better farming methods, then the "growth" would be apparent in larger "investment funds" and there would be more to share out of the kitty.


A pension fund is no more than an IOU drawn on future generations. It has no intrinsic value. If all the workers died then the "investments" would be worth nothing.

Sapphire

kabayiri wrote: »

I would agree that today's pensioner has a lot of support,

This is not the case. The average pensioner does not have 'a lot of support'. We've found that from personal experience with (monetarily poor and frail) members of our family, where we've experienced procrastination and obfuscation at every step with the local (Lambeth) council, despite the people being in desperate need of help. That's also been the experience of others we know. I dread to think what happens to those elderly and defenceless people who have no family, or whose family does not want to know.

And in care homes it seems that 'care workers' are employed on the cheapest terms possible. So they are often low-grade workers from abroad, with no connection to those they are supposed to be looking after and no understanding of their lives, coupled with substandard experience for such a difficult job, which should be done by sympathetic, trained local professionals. There have been enough cases with regard to this issue, but it has been shoved underneath the carpet as just another 'inconvenient truth'.:mad:

We should first be looking after our own, most of whom have been contributors all their lives, before we 'help' anyone else.

Those who so hideously complain about elderly people seem to ignore the fact that they too will get to that stage sooner than they imagine they will. I hope they will reap what they've sown and enjoy the results of their efforts.

kabayiri

Sapphire wrote: »

This is not the case. The average pensioner does not have 'a lot of support'. We've found that from personal experience with (monetarily poor and frail) members of our family, where we've experienced procrastination and obfuscation at every step with the local (Lambeth) council, despite the people being in desperate need of help. That's also been the experience of others we know. I dread to think what happens to those elderly and defenceless people who have no family, or whose family does not want to know.
...

I agree with much of what you say. I suppose my point on support is that there are still quite good Cancer support programs for older people.

However, some cancers are not set to peak until the 2020s, and coupled with dementia and obesity we are probably going to look at this period and see it as a peak.