The economics of pensions - what should the country do?

lisyloo

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.

This is not universal.
Both my MIL and FIL got social care for free.
This was not at all difficult to get - in fact the social worker and local authority in our area (BANES) seemed to understand that's it's cheaper to keep people well in their own homes rather than in hospital or residential care.


My MIL went to a day center for free where transport (including an escort for the unsteady was provided) she just had to pay for her lunch.
My FIL got a weekly visit merely to take him out for coffee and cake.
So even their wellbeing was catered for to some extent.



In fact I would say they got TOO much money as they both got attendance AND both got carers (and pension credit, council tax benefit). They were getting £600 per week between them.
Both were put in a nice nursing home and had to pay very little (income minus £25).



We did have a complaint when they wanted to put my dying FIL in a differrent home to MIL when neither were fit to travel i.e. split them up after 60 years of marriage We did have to fight for that.


However the benefits were TOO MUCH MONEY and the services they have received have been very good including entertainment.


Not denying your personal experience or the "average".
Just saying it's not a universal experience.

lisyloo

The retirees can build up all the tokens they like (with interest) but if the farmers and fisherman of tomorrow decide they'll only use their productive capacity to feed themselves the retirees will have to go back to work.

So no-one will be willing to sell me goods or services? I don't believe it.

I would agree the price could go up due to demand, but I don't believe there won't be enough people who want to work for tokens.

System

ilovehouses wrote: »

Your example perfectly demonstrates that the kitty of yams and fish is illusory, investment returns & IOUs irrelevant.

They are illusory, but vital, if that paradox makes sense.



For money, property, the economy, liberty, etc to work people have to believe that they are real. If they do, and if society has the necessary moral persuasion or rules to underline that belief, then they exist.


Not quite as securely as a private cache of baked bean tins would provide a pension even if the entire work force died, but with more variety.

Sapphire

lisyloo wrote: »

This is not universal.
Both my MIL and FIL got social care for free.
This was not at all difficult to get - in fact the social worker and local authority in our area (BANES) seemed to understand that's it's cheaper to keep people well in their own homes rather than in hospital or residential care.

My MIL went to a day center for free where transport (including an escort for the unsteady was provided) she just had to pay for her lunch. My FIL got a weekly visit merely to take him out for coffee and cake. So even their wellbeing was catered for to some extent.

In fact I would say they got TOO much money as they both got attendance AND both got carers (and pension credit, council tax benefit). They were getting £600 per week between them.
Both were put in a nice nursing home and had to pay very little (income minus £25).

We did have a complaint when they wanted to put my dying FIL in a differrent home to MIL when neither were fit to travel i.e. split them up after 60 years of marriage We did have to fight for that.

Not denying your personal experience or the "average".
Just saying it's not a universal experience.

I'm very pleased that your relatives' experiences were rather better than mine and friends' of mine. It is heartening to read of it. It may depend on the area you live in (don't know where Banes is, or do you mean Barnes?). However, in the case of my family member, any care has been rather grudgingly given, with much procrastination, and certainly lack of efficiency and speed when rapid care is greatly needed. I don't think my relatives would ever have wanted coffee mornings and the like, since they've always been very private people. In fact, they would have kicked up something of a fuss had anyone tried to take them to such events. I'm amazed that yours got £600 a week between them! That's certainly not the case with mine.

In the latest case involving my family, the person is in desperate need of care (she is now very ill with dementia), since she cannot look after herself and it is dangerous for her to be at home on her own (she is doing things like standing on chairs to 'rearrange' pictures, and worse, and cannot even manage to get dressed in the right clothes, without going into further details). Such a person needs to have specialized care in a home, even though people do come twice a day to cook for her, and all her shopping, washing and so on is done for her by the family, and her cooker is locked after she tried to cook something in a plastic bowl, which melted (very dangerous).

kinger101

ilovehouses wrote: »

It seems like nonsense because you're hung up on pension pots and investment returns when that's not the root cause of the problem.

If you're non-productive you are 100% reliant on the productive to donate some of their production for you to consume. They might want some of your capital or it might be purely charitable. Everyone saving more and having bigger pots just means more money chasing a fixed resource.

The objective from saving is to give yourself a comparative advantage over your peers otherwise there's little point bothering.

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.

There is no wealth pie.

And you've missed the other flaw in the state pension system. As well as aging, populations (particularly with reference to workers) can contract.

MPD

kabayiri wrote: »

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.

It was a bit of a guess on my part but it would be down to how you define each element.

What % should an average worker pay towards their own pension? Do you include NI contributions for SP?

On the PS DB side what do you count as the contribution? Is it whatever is paid out in year for NHS, CSPS etc plus employer contributions for LGPS? Do you deduct employee contributions for NHS et al?

The average worker will include many who are not average. Minimum wage with no pension to company directors using pensions to reduce overall tax liability. Then there are non-taxpayers paying in £2880 from wealth for the tax break, where do they come in?

michaels

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.

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.

Problem is many haven't worked all their lives. Some retiring now probably left uni at 21 and are retiring on a govt db pension at 55, life expectancy 90 means they have only worked 34/90 = about 40% of their working lives so to be fair thy needed to have paid about 60% of what they earned each year as tax to support the previous generation of pensioners (note this does not include tax for other things like the nhs). Do you think when they were working they realised that they were getting a pension benefit worth 1.5 times their gross salary?! Do you think what they did was worth 2.5 times there gross pay?

kabayiri

michaels wrote: »

Problem is many haven't worked all their lives. Some retiring now probably left uni at 21 and are retiring on a govt db pension at 55, life expectancy 90 means they have only worked 34/90 = about 40% of their working lives so to be fair thy needed to have paid about 60% of what they earned each year as tax to support the previous generation of pensioners (note this does not include tax for other things like the nhs). Do you think when they were working they realised that they were getting a pension benefit worth 1.5 times their gross salary?! Do you think what they did was worth 2.5 times there gross pay?

It's a great deal when you think about it, but I also think you miss an added benefits : predictability.

In private sector schemes, there was a serious drop in the annuity a block of money would buy you, from 2000 to 2010 (ish). I think it was 50% from memory.

That could easily affect someone's planning. The PS schemes have a level of predictability which seems much more secure.

If you can plan effectively, you can use the 'now' resources much more efficiently.

Maybe private sector employees should be able to buy into a scheme with PS style benefit?

kinger101

kabayiri wrote: »

It's a great deal when you think about it, but I also think you miss an added benefits : predictability.

In private sector schemes, there was a serious drop in the annuity a block of money would buy you, from 2000 to 2010 (ish). I think it was 50% from memory.

That could easily affect someone's planning. The PS schemes have a level of predictability which seems much more secure.

If you can plan effectively, you can use the 'now' resources much more efficiently.

Maybe private sector employees should be able to buy into a scheme with PS style benefit?

Indeed. With drawdown, the planning also continues into retirement, as one has to decide how much to leave vested in equities, and what rate draw down at.

Sapphire

michaels wrote: »

Problem is many haven't worked all their lives. Some retiring now probably left uni at 21 and are retiring on a govt db pension at 55, life expectancy 90 means they have only worked 34/90 = about 40% of their working lives so to be fair thy needed to have paid about 60% of what they earned each year as tax to support the previous generation of pensioners (note this does not include tax for other things like the nhs). Do you think when they were working they realised that they were getting a pension benefit worth 1.5 times their gross salary?! Do you think what they did was worth 2.5 times there gross pay?

Well, I don't know anyone like that, so I can't really comment on it, though I would probably agree that it doesn't seem 'fair' that some can retire at 55 on those government DB pensions, while others who have perhaps worked much harder and for longer, cannot do so and are often very badly off.

Most of the elderly people I know did not go to university. I didn't myself until I had an established career and paid for my own degree, and I began work at the age of 17 in a variety of interesting but low-paid jobs. None of the people I know retired before the state pension age, and in fact some are still working in their early seventies. Their professions may have been very interesting, but they notoriously did not pay well.