The demise of the triple lock.

pafpcg

hugheskevi said:

Some social research on attitudes to triple lock published yesterday, at this link.

Based on a poll of 2,000 adults the key findings are:

1.  That the results of any survey reflect what the organisation which paid for the survey wants the results to show!

By changing the way the question is posed, the results can be manipulated.  The only surveys which can be relied upon publish the questions asked.   I'm sure AJBell would wish to see pensioner income maintained at as high a level as possible because that's where much of their client base is.  But then I'm just an old cynic...

woolly_wombat

itwasntme001 said:

woolly_wombat said:

itwasntme001 said:

hugheskevi said:

Some social research on attitudes to triple lock published yesterday, at this link.

Based on a poll of 2,000 adults the key findings are:

1. Almost a third (30%) of UK adults say breaking the manifesto pledge would be ‘unacceptable’
2. There is a clear generational split over the policy, with people over 55 twice as likely to deem breaching the commitment unacceptable compared to those aged 18-34

Key findings regarding tax increases are:

1. Around a quarter (26%) say it would be unacceptable if the Conservatives broke their manifesto promise to not increase VAT or National Insurance rates
2.   Just under a quarter (23%) say breaking the manifesto pledge not to raise income tax rates would be unacceptable

Other key points noted in the article:

1. Based on Office for Budget Responsibility average earnings and inflation forecasts, the flat-rate state pension could rise by over 21% by 2022
2. By contrast, average earnings are expected to increase by 9.7% over the same period

21% vs. 9.7%.  I call that 1-0 to the baby-boomers.  And another clear piece of evidence of the generational inequality.

.
You are conveniently overlooking the 1980 Social Security Act, which removed the link between a person's average earnings and the increases in the State Pension.

The triple lock was a long overdue attempt to redress the balance.

And you have provided further evidence of the generousness of pensions for the current retirees (as triple lock was introduced in 2011), RELATIVE to the previous generation.  Question remains if it will be as valuable for the next generation of retirees, already it is not given state pension age is set to increase for younger people.

Thank you.

.
It certainly won't be as generous for the next generation if you and your ilk are baying for blood over the perceived unfairness.

Take care not to be the architect of your own collective misfortune.

itwasntme001

woolly_wombat said:

itwasntme001 said:

woolly_wombat said:

itwasntme001 said:

hugheskevi said:

Some social research on attitudes to triple lock published yesterday, at this link.

Based on a poll of 2,000 adults the key findings are:

1. Almost a third (30%) of UK adults say breaking the manifesto pledge would be ‘unacceptable’
2. There is a clear generational split over the policy, with people over 55 twice as likely to deem breaching the commitment unacceptable compared to those aged 18-34

Key findings regarding tax increases are:

1. Around a quarter (26%) say it would be unacceptable if the Conservatives broke their manifesto promise to not increase VAT or National Insurance rates
2.   Just under a quarter (23%) say breaking the manifesto pledge not to raise income tax rates would be unacceptable

Other key points noted in the article:

1. Based on Office for Budget Responsibility average earnings and inflation forecasts, the flat-rate state pension could rise by over 21% by 2022
2. By contrast, average earnings are expected to increase by 9.7% over the same period

21% vs. 9.7%.  I call that 1-0 to the baby-boomers.  And another clear piece of evidence of the generational inequality.

.
You are conveniently overlooking the 1980 Social Security Act, which removed the link between a person's average earnings and the increases in the State Pension.

The triple lock was a long overdue attempt to redress the balance.

And you have provided further evidence of the generousness of pensions for the current retirees (as triple lock was introduced in 2011), RELATIVE to the previous generation.  Question remains if it will be as valuable for the next generation of retirees, already it is not given state pension age is set to increase for younger people.

Thank you.

.
It certainly won't be as generous for the next generation if you and your ilk are baying for blood over the perceived unfairness.

Take care not to be the architect of your own collective misfortune.

That is a little aggressive and harsh don't you think?  My posts are never meant to create any resentment towards the retiree generation.  I was merely pointing out how I see things.  I suppose given the typical age range and circumstances of the posters on this forum, I do not stand much of a chance in terms of debating these sorts of issues.  But at least I have explained myself in a calm and logical manner.

squirrelpie

itwasntme001 said:

And you have provided further evidence of the generousness of pensions for the current retirees (as triple lock was introduced in 2011), RELATIVE to the previous generation.

Eh? The triple lock applies to all [state] pensions in payment, not just those who have retired since 2011. And there's no real difference between somebody who retired in 2010, 2011 or 2012 as far as 'generations' goes!?

itwasntme001

squirrelpie said:

itwasntme001 said:

And you have provided further evidence of the generousness of pensions for the current retirees (as triple lock was introduced in 2011), RELATIVE to the previous generation.

Eh? The triple lock applies to all [state] pensions in payment, not just those who have retired since 2011. And there's no real difference between somebody who retired in 2010, 2011 or 2012 as far as 'generations' goes!?

Yes I understand all that.  In general the baby boomer generation will have benefited more from it because they generally started retiring around the time of the triple lock introduction.  However the post-war generation retired started retiring a whole generation earlier and would have for the most part been under the old, less generous scheme (and later years been under the triple lock system).

It is obviously unclear how the millennial generation will fair in terms of state pension but clearly deferring the age that it starts will certainly happen.

squirrelpie

itwasntme001 said:

Yes I understand all that.  In general the baby boomer generation will have benefited more from it because they generally started retiring around the time of the triple lock introduction.  However the post-war generation retired started retiring a whole generation earlier and would have for the most part been under the old, less generous scheme (and later years been under the triple lock system).

You don't seem to understand what you're talking about. Baby boomers ARE the post-war generation, caused in part by the war. And yes, the earlier generation that were alive during the war (WWII that is) will have spent time under the earlier scheme and will have seen their pensions eroded by that blatantly unfair scheme. But I hope you're not suggesting that is a reason not to correct that unfairness. If anything they should receive extra compensation.

itwasntme001

squirrelpie said:

itwasntme001 said:

Yes I understand all that.  In general the baby boomer generation will have benefited more from it because they generally started retiring around the time of the triple lock introduction.  However the post-war generation retired started retiring a whole generation earlier and would have for the most part been under the old, less generous scheme (and later years been under the triple lock system).

You don't seem to understand what you're talking about. Baby boomers ARE the post-war generation, caused in part by the war. And yes, the earlier generation that were alive during the war (WWII that is) will have spent time under the earlier scheme and will have seen their pensions eroded by that blatantly unfair scheme. But I hope you're not suggesting that is a reason not to correct that unfairness. If anything they should receive extra compensation.

What I meant by post war generation was in fact the silent generation i.e. the parents of the baby boomers.  How do you define fair when it comes to state pensions?  All I am stating are the facts, that the baby boomer generation have had the advantages of being under the triple lock system and will almost certainly be getting their state pension at a younger age than the millenials will.  Why is it fair that the baby boomer generation gets it earlier?

How do you define fair exactly?  Do we really know the cost of funding the state pension year to year, generation to generation?  It certainly has increased a lot, especially over recent years.  Why is an unfunded scheme that is costing more and more continuing to be promise the triple lock?  Why will the millenials need to accept to get their state pension at a late age to pay for it?

Do you understand how to put a value to pension schemes such as the state pension or db pensions?  Do you understand how discounting works and what the implications are of real interest rates being negtive?  Do you even know what reinvestment risk is?  I suspect not.  A lot of people seem to be so naive....

crv1963

itwasntme001 said:

squirrelpie said:

itwasntme001 said:

Yes I understand all that.  In general the baby boomer generation will have benefited more from it because they generally started retiring around the time of the triple lock introduction.  However the post-war generation retired started retiring a whole generation earlier and would have for the most part been under the old, less generous scheme (and later years been under the triple lock system).

You don't seem to understand what you're talking about. Baby boomers ARE the post-war generation, caused in part by the war. And yes, the earlier generation that were alive during the war (WWII that is) will have spent time under the earlier scheme and will have seen their pensions eroded by that blatantly unfair scheme. But I hope you're not suggesting that is a reason not to correct that unfairness. If anything they should receive extra compensation.

What I meant by post war generation was in fact the silent generation i.e. the parents of the baby boomers.  How do you define fair when it comes to state pensions?  All I am stating are the facts, that the baby boomer generation have had the advantages of being under the triple lock system and will almost certainly be getting their state pension at a younger age than the millenials will.  Why is it fair that the baby boomer generation gets it earlier?

How do you define fair exactly?  Do we really know the cost of funding the state pension year to year, generation to generation?  It certainly has increased a lot, especially over recent years.  Why is an unfunded scheme that is costing more and more continuing to be promise the triple lock?  Why will the millenials need to accept to get their state pension at a late age to pay for it?

Do you understand how to put a value to pension schemes such as the state pension or db pensions?  Do you understand how discounting works and what the implications are of real interest rates being negtive?  Do you even know what reinvestment risk is?  I suspect not.  A lot of people seem to be so naive....

An interesting generational divide.
How do you define fair exactly? There in lies the problem. Changes to the various pensions available haven't been made on a whim or a hunch, but by policy makers taking a long term affordability view. The old system and pensions were ultimately unaffordable moving forward, raids via taxation on pension schemes made DB from most private sector employers unsustainable.
However ultimately the job of politicians is to be re-elected and drive forward their particular policies, the triple lock is only one form of electoral bribe.
Every generation feels they have it worse than others. We can all cite examples of how it was bad for us whatever age you are. All we can do as individuals is work within the rules we have before us. It appears my age group have done extraordinarily well, born early 60s, chose a professional career and weathered the various storms past and hopefully to come. However there are some things that I see my sons generation can have that we never dreamed of, but to be honest it is all smoke and mirrors the gains they have is at a loss of some of the things we had (or have).
Everything boils down to you get what you pay or save for. Yes they may get an inheritance but there again they may not if the state decides to take my assets to pay for any care needs in the future, so I suggested to them live life, work hard, save into whatever schemes offer free money- workplace pensions, LISA, H2BISA and plan, be much more financially aware than I was in my 20s. Keeping an eye out for opportunities and pitfalls.

hugheskevi

I think it is worth appreciating that although the Triple Lock was only introduced around 2010, the increase in State Pension value started back around the year 2000. Labour increased the rate by ad hoc amounts during their tenure, which roughly equated with earnings growth and was probably more valuable than the Triple Lock when you look at change in value in price terms.

There is also the maturing of SERPS/S2P (introduced 1978) alongside the basic State Pension, which significantly increased total value of State Pension until it was abolished in 2016 with the move to a system that gave out less in total but with much less distribution of amounts due to the removal of earnings-linked pension accrual.

With average earnings being low, the Triple Lock isn't really that generous, at least not to date. The massive effect of the change from RPI to CPI in the indexation of State and private pensions still isn't widely appreciated but has a very significant effect when earnings are at or below CPI levels.

We are now around the point of 'peak DB' where payments from DB pensions are at their highest and will soon start to decline to reflect the closing of private sector DB pension schemes which accelerated in the 1990s. With the absence of automatic enrolment until 2012 (or later) it will be interesting to see how pensioner incomes evolve over the coming decades.

MACKEM99

itwasntme001 said:

MACKEM99 said:

Linton said:

itwasntme001 said:

Linton said:

itwasntme001 said:

Just to add on the above by way of an example; I know of many couples (including my parents) who have retired or close to retiring who have not worked in typical "professional" careers and who do not have any more qualifications than A-level and they all are very well off, all with a minimum net worth of £1m and that is not even counting any of their private pensions they may have.

Now you have so many young "professionals" with undergraduate degrees working in low wage occupations where it is very difficult to see any decent real wage growth in their careers and with no gold plated DB pension plans to look forward to.

itwasntme001 said:

bigadaj said:

itwasntme001 said:

Just to add on the above by way of an example; I know of many couples (including my parents) who have retired or close to retiring who have not worked in typical "professional" careers and who do not have any more qualifications than A-level and they all are very well off, all with a minimum net worth of £1m and that is not even counting any of their private pensions they may have.

Now you have so many young "professionals" with undergraduate degrees working in low wage occupations where it is very difficult to see any decent real wage growth in their careers and with no gold plated DB pension plans to look forward to.

Though the above is partly due to a supply and demand element behind the value of a degree. If you produce people with degrees that are actually of lower academic standard than those with a levels in previous generations its no surprise to find that many graduates have a lower earning potential. 

Well yes but the point remains the same - before you did not need a degree to get wealthy.  Now the average degree (+ the wasted student debt) is not enough.

When I went to university in the 1960s the number of 18 year olds who went into any higher education, never mind university, was about 7% of the total.  So a good degree was pretty much a guarantee of a good job offer, but very few people had one.

The majority of people left school at 15 (the standard school leaving age), never had the opportunity to take O levels, never mind A levels, and went into a manual or equivalent unskilled job. Even having one A level suggested you were of above average academic ability.

So comparing the situation now with 50-60 years ago is crazy, it was a totally different world.  Would you have preferred to have been around then?  How confident are you that you would have been one of the lucky few?

You are also missing the point completely.  The majority who left school at 15 ended up working in jobs that still paid well and where the wages rose above the inflation trend and benefited from lower house prices, lower interest rates causing asset price inflation over time, DB pension schemes, GARs, cheaper public sector pension plans.  Give it 20 years and I am pretty sure in hindsight the baby boomer generation would have been a better generation to be born into.

Do you really believe the majority of the population leaving school at 15 ended up working in well-paid jobs?  I wonder who did all those poorly paid jobs.

You are comparing your situation, which to the best of my knowledge is average, with that of a lucky elite.  You disparage your parents who "did not have any qualifications other than A levels" when those A levels would have meant more than a degree now in terms of education level compared to the rest of the population.  Plus you have not taken account of the rise n expectations.  People lived simpler and cheaper lives a few decades ago.

Many people did not have DB pension schemes - they perhaps did not have any pension scheme at all until late in their careers as pensions were often a management perk.  As late as 2008 less than 50% of employees were in an occupational pension scheme.  The average income from occupational pensions now is about £180/week for those who receive it.  So hardly a life of luxury.

Housing for the young was hardly a bed of roses. People often lived at home until they got married and then rented perhaps saving for a future house. Young singles buying their own home was extremely unusual. 

Until relatively recently most women would have found career progression extremely difficult, but I assume you are male.

They did not have the "bank of mum and dad" either.  They had to do it themselves.

Whilst this is true, I do not think it has a meaningful impact on average due to the inequality.  Most of the wealth of the average retiree is tied up in housing and pension schemes that is not easily or impossible (annuities/ db schemes/ state pension) to extract for capital.

itwasntme001 said:

MACKEM99 said:

Linton said:

itwasntme001 said:

Linton said:

itwasntme001 said:

Just to add on the above by way of an example; I know of many couples (including my parents) who have retired or close to retiring who have not worked in typical "professional" careers and who do not have any more qualifications than A-level and they all are very well off, all with a minimum net worth of £1m and that is not even counting any of their private pensions they may have.

Now you have so many young "professionals" with undergraduate degrees working in low wage occupations where it is very difficult to see any decent real wage growth in their careers and with no gold plated DB pension plans to look forward to.

itwasntme001 said:

bigadaj said:

itwasntme001 said:

Just to add on the above by way of an example; I know of many couples (including my parents) who have retired or close to retiring who have not worked in typical "professional" careers and who do not have any more qualifications than A-level and they all are very well off, all with a minimum net worth of £1m and that is not even counting any of their private pensions they may have.

Now you have so many young "professionals" with undergraduate degrees working in low wage occupations where it is very difficult to see any decent real wage growth in their careers and with no gold plated DB pension plans to look forward to.

Though the above is partly due to a supply and demand element behind the value of a degree. If you produce people with degrees that are actually of lower academic standard than those with a levels in previous generations its no surprise to find that many graduates have a lower earning potential. 

Well yes but the point remains the same - before you did not need a degree to get wealthy.  Now the average degree (+ the wasted student debt) is not enough.

When I went to university in the 1960s the number of 18 year olds who went into any higher education, never mind university, was about 7% of the total.  So a good degree was pretty much a guarantee of a good job offer, but very few people had one.

The majority of people left school at 15 (the standard school leaving age), never had the opportunity to take O levels, never mind A levels, and went into a manual or equivalent unskilled job. Even having one A level suggested you were of above average academic ability.

So comparing the situation now with 50-60 years ago is crazy, it was a totally different world.  Would you have preferred to have been around then?  How confident are you that you would have been one of the lucky few?

You are also missing the point completely.  The majority who left school at 15 ended up working in jobs that still paid well and where the wages rose above the inflation trend and benefited from lower house prices, lower interest rates causing asset price inflation over time, DB pension schemes, GARs, cheaper public sector pension plans.  Give it 20 years and I am pretty sure in hindsight the baby boomer generation would have been a better generation to be born into.

Do you really believe the majority of the population leaving school at 15 ended up working in well-paid jobs?  I wonder who did all those poorly paid jobs.

You are comparing your situation, which to the best of my knowledge is average, with that of a lucky elite.  You disparage your parents who "did not have any qualifications other than A levels" when those A levels would have meant more than a degree now in terms of education level compared to the rest of the population.  Plus you have not taken account of the rise n expectations.  People lived simpler and cheaper lives a few decades ago.

Many people did not have DB pension schemes - they perhaps did not have any pension scheme at all until late in their careers as pensions were often a management perk.  As late as 2008 less than 50% of employees were in an occupational pension scheme.  The average income from occupational pensions now is about £180/week for those who receive it.  So hardly a life of luxury.

Housing for the young was hardly a bed of roses. People often lived at home until they got married and then rented perhaps saving for a future house. Young singles buying their own home was extremely unusual. 

Until relatively recently most women would have found career progression extremely difficult, but I assume you are male.

They did not have the "bank of mum and dad" either.  They had to do it themselves.

Whilst this is true, I do not think it has a meaningful impact on average due to the inequality.  Most of the wealth of the average retiree is tied up in housing and pension schemes that is not easily or impossible (annuities/ db schemes/ state pension) to extract for capital.

I must have imagined parents these days paying for children's cars, holidays and houses.