The demise of the triple lock.

jimpwarsop

Linton said:

jimpwarsop said:

Linton said:

  Many pensioners still are living on SP with no other pension. Under these circumstances I think that about £9K/year is too low as a basic income.

I doubt MANY pensioner live on SRP alone.

17% of all pensioner households according to:
 https://www.theactuary.com/news/2019/05/2019/05/01/pensioners-increasingly-dependent-state-pension have no other pension provision beyond SP. 

They may have no other pension provision, but there will be other benefit income.

My mother is in her 80s and worked until 60, because she has a small occupational pension and savings, she gets nothing more from the state, her peers who hardly worked after marriage get all sorts of add ons, pension credit, housing benefit, council tax benefit etc.If I did a proper comparison I doubt she has any extra disposable income.

jimpwarsop

Silvertabby said:

Comparing our State pension with European pensions is like comparing apple with oranges.

French/German/Spanish/Dutch etc pensions are hybrid schemes, part State part private.  Both employers and employees pay in a lot more than we do in NI - and very few people have additional pensions on top. 

A fairer comparison would be a European pension against the UK State pension PLUS all the private/occupational pensions that the pensioner could have/should have paid into. 

Plus, of course, a UK State pensioner who really had nothing but the State pension/pension credit could get add ons such as housing benefit, council tax benefit, etc etc.  This could easily double the £9K you quote. 

"a UK State pensioner who really had nothing but the State pension"
Or who could/would present as such.

eskbanker

bowlhead99 said:

eskbanker said:

minty777 said:

A lot of pension payments have stopped now due to covid

What do you mean by that

Perhaps that this year to date there has been a greater than average number of deaths of OAPs compared to other years. This has accelerated deaths that would have otherwise happened in later years; those pensioners' payments have 'stopped due to covid', saving the government's state pension bills. 

Of course, payments into the pot - contributions of national insurance that would have funded the pension payments - will have reduced or ceased with layoffs in many sectors, pay reductions as staff are furloughed on partial pay or hours reduced, lack of pay rises etc.

Fair enough, I hadn't understood the comment as relating to deaths but you're probably right about what was meant, although it would be stretching a point to describe the covid victim pensioners as 'a lot' in the context of the circa 12m who survive....

OldBeanz

Andy_L said:

OldBeanz said:

jimpwarsop said:

...

I would just have the inflation link.

Gordon Brown was crucified when the pension increased in line with inflation by 75p. There are also a number of rates of inflation and the pensioner inflation rate would be different to a young family.

and breaking the link to earnings & using only inflation (early 80s?) for 20 odd years was responsible for the huge decline of the state pension relative to earnings leading to the, then, problems of pensioner poverty

It wasn't a political point I was making about this it was more the likely response of the population at large to trivial increases when pensioners' inflation may be different.

jamesd

MaxiRobriguez said:

Wealth is now more concentrated in the older generations than it has been in forever. The triple lock has long since succeeded in it's aims of eradicating pensioner poverty and gone on to supplement already wealthy people who have hoarded the majority of financial assets.

Wealth is supposed to be concentrated with older people. A young person has lots of future years to work and invest for retirement. The retiree no longer has the years but the accumulated capital instead.

UK median after all taxes household income was £29,600 at the end of 2019. It's commonly suggested to retire on 66% of working income, so for a single person that it'd be 19,536.  Assuming a 9,000 state pension that's 10,536 to find. At age 65 a single life RPI annuity pays 2.023% of the purchase price at the moment so buying the income that way would cost 520,810.

I'm not sure that wealth is more concentrated in the older generations than it ever has been and that seems unlikely. Do you have a source?

The triple lock was introduced to reduce the cut in state pension relative to wages that started when the Thatcher government switched to inflation. It's unlikely to  catch up because the new state pension has eliminated the earnings link and will make even lifelong low earners worse off.

ffacoffipawb

jamesd said:

MaxiRobriguez said:

Wealth is now more concentrated in the older generations than it has been in forever. The triple lock has long since succeeded in it's aims of eradicating pensioner poverty and gone on to supplement already wealthy people who have hoarded the majority of financial assets.

Wealth is supposed to be concentrated with older people. A young person has lots of future years to work and invest for retirement. The retiree no longer has the years but the accumulated capital instead.

UK median after all taxes household income was £29,600 at the end of 2019. It's commonly suggested to retire on 66% of working income, so for a single person that it'd be 19,536.  Assuming a 9,000 state pension that's 10,536 to find. At age 65 a single life RPI annuity pays 2.023% of the purchase price at the moment so buying the income that way would cost 520,810.

I'm not sure that wealth is more concentrated in the older generations than it ever has been and that seems unlikely. Do you have a source?

The triple lock was introduced to reduce the cut in state pension relative to wages that started when the Thatcher government switched to inflation. It's unlikely to  catch up because the new state pension has eliminated the earnings link and will make even lifelong low earners worse off.

Thats the age 60 rate, At 65 it is 2.801%. The cost is then £376,151.

badmemory

They will have no choice but to stop the triple lock despite a recent promise not to.  Even though bread & milk has not so far gone up, my personal inflation rate is almost 10% already with over 3 months of the CPI year to go.  They no longer need pensioners to vote for them as they have broken the red wall, it was going to happen even before the virus hit, that has just cast it in stone.

Thrugelmir

michaels said:

skycatcher said:

At c£9k the new state pension is hardly generous compared to our European brothers and sisters, in fact one of the lowest! So I really don't get it when there are arguments to try and suppress it increasing. Perhaps to most on this board the state pension is a nice bit if pin money on top of their private pensions but to an awful lot more is what they only have to love on. 
If you don't need it just defer it till you die.

Yes I agree, if you look at it almost everyone in the country 'deserves' more than they have to live on, especially if you compare us with countries like Norway with a much higher GDP per head than us....

Ever been to Norway? With virtually everything imported extremely expensive. 

JezR

The New State Pension and old Basic State Pension rise by earnings not because of the triple lock policy, but because it is a requirement to do so by law, which would need to be changed.

pafpcg

jamesd said:

MaxiRobriguez said:

Wealth is now more concentrated in the older generations than it has been in forever. The triple lock has long since succeeded in it's aims of eradicating pensioner poverty and gone on to supplement already wealthy people who have hoarded the majority of financial assets.

Wealth is supposed to be concentrated with older people. A young person has lots of future years to work and invest for retirement. The retiree no longer has the years but the accumulated capital instead.

I'm not sure that wealth is more concentrated in the older generations than it ever has been and that seems unlikely.

I agree but it doesn't seem so unlikely to me, I'd suggest because of two factors:

1.  Rise in house "values" as a proportion of total wealth.  I'd expect that house ownership and the value of the properties is proportionately higher in older people once any mortgage is deducted.

2. Rise in Defined Contribution (DC) pensions.  Since it's easy to put a monetary value on a DC pension and older folk will have larger pension pots than youngsters, I'd expect the older generations to appear to be wealthier now than in the past.

Other than that, it seems to me to be blindingly obvious that wealth increases with working life (and then stabilises or declines to some degree during retirement).  Does anyone seriously suggest that it should be the aim of social policy to have it any other way?

PS:  For those muttering about "wealthy pensioners" getting increases in the State Retirement Pension, I'd point out we have an existing mechanism to deal with this perceived "problem".  If the nation needs to re-balance income against expenditure just increase those taxes which take from the wealthier (such as income tax and inheritance tax) and/or reduce the taxes (such as VAT) which bear more heavily on the poorer.