The demise of the triple lock.

jamesd

jimpwarsop said:

Why did you switch from "median household income" to a single pensioner ?

The number £19536 is very close to what we spend a year as a retired couple.

The data that was conveniently to hand to illustrate the potential cost of income. Same basis would have made a better example but it was adequate for the purpose.

jamesd

steampowered said:

MACKEM99 said:

I wonder how may of those gifted 80% of their £2.5k monthly salary by the tax payer would be able to manage on a pension?

I would imagine quite a lot, given that the average disposable income of pensioners is now greater than the average disposable income of workers. That is really an extraordinary switch around from what was the status quo 20 years ago and for generations before that.

https://www.ftadviser.com/retirement-income/2019/04/26/pensioners-have-more-spare-cash-than-workers/

Do you have a source for your claim that "average disposable income of pensioners is now greater than the average disposable income of workers"? What you linked to shows a higher growth rate due to more now retiring with final salary pensions but doesn't say which is higher.

Malthusian

itwasntme001 said:

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.

The average degree when they were much rarer and more valuable wasn't enough to get wealthy either. Nobody showered you with riches if you graduated from a second-tier university in the 1960s with a degree in Art History.

The value of the profession is what has an effect on wealth, not the value of the degree. If you are a glorified administrator with a degree you can't complain if you earn less than a skilled professional did a generation ago.

In addition many young people are much better off than their parents despite being in less skilled work - on their supposedly lower salaries they can afford to travel more than their parents and enjoy luxuries that didn't even exist 20 years ago.

itwasntme001

Malthusian said:

itwasntme001 said:

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.

The average degree when they were much rarer and more valuable wasn't enough to get wealthy either. Nobody showered you with riches if you graduated from a second-tier university in the 1960s with a degree in Art History.

The value of the profession is what has an effect on wealth, not the value of the degree. If you are a glorified administrator with a degree you can't complain if you earn less than a skilled professional did a generation ago.

In addition many young people are much better off than their parents despite being in less skilled work - on their supposedly lower salaries they can afford to travel more than their parents and enjoy luxuries that didn't even exist 20 years ago.

You are missing the point.  Forget about the quality of the degrees obtained.  3-4 decades ago there was a lot more demand for labour across many facets of the economy and society with technology yet to displace many of these workers and immigration yet to tip the balance on the side of capital and away from labour.  You also had real interest rates comfortably in positive territory into the high single digits and beyond and reinvestment risk was not an concern.  DB pensions and GARs were thus handed out with no concern for reinvestment risk and funding.  Real wages were going up.  Except for a relatively brief period, mortgages were serviceable and the barrier of entry lower compared to today as you did not need nearly as much of a deposit in real terms.  Today you have none of these things and it is difficult to see how real wages will go up.  Maybe they will in the longer term due to demographics and reduced labour.  But advancement in technology could displace even more workers.

Whilst we have better healthcare, technology and cheap flights, all this comes at a cost.  Healthcare ain't free (it is actually overpriced given the structure of the NHS) and we all will have to pay for it one way or another.  Technology has improved the means of communication and quality of lives in many other ways but what are the costs of social media use and the resultant dopamine addiction, higher rates of depression and creating a generation of social media narsassists?  Cheap flights also come at a cost due to carbon emissions and this pandemic could very well have long term implications in the whole sector which could raise the cost of a flight.  Whilst mortgages are cheaper in terms of nominal interest rates, it is a lot harder to start a family in areas such as London if you are even on an average wage.  Sure they can rent but it does have implications on stability of housing to start a family.  Unless we have laws like in Germany, this will not change.

Linton

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?

itwasntme001

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.

itwasntme001

And since they started work at 15, they had a FULL 7 years head start in earning and becoming skilled at what they did and thus commanding higher wages.  Compared to the professional who went to a uni graduating at 22 and starting a career 7 years later albeit at a higher starting salary.

Today you have media studies and liberal art graduates entering the work force at 22 with £50k of debt and earning wages at the lower end of the scale in jobs that can be outsourced or replaced by automation.  Completely different picture to 30-40 years ago.  We have evolved into a society full of fake intellectuals and keyboard warriors with no real meaningful skills sets to show for all the debt.

itwasntme001

Another way to look at all this is that we front loaded all the meaningful productivity gains and real growth in the economy (and resultant positive real rates of interest - because capital was very productive and thus demanded higher interest rates over and above inflation) 3-4 decades ago to the huge benefit of the baby boomer generation.

Now you have very little incentive for capital to be deployed productively because the rates of return are so pitiful which goes hand in hand with low interest rates and QE set by the CBs and why even bother to invest in productive activities when its much easier and logically attractive to just buy back your own shares?

All this means the current prime working generation have not got a lot to look forward to because the productive capacity has been at its limits for some time now and will remain so.

One positive for some of the current working generation is that they are being gifted and set to inherit vast sums of capital.  But this is by far not for everyone and things can change to reduce the amounts by way of taxation and rising cost of healthcare etc.

Linton

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.

MACKEM99

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.