Can't trust government with pensions

Thrugelmir

Barry_Bear said:

A few comments have been keen to dismiss the reports of changes as just speculation and nothing more. Although everything can be called speculation, the fact is the government has a track record of moving the goal posts before.

Typical of the short-termism that plagues our system of government actions that erode long-term trust are not going to encourage people to save now to plan for their futures.

There's a recent generation (myself included) that have benefited sizably from favourable Central Bank policies in the past decade. Which has widened the inequitable distribution of wealth. I've no complaints about contributing more back into the system. Will be my son that pays the bill otherwise. 

MEM62

Barry_Bear said:

Typical of the short-termism that plagues our system of government actions that erode long-term trust are not going to encourage people to save now to plan for their futures.

Why would it discourage people?  Only a small percentage of the population would be impacted by this.  How many people do you know that are likely to reach the threshold?   

And how do you make a Government avoid "short-termism" as you put it when their time in office is limited to five years?  

michaels

Thrugelmir said:

Barry_Bear said:

A few comments have been keen to dismiss the reports of changes as just speculation and nothing more. Although everything can be called speculation, the fact is the government has a track record of moving the goal posts before.

Typical of the short-termism that plagues our system of government actions that erode long-term trust are not going to encourage people to save now to plan for their futures.

There's a recent generation (myself included) that have benefited sizably from favourable Central Bank policies in the past decade. Which has widened the inequitable distribution of wealth. I've no complaints about contributing more back into the system. Will be my son that pays the bill otherwise. 

But he will pay it most likely from a bigger inheritance if it is not taken from you in higher taxes first - and any of the extra that you do manage to spend will pay VAT, income tax on wages, corporation tax on company profits etc so will also get recycled back to the govt.

EdSwippet

MEM62 said:

Why would it discourage people?  Only a small percentage of the population would be impacted by this.  How many people do you know that are likely to reach the threshold?

At least one worry would be that a repeatedly reducing 'threshold' reaches you, rather than the other way around.

And how do you make a Government avoid "short-termism" as you put it when their time in office is limited to five years?  

Take pension policy out of the hands of Government and give it to a separate and permanent commission. Pensions are multi-decade projects that are too important to be left to politicians.

Barry_Bear

EdSwippet said:

MEM62 said:

Why would it discourage people?  Only a small percentage of the population would be impacted by this.  How many people do you know that are likely to reach the threshold?

At least one worry would be that a repeatedly reducing 'threshold' reaches you, rather than the other way around.

And how do you make a Government avoid "short-termism" as you put it when their time in office is limited to five years?  

Take pension policy out of the hands of Government and give it to a separate and permanent commission. Pensions are multi-decade projects that are too important to be left to politicians.

Very good idea.

NedS

EdSwippet said:

And how do you make a Government avoid "short-termism" as you put it when their time in office is limited to five years?  

Take pension policy out of the hands of Government and give it to a separate and permanent commission. Pensions are multi-decade projects that are too important to be left to politicians.

Playing devil's advocate, if I were the non-elected appointed Chief Commissioner of such a Quango Commission, on a six figure salary, what controls would be in place to ensure I were acting independently and not making decisions influenced by my own personal interests and circumstances? After all, I would naturally want to save a large portion of my six figure salary towards my retirement in a tax efficient manner.

EdSwippet

NedS said:

Playing devil's advocate, if I were the non-elected appointed Chief Commissioner of such a Quango Commission, on a six figure salary, what controls would be in place to ensure I were acting independently and not making decisions influenced by my own personal interests and circumstances? After all, I would naturally want to save a large portion of my six figure salary towards my retirement in a tax efficient manner.

Something similar to the existing controls that prevent MPs from making rules that result in them getting better pension terms than those available to the private sector?

Oh, hang on ...

atush

michaels said:

atush said:

Barry_Bear said:

There are reports that the government may target private pensions to raise taxes.

The lifetime allowance has been reduced before and could be yet again!

How can you expect people to save for the future when they can see our governments have a track record of moving the goal posts and a financial crisis means our governments tend to target those who have saved into pensions?

Who can you trust with your pension?  AS above, who else would you trust?

Yes, tax regimes can change, but sometimes they need to.  Who else is going to pay for the pandemic but companies, the govt, and individuals?

Bit of a bizarre way of looking at things, the govt can not pay for anything, they are not an entity, govt income is from taxation, borrowing merely being pulling forward future tax.  Sure they do redistribute, the most productive higher earners are the main contributors with most others being net recipients but the govt itself only move money around, it doesn't earn it and store it for future disbursement in the way individuals have income and wealth.  Same is true of companies, company taxation is bourne by the customers, workers and owners (mostly pension holders).

So to whatever extent the pandemic needs to be paid for, it will be done by taking a share of income or assets of those who work or hold assets.

I find it far from bizarre, esp as compared to previous posts

Malthusian

EdSwippet said:

Take pension policy out of the hands of Government and give it to a separate and permanent commission. Pensions are multi-decade projects that are too important to be left to politicians.

What constitutional mechanism would be in place to prevent Parliament abolishing the commission and doing whatever it thought was best instead?

hugheskevi

Malthusian said:

EdSwippet said:

Take pension policy out of the hands of Government and give it to a separate and permanent commission. Pensions are multi-decade projects that are too important to be left to politicians.

What constitutional mechanism would be in place to prevent Parliament abolishing the commission and doing whatever it thought was best instead?

This is the whole problem with independent advice bodies.

There are many issues with having an unelected body directly responsible for billions of pounds of tax revenue (tax relief) and possibly billions of expenditure (State Pension). This could never be completely independent in its decision making - HM Treasury would at the very least confine the expenditure/revenue consequences of the body's decision making.

It is also likely that any decisions would not be permitted to make existing people worse-off, at least to any significant extent (as making people, especially pensioners, worse off has vote consequences). Once you constrain a body to not spend much more than is currently spent and not make anyone worse off, you have very little ability to change anything, at least in the short to medium term - that was what happened with single-tier pension reform in 2016, with very little change in current expenditure, but long term significant expenditure cuts.

It is therefore more likely that independent advice bodies would be established instead, usually a 'commission' of some form. However, if the advice bodies give advice the elected representatives don't like, they will be ignored (eg public sector pay review bodies). Therefore the advice bodies tend to either be ineffective, or advise within very narrow constraints which they know will be largely acceptable to elected representatives, so as to remain useful. But then you have to question whether they are really independent and impartial in the advice they are giving, as their advice is largely what the govt want to hear.

Ultimately the govt of the day which holds the purse-strings will determine pension and tax relief policy, either directly or indirectly, however the decision-making process is structured.