Omg 18%

Plasticman

I'm 5 years away from retirement and my retirement plan allows for 4% inflation per year. Hopefully by then that will seem more realistic! The biggest challenge is whether I can maintain my current levels of saving and investment for retirement while costs are increasing so significantly. 

ussdave

zagfles said:

ussdave said:

SouthCoastBoy said:

sevenhills said:

SouthCoastBoy said:

 From what the government is saying it also looks like people receiving benefits are also protected, it's the workers and people with private pensions that are going to take the hit

I have not seen anything that states benefits will increase with inflation, the state pension yes.
Poor people are getting hundreds £££s towards their energy bills, they won't get an inflation increase too.
More likely nothing or an increase to match wage increases.
The minimum wage could increase by 10+%

State benefits are currently linked to the sept inflation figure, this needs to be severed, totally unfair for benefits to increase with inflation when workers who pay for the benefits will most probably be receiving less than cpi in annual pay review.

I would much prefer that we argue for higher wages for workers rather than a race to the bottom for benefits claimants.  

And an inflation spiral like in the 1970's where higher wages lead to higher inflation which leads to higher wage demands which lead to higher inflation...

I meant more as a general rule rather than a specific response to the current situation.  I agree that what you've raised is a concern though.

sammyjammy

zagfles said:

ussdave said:

SouthCoastBoy said:

sevenhills said:

SouthCoastBoy said:

 From what the government is saying it also looks like people receiving benefits are also protected, it's the workers and people with private pensions that are going to take the hit

I have not seen anything that states benefits will increase with inflation, the state pension yes.
Poor people are getting hundreds £££s towards their energy bills, they won't get an inflation increase too.
More likely nothing or an increase to match wage increases.
The minimum wage could increase by 10+%

State benefits are currently linked to the sept inflation figure, this needs to be severed, totally unfair for benefits to increase with inflation when workers who pay for the benefits will most probably be receiving less than cpi in annual pay review.

I would much prefer that we argue for higher wages for workers rather than a race to the bottom for benefits claimants.  

And an inflation spiral like in the 1970's where higher wages lead to higher inflation which leads to higher wage demands which lead to higher inflation...

So we got 2% this year, if inflation balances out at 10% for the next three years you think thats ok?

zagfles

sammyjammy said:

zagfles said:

ussdave said:

SouthCoastBoy said:

sevenhills said:

SouthCoastBoy said:

 From what the government is saying it also looks like people receiving benefits are also protected, it's the workers and people with private pensions that are going to take the hit

I have not seen anything that states benefits will increase with inflation, the state pension yes.
Poor people are getting hundreds £££s towards their energy bills, they won't get an inflation increase too.
More likely nothing or an increase to match wage increases.
The minimum wage could increase by 10+%

State benefits are currently linked to the sept inflation figure, this needs to be severed, totally unfair for benefits to increase with inflation when workers who pay for the benefits will most probably be receiving less than cpi in annual pay review.

I would much prefer that we argue for higher wages for workers rather than a race to the bottom for benefits claimants.  

And an inflation spiral like in the 1970's where higher wages lead to higher inflation which leads to higher wage demands which lead to higher inflation...

So we got 2% this year, if inflation balances out at 10% for the next three years you think thats ok?

OK? If everyone gets 10% inflation might balance out at 15% over the next 10 years, do you think that's OK?

Inflation makes people (in general) worse off. One way or another.

NedS

zagfles said:

ussdave said:

SouthCoastBoy said:

sevenhills said:

SouthCoastBoy said:

 From what the government is saying it also looks like people receiving benefits are also protected, it's the workers and people with private pensions that are going to take the hit

I have not seen anything that states benefits will increase with inflation, the state pension yes.
Poor people are getting hundreds £££s towards their energy bills, they won't get an inflation increase too.
More likely nothing or an increase to match wage increases.
The minimum wage could increase by 10+%

State benefits are currently linked to the sept inflation figure, this needs to be severed, totally unfair for benefits to increase with inflation when workers who pay for the benefits will most probably be receiving less than cpi in annual pay review.

I would much prefer that we argue for higher wages for workers rather than a race to the bottom for benefits claimants.  

And an inflation spiral like in the 1970's where higher wages lead to higher inflation which leads to higher wage demands which lead to higher inflation...

Totally agree. The most effective way to combat high inflation is a good old fashioned recession where businesses go bust and people lose their jobs.

Either we increase earnings, giving people the spending power to keep fueling rising prices and we keep high inflation (which ends up costing us all), or those unfortunate to lose their jobs (and businesses) in a recession pay the price for getting inflation down again.

The BoE have already stated their (only) priority is inflation, as that is their remit. That will mean more interest rate rises and almost certainly a recession. The BoE do not care about that as that is not part of their remit. As long as inflation can be brought back down to the 2% range, all will be good in the BoE world. Those in secure jobs with no debt will pay a lower price than those who lose their jobs and/or have high amounts of debt to service.

Doglegger

Genuine concern about this with less than a year to when I'd planned to retire. DB capped at 5% which sounded wonderful a couple years back. Probably got enough flexibility in my DC pot to weather the worst of it but think I'd be mad to pack in a decent paying job, regardless of whether I hate it or not, while inflation is raging. I'm now looking at the unthinkable for me of OMY or maybe even two.

NedS

Doglegger said:

Genuine concern about this with less than a year to when I'd planned to retire. DB capped at 5% which sounded wonderful a couple years back. Probably got enough flexibility in my DC pot to weather the worst of it but think I'd be mad to pack in a decent paying job, regardless of whether I hate it or not, while inflation is raging. I'm now looking at the unthinkable for me of OMY or maybe even two.

If your DB is in deferment (and capped at 5%), it may be worth waiting to take it until inflation has dropped if you can. In deferment, the capped 5% will be cumulative over the period of deferment, whereas once you put the pension into payment, the 5% cap will apply annually. By continuing to defer, you may be able to negate the effect of the cap if inflation comes back down to around 5% within a couple of years.

[Deleted User]

This is one prediction from an analyst at Citibank. Look at the accuracy of talking heads’ past predictions. E.g. “inflation will be easing” in November 2021. https://www.reuters.com/world/uk/uk-inflation-expectations-fall-first-time-6-months-citiyougov-2021-11-26/

Talking heads are there to give predictions.  We are here to ignore talking heads and their predictions.   

Albermarle

Chickereeeee said:

I think that when people realise that a lot (most) of their final salary pensions are capped at 3 or 5% inflation increases, and that that they will be worth maybe 7-15% less (if inflation is 10-15% for just one year) probably for the rest of their lives, they may get a bit annoyed.

On the other hand if you are relying on a DC pension, you have inflation at 10% and a drop in value of the pot by between 5 and 15% . So a minus 20% , compared to someone with a DB with a minus 6 or 7% .

zagfles

Deleted_User said:

This is one prediction from an analyst at Citibank. Look at the accuracy of talking heads’ past predictions. E.g. “inflation will be easing” in November 2021. https://www.reuters.com/world/uk/uk-inflation-expectations-fall-first-time-6-months-citiyougov-2021-11-26/

Talking heads are there to give predictions.  We are here to ignore talking heads and their predictions.   

That was well before all the Ukraine stuff kicked off though.