Will the state pension exist for a 42 year old?

Pat38493

MattMattMattUK said:

I am nearly forty, I take the view that I will either not get a state pension or it will only come in my mid or even late seventies and what I do get if I get anything will be means tested and worth little if anything. The reality is that the state pension has not been sustainable for 20+ years now, pensioners have gone through their lives paying in too little then take far more out than they ever paid in in taxes. 55% of people arrive at pension age never having made a net contribution and it gets worse from their. If we want state pensions to be in any way sustainable we need to pay significantly more tax and the pensions need to come in later, they are not sustainable in their current form. That also means that we need to accept that several generations have had and will continue to experience a free ride, having paid in little to nothing and they will get the benefit of a pension on top, but if we want anyone under fifty to have a pension and a change of a retirement at some point then that is the only real option. Boomers, Gen X and older etc. never paid enough tax, Millennial (my generation) and younger could pay enough tax if rates were increased, but no one seems to want to pay enough take to fund the country, so instead things will just keep deteriorating. 

Although I don't totally disagree with your general point, I suspect that about 20% of people also pay in way way more than they take out.

ewaste

MattMattMattUK said:

Boomers, Gen X and older etc. never paid enough tax, Millennial (my generation) and younger could pay enough tax if rates were increased, but no one seems to want to pay enough take to fund the country, so instead things will just keep deteriorating. 

Younger generations and those still working are already being squeezed with increasingly higher tax take while trying to simultaneously deal with the cost of living, with one of the primary problems being unaffordable housing. In addition real terms wages have failed to keep up with that cost of living, work for many hasn't improved their standard of life as things have been going backward for a generation. They're also being told to save for their own retirement while providing for the retirements of previous generations who enjoy guarantees and tools simply no longer available. 

There is unlikely to be any serious effort to redress the intergenerational wealth and income inequality given the underlying demographics, we'll keep pulling up the ladders. It's not even in the mainstream political discourse, boomer bingo is what it rapidly devolves into "don't buy that Coffee and don't subscribe to Netflix and you'll be able to save for a deposit". 

Universidad

MattMattMattUK said:

I am nearly forty, I take the view that I will either not get a state pension or it will only come in my mid or even late seventies and what I do get if I get anything will be means tested and worth little if anything.

Honestly, this is too pessimistic, on two main counts. Firstly, the idea that we need to pay more tax, and secondly the idea that the state pension will disappear. 

You say that we will need to pay more tax, but our generation already does - in the form of fiscal drag, student loans (aka graduate tax), HICBC, and more. And in many cases there's double dipping - not only do we pay a graduate tax, but we don't get the grants of our parents generation, and have had tuition fees introduced.

If I weren't making significant extra pension contributions my effective top rate of marginal tax rate would have been something like 70% - how much more tax would it have been possible for me to pay? So maybe the government does need to raise more tax revenue, but it's not really feasible to squeeze the working middle class too much harder - that's just maths. If I'm ever working for 20p in the pound, I'll adjust my situation until I'm not.

On the second point, you're effectively suggesting a similar double-dip will happen on the state pension - we'll pay throughout our working lives for someone else to have it, but then not get one of our own, so then we will also pay for our own (private) pension.

But that's a bridge too far, and again it has nothing to do with fairness, but with practical limits. Unless you foresee an apocalyptic future in which our elderly starve on the streets, then the government will need to keep providing for those people. So the question is whether there is a more cost effective way to do that than with the state pension. And there might be, but it probably doesn't involve: (in depth) means testing, (significant) rises to state pension age, or (massive) cuts to the value of the state pension. Because if you do any of those things, you wind up paying to keep people above the waterline in ever more expensive ways. This can be in obvious ways, such as moving some pensioners to more expensive benefits, but it can be in other ways, such as coercing healthy, working age people to leave the workforce.

Any "solutions" to the pensions problem can't lead to a lowering proportion of working vs. non-working people, but that's exactly what happens when you coerce people to retire early, or force them to leave work to care for elderly relatives who don't have means of their own.

Ganga

I thought that when the gov introduced workplace pensions that this would be the start of the end for SP, i suppose if they made it compulsory for every business and the gov contributed to it they could /might get away with saying that SP will be phased out in say 50 years time ,this would give nearly the whole working population now the chance to plan their retirement and the ones just starting on the ladder of employment plenty of time to sort out their future.

badmemory

So many misconceptions it is difficult to know where to start.  But lets go with university.  When it was supposedly free to go then a much smaller proportion of the population did actually go - about a fifth or lower of what go now.  Only a small proportion of grammar school students went to university which would be unthinkable now.  Basically the change was made because of the number of late teenagers who had no jobs to go to, so it was thought better to keep them in education than to have them hanging about the streets.  Unfortunately a degree does not make someone better at a job & can make them overqualified & feeling themselves above a job.  Yes I will duck now.

Universidad

badmemory said:

So many misconceptions it is difficult to know where to start.  But lets go with university.  When it was supposedly free to go then a much smaller proportion of the population did actually go - about a fifth or lower of what go now.  Only a small proportion of grammar school students went to university which would be unthinkable now.  Basically the change was made because of the number of late teenagers who had no jobs to go to, so it was thought better to keep them in education than to have them hanging about the streets.  Unfortunately a degree does not make someone better at a job & can make them overqualified & feeling themselves above a job.  Yes I will duck now.

I think you're arguing the wrong point, which is that there was a problem with affordability of higher education, on the national level, as the proportion of people attending University rose. We could certainly have a reasonable debate about that, although I note that Scotland continues to disagree on this point.

But this does nothing to counter the fact that many people in professional jobs today a) had to get degrees to get those jobs (unlike in the past) and b) did so at a financial disadvantage compared to the past, and c) now pay a graduate tax that did not exist for the previous generation.

badmemory

There was no problem with affordability when only a small proportion of people went. When you insist on 50% going affordability is bound to be a major issue.

Don't blame the people who couldn't go to uni for this.  They have been penalised ever since.  And I hate to say this but especially women.

Ganga

badmemory said:

There was no problem with affordability when only a small proportion of people went. When you insist on 50% going affordability is bound to be a major issue.

Don't blame the people who couldn't go to uni for this.  They have been penalised ever since.  And I hate to say this but especially women.

When i went to a Secondary Modern school only the brightest pupils went to uni and it was very few went though the school itself was very good ,it now appears that kids are doing a lot better at school hence all the A* results being achieved ( it cannot be that exams are getting easier ?) also as uni,s are charging people to gain degrees and a lot are coming from abroad, the affordability will not be changed as they must be making money hand over fist ( i bet they deny this ) 

badmemory

Yes obviously teens are getting cleverer despite being in many cases virtually illiterate.  I do think though that kids our age got degrees because they worked for them, whereas now I often wonder if they got them because they paid for them - not their fault there I should say but I often feel they were conned.

Qyburn

badmemory said:

So many misconceptions it is difficult to know where to start.  But lets go with university.  When it was supposedly free to go then a much smaller proportion of the population did actually go

The grant was means tested against parent's income, so free for the student but not the family. Actually I knew a few who didnt get the contributions their parents were expected to make.