Video entitled 'The state pension is being phased out' ...

Scrounger

The state pension is being phased out ...

http://www.youtube.com/watch?v=TYAZpRgZeW0


Scrounger

hugheskevi

An actuary has calculated that State Pension age would need to be 71 to equalise the support ratio. This was published by the International Longevity Centre. This has been widely reported in media. 

This is nothing new, no statistics have changed. Many people have done the same very easy calculations over the last few decades (I did them myself in 2002, they showed the same thing they show now). There are many possible answers - higher immigration, lower childbirth (a short-sighted response but works in the short term), working longer, less healthcare for elderly (and so a reduced longevity), or some sectors of the population being poorer. Our political representatives will determine what will be done, and both of the main political parties have consistently shown they favour redistributing toward pensioners at the expense of other sectors of the population, at least in the short run (and perhaps not so much for healthcare).

No political party has any plans to increase State Penson to 71. No consultations or Green Papers on this have been put forward. Not even a Party Conference recommendation to vote on.

penners324

Scrounger said:

The state pension is being phased out ...

http://www.youtube.com/watch?v=TYAZpRgZeW0


Scrounger

Not yet..... don't believe you tube cranks....

Yest the SP age will rise.

LightFlare

Under the current system, it is totally unaffordable 

The problem we have today is an unprecedented amount of “old” people who are receiving far in excess of their contributions.

It is true when they say that current pensioners have never had it so good - they only had to work untill they were 60 and yet the are using massive amount of resources health wise and socially

Its the first time we have experienced anything like this since the 2 wars killed a vast amount of young men who never made it to old age

ader42

Our politicians will quite simply have to gradually increase people’s work-based pension contributions (legislation) to replace the state pension or require much higher national insurance. Unless of course they don’t mind the gap between the haves and have-nots widening… hmm… 

Albermarle

LightFlare said:

Under the current system, it is totally unaffordable 

The problem we have today is an unprecedented amount of “old” people who are receiving far in excess of their contributions.

It is true when they say that current pensioners have never had it so good - they only had to work untill they were 60 and yet the are using massive amount of resources health wise and socially

Its the first time we have experienced anything like this since the 2 wars killed a vast amount of young men who never made it to old age

It might be unaffordable, but any Govt that tries too hard to dilute the value of the state pension will commit political suicide, so they will not do it.
You can see already that both main parties are committed to the Triple Lock, which makes the SP even more unaffordable, because it is a vote winner.
So that is the RealPolitik of the matter.

westv

Albermarle said:

LightFlare said:

Under the current system, it is totally unaffordable 

The problem we have today is an unprecedented amount of “old” people who are receiving far in excess of their contributions.

It is true when they say that current pensioners have never had it so good - they only had to work untill they were 60 and yet the are using massive amount of resources health wise and socially

Its the first time we have experienced anything like this since the 2 wars killed a vast amount of young men who never made it to old age

It might be unaffordable, but any Govt that tries too hard to dilute the value of the state pension will commit political suicide, so they will not do it.
You can see already that both main parties are committed to the Triple Lock, which makes the SP even more unaffordable, because it is a vote winner.
So that is the RealPolitik of the matter.

Surely the triple lock shouldn't be any sort of issue now unless people don't want the SP to keep up with inflation?

hugheskevi

westv said:

Albermarle said:

LightFlare said:

Under the current system, it is totally unaffordable 

The problem we have today is an unprecedented amount of “old” people who are receiving far in excess of their contributions.

It is true when they say that current pensioners have never had it so good - they only had to work untill they were 60 and yet the are using massive amount of resources health wise and socially

Its the first time we have experienced anything like this since the 2 wars killed a vast amount of young men who never made it to old age

It might be unaffordable, but any Govt that tries too hard to dilute the value of the state pension will commit political suicide, so they will not do it.
You can see already that both main parties are committed to the Triple Lock, which makes the SP even more unaffordable, because it is a vote winner.
So that is the RealPolitik of the matter.

Surely the triple lock shouldn't be any sort of issue now unless people don't want the SP to keep up with inflation?

Inflation is one thing - pension keeps its real value (but declines relative to earnings and GDP growth, at least in normal times)

Earnings link is another thing - pension keeps its value relative to the spending power of workers

A random 2.5% underpin makes no sense at all, except to avoid headlines of "Disgrace - State Pension goes up by 75p!)"

Combining all the above leads to a system that generates unpredictable real-terms increases, and in the extremely long run leads to the State Pension increasing to an infinite amount. Hence the system is unsustainable by design.

A much more sensible system would be setting the full rate of new State pension at a proportion of average earnings and setting upratings to achieve this. That would usually be earnings, but allowance could be made for the level to briefly rise above target when inflation is above earnings growth, or in times of deflation. This would protect spending power and give a stimulus in recessions, with increases just being inflation (with floor of zero) when the level is above target so that it automatically corrects to its predetermined proportion of earnings.

af1963

No politicians will dare phase it out.  Leaving the personal allowance frozen (or, more likely for simplicity, rising to match the state pension) would ensure that better off pensioners pay some tax from their additional pensions. Triple lock may well go though, especially the "rise by 2.5% even if prices and wages haven't gone up.".  

Grumpy_chap

hugheskevi said:

Inflation is one thing - pension keeps its real value (but declines relative to earnings and GDP growth, at least in normal times)

Earnings link is another thing - pension keeps its value relative to the spending power of workers

A random 2.5% underpin makes no sense at all, except to avoid headlines of "Disgrace - State Pension goes up by 75p!)"

Over the long term, wages and inflation roughly track each other, but they do not do so in sync.

There was an article on the BBC in the past few days that showed a graph of inflation and wage growth last year and this.  Last year inflation was much higher than wage growth.  This year wage growth is higher than inflation.
Working people only get the wage growth.
State Pensioners get the most favourable for them each time.
Plus, and unper-pinned 2.5%, which is a notional figure and can exceed both inflation and wage growth (indeed has for a fairly long run until the current chaos on the world stage).

Ultimately, the current rules for Triple Lock mean that the State Pension is an increasing proportion of GDP year-on-year.  Eventually, if the rules do not change, State Pension will exceed GDP.  Things will crash some time before that.

I can't find the article I saw recently about wages and inflation, but I found one from November 2023:
https://www.bbc.co.uk/news/business-67402491

hugheskevi

Grumpy_chap said:

hugheskevi said:

Inflation is one thing - pension keeps its real value (but declines relative to earnings and GDP growth, at least in normal times)

Earnings link is another thing - pension keeps its value relative to the spending power of workers

A random 2.5% underpin makes no sense at all, except to avoid headlines of "Disgrace - State Pension goes up by 75p!)"

Over the long term, wages and inflation roughly track each other, but they do not do so in sync.

This isn't the case, for example, the Office for Budgetary Responsibility assumes long-run earnings growth of 3.8% and CPI of 2.0% (and Triple-Lock uprating of 4.4%).

Between about 1980 and 2000 the State Pension was uprated by RPI, yet lost a lot of value relative to earnings, as the chart in this article shows. Note that from 2000 the State Pension uprating became very erratic, with ad hoc increases above RPI inflation, yet still State Pension only roughly maintained its value relative to earnings until the Triple Lock was formally introduced (there was a similar informal commitment used by Labour in their later years in office, but was a political commitment rather than the legislative obligation to uprate by RPI).

The last 15-ish years have been an anomaly, of very low real earnings growth, as this article sets out.