Should the triple lock be scrapped in the 6 March Budget?

njkmr

No it should be kept

MattMattMattUK said:

njkmr said:

How about matching it to Spain's pension .
I believe thats about £25000 per year.
No that im near drawing it yet unfortunately.

Probably just about affordable if we had Spanish levels of taxation, 10% VAT on food, no tax free allowance for income tax (tax paid from the first Euro earned), higher property taxes than UK council tax etc. 

People in the UK seem to want all the nice benefits but seem to have an extreme reluctance to actually pay for them first. 

I'm pretty certain Council tax is lower in Spain.
Properties similar in size to mine with a pool is about €450-€650 per year , plus bin tax of about €150 per year.
My Council tax here is £330 per month. 
Considerably dearer here.

stripling

No it should be kept

enthusiasticsaver said:

There is an article in the telegraph today about whether this is affordable given that all of us baby boomers (I am 64)  are close to or already retired, the birth rate is falling and those of us who are economically inactive (early retirees or those above state pension age) is rising.  Apparently life expectancy is also falling so raising the state retirement age again is not going to be an option. So effectively there will be less workers and more retirees. 

I am not yet receiving my state pension but have voted the triple lock should go given that I think it is unaffordable. I think it should be linked to average earnings/CPI and the 2.5% promise should be scrapped. I acknowledge though that state pension is not our  main income in retirement. Sunak has said it will stay though so I don't think it will go in this years budget given it is an election year. 

"Baby Boomers" is mostly another myth - invented by the same bunch as those who gave us the "intergenerational fairness" argument. The actual birthrate figures dropped quite a lot in the mid 50s then rose a bit again for a while. (I don't know why). 

If we built council houses as we did in the past, for example, the housing benefit bills would plummet - right now housing benefit is a massive shift of public money into private hands. Now there's a thought - why cut already very low pensions? 

Just as an aside, the Telegraph pushing these lines is a bit cheeky if you consider that until it went on the market recently it was owned by a pair of brothers who live offshore in a tax haven.  Maybe the infamous 10% should actually pay a tad more tax? 

NorfolkCanary

Yes it should be scrapped

stripling said:

No it wouldn't, that's irrelevant to what is effectively one of the lowest state pensions in Europe. It was originally introduced because of pensioner poverty.  

Please be aware of the political 'excuses' for cutting in various ways, often driven by those who promote private pensions. Also 'workers' / young people retire so it is their loss further down the line. Perhaps wages should increase more, but that is a separate discussion from the state pension.

We used to have the 'intergenerational fairness' line promoted as an excuse to cut pensions (it originated in from a hedge fund owner in the US). That has quietened down now for similar reasons - the young get old. 

Pensions are taxed so anyone who has any other income pays tax so it returns to the state. If you are worried about state funding then maybe target those who move their assets offshore or into trusts in 'tax avoidance' schemes. There's plenty of holes in the top end of the tax bucket. 

Pensioners no longer have access to council housing and do not qualify for full housing benefit either - the numbers of pensioners in poverty and insecure, substandard housing, including only renting rooms not flats, is only going to increase. Plus they will have no "assets" to pay for social care if needed.

Be very wary of the rhetoric that plays one group off against the other with the end goal of cutting back the state. It is this very move that leaves us with a pot-holed, broken infrastructure, shattered NHS and decimated public services, state.  It doesn't actually have to be this way. 

Why didn't those currently in receipt of S.P. save enough for themselves via PAYE or N.I.? Or counter the govt. directive over cuts? Was there a lack of critical thinking? Seems as if I'm alright jack, pull up the ladder for the rest.
My N.I. contributions don't provide a pot for myself, it goes to the generation or two above, who didn't save enough, that isn't right.

Be aware when mentioning tax, when the top 1/3rd or is it10%? pay roughly 2/3rds or so of the total tax take. Is that not already fair?
Many people no longer have access to council housing, mainly because the previous generations benefited from cheap council house sell-offs and banked the profits, without a second thought about ensuring replacement. Not to mention profiteering from privatisation of the utilities and other nationally owned assets.

And don't forget as soon as anyone mentions trying to resolve the issue of grey brigade, the rag tops and right wing papers jump up and down on the bandwagon to protect their voting pool.

artyboy

No it should be kept

I'm paying for my kids higher education, probably buying them a house, and in all likelihood leaving them a substantial inheritance. I think the least they can do for me is pay enough tax to support my meagre state pension... 

Grumpy_chap

NorfolkCanary said:

I suspect by the time myself and people my age range come to retire, there won't be a S.P. to fall back on.

BlackKnightMonty said:

I think by the time I reach SP age it will either be means tested or it will be scrapped entirely.

either way all the years of NI I have made, as well as some tasty amounts of Income tax, will have bought me absolutely zero SP.

Thus is the cry of every generation of "young uns".

I am now rather nearer to SP age and recognise that any increase in the SP is "locked in" as it were, so I will become a benefit of this year's Triple Lock increase when I reach the requisite age to claim.

I am also rather feeling that means testing is less likely than I once thought it was, for two reasons:
1.  Means testing will result in a growing pool of pensioners claiming a managed benefit (Pension Credit or whatever) and that is rather more expensive to administer than a basic flat rate
2.  The direction of travel now seems to be increasing the eligibility age for SP

MattMattMattUK

Yes it should be scrapped

njkmr said:

MattMattMattUK said:

njkmr said:

How about matching it to Spain's pension .
I believe thats about £25000 per year.
No that im near drawing it yet unfortunately.

Probably just about affordable if we had Spanish levels of taxation, 10% VAT on food, no tax free allowance for income tax (tax paid from the first Euro earned), higher property taxes than UK council tax etc. 

People in the UK seem to want all the nice benefits but seem to have an extreme reluctance to actually pay for them first. 

I'm pretty certain Council tax is lower in Spain.
Properties similar in size to mine with a pool is about €450-€650 per year , plus bin tax of about €150 per year.

Depending on the region the IBI (Property ownership tax) is 0.4-1.1% of the cadastral value of the property (which is somewhat random and not entirely related to it's market, though almost always less than market value), so on say a €500k house that is €2,000-5,500 pa. A two bed flat in Barcelona might pay €400-500, a medium size house easily €2,000 or more, it could be cheaper in other regions. 
There is also the municipal tax (bins and water drainage) which is €80-300 depending on the location. 
For non-residents there is also a wealth tax on properties over €700k of between 0.25-3.12%.

njkmr said:

My Council tax here is £330 per month. 
Considerably dearer here.

Council tax varies considerably by council, for Band D ranges from £609 pa to £4,843 pa. Where I am that amount would put you in a band G or H property, which would be a property worth at least £1.25 million for band G and H would be £3 million or more. In Spain the tax on that property would be £13-33k pa. 

stripling

No it should be kept

enthusiasticsaver said:

njkmr said:

How about matching it to Spain's pension .
I believe thats about £25000 per year.
No that im near drawing it yet unfortunately.

Apparently the average state pension in Spain is 900 euros a month so way off £25k.  They have similar system to us with a three pillar system. The state pension where you have to work until 65 or 67 I think for a minimum of 35 years to get full pension.  Employees pay in about 5% and their employers 24% of their income.  It is topped up by private or occupational pensions like here and then there is a nominal low income/minimum pension for non earners similar to pension credit here I guess. The only way you can get £25k is to have a state pension and a private one which is more or less the same as the UK. 

That's not quite right.
Half my family is Spanish and my sister is on a Spanish state pension, I paid taxes in Spain. There's basically 2 systems, one an old one that only a few very elderly are on now - we used to call them the Franco pension, I don't know the proper name. Anyway, they are relatively small and I've seen real elderly poverty in some rural areas. 

The majority in Spain are on a pension relative to their average earnings with a ceiling so it doesn't get too silly. Once you draw a state pension, you are not allowed to work, to free up jobs, although you can run a business. You become eligible for 'something' after 10 years but the full pension eligibility is 35 tax years. 

Private pensions are not pushed in Europe as much as they are in the UK it's a very British-roll-back-the-state-privatise-your-auntie thing. France also has good state pensions. 

Most of my friends and family in Spain do not have private pensions. My cousin does but he worked for a foreign multinational. My sister gets more in a week in her State Pension than what a British person gets in a month. It's still not huge but if mortgages are paid off it is much more liveable. 

The other important thing to be aware of is a Spanish (and French)  pensioner who rents a home benefits from secure tenancies and strictly regulated rent increases.  A British pensioner who rents is now in a very bad, insecure situation and the numbers are increasing. Britain is going to see more and more pensioner insecurity and poverty going forward. 

hugheskevi

Even if you have a 'double-lock' of uprating by the better of earnings or CPI, the system is still unsustainable in the long-run. Given that prices are sometimes higher than earnings, a double-lock would constantly escalate State Pension as a proportion of earnings, eventually reaching unsustainable levels. The point at which it would become unsustainable would just take longer to reach than under the Triple Lock.

An alternative system would be to have specify the proportion of average earnings a full rate of new State Pension is intended to replace, eg 33%. That provides planning certainty upon which to base occupational and private pension saving. 

Whilst the State Pension is at or below target, it is uprated by the best of earnings, prices or 0%. Hence it can temporarily rise above target to ensure pensioners don't face declining real income, and combat deflation if necessary. If the State Pension is above target, it increases by the better of CPI and 0%, enabling it to gradually fall back to target without reducing incomes in real terms.

hyubh

stripling said:

Private pensions are not pushed in Europe as much as they are in the UK it's a very British-roll-back-the-state-privatise-your-auntie thing. France also has good state pensions.

Yes, the then-government's big push for 'contracting out' in the 1980s was a terrible thing for the now-pensioners concerned. Oh, hang on...



(via https://researchbriefings.files.parliament.uk/documents/SN07096/SN07096.pdf)

squirrelpie

Everybody is ignoring both history and experience. The pledge was made at a time when the pension was historically low and was intended to ensure that it increased back to a more sensible level. So there's a question of whether it has got there and if so what should replace it. That's the historical bit. Recent experience has shown that inflation and wages work in different ways and that basing an increase on the past year's values effectively means double-counting inflations spikes, because the wage rise spike follows the inflation rise. So again, what should replace it? Evidently not just some one or two factors from the present formula.

But is there anybody in the government who is smart enough to come up with a replacement that both pensioners and not-yet-pensioners will willingly accept? What are the various parties promising after the next election?