Gov launching pension age review

Silvertabby

artyboy said:

Silvertabby said:

Stubod said:

..would be interested to see the "real value" of the SP over time, and compare how much it has changed (up or down) over the last 50 yers or so taking into account rpi. Have had a google, but can't find anything. 

The modern UK State pension dates from 1948, being part of Beveridge's post war welfare state reforms. The aim of the State pension was just to provide a universal safety net against poverty in old age.  Beveridge himself stressed that the pension was only the bare minimum needed, and that anyone who wanted more would have to provide that for themselves.

Back in 1948 the weekly pension rates were:

Single person £1.30
Married couple £2.10

There are various means of uplifting these figures to present day, but I've used the public sector pensions increase tables (RPI to 2010 then CPI to date), giving us:

£1.30 X 44.2248 = £57.49
£2.10 X 44.2249 = £92.87

Later, it became possible to increase the State pension by means of salary related Graduated Pension (1961 to 1975) and SERPS/SP2 (1978 to 2016). 

ADD
A cost of living/inflation calculator reckons:

£1.30 = £68.77
£2.10 = £111.09

A bit better, but still nowhere near today's pensions.  Not even just the old basic State pension. 
 

Ah, but there was no Netflix, Starbucks, or fancy foreign holidays back then. People grew their own veg, and there wasn't the same socialisng culture (well, maybe the odd bottle of parsnip wine with Fred and Ethel at Number 23).

Even accounting for inflation, it was a simpler more austere life. And sweets were still rationed in 1948!

In so many ways!  The heating bill would have been the cost of a few sacks of nutty slack, and the bath was still stored outside the back door.  So glad to be retired now, rather than then.

OldScientist

Silvertabby said:

artyboy said:

Silvertabby said:

Stubod said:

..would be interested to see the "real value" of the SP over time, and compare how much it has changed (up or down) over the last 50 yers or so taking into account rpi. Have had a google, but can't find anything. 

The modern UK State pension dates from 1948, being part of Beveridge's post war welfare state reforms. The aim of the State pension was just to provide a universal safety net against poverty in old age.  Beveridge himself stressed that the pension was only the bare minimum needed, and that anyone who wanted more would have to provide that for themselves.

Back in 1948 the weekly pension rates were:

Single person £1.30
Married couple £2.10

There are various means of uplifting these figures to present day, but I've used the public sector pensions increase tables (RPI to 2010 then CPI to date), giving us:

£1.30 X 44.2248 = £57.49
£2.10 X 44.2249 = £92.87

Later, it became possible to increase the State pension by means of salary related Graduated Pension (1961 to 1975) and SERPS/SP2 (1978 to 2016). 

ADD
A cost of living/inflation calculator reckons:

£1.30 = £68.77
£2.10 = £111.09

A bit better, but still nowhere near today's pensions.  Not even just the old basic State pension. 
 

Ah, but there was no Netflix, Starbucks, or fancy foreign holidays back then. People grew their own veg, and there wasn't the same socialisng culture (well, maybe the odd bottle of parsnip wine with Fred and Ethel at Number 23).

Even accounting for inflation, it was a simpler more austere life. And sweets were still rationed in 1948!

In so many ways!  The heating bill would have been the cost of a few sacks of nutty slack, and the bath was still stored outside the back door.  So glad to be retired now, rather than then.

@artyboy Socialising was the pub, cinema, working mens clubs, dance halls, and the footie (and other sports). Culture was as diverse and rich then as it is now.

@Silvertabby Life expectancy at 65 in 1951 was 11 and 15 years for males and females, respectively - roughly half the amount of funding needed to support the state pension compared to today. So, I'd agree that it is nicer to be retired now than then.

Andy_L

I recall reading a idea (I think it was in one of the House of Lords briefing notes) that while people are accruing SP it should be earnings linked , as people (who bother to) plan on having X% of their salary in retirement to "keep them in a manner to which they have become accustomed" & then when it is in payment it should track inflation in order to maintain that lifestyle

QrizB

Andy_L said:

I recall reading a idea (I think it was in one of the House of Lords briefing notes) that while people are accruing SP it should be earnings linked

Some sort of state earnings-related pension scheme, you mean?

It'll never catch on.

BlackKnightMonty

Andy_L said:

I recall reading a idea (I think it was in one of the House of Lords briefing notes) that while people are accruing SP it should be earnings linked , as people (who bother to) plan on having X% of their salary in retirement to "keep them in a manner to which they have become accustomed" & then when it is in payment it should track inflation in order to maintain that lifestyle

Your NI contributions do not pay towards your own pension pot; they pay for the pension of current retirees.

Your NI contributions only qualify you, through a social promise, a similar deal for when you retire.

There is no state pension pot. The promise is just that.

Cobbler_tone

Reconciling 'then' and 'now' is nigh on impossible, regardless of how many graphs and spreadsheets you want to publish.
In the late 50's my parents bought their house for £800. They earnt £9 a week between them, so straight away you can see one issue compared to today. We got our first landline in the late 70's and didn't dream of buying the first VHS players for several hundred pounds. My dad sold his pushbike to buy cigarettes. They must have packed up in the 80's and no generation has smoked since, not that they could afford to now. You wouldn't have spent £40 at the cinema or £100+ on a ticket for a concert/show. I used to pay £2 to go and watch my local football club and buy crisps for 3p (price marked). We bought from catalogues before online was a thing, in fact my mum still does! We had one holiday abroad throughout my entire childhood (on a coach) and my elderly parents have never flown. My dad did two years national service in Hong Kong, reached by boat.

Whilst there is still far more choice and social expectation, there is still choice.
No one has to spend £16 on two coffees and cakes from Costa. Your kids don't have to have every new console that is launched, £200 trainers, or £1000 iphone....in fact, you don't even need to have kids (not the best move financially!) and can identify as whatever you want!

It must be true that there is more money about (and accessible) than there ever has been. The standard of living must also have improved and I'm sure the oldies remember pre-central heating days.
Maybe it is just a case of those that 'have' and 'haven't' got access to a comfortable standard of living has shifted but I am sure it is no coincidence that those who probably struggled back in the day are now the comfortable ones.
In a roundabout way, many of which really don't need the 'triple lock', no more than they need the winter fuel allowance. Affordable housing will unlock things a lot more for the upcoming generations, or the housing bubble needs to fully burst.

I still think people need to make better choices. As a Gen X, leaving school with no qualifications (of note) and starting on a YTS scheme at 16, I have done well for myself without handouts but always with a roof over my head. I'm not disputing that some of that was down to luck and timing but I get frustrated at the amount of people who approach life as the 'victim'...just be accountable and not entitled.

As to which political party are going to try the above, particularly the triple lock....GOOD LUCK!!

BlackKnightMonty

Cobbler_tone said:

Reconciling 'then' and 'now' is nigh on impossible, regardless of how many graphs and spreadsheets you want to publish.
In the late 50's my parents bought their house for £800. They earnt £9 a week between them, so straight away you can see one issue compared to today. We got our first landline in the late 70's and didn't dream of buying the first VHS players for several hundred pounds. My dad sold his pushbike to buy cigarettes. They must have packed up in the 80's and no generation has smoked since, not that they could afford to now. You wouldn't have spent £40 at the cinema or £100+ on a ticket for a concert/show. I used to pay £2 to go and watch my local football club and buy crisps for 3p (price marked). We bought from catalogues before online was a thing, in fact my mum still does! We had one holiday abroad throughout my entire childhood (on a coach) and my elderly parents have never flown. My dad did two years national service in Hong Kong, reached by boat.

Whilst there is still far more choice and social expectation, there is still choice.
No one has to spend £16 on two coffees and cakes from Costa. Your kids don't have to have every new console that is launched, £200 trainers, or £1000 iphone....in fact, you don't even need to have kids (not the best move financially!) and can identify as whatever you want!

It must be true that there is more money about (and accessible) than there ever has been. The standard of living must also have improved and I'm sure the oldies remember pre-central heating days.
Maybe it is just a case of those that 'have' and 'haven't' got access to a comfortable standard of living has shifted but I am sure it is no coincidence that those who probably struggled back in the day are now the comfortable ones.
In a roundabout way, many of which really don't need the 'triple lock', no more than they need the winter fuel allowance. Affordable housing will unlock things a lot more for the upcoming generations, or the housing bubble needs to fully burst.

I still think people need to make better choices. As a Gen X, leaving school with no qualifications (of note) and starting on a YTS scheme at 16, I have done well for myself without handouts but always with a roof over my head. I'm not disputing that some of that was down to luck and timing but I get frustrated at the amount of people who approach life as the 'victim'...just be accountable and not entitled.

As to which political party are going to try the above, particularly the triple lock....GOOD LUCK!!

Hard work isn’t rewarded. Just look at the £100k tax trap.

Introduced by Alistair Darling in 2009, it has remained through all the changes of government. If it had risen with inflation it should now come in at £150k !

It has remained frozen and not lifted for 16 years.

The trap means 60% marginal income tax (65% in Scotland) on income between £100k and £125k.

Plenty of professionals hit this trap in their careers. I have myself and it is brutal. No child benefit, no child care help, no personal tax allowance. Just 2/3rds of your income taken in tax.

Many choose to limit their hours or push the extra earnings into a pension. To avoid the trap.

So the tax drives low productivity behaviour. It disincentives work.

Why work hard to pay 60% income tax; whilst the infrastructure crumbles and the viability of a state pension erodes?

Cobbler_tone

BlackKnightMonty said:

Cobbler_tone said:

Reconciling 'then' and 'now' is nigh on impossible, regardless of how many graphs and spreadsheets you want to publish.
In the late 50's my parents bought their house for £800. They earnt £9 a week between them, so straight away you can see one issue compared to today. We got our first landline in the late 70's and didn't dream of buying the first VHS players for several hundred pounds. My dad sold his pushbike to buy cigarettes. They must have packed up in the 80's and no generation has smoked since, not that they could afford to now. You wouldn't have spent £40 at the cinema or £100+ on a ticket for a concert/show. I used to pay £2 to go and watch my local football club and buy crisps for 3p (price marked). We bought from catalogues before online was a thing, in fact my mum still does! We had one holiday abroad throughout my entire childhood (on a coach) and my elderly parents have never flown. My dad did two years national service in Hong Kong, reached by boat.

Whilst there is still far more choice and social expectation, there is still choice.
No one has to spend £16 on two coffees and cakes from Costa. Your kids don't have to have every new console that is launched, £200 trainers, or £1000 iphone....in fact, you don't even need to have kids (not the best move financially!) and can identify as whatever you want!

It must be true that there is more money about (and accessible) than there ever has been. The standard of living must also have improved and I'm sure the oldies remember pre-central heating days.
Maybe it is just a case of those that 'have' and 'haven't' got access to a comfortable standard of living has shifted but I am sure it is no coincidence that those who probably struggled back in the day are now the comfortable ones.
In a roundabout way, many of which really don't need the 'triple lock', no more than they need the winter fuel allowance. Affordable housing will unlock things a lot more for the upcoming generations, or the housing bubble needs to fully burst.

I still think people need to make better choices. As a Gen X, leaving school with no qualifications (of note) and starting on a YTS scheme at 16, I have done well for myself without handouts but always with a roof over my head. I'm not disputing that some of that was down to luck and timing but I get frustrated at the amount of people who approach life as the 'victim'...just be accountable and not entitled.

As to which political party are going to try the above, particularly the triple lock....GOOD LUCK!!

Hard work isn’t rewarded. Just look at the £100k tax trap.

Introduced by Alistair Darling in 2009, it has remained through all the changes of government. If it had risen with inflation it should now come in at £150k !

It has remained frozen and not lifted for 16 years.

The trap means 60% marginal income tax (65% in Scotland) on income between £100 and £125k.

Plenty of professionals hit this trap in their careers. I have myself and it is brutal. No child benefit, no child care help, no personal tax allowance. Just 2/3rds of your income taken in tax.

Many choose to limit their hours or push the extra earnings into a pension. To a avoid the trap.

So the tax drives low productivity behaviour. It disincentives work.

Why work hard to pay 60% income tax; whilst the infrastructure crumbles and the viability of a state pension erodes?

But that kind of observation is relative. How does a footballer on £100k a week feel about it?

You'll find that as incomes increase, sympathy decreases. I actually know some fools on £150k a year (I mean, you really wouldn't employ them to do a good job), so I don't automatically associate hard work with financial reward.
Even the (ever increasing) band of people finding themselves in the 40% bracket may struggle to get sympathy.
I've navigated that one for many years (including losing any chance of child benefit) but I can't change it, so I don't moan and it's not the end of the world if I pay some extra tax and cut my cloth accordingly.
Meanwhile, those who choose not to work because they will lose benefits might also struggle to get sympathy.
People will by nature be pointing fingers at other cohorts.

I guess it depends what your expectations of life and 'hard work' are. The savvy will be putting £60k into their pension, unless they have committed to a £4k a month mortgage and something fancy on their electric charge point, which wouldn't have been the wisest financial decision at any point.
The positive with the tax bands is that you know what they are and what is available to be the most tax efficient. If your motivation is to grow your net pay today, that's where it gets more challenging. Having said that, with those I know on big money the actual salary is only one part of the picture. With benefits and share options it is normally around 50% of the package.

I don't think you were playing the 'victim' though. 

Andy_L

BlackKnightMonty said:

Andy_L said:

I recall reading a idea (I think it was in one of the House of Lords briefing notes) that while people are accruing SP it should be earnings linked , as people (who bother to) plan on having X% of their salary in retirement to "keep them in a manner to which they have become accustomed" & then when it is in payment it should track inflation in order to maintain that lifestyle

Your NI contributions do not pay towards your own pension pot; they pay for the pension of current retirees.

Your NI contributions only qualify you, through a social promise, a similar deal for when you retire.

There is no state pension pot. The promise is just that.

Sorry, didn't make it clear. The idea was that SP increases with wages (as opposed to inflation or 2.5%) but when you retire it changes to inflation indexation instead.
Not that the amount of state pension you get is based on how much you earn

BlackKnightMonty

Cobbler_tone said:

BlackKnightMonty said:

Cobbler_tone said:

Reconciling 'then' and 'now' is nigh on impossible, regardless of how many graphs and spreadsheets you want to publish.
In the late 50's my parents bought their house for £800. They earnt £9 a week between them, so straight away you can see one issue compared to today. We got our first landline in the late 70's and didn't dream of buying the first VHS players for several hundred pounds. My dad sold his pushbike to buy cigarettes. They must have packed up in the 80's and no generation has smoked since, not that they could afford to now. You wouldn't have spent £40 at the cinema or £100+ on a ticket for a concert/show. I used to pay £2 to go and watch my local football club and buy crisps for 3p (price marked). We bought from catalogues before online was a thing, in fact my mum still does! We had one holiday abroad throughout my entire childhood (on a coach) and my elderly parents have never flown. My dad did two years national service in Hong Kong, reached by boat.

Whilst there is still far more choice and social expectation, there is still choice.
No one has to spend £16 on two coffees and cakes from Costa. Your kids don't have to have every new console that is launched, £200 trainers, or £1000 iphone....in fact, you don't even need to have kids (not the best move financially!) and can identify as whatever you want!

It must be true that there is more money about (and accessible) than there ever has been. The standard of living must also have improved and I'm sure the oldies remember pre-central heating days.
Maybe it is just a case of those that 'have' and 'haven't' got access to a comfortable standard of living has shifted but I am sure it is no coincidence that those who probably struggled back in the day are now the comfortable ones.
In a roundabout way, many of which really don't need the 'triple lock', no more than they need the winter fuel allowance. Affordable housing will unlock things a lot more for the upcoming generations, or the housing bubble needs to fully burst.

I still think people need to make better choices. As a Gen X, leaving school with no qualifications (of note) and starting on a YTS scheme at 16, I have done well for myself without handouts but always with a roof over my head. I'm not disputing that some of that was down to luck and timing but I get frustrated at the amount of people who approach life as the 'victim'...just be accountable and not entitled.

As to which political party are going to try the above, particularly the triple lock....GOOD LUCK!!

Hard work isn’t rewarded. Just look at the £100k tax trap.

Introduced by Alistair Darling in 2009, it has remained through all the changes of government. If it had risen with inflation it should now come in at £150k !

It has remained frozen and not lifted for 16 years.

The trap means 60% marginal income tax (65% in Scotland) on income between £100 and £125k.

Plenty of professionals hit this trap in their careers. I have myself and it is brutal. No child benefit, no child care help, no personal tax allowance. Just 2/3rds of your income taken in tax.

Many choose to limit their hours or push the extra earnings into a pension. To a avoid the trap.

So the tax drives low productivity behaviour. It disincentives work.

Why work hard to pay 60% income tax; whilst the infrastructure crumbles and the viability of a state pension erodes?

But that kind of observation is relative. How does a footballer on £100k a week feel about it?

You'll find that as incomes increase, sympathy decreases. I actually know some fools on £150k a year (I mean, you really wouldn't employ them to do a good job), so I don't automatically associate hard work with financial reward.
Even the (ever increasing) band of people finding themselves in the 40% bracket may struggle to get sympathy.
I've navigated that one for many years (including losing any chance of child benefit) but I can't change it, so I don't moan and it's not the end of the world if I pay some extra tax and cut my cloth accordingly.
Meanwhile, those who choose not to work because they will lose benefits might also struggle to get sympathy.
People will by nature be pointing fingers at other cohorts.

I guess it depends what your expectations of life and 'hard work' are. The savvy will be putting £60k into their pension, unless they have committed to a £4k a month mortgage and something fancy on their electric charge point, which wouldn't have been the wisest financial decision at any point.
The positive with the tax bands is that you know what they are and what is available to be the most tax efficient. If your motivation is to grow your net pay today, that's where it gets more challenging. Having said that, with those I know on big money the actual salary is only one part of the picture. With benefits and share options it is normally around 50% of the package.

I don't think you were playing the 'victim' though. 

I absolutely 100% am playing the victim.

The current system is egregious; and encourages non productivity.