The inevitable pre-budget speculation on pensions

RogerPensionGuy

af1963 said:

I'm old enough to remember how unpopular Margaret Thatcher was 18 months into government, even among Conservatives. 

Just checked the  details again: the Tories were 24 points behind Labour in Dec 1980 in what was still largely a 2-party system.  By Dec 1981 they were running third, 16 points behind the Lib SDP Alliance. But at the election in June 1983, they finished 16 points ahead of Labour and 18 ahead of the Alliance.

Anyone basing their personal financial decisions on the expectation that the next election is a cert for the current leading party is being hugely naive.

https://www.theguardian.com/politics/2013/apr/09/margaret-thatcher-falklands-gamble?CMP=Share_AndroidApp_Other

Somebody

Albermarle said:

I am sure the Labour Party will not have given up on the next election, so will not be willing to take the flak for doing all those unpopular things.
As was once said a week is a long time in politics. In 3.5 years literally anything could happen.

In my view, Labour have already lost the next election as they won't be forgiven for bringing pensions into estates for IHT. 

MK62

While it no doubt has major implications for many, the majority of the electorate won't even know about that change......and of those that do, many won't really appreciate exactly what the implications of it are to them.

MeteredOut

german_keeper said:

BlackKnightMonty said:

Eldi_Dos said:

BlackKnightMonty said:

RogerPensionGuy said:

Cobbler_tone said:

Today I have read about a 2p increase on IC and 2p reduction on NI. Reducing or scrapping NI relief on salary sacrifice. Reducing the TFLS to £100k. Extending the freeze on tax bands.
They may not do any of them but at the same time could do all of them. If they did I think some posters on here would go into meltdown. Being close to retirement could mean a case of damage limitation but I’m sure they’ll be an impact somewhere but hopefully not enough to change my plans.

With the current blackhole, economic outlook/GDP/age demographics etc and having in place a sensible headroom for the following few budgets, pulling a fair few levers looks very likely to me.

Only one item comes to mind that they won't pull on, state pension tripple lock. 

We will see on the 26th.

Shame, it’s breaking the economy, and quite frankly society.

Suppose if you repeat a mantra often enough some people will start to believe it.

Talk to anyone under 40 about what they think of the triple lock…

I suspect the vast majority wouldn't have a clue what you were talking about.

And those that do will also be adamant the state pension won't exist when they reach the age to qualify for it. Or it will be heavily means tested. Unfortunately, much of that cohort get their "news" from click-bait/rage-bait social media, and live in a news-bubble where the algorithms push content that reinforces their view that the majority share their opinion.

BlackKnightMonty

Totally sustainable. Move along, move along…

michaels

Presumably as the triple lock basically fixes the state pension relative to average income, the overall cost as a share of GDP will simply reflect demographics?

BlackKnightMonty

michaels said:

Presumably as the triple lock basically fixes the state pension relative to average income, the overall cost as a share of GDP will simply reflect demographics?

The projection shows SP rising as a percentage of GDP for the next +40 years. Then falling. I think the fall is due to the lower birth rate:

QrizB

michaels said:

Presumably as the triple lock basically fixes the state pension relative to average income, the overall cost as a share of GDP will simply reflect demographics?

And any changes in state pension age.

I'd expect to see a dip in that curve to reflect the increase in SPA to 68 in the mid-40s, for example.

I'm also curious about the demographics assumed by the FRS for the second half of the century, since a lot of those people haven't been born yet.

hugheskevi

michaels said:

Presumably as the triple lock basically fixes the state pension relative to average income, the overall cost as a share of GDP will simply reflect demographics?

Office for Budget Responsibility estimates the long-term annual cost of Triple Lock to be 4.41% p/a and earnings to increase by 3.83%.

A 0.6 percentage point increase is not much in any single year, but compounds rapidly. In practice, the cost will not be in every year, but through unpredictable, bigger increases in certain years when inflation or 2.5% exceeds earnings growth.

Albermarle

Somebody said:

Albermarle said:

I am sure the Labour Party will not have given up on the next election, so will not be willing to take the flak for doing all those unpopular things.
As was once said a week is a long time in politics. In 3.5 years literally anything could happen.

In my view, Labour have already lost the next election as they won't be forgiven for bringing pensions into estates for IHT. 

Currently about 4% of estates pay IHT. With increases in house prices and frozen thresholds, this was expected to slowly increase to 7 or 8%. With the inclusion of unused pension pots it is expected to rise to 10%.
Another prediction is that the changes will bring another 10,000 estates per year into IHT, and increase the bill for another 40,000.
Some of these estates will only have small IHT bills.
The overall impact on the population as a whole will be small, and will inevitably mainly affect the better off.
Even some ( not all) people affected, realise in the end it was a loophole that would inevitably get closed one day.

Predicted effect on next election - very small.