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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 22nd Nov 11, 10:11 AM
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    Former MSE Helen
    MSE News: Calls for 'graduated' state pension
    • #1
    • 22nd Nov 11, 10:11 AM
    MSE News: Calls for 'graduated' state pension 22nd Nov 11 at 10:11 AM
    This is the discussion thread for the following MSE News Story:

    "The Government should consider paying the state pension early but then offering less in retirement, a report says today ..."

Page 1
    • MacMickster
    • By MacMickster 22nd Nov 11, 10:48 AM
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    MacMickster
    • #2
    • 22nd Nov 11, 10:48 AM
    • #2
    • 22nd Nov 11, 10:48 AM
    The idea of a flexible retirement age with an actuarily reduced or supplemented state pension is attractive, giving people more choice to plan their retirement, however there would need to be precautions to ensure that there was no incentive to take a lower pension earlier, only for this to be then topped up by benefits.

    Hopefully this would encourage people to make payments towards a personal pension, the incentive being potential earlier retirement combining their income from both state and personal pensions rather than having to work until an ever increasing state pension age.
    • gadgetmind
    • By gadgetmind 22nd Nov 11, 10:52 AM
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    gadgetmind
    • #3
    • 22nd Nov 11, 10:52 AM
    • #3
    • 22nd Nov 11, 10:52 AM
    I guess it all depends on how much you'd lose if you took it 5/10 years early.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • Paul_Herring
    • By Paul_Herring 22nd Nov 11, 10:56 AM
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    • #4
    • 22nd Nov 11, 10:56 AM
    • #4
    • 22nd Nov 11, 10:56 AM
    Hopefully this would encourage people to make payments towards a personal pension, the incentive being potential earlier retirement combining their income from both state and personal pensions rather than having to work until an ever increasing state pension age.
    Originally posted by MacMickster
    The incentive is already there - you can start taking a personal pension from age 55. If that's not enough incentive for those not already doing it, then I fail to see how allowing people to take their state pension earlier is going to induce them to put more away than they already are (i.e. nothing.)
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
    • MacMickster
    • By MacMickster 22nd Nov 11, 11:09 AM
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    MacMickster
    • #5
    • 22nd Nov 11, 11:09 AM
    • #5
    • 22nd Nov 11, 11:09 AM
    The incentive is already there - you can start taking a personal pension from age 55. If that's not enough incentive for those not already doing it, then I fail to see how allowing people to take their state pension earlier is going to induce them to put more away than they already are (i.e. nothing.)
    Originally posted by Paul_Herring
    The problem is that in order to retire early, your income from your personal pension would have to be sufficient to live on alone. You would then receive a relatively large boost in income on reaching state pension age.

    Many realise that they have little realistic prospect of saving enough to provide a large enough private pension to enable them to retire, say, 5 years early. If, however, they were able to supplement their private pension with a reduced state pension then this may encourage them to make their own pension provision.
    • Paul_Herring
    • By Paul_Herring 22nd Nov 11, 11:31 AM
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    • #6
    • 22nd Nov 11, 11:31 AM
    • #6
    • 22nd Nov 11, 11:31 AM
    The problem is that in order to retire early, your income from your personal pension would have to be sufficient to live on alone. You would then receive a relatively large boost in income on reaching state pension age.

    Many realise that they have little realistic prospect of saving enough to provide a large enough private pension to enable them to retire, say, 5 years early. If, however, they were able to supplement their private pension with a reduced state pension then this may encourage them to make their own pension provision.
    Originally posted by MacMickster
    The full state pension isn't really that much (102.15 per week - or 17 hours at minimum wage - less if you get more per hour.)

    Having a 'reduced amount of it' isn't really going to change very much.

    I'm assuming that no pension credit will be available until the 'state retirement age' (which I shall assume to be the age you get 100% of your state pension.)
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
    • jennifernil
    • By jennifernil 22nd Nov 11, 3:51 PM
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    jennifernil
    • #7
    • 22nd Nov 11, 3:51 PM
    • #7
    • 22nd Nov 11, 3:51 PM
    They have a scheme something like this in Norway. There, pension age is 67, but you can retire completely and take your pension from 62, at a reduced rate, or any time up to 72. If you wait till after 67 you get a higher rate.

    Once you claim it, it stays at that reduced (or increased) rate forever (with index linking of course).

    They also have the "part work part pension" scheme where you work say 3 days a week for a proportionally reduced wage, and then claim a portion of your pension to help make up the shortfall.

    I don't know all the details as this only came in this year, after OH retired, but it seems very flexible as you seem to be able to increase your working hours again if you change your mind.
    Last edited by jennifernil; 23-11-2011 at 11:05 AM.
    • gadgetmind
    • By gadgetmind 22nd Nov 11, 5:03 PM
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    • #8
    • 22nd Nov 11, 5:03 PM
    • #8
    • 22nd Nov 11, 5:03 PM
    The full state pension isn't really that much
    Originally posted by Paul_Herring
    It would take a pot of over 75k to afford that in a private pension, so it really does reduce what people have to save. The only people who think the state pension isn't much are those who save nothing for themselves and use the state pension as the core of their retirement income rather than a handy top-up.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • Paul_Herring
    • By Paul_Herring 22nd Nov 11, 7:09 PM
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    Paul_Herring
    • #9
    • 22nd Nov 11, 7:09 PM
    • #9
    • 22nd Nov 11, 7:09 PM
    It would take a pot of over 75k to afford that in a private pension, so it really does reduce what people have to save.
    Originally posted by gadgetmind
    If you think 100 per week is a lot, then all power to you. I know it won't be for me; assuming there is even a state pension scheme around when I 'retire.'

    The only people who think the state pension isn't much are those who save nothing for themselves and use the state pension as the core of their retirement income rather than a handy top-up.
    No, that's not the only group of people who think it isn't much.

    At least one other group is those who are actively saving enough such that they don't have to rely on the state pension.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
    • gadgetmind
    • By gadgetmind 22nd Nov 11, 9:04 PM
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    gadgetmind
    If you think 100 per week is a lot, then all power to you.
    Originally posted by Paul_Herring
    Did I say that?

    At least one other group is those who are actively saving enough such that they don't have to rely on the state pension.
    I know I'll have to bridge the decade or so between retirement and SPA from my own funds, and could see out my days without SP, but it's a nice boost.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • Paul_Herring
    • By Paul_Herring 22nd Nov 11, 9:23 PM
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    Paul_Herring
    Did I say that?
    Originally posted by gadgetmind
    No, but I read it as implied by the way you replied to my comment - sorry if that's not what you were getting at.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
    • BobQ
    • By BobQ 22nd Nov 11, 10:03 PM
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    BobQ
    The idea has some merit. But the notion of encouraging people to work longer is fine if they want to do it. A more useful approach would be to incentivise those that can afford to retire to do so earlier. While age discrimination is wrong, I cannot see how it helps the younger generation to encourage anyone to work longer than they need to taking jobs that could be filled by younger people.
    • Paul_Herring
    • By Paul_Herring 22nd Nov 11, 10:16 PM
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    Paul_Herring
    I cannot see how it helps the younger generation to encourage anyone to work longer than they need to taking jobs that could be filled by younger people.
    Originally posted by BobQ
    While this may be the popular opinion of what goes on, I wonder if this is really the case.

    e.g. does a senior project manager keeping their job really prevent an 18 yr old having that job?

    Or more realistically, if they were to retire 'early,' would everyone shuffling up the organisational chart (presuming the position would be filled) really result in the employment of that 18 yr old at the lower ranks?

    I'm not too sure.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
    • gadgetmind
    • By gadgetmind 23rd Nov 11, 7:39 AM
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    gadgetmind
    would everyone shuffling up the organisational chart (presuming the position would be filled) really result in the employment of that 18 yr old at the lower ranks?
    Originally posted by Paul_Herring
    Yes. that happens, though some people sprint up the org chart while others seem reluctant to even shuffle. And you definitely get cases of "dead mens boots" where advancement is impossible unless the incumbent retires or dies.

    What's annoying is that it's still very difficult to recruit in the UK for many roles, and we're increasingly reliant on cross-EU recruitment and even non-EU nationals if we can get the visas.

    I wonder if UK youngsters are applying for overseas roles to quite this extent?
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • property.advert
    • By property.advert 23rd Nov 11, 9:38 AM
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    property.advert
    At higher income levels it matters less and less but if we take the average income of circa 25k per annum then it does make a large difference.

    Even after a full working life up to age 55, many (on a 25k salary) will not have a pension able to pay anything like 50% of that. Just to highlight the argument let's say their pension is 5k at age 55.

    Unless they could live on 5k a year, they would have to use savings (of how much on 25k a year ?) to bridge the gap until the age of 65 when they will get their pension of 5k a year, making an income of 10k per year.

    This is a huge spike, being a 100% increase in their income before taxes.

    But what if they were able to draw on a reduced pension of say 2.5k per year, making a total income of 7.5k ? That may be enough to live on but would cost the state no more money.

    With 3/4/5 or however many million unemployed, surely the idea is to get old people out of work, creating jobs for the younger generation, rather than have them pushing on for another decade or so.
    • Paul_Herring
    • By Paul_Herring 23rd Nov 11, 10:18 AM
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    Paul_Herring
    Just to highlight the argument let's say their pension is 5k at age 55.
    Originally posted by property.advert
    Ah, Mr Advert, you spoil us with your estimates

    Spot quotes on (to pick a site from google at random) http://www.sharingpensions.co.uk/pension_annuity8.htm indicates that for a 5,000 (gross) pension a 55yr old man needs a pot of 96,600, a woman 101,400.

    To pick (again at 'random') some headlines in the papers recently:

    Average woman aged 56 has just 9,100 pension pot (Telegraph, Feb '11)

    The average pension pot [at retirement] is 25,000 (Fool/LoveMoney, March '11)

    But what if they were able to draw on a reduced pension of say 2.5k per year, making a total income of 7.5k ? That may be enough to live on but would cost the state no more money.
    Originally posted by property.advert
    I somewhat doubt that at age 55, the state would pay as much as 50% of the full state pension.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • FATBALLZ
    Terrible idea. Far too many stupid people who will just think 'I can get extra money aged 60, gimme now'. 10 years down the line daily mail headlines "poor pensioners living in poverty, please increase tax 15%".
    • gadgetmind
    • By gadgetmind 23rd Nov 11, 6:24 PM
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    gadgetmind
    Terrible idea. Far too many stupid people who will just think 'I can get extra money aged 60, gimme now'. 10 years down the line daily mail headlines "poor pensioners living in poverty, please increase tax 15%".
    Originally posted by FATBALLZ
    I guess that stupid is as stupid does, and always will be. Should those of use less stupid let the stupid be a shackle around out ankles?

    And yes, everyone at the DM goes into the stupid category, as does everyone who reads said paper, other than those who do it ironically.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • FATBALLZ
    I guess that stupid is as stupid does, and always will be. Should those of use less stupid let the stupid be a shackle around out ankles?
    Originally posted by gadgetmind
    We shouldn't, but inevitably we are forced to bear the brunt of the stupid decisions made by idiots. Just look at the financial crisis and the state of the Eurozone.
    • Paul_Herring
    • By Paul_Herring 24th Nov 11, 8:24 AM
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    Paul_Herring
    Should those of use less stupid let the stupid be a shackle around out ankles?
    Originally posted by gadgetmind
    We already do, in case you hadn't noticed.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
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