Retirement

[teamsaint]

The only trouble is that this is demonstrably not how it actually works in practice. If people really do expect this, wouldn't they expect the government of the day to invest that money wisely on their behalf for a pension later in life rather than not investign it at all? State benefits being paid to people of and above so-called "state retirement age" are all funded by taxes being collected by government a few weeks before they're paid out; what kind of investment for a pension is that?

Why should taxpayers expect governments to do this properly when that's not what they're in business to do?

But governments ARE in this business, because that is what we elect them to do.
you call it what you like. Everybody else thinks that it is a pension entitlement, whether or not it comes from invested funds. There are in any case plenty of historical examples of pensions paid from current revenues.

Better perhaps to focus on the issues facing those who will have to work till age 68, in an era of sky high house prices, woeful private pension arrangements and flat wages, and who will really need the state pension, as they think of it.

[ahinton]

But governments ARE in this business, because that is what we elect them to do.

then we should question whether that is a sensible course of action if these people do not have the professional expertise to do it, not least because the various rises in "state retirement age" have less and less relationship with actual retirement for more and more people and, perhaps more importantly, because they're just means of admitting that the money isn't there to do this without anyone hopefully noticing this. Never mind the number of years for which some people will take their state retirement benefit; when that scheme began, far fewer people ever reached "state retirement age" at all. The more successful NHS becomes (and we surely all want that, don't we?), the greater the drain on funds to pay out this benefit.

you call it what you like. Everybody else thinks that it is a pension entitlement, whether or not it comes from invested funds. There are in any case plenty of historical examples of pensions paid from current revenues.

That "everyone else" doesn't appear to include DWP that pays the benefit; although it calls itself "The Pension Service", annual letters that its sends out each February to recipients detailing the increase to take effect from around the beginning of the next tax year are headed ABOUT THE GENERAL INCREASES IN BENEFITS and the new figures for each claimant are headed HOW YOUR BENEFIT IS MADE UP. What people think it is must be up to them.

Better perhaps to focus on the issues facing those who will have to work till age 68, in an era of sky high house prices, woeful private pension arrangements and flat wages, and who will really need the state pension, as they think of it.

Many people already work well beyond that age, some from choice, some from necessity and some from both. I don't think that the sky high house price phenomenon will continue and I expect it to run out of steam in many places outside the capital; I do not imagine Russian oligarchs wanting to buy properties on new housing estates just because no one else can afford them. It will be a good thing if this bubble does burst, too, because most UK citizens' pay bears no realistic relationship to the price of homes there. Those who "really need the state pension" as the basis of their incomes in retirement (should they take it) will still have a nasty shock, however, because it's not going to keep them to any decent standard at all.

[teamsaint]

The money is there. This county has never been wealthier, never had a bigger GDP.
Its a question of will. The fact that the state retirement pension won't keep people in luxury is no reason at all to denigrate its value to those people who really need it, probably a lot of musicians included.

Still, it must all be alright, because we all know the state pension is modest, and house prices are going to fall .

You really should pop into our office sometime and tell this stuff to the twenty somethings paying 40% deductions and looking at a working life till age 70 . I'm sure they'll thank you.

[antongould]

The money is there. This county has never been wealthier, never had a bigger GDP.
Its a question of will. The fact that the state retirement pension won't keep people in luxury is no reason at all to denigrate its value to those people who really need it, probably a lot of musicians included.

Still, it must all be alright, because we all know the state pension is modest, and house prices are going to fall .

You really should pop into our office sometime and tell this stuff to the twenty somethings paying 40% deductions and looking at a working life till age 70 . I'm sure they'll thank you.

Agree with you ts .... but the UK is awash with what seem to be called timebombs and there seems very little will to do anything about them .....

[jean]

What I don't understand is how anyone can believe that those with the 'professional expertise' have ever used it to look after the interests of the recipients of the pensions they were supposedly so good at providing.

[teamsaint]

Agree with you ts .... but the UK is awash with what seem to be called timebombs and there seems very little will to do anything about them .....

Well, it depends who is calling them timebombs, AG. for example, the nonsense about life expectancy reaching 100 is already unravelling.
It's very important to separate narratives created by those with an agenda, from something approaching truth or fact, isn't it?

Unfortunately, the will do make things better ( the things that so very many people agree about,housing, health, education, pensions, transport, etc) is somewhat hampered by the reluctance of those with real means, ( big corporations , the very wealthy, and the very comfortable upper middle classes) to pay a bit more to make them happen.

[teamsaint]

What I don't understand is how anyone can believe that those with the 'professional expertise' have ever used it to look after the interests of the recipients of the pensions they were supposedly so good at providing.

Well quite.

John Grisham's The Rainmaker should be required reading for all 6th form students.
Well worth a read, tells you most of what you need to know about insurance.......

[ahinton]

The money is there. This county has never been wealthier, never had a bigger GDP.

Or as many people, many of them living longer than they used to do.

The fact that the state retirement pension won't keep people in luxury is no reason at all to denigrate its value to those people who really need it, probably a lot of musicians included.

Agreed, of course but, at the same time, there's no reason at all to assume that it will keep people to a decent standard (I didn't mention luxury) or be most people's principal income source.

Still, it must all be alright, because we all know the state pension is modest, and house prices are going to fall

I don't think that it's likely to be "alright" at all and I stated that I anticipate the housing market bubble to burst, not that it WILL do so; it is unsustainable, after all.

You really should pop into our office sometime and tell this stuff to the twenty somethings paying 40% deductions and looking at a working life till age 70 . I'm sure they'll thank you.

Thank you for the kind invitation but no thanks, since I do not expect things to work out well. More and more people are now renting rather than buying their homes, albeit not from choice, but some are struggling to afford to do even that, not least becuase increases in sale prices for homes means increases in rental costs. Add to this the other burdensome commitments such as tuition fees debt and the cause for optimism is pretty much unfounded, so I'm not sure why you'd assume that I think that things will be "alright"!

[ahinton]

What I don't understand is how anyone can believe that those with the 'professional expertise' have ever used it to look after the interests of the recipients of the pensions they were supposedly so good at providing.

Whilst I accept your premise here in principle, at least they can sometimes be held accountable when they demonstrably fail to do so, whereas the government cannot; it is not a regulated financial adviser or pension trustee so cannot be brought to book for misconduct or even bad planning and, in any case, governments change.

[french frank]

to the twenty somethings paying 40% deductions

This ignores the different income levels at which contributions become payable at all after free allowances (personal tax allowance for income tax (£11,500), weekly wage level for NIC (£157), yearly income for student loans (£21,000) &c.).

[teamsaint]

This ignores the different income levels at which contributions become payable at all after free allowances (personal tax allowance for income tax (£11,500), weekly wage level for NIC (£157), yearly income for student loans (£21,000) &c.).

Marginal rate is what I am talking about.
IT 20%
NIC 11%
Student Loans 9%

Many pay this rate on anything over about £20k PA

Meanwhile the top marginal rate paid by those on over £150k is 45 %, plus 2% NI on anything over the top earnings limit.

[french frank]

Marginal rate is what I am talking about.

Of course you are - and on that basis, the more you earn, the more you pay (isn't NIC 12% above £157pw, btw?). But apart from the student loan - which is one cup of coffee per week for every £20 coming in above the first £21,000 - it's what all workers pay, not just the twenty somethings.

[Add: https://www.moneyadviceservice.org.u...nce-deductions ]

[teamsaint]

Of course you are - and on that basis, the more you earn, the more you pay (isn't NIC 12% above £157pw, btw?). But apart from the student loan - which is one cup of coffee per week for every £20 coming in above the first £21,000 - it's what all workers pay, not just the twenty somethings.

Well no it isn't as simple as that of course, because those above the NIC earnings threshold , around £40k, pay only 2% NI on their top slice.

Marginal rates for people on modest incomes of whatever age really matter, but the lower age groups which include so many graduates are getting much worse hit, with a treble whammy of high marginal rates, high house prices, and flat wages.
Oh, make that quadruple, as decent pensions company pensions ( final salary etc)are increasingly eaten away.
You should see our pension arrangements. Laughable in terms of ever providing a retirement income.

[ahinton]

isn't NIC 12% above £157pw, btw?

It is indeed and has been so for several years. It's a pity that it's not collected along with income tax as this would cost less; maybe it will be eventually (after all, NIC2's been consigned to history, so the need for simplification is presumably in at least some people's minds).

[ahinton]

Well no it isn't as simple as that of course, because those above the NIC earnings threshold , around £40k, pay only 2% NI on their top slice.

Marginal rates for people on modest incomes of whatever age really matter, but the lower age groups which include so many graduates are getting much worse hit, and a treble whammy of high marginal rates, high house prices, and flat wages.
Oh, make that quadruple, as decent pensions company pensions ( final salary etc)are increasingly eaten away.
You should see our pension arrangements. Laughable in terms of ever providing a retirement income.

I haven't seen them, of course, but what you write about them surprises me not at all; it is indeed a widespead problem that shows no signs of improving in the foreseeable future.