Inflation?

[teamsaint]

Pension pots being raided is a scandal.
And in our stripped down, trickle down economy, too many people don't have a pension pot worth raiding.

[ahinton]

Pension pots being raided is a scandal.
And in our stripped down, trickle down economy, too many people don't have a pension pot worth raiding.

You're correct, of course. But pensions? What are they? Well, OK, I know what they are, of course, but they're surely well on the way to becoming a thing of the past, just like the late but surely not at all lamented currency of pounds, shillings and pence. Pensions used to be regarded as funds on which to draw in retirement, but then retirement itself is likewise becoming an endangered species, partly because some people don't want it and partly because it's a luxury that increasing numbers of others can no longer afford; there are in any case plenty of other means of investment for retirement available to those who think that they might want to retire at some point. Also, while we're about it, the so-called "state pension" (which might also become an endangered species) isn't a "pension" at all - it's a state benefit which, like all other state benefits, is funded by what taxpayers have paid within the past couple of weeks or so and there's no "pension pot" attached to it as no monies are ever invested in any fund over time for the purposes of providing access to a "pension".

By they way, is it appropriate for this thread to be under The Choir? I know how it started but, since there's no evidence of which I am aware that members of vocal ensembles are inflating, might there be a case for its removal to another part of the forum?

[Richard Tarleton]

In 1969 I put a few shillings on Highland Wedding in the Grand National, and won £5 (£84:04 today ). That bought a handsome pair of Chelsea boots . You could get a reasonable pair of Chelsea boots for £84 today, which I suppose means they're relatively still about the same price.

[Richard Tarleton]

By they way, is it appropriate for this thread to be under The Choir? I know how it started but, since there's no evidence of which I am aware that members of vocal ensembles are inflating, might there be a case for its removal to another part of the forum?

Good point will consult m'learned friend - would Platform 3 be appropriate?

[ardcarp]

. But pensions? What are they? Well, OK, I know what they are, of course, but they're surely well on the way to becoming a thing of the past, just like the late but surely not at all lamented currency of pounds, shillings and pence. Pensions used to be regarded as funds on which to draw in retirement, but then retirement itself is likewise becoming an endangered species, partly because some people don't want it and partly because it's a luxury that increasing numbers of others can no longer afford; there are in any case plenty of other means of investment for retirement available to those who think that they might want to retire at some point. Also, while we're about it, the so-called "state pension" (which might also become an endangered species) isn't a "pension" at all - it's a state benefit which, like all other state benefits, is funded by what taxpayers have paid within the past couple of weeks or so and there's no "pension pot" attached to it as no monies are ever invested in any fund over time for the purposes of providing access to a "pension".

I couldn't disagree with you more (in a friendly way appropriate to this board!) especially in the weaselly re-naming by our government of a retirement pension as a 'benefit'. A pension is something you earned as a right by your NI contibutions. A benefit is a hand-out from the state, and now, when you are in receipt of this 'benefit' you no longer get some other genuine benefits. We have an example close to home. A retired person caring (as full-time guardian) for a grandchild applied for a carers' allowance. She received a wonderfully Kafka-esque letter from the DWP saying, "Dear Mrs XXX, We are pleased to inform you that you qualify for a carer's allowance." Below it said, 'Amount payable £0.00" And in the small print, the reason for this was that Mrs XXX was already in receipt of retirement benefit, and as such didn't get any additional benefit payments in spite of 'qualifying' for them. I'm sure the unfairness of this get-out clause is obvious to all.

No, The Choir probably isn't the right place for all this. My fault! But it did start off talking about payments/ salaries for musicians.

[Pulcinella]

Good point will consult m'learned friend - would Platform 3 be appropriate?

I was wondering that too.

[Eine Alpensinfonie]

Sorted

[ahinton]

I couldn't disagree with you more (in a friendly way appropriate to this board!) especially in the weaselly re-naming by our government of a retirement pension as a 'benefit'. A pension is something you earned as a right by your NI contibutions. A benefit is a hand-out from the state, and now, when you are in receipt of this 'benefit' you no longer get some other genuine benefits. We have an example close to home. A retired person caring (as full-time guardian) for a grandchild applied for a carers' allowance. She received a wonderfully Kafka-esque letter from the DWP saying, "Dear Mrs XXX, We are pleased to inform you that you qualify for a carer's allowance." Below it said, 'Amount payable £0.00" And in the small print, the reason for this was that Mrs XXX was already in receipt of retirement benefit, and as such didn't get any additional benefit payments in spite of 'qualifying' for them. I'm sure the unfairness of this get-out clause is obvious to all.

Then we must agree to disagree (again in a friendly way appropriate to this board!!.

I do not know when the benefit payable to people upon attainment of state retirement age was first described by government as a state benefit rather than as a "pension but it's certainly long enough ago for it not to have been the present government. I do not accept that the descriptor is "weaselly"; in fact, it's honest (which isn't something that one might instinctively associate with a government!).

A pension is an investment vehicle for savings purposes (largely to go towards making up for lost salaries upon retirement but not always or only that and increasingly less so these days as ever more people continue to work for money after reaching state retirement age); in most cases, contributions to it are made from salaries from employment or out of profits from businesses and, in the former case, contributions are usually also made by employers. The monies contributed are invesed in a pension fund managed by trustees whose duties include ensuring the best possible financial advice with a view to securing the best possible return from the investment so that, when the pension is vested, it will provide a good income for the investor. Pension contributons may be made until almost age 80, I think (although it might be later than that now - I don't have the current information to hand) and pensions may be vested in most cases between age 55 and age almost 80 (again, this might not be quite up to date).

State retirement benefit is a different anmal altogether. It is geared to the state retirement age at which point entitlement to it kicks in, although individuals may elect to defer it for a time (I'm not sure how long); although tied to state retirement age, it has nothing to do with whether those entitled to it continue to derive an income from work. The quaintly (and misleadingly) termed "National Insurance Contributions" are nothing of the kind, in that, whilst national, they insure no one against any risk and they are compulsory rather than voluntary (excepting the very expensive NIC3 - does anyone really pay those?).

Not only are these "contributions" not paid into a pension fund and invested on the payer's behalf, as with pensions, they also entitle payers not only to state retirement benefit but to a range of other state benefits, so no hypothecation there. These benefit entitlements vary - for example, employees paying them usually entitle themsleves to unemployment benefit but, of course, the self-employed do not. Morevover, NIC4, paid by the self-employed, entitles payers to no benefits whatsoever, presumably on the assumption that they're also paying NIC2 which does; however, NIC2's about to be abolished, so to what benefits the self-employed might be entitled thereafter seems far from clear.

The most significant difference, however, is that NICs received are paid out in state benefits, including state retirement benefit, within a very short space of time following receipt, so they are never invested for anyone's benefit. Rather than a pension scheme, then, the system of NIC is more akin to a government sponsored Ponzi scheme, the adverse impact of which will eventually become evident when a future government will find itself obliged to come clean and admit that there's no more money left to pay state retirement benefit; OK, lots of juggling could be done in the meantime to postpone that day, but it will likely come at some point.

NICs are merely a tax on income by another name and, as they're administered separately from income tax, the cost of collecting them is inevitably greater than would be the case were it to be merged with income tax.

A benefit is indeed a handout from the state, but those handouts are made possible only because people have paid taxes to the state; in this, state retirement benefit is no different to any other kind. As to weasel words, I'd say that it's more a case of government hedging its terminological bets, given that state retirement benefit is administered by the Department of Work and - well, you know the word!

[Bryn]

Tut tut. Mr. Hinton, the state retirement benefit/pension does not "kick in". It must b claimed. If not claimed it continues to accrue so that the eventual sum payable each payment when it is eventually claimed might provide a more equitable income to the recipient. Indeed, even after making a first claim, the recipient may choose to withdraw from the benefit/pension and its payable value will again accrue. Such withdrawal can only be done once.

By the way, the Government refers to it as a State Pension.

[ahinton]

Tut tut. Mr. Hinton, the state retirement benefit/pension does not "kick in". It must b claimed. If not claimed it continues to accrue so that the eventual sum payable each payment when it is eventually claimed might provide a more equitable income to the recipient. Indeed, even after making a first claim, the recipient may choose to withdraw from the benefit/pension and its payable value will again accrue. Such withdrawal can only be done once.

Well, yes, of course it must be claimed but, usually, DWP writes to people in advance of their entitlement to it to advise what they'll expect to get and when and, in any case, what I should have written was that entitlement to it, rather than the benefit itself, usually "kicks in" at state retirement age.

By the way, the Government refers to is as a State Pension.

Not consistently, it doesn't; DWP sends out correspondence describing it as state retirement benefit. Clearly, then, government either can't make up it's mind or couldn't care less what to call it. Even then, just because government calls it a pension on certain docuiments doesn't make it correct!

Either way, there can be no doubt that it is in every respect a quite different financial product to a pension, for reasons including those I've tried to outline above, to which I might add that the estates of those who have the misfortune to die before reaching state retirement age receive nothing, regardless of how much the payers will have "contributed" during their lifetimes.

[Dave2002]

In 1977 we bought a (then) 2 bedroomed flat in Chiswick for £11,000 with a separate purchase of a garage IIRC for about £500. A year later we sold both for around £18000, a difference of about £7000+.
This was more than we as a couple had earned between us in the year, and we both had decent enough jobs. I've just looked at the prices of property in the same street, and a 2 bedroomed flat now sells for around £600k,
though I suspect it might have been a 3 bedroomed flat in earlier years, as the one I saw had been revamped and modernised and generally updated.

I fear I can also remember when beer was cheap - maybe even 11d per pint in the very earliest of my drinking days. Petrol became expensive around 1970, going up to maybe 3s6d per gallon. My first job - around 1966 paid £6 per week, and after saving for several weeks I was able to buy a new flute - which might have cost over £100. LPs were still around £1 - earlier they had been 32s6d.

[Eine Alpensinfonie]

My first job - around 1966 paid £6 per week, and after saving for several weeks I was able to buy a new flute - which might have cost over £100. LPs were still around £1 - earlier they had been 32s6d.

It was a bit more complicated than that. Full price LPs were generally 37/6, and medium price ones were around 32/6. Pye Golden Guinea were 21/-, Ace of Clubs were 20/6, HMV Concert Classics 22/6. Then there were Saga/Fidelity ranging from 9/11 to 12/6, Music For Pleasure at 12/6 and a number of newer cheap labels (Turnabout, etc.) at 17/6.

Things are not so different today.

[ardcarp]

A benefit is indeed a handout from the state, but those handouts are made possible only because people have paid taxes to the state; in this, state retirement benefit is no different to any other kind. As to weasel words, I'd say that it's more a case of government hedging its terminological bets, given that state retirement benefit is administered by the Department of Work and - well, you know the word!

You seem to have dodged the point I was making that being in receipt of a retirement benefit appears to rule you out for receipt of other non-means-tested benefits such as guardian's allowance for looking after a child under 16. It's as if the government says, OK mate, you're retired, we're paying you a benefit (i.e. pension) already, so you've got all the time and money in the world to act as a full-time parent in your 70s. AAArrrgghhh!!!

[ahinton]

You seem to have dodged the point I was making that being in receipt of a retirement benefit appears to rule you out for receipt of other non-means-tested benefits such as guardian's allowance for looking after a child under 16. It's as if the government says, OK mate, you're retired, we're paying you a benefit (i.e. pension) already, so you've got all the time and money in the world to act as a full-time parent in your 70s. AAArrrgghhh!!!

No, I'm not dodging that point at all. I do understand and sympathise with what you are writing here but, as far as I am aware, those other benefits to which claimants of state retirement benefit are unentitled would be unavailable to them whether that product was called state retirement benefit or state retirement pension and, in any event, neither is a strictly correct name for it because claimants do not need to be retired in order to be eligible to receive them - they need only be of or above state retirement age (which is now a moveable feast in any case and will likely remain so until its eventual abolition).

I'm not sure in any case that entitlement to state retirement benefit disqualifies claimants from all other state benefits; I would have thought that at least some of those other benefits might be available especially to those who are not entitled to receive the full state retirement benefit (although I may be wrong about this) and, in any case, other benefits such as Working Tax Credits and Housing Benefit are available to some claimants of state retirement benefit (provided that they qualify for them by reason respectively of being in work and financial hardship). There's also the option to defer state retirement benefit, so unless other state benefits are unavailable to claimants purely because they've attained state retirement age rather than because they're in receipt of state retirement benefit (having chosen not to defer it), it might be possible to access at least some of them, I'd have thought.

[ardcarp]

other benefits such as Working Tax Credits and Housing Benefit are available to some claimants of state retirement benefit

Yes, but they are means-tested benefits.


Apart from anything else, the semantics of 'pension' and 'benefit' could not be more different.
A pension suggests something deserved or existing as a right,
A benefit whiffs of charity and hand-outs.

These meanings may be unimportant to some, but in my opinion re-naming a pension as a benefit shows disrespect to the recipients.

BTW, when I referred to 'the government' above, I was not being partisan, I just meant any government (Major, Blair, Brown, Cameron, Boris, Jeremy). And talking of weaselly tricks, did you know that friends of mine who are teachers and who retired at 60 with a Pension from the Teachers' Superannuation Scheme had that pension (their RIGHT, IMO)) reduced when they began receiving the state retirement benefit, aged 65? We live in a miserable, miserly state!