A million to march on Westminster!

[Petrushka]

... what precisely is their vision of Britain as a whole in the next 5,10, 15 and 20 years?

They don't have one. Is there any politician who can lay claim to anything so grand as a vision? Truly we are ruled by pygmies.

[Lateralthinking1]

I think you are right. I feel as if I have mellowed slightly into this part of the week. After more than a year of upset and immense irritation about poor administration and illogicality at every level - Government Departments, the Council, an Ombudsman, a private telephone company, job advertisers - I'm beginning to see that the systems just can't cope now. The only difference with those at the top is that they believe they are great, are not overly bothered if they are useless and earn ludicrous wages.

One starts to wonder whether it is best to pity the ordinary unemployed person or the ordinary worker. The latter is now having to work in ever diminishing teams to such unrealistic orders, it becomes virtually impossible. Required to have the fitness of an 18 year old and the mind of someone aged 70. The hairdresser in Plymouth tonight with the beginnings of RSI was contemplating a further 45 years of doing the same and that if she is lucky.

It seems the penny is beginning to drop with the public. Knowing the emotional processes involved in becoming resigned to where it seems most of us will be, I keep thinking of the phrase "powder keg". Regrettably it ain't gonna be at all pretty. For that surely is the look of large numbers when they start on the journey I've been on for a while and try to reframe.

The War on Terror. Remember that? I only mention it now because we had a decade of being asked to look away at a supposed common enemy. That I think was how the financial institutions brought it all down, knowing that there wouldn't be scrutiny.

[PatrickOD]

Would love to join in, Lat, but I'm off now to a demonstration. Solidarity!

[Lateralthinking1]

Good.

PMQs - Low childish insults from Cameron. Clearly revelling in being Mrs Thatcher except he isn't. That the proposals are ideological becomes crystal clear. Course you can't sell off the rest of the public sector if private companies fear paying decent pensions.

[Lateralthinking1]

......Seeing that no one knows what the economy will be like in 10, 20, 30, years, the only sensible solution both to the state and public sector pensions issues is to introduce two levels both to apply in principle from now.

One, a much fairer approach to pensions in line with earlier commitments and to apply if the economy is much improved in X number of years and two, something nearer to the Government's approach, though less draconian, if it isn't.

Why is this not being discussed? Is it just too logical? Would it prevent the Government from pursuing a political agenda?

[ahinton]

......Seeing that no one knows what the economy will be like in 10, 20, 30, years, the only sensible solution both to the state and public sector pensions is to introduce two levels to apply from now. One, a much fairer approach to apply if the economy is much improved in X number of years and two, something nearer to the Government's approach, though less draconian, if it isn't.

Why is this not being discussed? Is it just too logical?

Or one could discuss the abolition of pensions altogether. I'm not suggesting that one should - merely that one could. In the past, pensions and retirement were seen as indelibly linked and that, as a general rule, the majority of the workforce would not expect to receive any pension until and unless they had retired at around state retirement age. Much, however, has changed since then, including but not limited to the following.

1. the "job for life" idea has pretty much disappeared.

2. the proportion of self-employed to employed has increased considerably.

3. state retirement ages are on the increase and will almost certainly continue to be so in the future.

4. far more employed and self-employed people now continue to work beyond state retirement age, either through choice, through being unable to afford not to do so or both.

5. private pensions can be taken at age 50 (or is it now 55? - I have a feeling that this may have changed recently but can't now remember), which is well before state retirement age.

6. quite a few people receive pensions as well as salaries, fees and other income from work, whether before or after state retirement age.

7. it is now far more widely accepted that pension contributions are only one of several methods of saving for retirement and, whilst they have been regarded in the past as the most efficient way to do this because they attract tax relief (though much less of it at the upper end than was once the case), although pensions in payment are liable to income tax, whereas, for example, contributions to ISA savings plans do not attract tax relief but the growth on the funds is free of tax.

8. the so-called "state retirement pension" is on the way out, regardless of what successive governments try to tell their electorates and, in any case, they are in themselves nowhere near enough for their receipients to live on; this is in some ways no bad thing, because at least, once they've finally disappeared, members of the public will no longer be conned into believing that their contributions to them are treated by government as savings for their retirement when they've never been anything of the kind.

[aeolium]

the so-called "state retirement pension" is on the way out

You're suggesting a return to the status quo ante-1909, ahinton? I know government policy is moving us closer to that period in some respects, e.g. income inequality, but I'd be surprised if any government or party advocated the abolition of the state pension or even tried to let it wither away. The so-called 'grey vote' is a large proportion of the electorate these days (and more likely to vote than most other age groups). Any party which did not take its interests into account would be swiftly cut down.

[Lateralthinking1]

I agree with you ahinton on many of your factual statements, some of which are new to this forum and are helpful for being seen, but I don't agree on point 8. We have discussed this before. I'm not saying it couldn't happen but it isn't where the Coalition's emphasis is in policy. Having said this, Governments could keep increasing the age so that most drop dead before getting a pension. They could still say that they are committed to pension provision. As people say, anything could happen. You do capture very effectively often ignored and yet salient points. But I don't feel that you have addressed my main point. You have sidestepped it and while I am a bit hit and miss with some of the things I put forward, I feel it is one of much merit.

On aeolium's point, yes, what we are seeing here is surely the hitting out at future pensioners because pensioners have some clout in old age. It isn't I think just the turnout of grey voters but also the emotional and moral impacts. That is why they can never attack current pensioners or indeed pensioners in any era severely. As a society we may be in the moral gutter but it would take some major shifts, almost unthinkable, for the electorate to accept a destitute elderly. I think my major worry is that it might take some years and a lot of heartache to address dire consequences in the future with a reassessment then of economic priorities, by which time many would be in a desperate state. Look how inept they have proven to be in paying out to the victims of the riots!

[Serial_Apologist]

I agree with you ahinton on many of your factual statements, some of which are new to this forum and are helpful for being seen, but I don't agree on point 8. We have discussed this before. I am not saying it couldn't happen but it isn't where the Coalition is heading in terms of emphasis in policy. Having said this, Governments could keep increasing the age so that most drop dead before getting a pension. They could still say that they are committed to pensions! As people say, anything could happen. You do capture very effectively often ignored and yet salient points. But I don't feel that you have addressed my main point. You have sidestepped it.

On aeolium's point, yes, what we are seeing here is surely the hitting out at future pensioners because it will have some clout in old age. It isn't I think just the turnout of grey voters but also the emotional and moral impacts. That is why they can never attack current pensioners or indeed pensioners in any era severely. As a society we may be further in the moral gutter but it would take some major shifts, almost unthinkable, for the electorate to accept a destitute elderly. I think my major worry is that it might take some years and a lot of heartache to address dire consequences in the future with a reassessment then of economic priorities, by which time many would be in a desperate state. Look how inept they have proven to be in paying out to the victims of the riots!

Inasmuch that the government is thinking long-term, they are probably counting on a reversal taking place in longjevity in general, given the effects of obesity now affecting so large a percentage of the children of today leading to a shortening of life. And of course the lowering of living standards through a combination of sheer exhaustion, as pension ages are raised and raised, and poverty in retirement.

[ahinton]

You're suggesting a return to the status quo ante-1909, ahinton? I know government policy is moving us closer to that period in some respects, e.g. income inequality, but I'd be surprised if any government or party advocated the abolition of the state pension or even tried to let it wither away. The so-called 'grey vote' is a large proportion of the electorate these days (and more likely to vote than most other age groups). Any party which did not take its interests into account would be swiftly cut down.

What I'm suggesting is two things. Firstly, that the goverment of the day - which has no funds of its own, only those that it appropriates from taxpayers and those that it borrows from elsewhere - will be able to fund "state pensions" only as long as they have the funds with which to do this - and let it not be forgotten what, when such pension benefits were initially contemplated, no one ever consdered that some proportion of these might ever have to come to be funded out of state borrowings. Secondly, the principle under which "state retirement pension" has been marketed to the public for generations is one in which contributors' "contributions" count towards their eventual state "retirement pensions", which is a barefaced lie perpetuated by all of them regardless of political hue, because the fact is that all such "contributions" are paid out again in state benefits within a week or so and are thus never invested for growth on behalf of the pensioner-to-be; such blatant dishonesty on so vast a scale ill behoves any democratic government that deserves to be elected. In the future, however, the truth will be out, even if not before the unfortunate government of the day finds itself forced to admit it when the moeny to pay these benefits runs out.

[ahinton]

I agree with you ahinton on many of your factual statements, some of which are new to this forum and are helpful for being seen, but I don't agree on point 8. We have discussed this before. I'm not saying it couldn't happen but it isn't where the Coalition's emphasis is in policy. Having said this, Governments could keep increasing the age so that most drop dead before getting a pension. They could still say that they are committed to pension provision. As people say, anything could happen. You do capture very effectively often ignored and yet salient points. But I don't feel that you have addressed my main point. You have sidestepped it and while I am a bit hit and miss with some of the things I put forward, I feel it is one of much merit.

Which bit/s of point 8. do you disagree with? I'm not referring specifically to the presnet Coalition government or necessarily even the one that immediately follows it, but I hope that I've answered at least some of your concerns in my above response to aeolium. Which of your points do you feel that I have failed properly to address? Please confirm and I'll endeavour to address it as best I can.

On aeolium's point, yes, what we are seeing here is surely the hitting out at future pensioners because pensioners have some clout in old age. It isn't I think just the turnout of grey voters but also the emotional and moral impacts. That is why they can never attack current pensioners or indeed pensioners in any era severely. As a society we may be in the moral gutter but it would take some major shifts, almost unthinkable, for the electorate to accept a destitute elderly. I think my major worry is that it might take some years and a lot of heartache to address dire consequences in the future with a reassessment then of economic priorities, by which time many would be in a desperate state. Look how inept they have proven to be in paying out to the victims of the riots!

I'm not, of course, for attacking pensioners but I do believe that, where "state pensions" are concerned, governments should be honest and own up and, where private and public sector workers' pensions are concerned, they should not ruin the former by overtaxing them (as they have done since Brown's earliest days as Chancer of the Exchequer) or interfere in the latter by misppropriating contributions as they've been caught out doing and which activity has been largely responsibvle for today's perfectly understandable protests.

[aeolium]

Secondly, the principle under which "state retirement pension" has been marketed to the public for generations is one in which contributors' "contributions" count towards their eventual state "retirement pensions"

Yes, that is true to the extent that the more years of NI contributions someone makes (generally up to a maximum of 30) the more state pension entitlement one accrues - although recent introductions such as pension credit have to an extent rendered that much less relevant. But I'm not sure that the state pension is marketed on the basis that it is solely NI contributions that funds it, which would surely be ridiculous as you say. The state pension is now simply one among a number of benefits that are paid for partly out of general taxation and partly out of NI contributions (indeed, you might as well merge NI into general taxation). Given this, I don't think any political party is going to say that we can only use such taxation for, say, infrastructure, education, the health service, defence etc and forget about welfare benefits. It would be committing political suicide - some of those other things would have to shrink first.

[ahinton]

Yes, that is true to the extent that the more years of NI contributions someone makes (generally up to a maximum of 30) the more state pension entitlement one accrues - although recent introductions such as pension credit have to an extent rendered that much less relevant.

True as that is, it's all about qualifying entitlement, not about how much money each contributor has contributed or how well it's been invested over the years to produce a fund from which pension payments can be made.

But I'm not sure that the state pension is marketed on the basis that it is solely NI contributions that funds it, which would surely be ridiculous as you say.

I'm afraid that I believe that it is, actually - and your remak about qualifying NI conributions appears broadly to endorse this; at least the public perception of state retirement pensions is that, like other state benefits, are funded out of NI payments, although the sheer immediacy of this process is not as widely known as it should be. Yes, I daresay that other taxes are also pressed into service to pay some benefits, but the main point is that, in most cases, a pension of any kind is by definition a long-term investment, whereas the so-called state one is quite obviously nothing of the kind.

The state pension is now simply one among a number of benefits that are paid for partly out of general taxation and partly out of NI contributions (indeed, you might as well merge NI into general taxation).

Might? I most certainly would! Why on earth we have two quite distinct enormously clumsy tax-collecting organisations is beyond me, since what each of them colects is tax by one name or another (indeed, one NI category, Class IV, is in any case collected not by DWP but by HMRC in any case). But let's not forget that, these days, a proportion of these benefits is paid out of government borrowings and, given that this is the case only because there are no longer sufficient tax revenues to fund it on their own, such benefit payments are in danger of compromise if and when lenders begin to decline to lend (if indeed they do).

Given this, I don't think any political party is going to say that we can only use such taxation for, say, infrastructure, education, the health service, defence etc and forget about welfare benefits. It would be committing political suicide - some of those other things would have to shrink first.

That's what's technically known as hypothecation - and no, I rather doubt that this would be introduced in more general terms, yet taxes collected under the NI umbrella (as distinct from those collected by HMRC) are indeed hypothecated already to some extent, in that they are not allocated proportionately - or indeed even at all - to certain areas of government spending but are limited in their application within the government's spending procedures.

[aeolium]

True as that is, it's all about qualifying entitlement, not about how much money each contributor has contributed or how well it's been invested over the years to produce a fund from which pension payments can be made.

But AFAIK - and a pensions expert would be better able to inform on this - I'm not sure than any state pension provision anywhere works on the basis of setting aside people's contributions into a pension fund. Doesn't it work on the basis that people put in money during their working life (which in part pays for the pensions of those who have retired) and then receive benefits when they retire, again, from the funds of those who are contributing through tax and NI? That's why, as people live longer, the government is seeking to increase the age at which people can claim those retirement benefits.

Why on earth we have two quite distinct enormously clumsy tax-collecting organisations is beyond me

Do we? I thought HMRC collected all taxes, including NI, apart from council tax/business rates which are collected locally.

taxes collected under the NI umbrella (as distinct from those collected by HMRC) are indeed hypothecated already to some extent, in that they are not allocated proportionately - or indeed even at all - to certain areas of government spending but are limited in their application within the government's spending procedures.

Are you sure about this? I thought NI simply went into the general tax pot (and see my comment above about its being collected by HMRC).

[ahinton]

But AFAIK - and a pensions expert would be better able to inform on this - I'm not sure than any state pension provision anywhere works on the basis of setting aside people's contributions into a pension fund. Doesn't it work on the basis that people put in money during their working life (which in part pays for the pensions of those who have retired) and then receive benefits when they retire, again, from the funds of those who are contributing through tax and NI? That's why, as people live longer, the government is seeking to increase the age at which people can claim those retirement benefits.

Whilst this is indeed broadly correct, it just doesn't work and it's not marketed in this way. If there are insufficient people at work at any time to be able to pay enough taxes to enable payment of the "pensions" of people entitled to receive them, those people won't get them from that source and, it the government of the day can't top up such shortfalls with sufficient borrowings, they might not get them at all; it's surely far too risky. The principal difference between these state-funded "pensions" and real ones is that real ones invest the contributions of pensioners-to-be whereas state ones don't and can't, so the latter shouldn't be termed "pensions" at all and it should be made clear to taxpayers that they're not contributing to their own future pensions and that they might not get all or indeed any of such pensions later in life if there's not enough money to pay them when they become legally entitled to receive them. Furthermore, the longer people live (and you have yourself noted the longevity argument), the less able governments will be to fund pensions for people whose periods of entitlement to them might well exceed those of their working times.

The fact that government is already having to rely on its borrowings to continue making these payments should itself ring allthe necessary warning bells loudly enough. Apart from any other considerations, it's simply not reasonable or practical that taxpayers should be led to expect that governments are able to be entrusted with pension planning, especially as they have so many other calls on their time and responsibility, so they should get out of it; the latest fracas over governmental mismanagement and misappropriation of public sector workers' pension contributions is yet another example that points to the need for a gradual governmental exit from involvement in the pensions market.

I thought HMRC collected all taxes, including NI, apart from council tax/business rates which are collected locally.

Maybe you're correct about this and I'm out of date on it, in which case I sit corrected, but there remain two quite distinct categories of tax on incomes, one called income tax and the other called NI, which is ridiculous and ridiculously over-expensive; in any event, state retirement pension is not paid out by HMRC but by DWP.

I thought NI simply went into the general tax pot (and see my comment above about its being collected by HMRC).

I'm not sure about this now (see my remark above), but the fact remains that they are still two quite distinct types of tax and one of them (NI) is split into numerous sub-categories which serves only to complicate taxes on income yet further.