Business & Finance1 min ago
State Pension Age Rise Brought Forward
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Let me say, right from the start, that the Government had little choice but to do this, given the increasing life span of the population.
But if you are between 39 and 47, its not very good news. It could even get worse, if the age is extended to 70 !
Let me say, right from the start, that the Government had little choice but to do this, given the increasing life span of the population.
But if you are between 39 and 47, its not very good news. It could even get worse, if the age is extended to 70 !
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Let me say, right from the start, that the Government had complete choice whether to do this or not, and that increasing life span of the population merely creates an issue, one that isn't solved by forcing those in work to stay in work whilst ensuring that those out if work are even less likely to find a job offer.
Not a single job opportunity is created by withholding pension. And the government still has an increased bill to budget for, it's either pension or it's welfare/dole. It's a conscious decision to keep the young out of work and feeling worthless whilst forcing those who have already contributed to society to continue until they drop.
All this shows is the lack of morality those in control have, and the lack of priority in creating a fair decent society.
Not a single job opportunity is created by withholding pension. And the government still has an increased bill to budget for, it's either pension or it's welfare/dole. It's a conscious decision to keep the young out of work and feeling worthless whilst forcing those who have already contributed to society to continue until they drop.
All this shows is the lack of morality those in control have, and the lack of priority in creating a fair decent society.
the pension system's a Ponzi scheme, it needs more and more people to sign up to provide the money paid to previous retirees. When it started the idea was you lived five years after retiring and you had several kids whose earnings paid for your pension.
Now people live years longer and choose to have fewer kids. (Some even have none at all!) So where do they think the money's coming from?
Now people live years longer and choose to have fewer kids. (Some even have none at all!) So where do they think the money's coming from?
I understand Deskdiary’s opinion, as I have no sympathy for a lot of people in various situations, but it can be difficult to save for retirement when you are on a low wage, or in younger years when you have a mortgage and children.
But, these days a pension pot aint worth schit. If you use this calculator:
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You will see that a pension pot of 250k would only give you an annual taxable income of £8,300 if you choose to take it at 60 years old. £8,300 a year - whoopee do!
This is having taken your 25% tax free allowance, of course. I haven’t been able to find a pension calculator that shows not taking the 25% and adding it to your monthly income.
And then there are the people that thought their works based pension pots were safe, but because of greedy bosses (BHS) or company failure (Tata Steel), they find they will be well short of what they expected to get.
But, these days a pension pot aint worth schit. If you use this calculator:
https:/
You will see that a pension pot of 250k would only give you an annual taxable income of £8,300 if you choose to take it at 60 years old. £8,300 a year - whoopee do!
This is having taken your 25% tax free allowance, of course. I haven’t been able to find a pension calculator that shows not taking the 25% and adding it to your monthly income.
And then there are the people that thought their works based pension pots were safe, but because of greedy bosses (BHS) or company failure (Tata Steel), they find they will be well short of what they expected to get.
Some describe it as a Ponzi scheme because one appears to have to find new contributors over time, but there are differences. It's image is worse than it should be because the claim is that we contribute to the pension via National Insurance; but that's a tax by any other name, and we all have to pay taxes anyway.
The way taxation works is that money is collected for use today, and citizens are then entitled to be helped in their turn when they need it. One doesn't need to pull in other voluntary investors, one simply ensures the taxes already levied cover all costs. It's how taxation has to be.
We never get full employment; it seems there has always been more people who could work and generate wealth that there were job positions for them to take. So the fewer children for the future workforce concern is also misleading. In fact fewer children now implies fewer out of work, long term looking for a job, in the future. Within reason it is irrelevant whether the population is growing or shrinking, just as long as the tax collected from those who actually find a paid job (and from indirect stealth taxes) cover the costs of the State. As always, that is where the money comes from to cover the costs, from those who pay their taxes.
The way taxation works is that money is collected for use today, and citizens are then entitled to be helped in their turn when they need it. One doesn't need to pull in other voluntary investors, one simply ensures the taxes already levied cover all costs. It's how taxation has to be.
We never get full employment; it seems there has always been more people who could work and generate wealth that there were job positions for them to take. So the fewer children for the future workforce concern is also misleading. In fact fewer children now implies fewer out of work, long term looking for a job, in the future. Within reason it is irrelevant whether the population is growing or shrinking, just as long as the tax collected from those who actually find a paid job (and from indirect stealth taxes) cover the costs of the State. As always, that is where the money comes from to cover the costs, from those who pay their taxes.
Of course one of the main benefits of bussing in millions of migrants is said to be that they contribute hugely to the Exchequer and so support the State Pension scheme, which would otherwise be unsustainable because of the reducing birth rate among those already here (bar immigrants, that is). Oh, hang on though! Those migrants will eventually get old and will require pensions themselves. I know. We can bring in a few more millions to support them. But hang on! (Continued for two hundred years or until the country disappears up its own exhaust, whichever occurs first).
The State Pension scheme falls down because, unlike normal pension schemes, there is no proper relationship between contributions made and benefits drawn out. In fact for many recipients the relationship is near enough inverse. The criterion for receiving around £8k per annum (the full amount under the new arrangements and which, as has been pointed out by bigbad, would require a "pension pot" of around £250k) is 35 qualifying years of NI contributions. "Qualifying Years" are those where the individual has earned the equivalent of the “Primary Threshold” (PT) for NI payments or has been awarded “credits” (e.g. those unemployed or bringing up children). To qualify whilst working you currently have to earn £157 per week with one employer (on which sum you would in fact make no NI contributions until you earn more). So a person could qualify for a full State Pension without having made any NI contributions at all provided they earned the PT amount only or were awarded credits.
This is utterly ridiculous and many people receiving a State Pension have made nothing like the contributions required to secure the sum they receive. The scheme would be perfectly sustainable if a direct relationship was used and as I have constantly said when this question is debated there needs to be separation of “pensions” between those that are properly funded by the recipients and those that are not and which are simply retirement age benefits. The sustainability of the former could then be judged in a different way to that of the latter and not jeopardised every time a spending review takes place.
The State Pension scheme falls down because, unlike normal pension schemes, there is no proper relationship between contributions made and benefits drawn out. In fact for many recipients the relationship is near enough inverse. The criterion for receiving around £8k per annum (the full amount under the new arrangements and which, as has been pointed out by bigbad, would require a "pension pot" of around £250k) is 35 qualifying years of NI contributions. "Qualifying Years" are those where the individual has earned the equivalent of the “Primary Threshold” (PT) for NI payments or has been awarded “credits” (e.g. those unemployed or bringing up children). To qualify whilst working you currently have to earn £157 per week with one employer (on which sum you would in fact make no NI contributions until you earn more). So a person could qualify for a full State Pension without having made any NI contributions at all provided they earned the PT amount only or were awarded credits.
This is utterly ridiculous and many people receiving a State Pension have made nothing like the contributions required to secure the sum they receive. The scheme would be perfectly sustainable if a direct relationship was used and as I have constantly said when this question is debated there needs to be separation of “pensions” between those that are properly funded by the recipients and those that are not and which are simply retirement age benefits. The sustainability of the former could then be judged in a different way to that of the latter and not jeopardised every time a spending review takes place.
I couldn't agree more with New Judge if I tried.
If my understanding is correct, I could potentially receive less state pension (I have 7 years to go until I'll have done the 35 years of contributions) than somebody who has paid the total sum of F all into the pot.
In what warped universe is this justifiable?
If my understanding is correct, I could potentially receive less state pension (I have 7 years to go until I'll have done the 35 years of contributions) than somebody who has paid the total sum of F all into the pot.
In what warped universe is this justifiable?
"In what warped universe is this justifiable?"
In the warped universe that is the State (so-called) Pension.
I won't even go into "Pension Credits" (which is another universe altogether where the less you pay in the more you get out). Simply sticking to the ordinary pension scheme somebody who has paid absolutely nothing in under the scenario I described will get considerably more in pension than somebody who has earned £30k a year (and who under the current rates would be paying over £2k per year in NI) but who "only" managed to work for 25 years. Absolutely outrageous.
In the warped universe that is the State (so-called) Pension.
I won't even go into "Pension Credits" (which is another universe altogether where the less you pay in the more you get out). Simply sticking to the ordinary pension scheme somebody who has paid absolutely nothing in under the scenario I described will get considerably more in pension than somebody who has earned £30k a year (and who under the current rates would be paying over £2k per year in NI) but who "only" managed to work for 25 years. Absolutely outrageous.
"To expect the workers to keep supporting pensioners as they are living much longer isn't viable."
And that's another shortcoming of the State Pension scheme (which I wasn't going to raise, but since it's been mentioned).
Proper pension schemes do not depend on current contributions to pay existing pensioners. (If they did schemes that wind up - as many have in recent years - would be unable to meet their obligations). They invest their contributions so that they are available to draw as required.
It is scarcely the fault of current pensioners (those who have made adequate contributions to cover their withdrawals) that successive governments have handled their money so ineptly. Much of that ineptitude is due to the fact that they insist on paying people who have not made sufficient contributions from the funds provided by those who have meaning that they can only meet their current obligations from current contributions. I expect my contributions to be available as agreed and it is not my fault they've used them to pay someone else.
The issue of "Life Expectancy" is a red herring. It has not suddenly crept up on the government that life expectancy is on the increase. But the pensions "crisis" is portrayed as exactly that - a crisis that has just come about. It has only just come about because successive administrations were reluctant to grab the bull by the horns and deal with it.
And that's another shortcoming of the State Pension scheme (which I wasn't going to raise, but since it's been mentioned).
Proper pension schemes do not depend on current contributions to pay existing pensioners. (If they did schemes that wind up - as many have in recent years - would be unable to meet their obligations). They invest their contributions so that they are available to draw as required.
It is scarcely the fault of current pensioners (those who have made adequate contributions to cover their withdrawals) that successive governments have handled their money so ineptly. Much of that ineptitude is due to the fact that they insist on paying people who have not made sufficient contributions from the funds provided by those who have meaning that they can only meet their current obligations from current contributions. I expect my contributions to be available as agreed and it is not my fault they've used them to pay someone else.
The issue of "Life Expectancy" is a red herring. It has not suddenly crept up on the government that life expectancy is on the increase. But the pensions "crisis" is portrayed as exactly that - a crisis that has just come about. It has only just come about because successive administrations were reluctant to grab the bull by the horns and deal with it.
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