Society & Culture0 min ago
Baroness Altmann: Scrap Pensions Triple-Lock Guarantee
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Baroness Altmann, who lost her job in Theresa May's reshuffle, said the policy had "outlived its purpose".
The start of the thin end of the wedge perhaps ?
Baroness Altmann, who lost her job in Theresa May's reshuffle, said the policy had "outlived its purpose".
The start of the thin end of the wedge perhaps ?
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odd that I agree
the great champion of pensions saying....
I think the old age penstoners are or may be in the future - getting too rich !
no wonder she lost her job in the recent reshuffle
I listened carefully to the argument which was kinda
Pensions have been wilfully made crap over the last twenty years
and OAP are slighly better than average now
so this may be the cause of another round of politics of envy
so lets make OAPs more crap and no one will complain
PS I am in the house of lords ...
jaw dropping stuff ......
the great champion of pensions saying....
I think the old age penstoners are or may be in the future - getting too rich !
no wonder she lost her job in the recent reshuffle
I listened carefully to the argument which was kinda
Pensions have been wilfully made crap over the last twenty years
and OAP are slighly better than average now
so this may be the cause of another round of politics of envy
so lets make OAPs more crap and no one will complain
PS I am in the house of lords ...
jaw dropping stuff ......
The argument as I read is that the 2.5% guarantee should be removed - for the stated reasons. The baroness, as I understand her, wants to retain the link between pensions and inflation(which roughly maintains the purchasing worth of the pension) and average earnings (which means that pensioners share rising prosperity).
I can see the objection to it, but isn't this simply trying to solve a problem of barely adequate pension especially after years of trying to tie the pension rise with the lowest rising index ? Maybe there should be a large jump to make pensions just reward for years of working, keeping the country going, and then tied to an nationally agreed index thereafter. Perhaps an average of the price inflation and the earnings rise ?
//just reward for years of working"//
Understand your moral point, OG, but today's state pensions (unlike private ones) are not being paid for by the invested contributions of pensioners and their employers during their working life: they're being paid for by today's tax payers. NI is just another tax receipt be be distributed at the government's discretion. A year after retirement I returned to work part-time for three years. Although I had to get a form excusing me from the employee's NI contribution my employer still had to cough up his.
Generous pensions cannot be provided without generous and honest funding.
"Perhaps an average of the price inflation and the earnings rise ?".
This would mean the pensioner would lag behind in prosperity, or sharless of the pain, depending on which of the two were the greater.
Understand your moral point, OG, but today's state pensions (unlike private ones) are not being paid for by the invested contributions of pensioners and their employers during their working life: they're being paid for by today's tax payers. NI is just another tax receipt be be distributed at the government's discretion. A year after retirement I returned to work part-time for three years. Although I had to get a form excusing me from the employee's NI contribution my employer still had to cough up his.
Generous pensions cannot be provided without generous and honest funding.
"Perhaps an average of the price inflation and the earnings rise ?".
This would mean the pensioner would lag behind in prosperity, or sharless of the pain, depending on which of the two were the greater.
The changes she suggests would not be made until 2020. I don't think she has any influence either but her suggestion should be considered.
I know many won't agree but I don't think the state pension is a bad deal at the moment, although the increases did fall behind earnings growth for quite some time. I am pretty sure the average pensioner receives more in state pension than they pay in NI (all in real terms) during their working life. The state pension is never going to be enough to live a life of luxury but provided we make some private pension provision and build up saving and maybe downsize a property for those lucky enough to have one, the state pension is more than adequate.
I don't see a need for the guaranteed 2.5% part of the triple lock, especially as we could have a few years of zero interest rates and low inflation. As long as the other locks remain I'd be happy as a future pensioner
I know many won't agree but I don't think the state pension is a bad deal at the moment, although the increases did fall behind earnings growth for quite some time. I am pretty sure the average pensioner receives more in state pension than they pay in NI (all in real terms) during their working life. The state pension is never going to be enough to live a life of luxury but provided we make some private pension provision and build up saving and maybe downsize a property for those lucky enough to have one, the state pension is more than adequate.
I don't see a need for the guaranteed 2.5% part of the triple lock, especially as we could have a few years of zero interest rates and low inflation. As long as the other locks remain I'd be happy as a future pensioner
Firstly remember that it is only the basic state pension which benefits from the “triple lock”. Additional amounts (which can be considerable and depend on extra contributions) do not and rise only with inflation. However, I digress.
The biggest problem is, of course, that the State pension scheme is not a pension scheme at all. It is simply an almost flat-rate welfare scheme paid to people over a certain age. Pension schemes generally have a relationship between contributions received and payments made. The State pension scheme has no real relationship like that at all. To take an example, a person earning £100,000 per year would make NI contributions of £5,333 (at today’s rates). Somebody earning £15,000 would pay just £833. Assuming both worked for the minimum of 35 years at these rates, both would receive identical pensions. Yet the higher earner would have paid around six times as much NI (and, incidentally though perhaps not so relevant, 37 times as much income tax).
The State pension scheme – as a proper pension scheme which relates contributions made to benefits drawn – is perfectly sustainable. What is unsustainable is to pay the same pension to somebody who has made little or no contribution as is paid to somebody earning (and paying in) many times more. (I won’t even begin to bring into the argument the issue of those who have made no contribution at all). Add to this the “Ponzi scheme” nature of State pensions and the system clearly is a huge drain on the exchequer (i.e. current taxpayers). However it is scarcely the fault of current pensioners that their contributions to the scheme have been frittered away by successive governments instead of being invested.
If the State is to run a pension scheme worthy of the name it should separate properly funded pensions (which should be paid according to contributions) from welfare payments for older people. That is what Ms Altmann should be lobbying for. Either this or get out of the pensions business altogether by reducing the amount workers have to pay in tax and NI, allowing them to make their own investments as appropriate. The State can then concentrate on welfare for those older people who have been unable or unwilling to make provision for themselves.
The biggest problem is, of course, that the State pension scheme is not a pension scheme at all. It is simply an almost flat-rate welfare scheme paid to people over a certain age. Pension schemes generally have a relationship between contributions received and payments made. The State pension scheme has no real relationship like that at all. To take an example, a person earning £100,000 per year would make NI contributions of £5,333 (at today’s rates). Somebody earning £15,000 would pay just £833. Assuming both worked for the minimum of 35 years at these rates, both would receive identical pensions. Yet the higher earner would have paid around six times as much NI (and, incidentally though perhaps not so relevant, 37 times as much income tax).
The State pension scheme – as a proper pension scheme which relates contributions made to benefits drawn – is perfectly sustainable. What is unsustainable is to pay the same pension to somebody who has made little or no contribution as is paid to somebody earning (and paying in) many times more. (I won’t even begin to bring into the argument the issue of those who have made no contribution at all). Add to this the “Ponzi scheme” nature of State pensions and the system clearly is a huge drain on the exchequer (i.e. current taxpayers). However it is scarcely the fault of current pensioners that their contributions to the scheme have been frittered away by successive governments instead of being invested.
If the State is to run a pension scheme worthy of the name it should separate properly funded pensions (which should be paid according to contributions) from welfare payments for older people. That is what Ms Altmann should be lobbying for. Either this or get out of the pensions business altogether by reducing the amount workers have to pay in tax and NI, allowing them to make their own investments as appropriate. The State can then concentrate on welfare for those older people who have been unable or unwilling to make provision for themselves.
Where the funding comes from V_E is not relevant to the pension being a just return for the years those receiving it did their bit by paying in for the last lot.
Funding it from present day tax collection is not such a bad idea anyway as it avoids the dangers of investing and losing out through bad investment choices. Money is collected by the society it serves and used as needed for those in the same society who are owed.
Funding it from present day tax collection is not such a bad idea anyway as it avoids the dangers of investing and losing out through bad investment choices. Money is collected by the society it serves and used as needed for those in the same society who are owed.
Quite.
And the schemes that Maxwell and (possibly) Green plundered were pukka pension schemes. For the reasons I pointed out above (in particular the lack of a proper relationship between the contributions made and the benefits received) the State scheme is not.
No private pension scheme (either "Defined Benefit" or "Defined Contribution") would pay the same amount in pension to somebody who had made considerably less contributions than somebody else. But this is precisely what the State scheme does. Apart from making a small recognition of the number of years NI contributions made there is no difference in the benefits paid to all. Even this is not definitive because people get "credits" for the years they are raising children, have been off sick or unemployed.
I've no objection in princilple to the State helping those who have, for one reason or another, been unable to make provision for themselves (though I do object to the same help being given to those who have been unwilling to do so). What I object to is that when State pensions are placed under threat of reduction or alteration, all sorts of figures are sloshed around about how unsustainable the scheme is. It is not the "proper" State pension scheme which is excessively costly but the State welfare scheme for older people. People who have fully funded their State pension should not have their meagre payments jeopardised by those who have made insufficient contributions.
And the schemes that Maxwell and (possibly) Green plundered were pukka pension schemes. For the reasons I pointed out above (in particular the lack of a proper relationship between the contributions made and the benefits received) the State scheme is not.
No private pension scheme (either "Defined Benefit" or "Defined Contribution") would pay the same amount in pension to somebody who had made considerably less contributions than somebody else. But this is precisely what the State scheme does. Apart from making a small recognition of the number of years NI contributions made there is no difference in the benefits paid to all. Even this is not definitive because people get "credits" for the years they are raising children, have been off sick or unemployed.
I've no objection in princilple to the State helping those who have, for one reason or another, been unable to make provision for themselves (though I do object to the same help being given to those who have been unwilling to do so). What I object to is that when State pensions are placed under threat of reduction or alteration, all sorts of figures are sloshed around about how unsustainable the scheme is. It is not the "proper" State pension scheme which is excessively costly but the State welfare scheme for older people. People who have fully funded their State pension should not have their meagre payments jeopardised by those who have made insufficient contributions.
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