State pensions up 2.5% next year

At a time inflation is 0.5% and wage growth is negative.

What a great use of public money, glad to see we are looking after the over 65s again.  Fuck everyone else.

Like so much else it defies the irrationality of this policy is breathtaking 

yeah, but pensioners vote Tory

Clubbers m1, this is your fault

Why do UK Keynesian  economists insist on using only  the price of Chinese manufactured goods as a measure of inflation ?

If they included asset price increases, caused by B of E money printing, then inflation is nearer 20% 

Let them enjoy it. This time next year Dom will be dipping into their pension pot to find the extra money we took back from the EU. 

Do you want to give pensioners 5p guy, like Gordon brown?

5p?   No idea what you are talking about.   You think 2.5% is justifiable risk?

Pension pot raids will hurt future pensioners more than current ones though. It’s all shit. 

Not if they raid the current ones and just slash it in half - ala Greece 2012.

While the principle of it does rile, I would think that in terms of the actual magnitude of the numbers involved, it's a drop in the bucket? (Someone please confirm/correct.)

2.5% for every pensioner, bearing in mind it will henceforth be paid every year and future increases will be calculated based on the new higher pension is actually a pretty huge cost.

The UK state pension is the worst in the developed world, according to data from Organisation for Economic Co-operation and Development. (2018 data)

As a percentage of average earnings, the UK government pays out 29 per cent, putting it at the bottom of a table which is led by the Netherlands, which pays 100.6 per cent, Portugal, which offers 94 per cent, and Italy, which gives 93.2 per cent.

The UK is joined at the bottom of the list by Japan, Poland and Mexico, but all these countries still pay better state pensions, the report by the group of developed nations showed.

Mexico's is the closest, representing 29.6 per cent of average earnings but the next country in the ranking, Poland, pays 38.6 per cent while Japan pays 40 per cent.

Germany is around the middle of the pack, paying 50.5 per cent of average earnings, just above the USA which offers 49.1 per cent.

The average across the OECD is 62.9 per cent.

***********

Of course, to triple the payout (from 29% to 100%) contributions (combined from employer and employee) would have to triple too - for forty years - to close the gap

THEY MORE THAN EARNED IT WHEN THEY VOTED FOR BREXIT: THIS IS THE VERY LEAST WE CAN DO WHEN WE ALREADY OWE THEM SO MUCH

What kind of madness would lead to the government to pay out 100% of average earnings as pension on top of private pension provision?    I don't think that is something we should be aspiring too.

Guy hates the elderly. That’s why he’s actually the (reasonable sounding) puppet master behind teamsane 

These people won both world wars and a world cup. The least young people can do is sacrifice their financial future to further feather boomer nests.

It was a Con party pledge to maintain the triple lock. i think labour also?

Guy, I may be wrong, but I think in a lot of the more generous countries there's minimal private pension provision with the state pension system taking on that role. 

Indeed, I very much suspect we are not comparing like with like.  I suspect countries with high government pensions also exact higher pension/insurance contributions from employers and employees in lieu of employer/employee contributions to private schemes.

"Guy hates the elderly. That’s why he’s actually the (reasonable sounding) puppet master behind teamsane" 

Heh that would be very deep cover given I spend most of my time on here arguing with them...

 

Wait till the following year, where the massive upward correction in salaries also determines the triple lock increase. When pensioners get a 10% increase, the sh*t will really hit the fan. By then of course it will be too late to avoid the damage.

May: SPEND 250 BILLION TO SAVE THE ELDERLY!!!

October: £4 A WEEK??? MAD PROFLIGACY!!!

#Team Consistent

"

Elfffi21 Oct 20 14:22

Reply | 

Report

The UK state pension is the worst in the developed world, according to data from Organisation for Economic Co-operation and Development. (2018 data)

As a percentage of average earnings, the UK government pays out 29 per cent, putting it at the bottom of a table which is led by the Netherlands, which pays 100.6 per cent, Portugal, which offers 94 per cent, and Italy, which gives 93.2 per cent."

Using statistics like a drunk uses a lamp post...

I believe the elderly have a right, within reason, to be protected from illnesses that will take them before they would otherwise go, they have no right to be protected from economic shocks everybody else is going through, fucking ridiculous.     Most boomers I know are embarrassed.

I can understand how you would have that effect on them.

May: SPEND 250 BILLION TO SAVE THE ELDERLY!!!

October: £4 A WEEK??? MAD PROFLIGACY!!!

#Team Consistent

 

Why are you aggregating one figure and not the other?  Couldn't be the team sane method of presenting statistics again could it?

Because it shows how awful you are. You’re not even prepared to give the people who fought in two world wars and survived the Great Depression a few measly quid a week.  

A comparison of state pensions across the OECD is surely a bit pointless if you don't take into account the tax/social care system as a whole, differences in retirement age, approach to means testing etc. Not sure the higher social security payments in the US would be worth having to rely on Medicare for many people... 

'  Most boomers I know are embarrassed'

I guess in leafy Surrey, in £1m houses and company, earnings linked, inflation proofed pensions, that's true

Redundant industrial,  steel workers in the north, not so much

I'm fascinated by the Venn diagram between people who are outraged about state pensioners getting 2.5% but aghast at any suggestion that public service defined benefit pensions should be reeled in.

No-one, correction - no-one who actually understands how it works, is outraged about state pensioners getting 2.5% in isolation, they are outraged about the aggregate effect over 2 years, where wages dip massively in one year and then bounce back in the second. The triple lock just doesn't anticipate that scenario properly. 

The point isn't (IMHO) pensioners getting 2.5% this year.

It's the massive inter-generational unfairness arising from the old being continually prioritised over the young.

It's because our system is set up so that politicians are not rewarded for making long-term sensible decisions, but rather incentivised to kick massive stinking topics down the road.

I wouldn't be surprised if a future generation votes in a government which fucks over the old badly.  Taxing private and public DB pensions to fuck, means-testing state pension.  And they'll be justified to.  The way the young are being fucked in the tight one is a disgrace.

I'm amazed the state pension isn't already means tested tbh.  It's square root of fuck all so the 2.5% barely moves the dial. But do agree with all the intergenerational unfairness stuff too. 

There is no way we will be getting full tax relief on our shitty DC schemes next year

The problem is of course massively compounded by the fact that salaries will go down and then go up again and pensioners will get the benefit of the latter without the hit of the former.  If average wages go down 10 per cent this year and then recover the following year pensioners will get a 2.5% rise this year and a 10% rise next year, combined 12.5 (actually a bit higher) up over two years.  Workers will just be back where they are now.

There is nothing nasty about querying whether it is the right use of public money to give pensioners increases above inflation and wage growth in the current circumstances Abbey.

In real terms lots of workers still aren't earning that much more than they were in 2008 

Serious Sam Double D21 Oct 20 16:04

It's the massive inter-generational unfairness arising from the old being continually prioritised over the young

-------------

if young people actually turned out to vote they might be surprised how quickly politicians changed their tune

ps - welcome back sourkraut muncher ;-)

 

The triple lock clearly won’t be appropriate next year as it should be linked to highest ever average wage not the increase in  the last twelve months. 

It’s really difficult to change the system while the politicians claim that National Insurance isn’t a tax. You’d be pissed off if you paid into a private scheme for forty years and they then decided not to pay you. That’s how pensioners have been told to think about the state pension and their NI contributions.

Progressively run-off NI contributions over the next forty years and let young people make their own arrangements.  That’s fine - get the state out of pension provision. Let future pensioners dependent on the state pension, poor souls, claim supplementary welfare benefits on a mean tested basis. 

Of course that the state pension is pay-as-you-go and not fully funded makes it the biggest Ponzi scheme ever.

All national politicians since the founding of the welfare state have been either criminally ignorant or utterly dishonest.  They should all be locked up.

Do we need to build more prisons?  Or can we just let out the cannabis smokers?

They should abolish NI, raise general income taxes to a lesser net amount, and then tell everyone born from 2005 (or something) onwards that state pension will be means tested and they need to sort out their own pension instead.

I don't think inflation is going to be 0.5% after no deal.

But also, fuck pensioners.

It was means tested Dimi. They specifically moved away from that system. 

Honestly roll out UBI and get rid of state pension and all other welfare schemes. Then there's no age warfare.

My grandmother (not the one who resembled Judo) lived off her state pension in retirement. She tried to write me a cheque on more than one occasion as she had a little leftover from that week's pension and she thought I might need it. 

I was a trainee/NQ at a top 10 city law firm at the time.

diceman - there's a lot of theory on whether it WOULD be more expensive or not to roll out UBI rather than operate about a million different government schemes meant to help people out.

Honestly, the far left and far right agree on UBI because not only is it much more fair and humane to have a UBI in place rather than go through hoops and humiliating admin to apply for benefits (left wing happy), it is likely super easy to administer such a program which cuts out tons of bureaucratic waste and could result in overall less cost (right wing happy).

No one's done it yet properly in the world, so we don't know how it will work out in practice but covid seems a good a time as any for a proper trial. As for "more expensive", well fuck, if we can pay for national lockdown and its ugly sisters rolling regional lockdowns at a cost of hundreds of billions, we can pay for anything.

I don't know who you are thinkin of when you talk about the far right agreeing on UBI but I think UBI has vanishingly little support in the Conservative party.

 

also not clear if it is something that starmer is serious about

Also many of the right are in favour as it may be the only way consumer capitalism is sustainable in the long term 

https://bigthink.com/politics-current-affairs/negative-income-tax

Some reading on it - but UBI does have its supporters in the further reaches of right wing. Admittedly, not the middle-road conservatives and liberals who can't fathom paying people not to work (gasp!), even though humans have been doing this since history began in one way or another. It is just 

Risky - there's never been true UBI done to my knowledge. Finland has/had a pilot going, Canada had one in the 70s (Dauphin) which I've studied a lot in school:

https://www.bbc.com/worklife/article/20200624-canadas-forgotten-univers…

 

Most adolescents in developed countries benefit from board and lodging and 'pocket money'. Not to mention on tap taxi, laundry services.

Doesn't seem to make them universally responsible, contributing residents.

I support UBI.  Because the zoopedia of welfare benefits are demeaning, inefficient, and ineffective.

Two critical issues, which are both in the name, are Universal and Basic.  Universal for the sake of simplicity: the people to whom you give it who don't need it, will anyway pay back more in taxes: don't faff about with a means-test. Basic in that it's not meant to cover all types of expenditure. People should still get material benefit from working

i support a tax which makes elffffi whine uncontrollably. like properly squeal. that’s the sort of tax the world needs.

Just out of interest how does a ubi cope with people who are paying rent v those who aren’t?

Makes no difference, everyone gets enough to just about live on, if they want to work to earn more entirely up to them.

So state pension is about 150 per week? And UBI at that level is the only benefit? There are gonna be a lot of people on the streets then...

May need some extra for people with kids I suppose but genrwlly speaking  rents are dictated by ability to pay housing benefit keeps rents at lower end artificially high.  Ideally I would like to see a universal income  of around £250 a week which would mostly eliminate any such problems but that will take some time to achieve

I earn much less now in real terms than I did in 2008. Have a play on the BoE inflation tool and then realise that true man-made up inflation is far worse.

Not sure where the man came from but maybe true as well.

Just one of the problems with UBI is that if you really want it to be a) the only benefit b) the same amount payable no matter what the circumstances and c) sufficient to live on, to be anywhere near affordable the withdrawal rate has to be so high you destroy any work incentive for low-end work. It simply isn’t possible to have a b c and d) reasonable work incentives and e) affordability. 

No it does not destroy incentive for work - rather the opposite there is no poverty trap/admin nightmare in transitioning from benefits to work

Err if you have a withdrawal rate of 90p in the pound why would anyone bother taking a £15k per year job? It’s impossible to square the affordability circle. 

I don’t know what you mean - everyone gets the benefit - if you want to live on 12k a year that’s up to you but there is every incentive to earn more as you won’t lose anything by doing so.

Couple each get the same amount as a single person.  Yes, there’s economy from living together.   UBI should encourage large households, not hermits in their own individual separate hutch.

No extra for parents. People who want to have children need to make sacrifices. Income to support children is not ‘Basic’.

 

Risky, what do you mean by the ‘withdrawal rate’.  
 

Sounds like something only Catholic priests would rhythmically worry about.

In principle I agree elffi universal income is a an entlement for all, not needs related, if your lifestyle means you need more you work. There may have to be some measures to prevent child poverty but should be targeted in such a way that they do not improve the lifestyle of the parents.

Oh right, so you’re allowing people to keep 100pc of earnings (apart from normal tax). You realize you’re spending 600bn a year then?

Paid for in various ways - abolition of all state pensions and benefits, abolition of personal allowance, and claw it back from high earners through increased income tax.  No longer a need for minimum wage  so companies could afford to pay higher tax too

So the ubi amount is subject to tax? Or do you mean tax starts from 1 pound above the Ubi amount? If the latter, it won’t give you anything cos it’s about 12k now anyway. Total welfare spending inc state pension is about 270bn. So you’re maybe only looking for another 330bn per year. 

Income tax in total raises 195bn so you’re talking about more than doubling everyone’s income tax rates... assuming that has no effect on behaviors 

Yep perhaps an extra £1,500 per tax payer from income tax on average an absolute steal for the benefits the scheme would bring

Guy, you’re talking about a basic rate of income tax of about 50pc....

Well I envisage a special tax band to claw it back from people earning over a certain level so basic income tax would not need to increase that much, but yes taxes would be higher no question 

Forster, I’m going to assume that’s aimed at guy?!  It’s amazing how confident people in their schemes even when reality is pointed out to Them...

No I don’t know that - would increase current government spending of around 900 billion by about 20 per cent, perfectly possible to raise taxes to pay for that particularly as we would be reducing labour costs.

No guy, as calculated, would be about a 33pc increase. Not really clear why you think laboir costs would reduce. People are likely to want to be paid more to compensate for the fact that they’re now losing 50p in every Pound in income tax 

Ok 33 .. detail

labour costs would reduce because people work for less once basic needs already catered for.

look lots of details to be worked out - but I am talking about a radical rethink about the way our society works not tinkering with the benefits system.  This is big picture.

I refer the hon gentleman to my 2117..... out of interest I hope you’ve considered the immigration policy that would go with your generosity. 12,000 quid a year free will attract a lot of external interest

Will require a long residence to qualify - one benefit of Brexit 

Risky, you are right to ask for specifics.  

The numbers make a huge difference to what is and what is not possible.

And there would have to be significant, sustained (And very complicated and expensive) transitional arrangements.

The long-term outcomes would presumably be something like:

- (10%) significantly worse off because they are big beneficiaries of the current welfare systems

- (80%) slightly better/worse off because the UBI plus wages, minus increased tax will be more/less than they receive now

- (10%) significantly worse off because their increase in tax will be greater than the UBI they receive

 

 

I just think a country with (income) tax rates that high would be sclerotic. I’d be much more interested in something that looked to redistribute wealth more directly....

That’s the problem for the left with freedom of movement.

You can’t stop the wealth creators from leaving ... if you try to squeeze them too hard