Pensions

[Tom Joad]

"My name is Phillip",  Radio 4 doc today. A pensioner and his wife are converting a van into their new home as they can't afford to llive in a conventional house or flat. I thought I would post this as last time there was a pensions debate on here it appeared most thought pensioners were all on index linked salaries of £40,000+, or had fecklessly failed to look after their future and were an undeserving bunch.
What emerged from this was that Phillip and his wife had worked in physical jobs all of their lives. They used to own a house but that was in the days of Thatcher's reign and the mortgage payments rapidly doubled, (remember those days, 13%+?), forcing them into debt and to give it up. Their pension barely covers their rent. The wife has had to work an extra 6 years more than planned and they are both unable physically, to work into their late 60's. Also from this we learned that regionally, 18 to 24% of pensioners live in poverty, many have struggled for years to survive on low wages, let alone put into a pension pot. UK pensions are among the very lowest in Europe. What came over strongly was the despair that comes with being unable to help oneself. Food for thought?

[Ossian]

For my generation 'good' pensions often meant working for either the public sector or profitable larger employers. There were plenty of the latter when I entered working life as a teenager - not least in the the industrial West Midlands - but as profits declined, many of those businesses shrank and eventually disappeared completely (just a few names off the top of my head: Glynwed, John Thompson, Ductile Steels, Round Oak, Stewarts & Lloyds, BL and its supply chain). What remained was an employment landscape permanently altered in all sorts of ways; decent employer pensions being just one casualty, along with well-paid secure employment. And there were those who believed it was "a price worth paying".

I come from a background where there was often little or no empathy for the less fortunate, and probably that has been formative in terms of my own politics. The 24% figure only surprises me to the extent that I'm amazed it's not higher; I know of plenty who've spent their working lives so preoccupied with managing the immediate that providing for the future was a luxury simply not available to them.

[Borin' Baggie]

And this is exactly why pensions need to be means tested.

[JOK]

Good post Tom.

Yep, there seem to be some who think all pensioners are living in the lap of luxury with incomes of tens of thousands and assets to match. If I am not mistaken the state pension is actually below the ‘living wage’.
I do remember those ‘interesting’ (see what I did there) days. We took out our mortgage at 7%  and within months, it seemed, it had almost doubled.  I wasn’t on a great wage at the time and in fact, never was. We had a new baby and the ‘financial controller’ decided to give up work to look after her for four years. So, for us, there was not a great deal of disposable income in those years.

I did, however, thankfully heed the many calls, at the time, to take out a private pension which was unusual for me, to be honest. I moved into a job with a slightly better salary and was able to allocate a good proportion of the extra to said pension.  That pension has performed far better than I’d expected and with my wife’s company pension we hope to have a worry free last few years. As long as we budget well.

Yes, I consider myself fortunate and still can’t believe I made such a good call. We do still have our modest house and can have a week or two self-catering hols in Britain and hopefully, covid willing, the odd trip to the theatre.
My mother worked for from 14 years old  to 60 in hard menial jobs. Lived through the depression and was drafted to work on the buses in the Second World War. She never owned her own home, was widowed at 57. She is now ‘allowed’ to keep about a fiver a week out of her state pension for pocket money, the rest goes towards her care.

So, I do not apologise for sounding off when I hear or read people talking cr*p about how well off pensioners are or how selfish they have been and still are. The vast majority are not living in the lap of luxury and able to live off the interest from assets, tax free.

[baggy1]

Agree 100% JOK, there really is some sort of disgruntled fantasists out there that imagine there are hoards of pensioners riding round in Bentleys having lunch at The Ivy and popping over to St.Tropez for the winter months. The state pension will amount to about 10k for anyone that has managed to work for the 35 years and pay NI so it is a top up to anything else you have saved for, not a key to the life of luxury.

Pensions weren't the rule when I was in my 20s and I didn't really start paying in until I was in my late 20s. I've managed to put as much away as is comfortable and will end up, including the state pension and 9 years of a local government one, to end up with about 26k a year when I pack it in. I could go for more but I've worked since I was 16 and will pack it in at 60. I'm lucky that I've also saved a decent sum and have benefitted from buying my house early on, but these aren't reasons to punish me by means testing. We should have a functioning state system that rewards people who have worked towards the benefit of the state for the majority of their lives. 20 years of education, 40 years of work and 20 to 40 years of rest should be the minimum that one of the richest countries on the planet can allow.

[Protheroe]

We should have a functioning state system that rewards people who have worked towards the benefit of the state for the majority of their lives. 20 years of education, 40 years of work and 20 to 40 years of rest should be the minimum that one of the richest countries on the planet can allow.

Where is the money for this going to come from?

With current tax policies you couldn't disincentivise work, business or investment much more.

I agree with BB that the State Pension (and all old age benefits) ought to be means tested. And those fortunate enough to have built substantial wealth (largely thrrough housing) ought to be incentivised to release equity or downsize as a means of pension provision.

[baggy1]

We should have a functioning state system that rewards people who have worked towards the benefit of the state for the majority of their lives. 20 years of education, 40 years of work and 20 to 40 years of rest should be the minimum that one of the richest countries on the planet can allow.

Where is the money for this going to come from?

With current tax policies you couldn't disincentivise work, business or investment much more.

I agree with BB that the State Pension (and all old age benefits) ought to be means tested. And those fortunate enough to have built substantial wealth (largely thrrough housing) ought to be incentivised to release equity or downsize as a means of pension provision.

So basically someone who has worked and built up a decent pension whilst also strived to live in a better area is punished because we as a state have failed to build up a pot of money to cope with what we knew was coming. 

We have had a rinse and repeat political history where it has always been a focus on the short term - "what do I promise to get voted in with" and "who cares I'll be on the speaker circuit in 5 years" type politician, and now we find ourselves with nothing left to cut spending on. we've decimated local and health services, sold off the family silver, and now we are down to stopping spending all together. Look further down the road and eventually we will have no spending on anything because once we have means tested pensions and find out that still isn't enough what is left - raise taxes.

I agree on the benefits btw, there is no reason I would want a free TV licence or prescriptions if I had enough to pay for them.

[Protheroe]

So basically someone who has worked and built up a decent pension whilst also strived to live in a better area is punished because we as a state have failed to build up a pot of money to cope with what we knew was coming. 

I don't see it as being punished, I see it as being responsible and forward thinking if you want anything other than a subsistence existence in your old age.

You may well have strived to live in a bigger house and a better area, but no one ever did any striving in the cause of "free wealth" created by house price inflation.

I count my lucky stars I bought at around the right time in a couple of decent areas. It's pure good fortune.

[baggy1]

So basically someone who has worked and built up a decent pension whilst also strived to live in a better area is punished because we as a state have failed to build up a pot of money to cope with what we knew was coming. 

I don't see it as being punished, I see it as being responsible and forward thinking if you want anything other than a subsistence existence in your old age.

You may well have strived to live in a bigger house and a better area, but no one ever did any striving in the cause of "free wealth" created by house price inflation.

I count my lucky stars I bought at around the right time in a couple of decent areas. It's pure good fortune.

It's not good fortune, I wasn't sitting in Old Hill and my missus in Sheldon and had good fortune to move to Solihull. We had to work hard to bridge the gap and afford the move to the area. This view that it is all random is rubbish. 

It's all a sideshow to distract away from the fact that we have seriously underfunded the state for nearly 40 years and are now running out of pots to plunder, foresight is what is needed and whereas everyone has benefitted from cheap living and taxation for the past 4 decades we now have to start paying something back in. If we'd have been paying in enough for the past 4 decades then we wouldn't be plundering pensions - if we don't start paying back in now then we will really be in shit street in another 4 decades time.

Blame the Unions - Blame the foreigners - Blame the EU - Blame the pensioners - Blame the benefit users, or simply blame the short sighted greedy politicians who should have planned for the countries future and not the next election.

[Fido]

So basically someone who has worked and built up a decent pension whilst also strived to live in a better area is punished because we as a state have failed to build up a pot of money to cope with what we knew was coming. 

I don't see it as being punished, I see it as being responsible and forward thinking if you want anything other than a subsistence existence in your old age.

You may well have strived to live in a bigger house and a better area, but no one ever did any striving in the cause of "free wealth" created by house price inflation.

I count my lucky stars I bought at around the right time in a couple of decent areas. It's pure good fortune.

It's not good fortune, I wasn't sitting in Old Hill and my missus in Sheldon and had good fortune to move to Solihull. We had to work hard to bridge the gap and afford the move to the area. This view that it is all random is rubbish. 

It's all a sideshow to distract away from the fact that we have seriously underfunded the state for nearly 40 years and are now running out of pots to plunder, foresight is what is needed and whereas everyone has benefitted from cheap living and taxation for the past 4 decades we now have to start paying something back in. If we'd have been paying in enough for the past 4 decades then we wouldn't be plundering pensions - if we don't start paying back in now then we will really be in shit street in another 4 decades time.

Blame the Unions - Blame the foreigners - Blame the EU - Blame the pensioners - Blame the benefit users, or simply blame the short sighted greedy politicians who should have planned for the countries future and not the next election.

We need to be careful about potentially "pulling up the ladder" here. We've spent a fair amount of money doing things to our house but comparing it to a place just sold down the road (similar condition to when we bought ours) the property has pretty much doubled in value in 16 years. Some of that is just a return on investment but that is a lot of value gained for very little effort and I'm not sure there is capacity for anything like that to happen again in the near future.  As soon as the kids are off and settled we'll no doubt be looking to downsize and move to a different area and realize some of that. But when you say that you worked extra hard to bridge the gap that's fine but many young folk will just not have that opportunity financially, even if they work 24 hours a day, seven days a week. 

The government should do more to encourage or even compel people to pay into personal pensions or, as Proth has suggested before, pay into housing bonds that everyone can benefit from. People are living longer and just sticking the pensionable age up a year or two every few years is going to be nowhere near enough. It may well be the case that society changes as well and more extensions and granny flats and the like are built so children can, to a certain extent, help out their parents.