Pensions

[baggy1]

I agree entirely about not pulling up the ladder but you downsizing is not going to reduce the value of your current house and make it more affordable for the young folk to move into, and means testing the state pension has nothing to do with bridging the gap it is purely another method of cutting costs. 

This tax year I will have paid my full 'stamp' according to my HMRC record and I will continue to pay into the pot (at no benefit to myself) for the next 15 years before I can pick up the state pension - I've worked for that state pension which will be a top up to my other pensions that I have worked for, that added to the pot of money that I have saved will allow me to be comfortable when I retire, nothing lavish but able to maintain the lifestyle that I have earned. The fact that the various governments have made no effort at long term planning shouldn't mean that I get less because i've worked for more, it also shouldn't mean that I have to sell the house that I have worked hard for just to top up my pension. By the time I am 68 I will have been paying in for over 50 years, 10k a year is a pretty paltry return on a 50 year investment, don't let's make out its going to see me in the lap of luxury.

[Borin' Baggie]

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.

You need to separate the intrinsic value of the asset that is your house to the purchasing of your home. You worked hard for the latter, you didn't work hard for the former which is largely the result of good fortune as per when you bought the house and how much housing has appreciated in this country. Otherwise you fall into the trap of insinuating that young people aren't working hard enough to afford a home when a lot of the time it's because of how broken the housing market is and how much housing prices have gone up.

I've said this before, even adjusted for inflation I earn more than my parents did combined at the same age as I am now, not only did they have enough financial capacity to put me through nursery at this stage but they also owned a 3 bedroom semi-detached house in south Warwickshire having come from working class backgrounds and still likely at that point being working class (most certainly still perceiving themselves as working class as they do now, that's a different debate). I still live in that town, I rent. There is no chance that I am going to be able to afford the ~£400k (ignoring the fact that it was close to ~£320k this time 2 years ago) that house costs now if I hypothetically wanted it, that is ludicrous. That asset appreciation to the point of what your house is worth now compared to when you bought it is the 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.

You need to separate the intrinsic value of the asset that is your house to the purchasing of your home. You worked hard for the latter, you didn't work hard for the former which is largely the result of good fortune as per when you bought the house and how much housing has appreciated in this country. Otherwise you fall into the trap of insinuating that young people aren't working hard enough to afford a home when a lot of the time it's because of how broken the housing market is and how much housing prices have gone up.

I've said this before, even adjusted for inflation I earn more than my parents did combined at the same age as I am now, not only did they have enough financial capacity to put me through nursery at this stage but they also owned a 3 bedroom semi-detached house in south Warwickshire having come from working class backgrounds and still likely at that point being working class (most certainly still perceiving themselves as working class as they do now, that's a different debate). I still live in that town, I rent. There is no chance that I am going to be able to afford the ~£400k (ignoring the fact that it was close to ~£320k this time 2 years ago) that house costs now if I hypothetically wanted it, that is ludicrous. That asset appreciation to the point of what your house is worth now compared to when you bought it is the good fortune.

Which is good fortune that I won't benefit from unless I sell that asset, which I don't intend to - I live in the same size of house that my parents did, I have a similar role to my Dad, I want my grandkids to come and stay and play in my garden, and I want to pass on any wealth to my kids to allow them to have a good lifestyle. The real problem is house prices and unless we build more or make policy decisions to reduce house prices the will be in this mess for ever, again back to the point reducing my state pension because of my asset is about cutting costs, not about making the country more equitable. 

We need more money in the pot, we can keep cutting state costs (we are talking pensions here but there is very little left) but what happens when we run out of costs to cut. We will be left with raising taxes - we need to start doing that now rather than keep looking at what public services we can reduce.

[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.

You need to separate the intrinsic value of the asset that is your house to the purchasing of your home. You worked hard for the latter, you didn't work hard for the former which is largely the result of good fortune as per when you bought the house and how much housing has appreciated in this country. Otherwise you fall into the trap of insinuating that young people aren't working hard enough to afford a home when a lot of the time it's because of how broken the housing market is and how much housing prices have gone up.

I've said this before, even adjusted for inflation I earn more than my parents did combined at the same age as I am now, not only did they have enough financial capacity to put me through nursery at this stage but they also owned a 3 bedroom semi-detached house in south Warwickshire having come from working class backgrounds and still likely at that point being working class (most certainly still perceiving themselves as working class as they do now, that's a different debate). I still live in that town, I rent. There is no chance that I am going to be able to afford the ~£400k (ignoring the fact that it was close to ~£320k this time 2 years ago) that house costs now if I hypothetically wanted it, that is ludicrous. That asset appreciation to the point of what your house is worth now compared to when you bought it is the good fortune.

Which is good fortune that I won't benefit from unless I sell that asset, which I don't intend to - I live in the same size of house that my parents did, I have a similar role to my Dad, I want my grandkids to come and stay and play in my garden, and I want to pass on any wealth to my kids to allow them to have a good lifestyle. The real problem is house prices and unless we build more or make policy decisions to reduce house prices the will be in this mess for ever, again back to the point reducing my state pension because of my asset is about cutting costs, not about making the country more equitable. 

We need more money in the pot, we can keep cutting state costs (we are talking pensions here but there is very little left) but what happens when we run out of costs to cut. We will be left with raising taxes - we need to start doing that now rather than keep looking at what public services we can reduce.

I know it's late in the day but there have to be more contributions into people's own personal pension plans. This would be money that gets deducted at source at gross through PAYE and goes straight into someone's fund (or one organized by the employer). No going through the treasury as that will just end up wasting a fair chunk of it. The ideal end goal should be that state pensions are there to cover the vulnerable as a safety net. If you have final salary pensions or a pot large enough to pay you say £25/30k a year then you shouldn't need a state pension. If you have a four-bed house it seems you then have a choice as to whether you stay there and live off that or downsize and have more money for other stuff. 

A very simplistic, fag-packet approach, of course, which won't cater for all by a long stretch but you get the drift.

[baggy1]

I know it's late in the day but there have to be more contributions into people's own personal pension plans. This would be money that gets deducted at source at gross through PAYE and goes straight into someone's fund (or one organized by the employer). No going through the treasury as that will just end up wasting a fair chunk of it. The ideal end goal should be that state pensions are there to cover the vulnerable as a safety net. If you have final salary pensions or a pot large enough to pay you say £25/30k a year then you shouldn't need a state pension. If you have a four-bed house it seems you then have a choice as to whether you stay there and live off that or downsize and have more money for other stuff. 

A very simplistic, fag-packet approach, of course, which won't cater for all by a long stretch but you get the drift.

I've paid into my pension for about 25 years (it only became an option in the 90s) and part of that is a final salary pension from local government, I'll have a pension including the 10k state pension of about 25k - am I let off having to sell my house now? Just as a check on my figures, how much of a pot do you think you need for 25k?

[Fido]

I know it's late in the day but there have to be more contributions into people's own personal pension plans. This would be money that gets deducted at source at gross through PAYE and goes straight into someone's fund (or one organized by the employer). No going through the treasury as that will just end up wasting a fair chunk of it. The ideal end goal should be that state pensions are there to cover the vulnerable as a safety net. If you have final salary pensions or a pot large enough to pay you say £25/30k a year then you shouldn't need a state pension. If you have a four-bed house it seems you then have a choice as to whether you stay there and live off that or downsize and have more money for other stuff. 

A very simplistic, fag-packet approach, of course, which won't cater for all by a long stretch but you get the drift.

I've paid into my pension for about 25 years (it only became an option in the 90s) and part of that is a final salary pension from local government, I'll have a pension including the 10k state pension of about 25k - am I let off having to sell my house now? Just as a check on my figures, how much of a pot do you think you need for 25k?

Let's take it from this angle. I worked for a company for 12 years and got in there just before final salary schemes were abolished. If I were 65 and were to retire today that would pay me about £10k a year I think. There were many employees there who had been at the company for 30+ years which, given the rate at which this was calculated re median rate (not exactly final salary) then someone on a similar salary to me would be looking at more like £25-30k per year. If they already owned their house I would suggest that £25-30k a year would be enough to live a comfortable life without the need for state pension. Of course, this would be part of means testing but trying to squeeze the sponge/increase taxes to cater for people who can financially take care of themselves is, in my mind, not something we should look to do.

[Protheroe]

I will continue to pay into the pot

This is the great conceit about the state pension. There is no "pot". Your NI contributions pay for current spending.

You also talk about not wanting to pull the ladder up. I'm afraid the ladder has been pulled up, sawn apart and burned. That is exactly the reason why the only practicable solution for our kids and grandkids is that you, I and everyone else lucky enough to have housing assets that have grown without any effort on our part ought to be using the equity therein to fund our retirement.

Oh, and working pensioners should continue to pay NI - and pubic sector workers taking unfunded pensions ought to be banned until the age of 65.

[baggy1]

Fido: Final salary pensions finished around the turn of the century so you are looking to implement something that will punish people going forward i.e. those without a final salary. To get 25k you will need a pot of around 625k as a real broad brush figure, that's 40 years of contributions of 10k and a hell of a lot of growth to get to that figure. Lets say employee and employer combined contribution is about 15% of salary which equates to 66k a year every year for 40 years. How many people are going to be earning 66k every year during their working life?

The number of people with pensions over 25k is minuscule, final salary or contributions.

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I will continue to pay into the pot

This is the great conceit about the state pension. There is no "pot". Your NI contributions pay for current spending.

You also talk about not wanting to pull the ladder up. I'm afraid the ladder has been pulled up, sawn apart and burned. That is exactly the reason why the only practicable solution for our kids and grandkids is that you, I and everyone else lucky enough to have housing assets that have grown without any effort on our part ought to be using the equity therein to fund our retirement.

Oh, and working pensioners should continue to pay NI - and pubic sector workers taking unfunded pensions ought to be banned until the age of 65.

Of course there's a pot - we pay in to it through taxes and the government draws out of it to spend. I love the way you avoid taxes in every way you can and rejoice in it and then pontificate to others about there not being enough money to fund the state provisions that are in place.

[Ossian]

I will continue to pay into the pot

This is the great conceit about the state pension. There is no "pot". Your NI contributions pay for current spending.

You also talk about not wanting to pull the ladder up. I'm afraid the ladder has been pulled up, sawn apart and burned. That is exactly the reason why the only practicable solution for our kids and grandkids is that you, I and everyone else lucky enough to have housing assets that have grown without any effort on our part ought to be using the equity therein to fund our retirement.

Oh, and working pensioners should continue to pay NI - and pubic sector workers taking unfunded pensions ought to be banned until the age of 65.

I'm pretty sure Baggy1 is sufficiently well-informed to know that there's not a separate fund in the DWP coffers with his name and NI number attached. The pot/fund/call it whatever is simply shorthand for the years of accumulated contribution which, in turn, do define the individual's entitlement (subject to the caveats regarding completed years and, of course, the value of a state pension when the time comes to collect). To that extent he will, like many, continue to chip in well beyond the point where it is bringing him any personal benefit.

[Protheroe]

Of course there's a pot

There is not, and never has been a state pension pot with your name on it. NI is just current tax for current spending.

On Radio 4 this morning variously NHS England demanded another £10 billion a year, the Labour Party demanded another £6 billion a year to retain the temporary UC increase and educationalists were whinging that the £7 billion extra for schools is not enough.

That's why I only pay the tax that is legally due. The demands on our money from sectional interests are huge and relentless. I wonder whether there will even be a State Pension when I come to retire.

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To that extent he will, like many, continue to chip in

He's not "chipping in" he's simply paying tax.