George Osborne's Plan B

[Undesired Walrus]

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2) (Brown's) high spending in the good times had left less flexibility for high spending in bad times

Yet is this unique from Brown?

From my untrained eye, I see that the longest period in the last 40 years or so in which there was a surplus was while Gordon Brown was chancellor.

 

[richardm]

W.r.t. the carriers, has the Ark Royal sale been finalised, yet? I wonder how much it would cost to recommision.

As far as I know they didn't find any takers, which probably suggests that the recommissioning costs would be a bit stiff.

 

[Debaser]

...Retiring later...

Honestly though, is there anyone in this country under the age of 40 (and witha job) who seriously expected to retire at 65-or so, with a comfortable pension that didn't at the very least require some part-time work to top-up?

Really?

 

[andyandy]

Honestly though, is there anyone in this country under the age of 40 (and witha job) who seriously expected to retire at 65-or so, with a comfortable pension that didn't at the very least require some part-time work to top-up?

Really?

true....

but I'm doing the sums, (and checking out the actuarial life expectancy charts), well my life expectancy is about ~77. By the time I get to retirement I think retirement age is going to be 70. Which only means 7 years of pension on average. Not sure those sums really encourage paying into a pension fund.

we're getting close to the death of the pension for most workers - the numbers of people without any pension provision is already pretty massive - who's going to be left? Fat cat CEOs and MPs...?

Some genuinely needed reform is capping public sector pensions at the median wage (currently ~£25,000). There is absolutely no excuse for the public to have to spend £50,000 or £100,000 p/a for life on MPs or County Council Chief Exec pensions. Any more than the median wage and you buy private provision. Of course this won't happen because it'll affect MPs.

It was pretty nauseating today listening to Maude (I think) bleating on about how unfair it would be to do anything to affect people over 50, because they hadn't had time to prepare for any changes - so instead they were going to shaft every future generation as the 50-somethings sail off into the sunset with what's left of the country's wealth....

Coincidence that the average MP age is over 50? Hmmmm.....

 

[Darat]

Honestly though, is there anyone in this country under the age of 40 (and witha job) who seriously expected to retire at 65-or so, with a comfortable pension that didn't at the very least require some part-time work to top-up?

Really?

I'm over 40 and didn't expect that... mind you I have been saying that the pension idea was ludicrous since the mid 1980s.

 

[andyandy]

I'm over 40 and didn't expect that... mind you I have been saying that the pension idea was ludicrous since the mid 1980s.

What happens if/when pension provision does become unsustainable? ie. people like me decide it's not worth paying into a fund, public sector workers withdraw, and we have the ever increasing burden of more retirees living longer on the final salary pensions they bagged early enough?

 

[Darat]

What happens if/when pension provision does become unsustainable? ie. people like me decide it's not worth paying into a fund, public sector workers withdraw, and we have the ever increasing burden of more retirees living longer on the final salary pensions they bagged early enough?

Don't know, I can see it developing in many different ways but I'm sure we will probably end up with a bodge!

 

[richardm]

Don't know, I can see it developing in many different ways but I'm sure we will probably end up with a bodge!

If by "bodge" you mean a damp unheated bedsit to die in you're probably right.

 

[Darat]

If by "bodge" you mean a damp unheated bedsit to die in you're probably right.

Don't be silly - we will have nice, well heated "Advancement Centres*" in every town and city that will help folk advance through the remaining years of their lives as efficiently as possible. (I think the injection will take about 5 minutes to advance you to your death.)







*Run privately of course.

 

[Debaser]

Careful...I'll bring up my 'Modern Workhouse' idea again (which looks increasingly likely, sadly).

I can also see an incremental pension - 80% of full state pension for retiring at 67, 90%/69, 100%/71, 110%/73, etc.

 

[Skepticemea]

As 700k public sector workers are about to lose their jobs, does that make the pension schemes more or less sustainable?

 

[Debaser]

Don't be silly - we will have nice, well heated "Advancement Centres*" in every town and city that will help folk advance through the remaining years of their lives as efficiently as possible. (I think the injection will take about 5 minutes to advance you to your death.)







*Run privately of course.

We already have them.

All those single bedroom waterside apartments too small to swing a cat in the combined kitchen/living room. Either equip each room for teleworking, or take a couple of floors and make them into call centres.

Low-paid, relatively low (physical) effort work, but do enough hours per week and you cover your own board and lodgings. Feel like doing extra hours and you get additional pay to spend as you like. Fail to do enough and you eat into any savings you might have.

 

[Debaser]

As 700k public sector workers are about to lose their jobs, does that make the pension schemes more or less sustainable?

What are redundancy payments like in the public sector? That could gut their finances sooner rather than later.


For the record, this private sector worker will get the statutory minimum after 15 years at the company...should it come to that.

 

[Giz]

true....

but I'm doing the sums, (and checking out the actuarial life expectancy charts), well my life expectancy is about ~77. By the time I get to retirement I think retirement age is going to be 70. Which only means 7 years of pension on average. Not sure those sums really encourage paying into a pension fund.

Either you live in a blighted area, or have horrible personal habits or that is off.

77 years is the life expectancy for UK males at birth, i.e. it is skewed downwards by including infant mortality, youthful risk taking (driving fast etc), heart attacks in the 50's and 60's etc. Once (if) you hit 70 you probably have double the time left that you guessed.

 

[Debaser]

http://longevity.about.com/od/longevity101/p/life_expect.htm

Life Expectancy at 65:
As people age, their life expectancy actually increases. Each year you live means that you have survived all sorts of potential causes of death. If you were born in 1942, your life expectancy at birth was about 68 years. But the good news is that you didn't die of infectious diseases when young, car accidents, or anything else. The average 65-year-old today can expect to live another 18.4 years. So your life expectancy now is not the same as it was at your birth. It is 5.9 years longer than the current life expectancy figure (which is for people born in 2006) or 83.4 years.

Life Expectancy at 75:
The news just keeps getting better -- if you make it to 75 your life expectancy increases to 86.8. You gain another 3.4 years. That means the average 75-year-old will live 9.3 years longer than the average child born in 2006. Sound like funny math? It's not, it is one of those weird things that statistics does. So don't be discouraged when you outlive the current average life expectancy at birth. Only the oldest person in the world can outlive his or her own life expectancy. For the rest of us, there is always someone older.

 

[The Don]

I love (and by love I mean hate) the way in which the responsibility (and risk) for pensions in the private sector has moved from being shared between employee and employer (so defined benefits with contributions being reviewed periodically to maintain the fund) to being entirely the risk of the employee (defined contributions).

Then we layer on top of this the contribution holidays that some employers took back in the '80s and '90s when stock market performance was good, subsequent rubbish stock market performance, predictably poor performance from find managers (but still taking their exorbitant fees) and the dividends tax.

All of this means that far from the 7% return which was included in the most pessimistic pension forecasts 20 years ago, my pension fund is barely larger than my individual contributions into it. In fact one of my pensions I think is currently less than my contributions despite 15 years of investment returns.

All of this has left most private sector employees with very poor pension arrangements.

Rather than saying "Oi ! what happened to my pension" we've been persuaded that the villains of the piece aren't the cheapskate companies, appalling fund managers or successive chancellors of the exchequer but instead the public sector employees who have retained their acceptable pensions (which have now been rebranded as gold plated). The ConDems have resorted to the politics of envy.

The Hutton report highlighted that public sector pensions weren't too generous but that private sector pensions were too miserly.

I realise that we're living longer (though remember that a significant proportion of the increase in life expectancy over the last century is due to the number of people surviving into adulthood) but there are far bigger factors at play in terms of the size of our pension funds:

• Low returns on pensions (down by 72% http://news.bbc.co.uk/1/hi/business/8506423.stm)
• Lower annuity rates (http://www.williamburrows.com/charts/chart100k.aspx)
• Exhorbitant fees all around

Let's not demonise the public sector for wanting to retain a decent, living pension. These days to get an index linked pension with widows benefit of £20,000 (hardly the high-life but comfortable) would require a pension fund of £600-£700,000

I don't know about you but my pension funds aren't going to be anything like that by the time I'm ready to semi-retire.

 

[Debaser]

Let's face it. In order to try to plan ahead for retirement and contribute to pensions we each ideally need 40 years of stable government policy towards them. Since most governments seem to work on 5 year plans it's never going to add up.

 

[Darat]

We already have them.

All those single bedroom waterside apartments too small to swing a cat in the combined kitchen/living room. Either equip each room for teleworking, or take a couple of floors and make them into call centres.

Low-paid, relatively low (physical) effort work, but do enough hours per week and you cover your own board and lodgings. Feel like doing extra hours and you get additional pay to spend as you like. Fail to do enough and you eat into any savings you might have.

It's creative entrepreneurs* like you that will make this country great again!




*Assuming you either went to school with the Minister for the Aged and/or made the appropriate party donations.

 

[Debaser]

It's creative entrepreneurs* like you that will make this country great again!
[/SIZE]

Well 'every cloud has a silver lining' as they say, and the silver lining to the demographic timebomb will be a pool of time rich/income poor and relatively tech savvy old people desparate to make ends meet.

I'm just looking for a catchy name to call them to put in the business plan; 'Workhouse' is so...loaded.

 

[Giz]

Let's not demonise the public sector for wanting to retain a decent, living pension. These days to get an index linked pension with widows benefit of £20,000 (hardly the high-life but comfortable) would require a pension fund of £600-£700,000

I don't think that they are getting demonized for wanting that (everybody wants that).

The problem is simply a lack of money. Giving the public sector workers their pensions requires money from the private sector. This sticks in the craw of private sector workers as money that could go towards their pensions or pay is instead going to be used on public sector pensions (which are way better).

It's a question of robbing the worse off to fund the better off. Absolutely appalling (and I would hope all progressives would agree).