UK - Election 2015

[funk de fino]

Agreed, the jobs totals tell a different story. It is quite possible for public spending to increase and public sector employment to decrease. Which many people equate with "privatisation of public services". But it represents increased private provision of increased public services.

Which isn't anything really to do with the point I was making but hey ho

Perhaps not if you have abolished boom and bust. If you have abjectly failed to do such an implausible thing, then during an 11 year expansion in output, it looks to have been a pretty bad idea. Particularly if (as Ed Miliband frequently insisted), the government had zero influence over if/when/how big a bust would come.

However if we look at GDP overall compared to the G8, at 2008, the UK had a a better ratio than the rest of them ( from memory only Japan aside) and many other Western countries. But the fact it had a massive financial sector and was a very service driven economy left it in a worse position than the others. You think that this didn't start back in 1979 and continued through the Red Tory years? A more evenly balanced economic output would have been less hard hit?

 

[Francesca R]

However if we look at GDP overall compared to the G8, at 2008, the UK had a a better ratio than the rest of them ( from memory only Japan aside) and many other Western countries.

What's a better ratio? From that table in 07 UK general government outlays were a higher percentage of the economy than US, Japan, Canada and lower than Germany, France and Italy.

But the fact it had a massive financial sector and was a very service driven economy left it in a worse position than the others. You think that this didn't start back in 1979 and continued through the Red Tory years? A more evenly balanced economic output would have been less hard hit?

Which isn't anything really to do with the point I was making but hey ho

 

[Information Analyst]

It is a case of yesterday's workers, today's pensioners "winning the lottery" against today's workers and tomorrow's pensioners. But not a fair lottery since only the former group bought the tickets.

Clearly you entirely missed the point of my lottery comment. IIRC, the average NHS pensioner gets around £7,000 per year, which clearly is not anything like winning the lottery, or a house by the sea, or a castle in the sky.

In my view defined benefit pension contracts should be declared invalid (by the supreme court or whomever) and renegotiated.

And replaced with what, exactly? What did I bother paying two-odd years of pension contributions for?

 

[Francesca R]

Replaced with contingent benefits that share the risks properly between generations and between retirees and taxpers around longevity, fertility, real interest rates, investment returns and insurance security, since you ask.

The last government's Hutton-inspired reforms did very little of this, used a smoke-and-mirrors change of switching the inflation indexing to lower costs, and concentrated on the obvious vote winner of keeping promises already made to existing scheme members. They cut back projected costs and did very little for inter-generational equality

 

[Information Analyst]

Clearly you entirely missed the point of my lottery comment. IIRC, the average NHS pensioner gets around £7,000 per year, which clearly is not anything like winning the lottery, or a house by the sea, or a castle in the sky.


And replaced with what, exactly? What did I bother paying two-odd years of pension contributions for?

Obviously that should have read "twenty-odd years..."

 

[The Don]

Clearly you entirely missed the point of my lottery comment. IIRC, the average NHS pensioner gets around £7,000 per year, which clearly is not anything like winning the lottery, or a house by the sea, or a castle in the sky.

Mrs Don and I hope to be comfortably off in our retirement through a combination of luck, lack of children, hard work and shrewd investments (but mostly luck). If things go to plan it's likely that we'll have a retirement income in the £40k-£60k range. If this happy set of circumstances comes to pass, which is the fairer situation:

• That we also get a £14k state pension that we either don't need or just fritter away
• We don't get that £14k and it can go so someone(s) else for whom that money will make a real difference

I tend towards the latter.

 

[Francesca R]

Obviously that should have read "twenty-odd years..."

Thought you were being a tad optimistic.

 

[Information Analyst]

Thought you were being a tad optimistic.

I think I started with "two decades" and then didn't property amend it when I changed my mind about the wording.

 

[Information Analyst]

Mrs Don and I hope to be comfortably off in our retirement through a combination of luck, lack of children, hard work and shrewd investments (but mostly luck). If things go to plan it's likely that we'll have a retirement income in the £40k-£60k range. If this happy set of circumstances comes to pass, which is the fairer situation:

• That we also get a £14k state pension that we either don't need or just fritter away
• We don't get that £14k and it can go so someone(s) else for whom that money will make a real difference

I tend towards the latter.

Being cynical, I somehow doubt that state pensions not paid due to the recipients already having other income enough won't actually equate to other state pensioners getting more.

Due to a number of factors, my NHS pension as it stands now is likely to be a minimum equivalent of £8k to an absolute maximum of £16k. So much for that house by the sea....

 

[Craig B]

In my view defined benefit pension contracts should be declared invalid (by the supreme court or whomever) and renegotiated.

Declared invalid - in favour of what? To be renegotiated by whom? Under what rules?

Can you clarify that you do not in fact think that universal state pensions should be abolished in favour of means tested relief payments? I really am confused about your position on this.

 

[funk de fino]

What's a better ratio? From that table in 07 UK general government outlays were a higher percentage of the economy than US, Japan, Canada and lower than Germany, France and Italy.

I have the figures elsewhere but most were higher than the UK? Do you claim otherwise? You think approx 40% was excessive and irresponsible?

Which isn't anything really to do with the point I was making but hey ho

I guess that only you get to play that game eh?

 

[Craig B]

which is the fairer situation:

• That we also get a £14k state pension that we either don't need or just fritter away
• We don't get that £14k and it can go so someone(s) else for whom that money will make a real difference

I tend towards the latter.

Then don't claim the pension if you don't want it. Or hand it back. If you don't take it, what will happen to that and other money now paid to people with adequate income? It will be used to pay means tested support to the most indigent people to keep them alive. But that means tested support would be paid anyway, so the pension as such will cease to exist. Old age pensions would disappear.

 

[The Don]

Then don't claim the pension if you don't want it. Or hand it back. If you don't take it, what will happen to that and other money now paid to people with adequate income?

Nope, I'll take it (in the same way that I don't pay a penny more in tax than I have to but still think that I should be subject to a higher rate of tax) because I'm human.

It will be used to pay means tested support to the most indigent people to keep them alive. But that means tested support would be paid anyway, so the pension as such will cease to exist. Old age pensions would disappear.

I'd rather that people who need money in their old age get more (at the expense of those that don't need it) rather than waste millions (billions ?) giving the state pension to those that do not need it. If that means the "pension as such" ceases to exist then so be it.

 

[Craig B]

Nope, I'll take it (in the same way that I don't pay a penny more in tax than I have to but still think that I should be subject to a higher rate of tax) because I'm human.



I'd rather that people who need money in their old age get more (at the expense of those that don't need it) rather than waste millions (billions ?) giving the state pension to those that do not need it. If that means the "pension as such" ceases to exist then so be it.

But they wouldn't get more, because the means test calculation gives a minimum required by the applicant to remain alive and in habitable accommodation. We see the growth of food banks and so on. So unless there was a guaranteed state pension, it won't matter under the means test whether a person is a pensioner or not. And Francesca is against employment pensions, I presume in favour of a means tested dole also in their case.

 

[Information Analyst]

And Francesca is against employment pensions, I presume in favour of a means tested dole also in their case.

IIRC, there have been mutterings from the Conservatives that they want to do away with Contribution-Based JSA, which would be the working age equivalent of abolishing the automatic state pension.

 

[The Don]

But they wouldn't get more, because the means test calculation gives a minimum required by the applicant to remain alive and in habitable accommodation. We see the growth of food banks and so on.

That's your assumption about how it will be applied. My point is that is it better that the £100 of pension budget is paid to all people of pensionable age or the 50%, 60%, 70% or whatever who actually need it ?

One form of "means test" would be that the state pension is paid to all qualifying people of a pensionable age whose income is, say, £50k or less and then tapers off thereafter.

So unless there was a guaranteed state pension, it won't matter under the means test whether a person is a pensioner or not.

You're making assumptions about how such a means test would be applied.

One way would be to ensure that all pensioners have at least £x. If the pensioner does not have private pension income to cover that then the state will make up the difference.

There are presumably models which taper off the state pension once income us over a certain level.

And Francesca is against employment pensions, I presume in favour of a means tested dole also in their case.

AFAIK FrancescaR is not against employment pensions, I'm not even sure that FrancescaR is against defined benefits schemes. I am reasonably sure that FrancescaR has said that underfunded public sector defined benefits schemes are a liability.

 

[Craig B]

You're making assumptions about how such a means test would be applied.

One way would be to ensure that all pensioners have at least £x. If the pensioner does not have private pension income to cover that then the state will make up the difference.

So why pay contributions to a private pension scheme up to that point? Is that not unfair to private pension contributors?

 

[Francesca R]

AFAIK FrancescaR is not against employment pensions, I'm not even sure that FrancescaR is against defined benefits schemes. I am reasonably sure that FrancescaR has said that underfunded public sector defined benefits schemes are a liability.

It doesn't really matter if public pensions are funded or not. "Funding" in no sense means that assets are matched to liabilities and even if it did, every time the matching was re-balanced the assets would be being drawn from people at an earlier stage of life to those the liabilities are paid to, so "fully funded" DB schemes do not achieve inter-generational equality of pay-in/pay-out. And this is the crux of the issue and very few people give consideration of it the time of day.

The point is that it is wholly wrong (inefficient and unfair) for "defined benefit" to be not contingent on the risks I mention repeatedly above. Defining a benefit based on final salary or career-average salary exposes beneficiaries and contributors to opposite sides of those risks. Nobody hedges those risks for either side. You can not hedge them yourself. It creates a lottery effect and--sorry and all--but the baby boom generation won the jackpot while generation Y was not even at the table when the bargains were struck.

I will not be responding to red-herrings and attempts to misrepresent my position on this matter I have been fully consistent about it here for years.

Meanshile I have to go to Australia now so excuse me.

 

[GlennB]

The point is that it is wholly wrong (inefficient and unfair) for "defined benefit" to be not contingent on the risks I mention repeatedly above. Defining a benefit based on final salary or career-average salary exposes beneficiaries and contributors to opposite sides of those risks. Nobody hedges those risks for either side. You can not hedge them yourself. It creates a lottery effect and--sorry and all--but the baby boom generation won the jackpot while generation Y was not even at the table when the bargains were struck.

It really is this simple. Striking deals for future times that can't cater for changing circumstances some decades down the line is/was utterly irresponsible, and can't be slavishly defended out of devotion to a sense of "fairness" to beneficiaries at the expense of those who suffer as a result. Fairness to who?


"Our children will hate us"

 

[Information Analyst]

It really is this simple. Striking deals for future times that can't cater for changing circumstances some decades down the line is/was utterly irresponsible, and can't be slavishly defended out of devotion to a sense of "fairness" to beneficiaries at the expense of those who suffer as a result. Fairness to who?

A bit like promising a fixed interest rate over period of time, then? Are there any calls to abolish government bonds because of such "unfairness"?