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Re: Why young people are worse off than their parents — and what to do about it
Posted: Sun Aug 18, 2024 10:08 am
by Beaglehound
Wales4rugbyWC23 wrote: ↑Sun Aug 18, 2024 9:42 am
Deep Blue wrote: ↑Sun Aug 18, 2024 8:44 am
Just rumours, not based on anything they've actually said. If it happens, I guess it would be phased in so that those who have made all the contributions continue to get the full pension, and means testing will kick in gradually over a couple of decades or so. This would seem fairish and give plenty of time for those affected (probably those in their 30's now) to start planning.
I also think they'd have to bin the triple lock if they start means testing for future pensioners. It's already deeply deeply unfair to those whose contributions are paying for the generation aboves current pensions.
Although the Australians have done this with their state pension- it is means tested, they have set up one of the most comprehensive private pension systems in the world, they did this over 30 years ago before all the baby boomers starting retiring. The sheer cost and bureaucratic nightmare this would involve would make it impossible. The state pension is the largest cost of UK government expenditure but after America, Brits have the second largest amount of pension reserves in the world. The state and private pension complement each other well, and in terms of pension provision I think we are well ahead of Japan.
I may be wrong as I have no specialist knowledge on this, but I think successive governments have been trying to encourage more private pension provision, whether through actual pensions or ISA. I would think any means testing of the state pension would be a serious disincentive to such saving. I think it's more likely they water down the triple lock substantially and/or further raise the pensionable age.
Re: Why young people are worse off than their parents — and what to do about it
Posted: Sun Aug 18, 2024 12:07 pm
by Wales4rugbyWC23
Beaglehound wrote: ↑Sun Aug 18, 2024 10:08 am
Wales4rugbyWC23 wrote: ↑Sun Aug 18, 2024 9:42 am
Deep Blue wrote: ↑Sun Aug 18, 2024 8:44 am
Just rumours, not based on anything they've actually said. If it happens, I guess it would be phased in so that those who have made all the contributions continue to get the full pension, and means testing will kick in gradually over a couple of decades or so. This would seem fairish and give plenty of time for those affected (probably those in their 30's now) to start planning.
I also think they'd have to bin the triple lock if they start means testing for future pensioners. It's already deeply deeply unfair to those whose contributions are paying for the generation aboves current pensions.
Although the Australians have done this with their state pension- it is means tested, they have set up one of the most comprehensive private pension systems in the world, they did this over 30 years ago before all the baby boomers starting retiring. The sheer cost and bureaucratic nightmare this would involve would make it impossible. The state pension is the largest cost of UK government expenditure but after America, Brits have the second largest amount of pension reserves in the world. The state and private pension complement each other well, and in terms of pension provision I think we are well ahead of Japan.
I may be wrong as I have no specialist knowledge on this, but I think successive governments have been trying to encourage more private pension provision, whether through actual pensions or ISA. I would think any means testing of the state pension would be a serious disincentive to such saving. I think it's more likely they water down the triple lock substantially and/or further raise the pensionable age.
Auto-enrolment in the UK has quietly and surprisingly smoothly insured that almost all workers have a private pension and a state pension for retirement. I think Japan should have a look at the 'nudge' incentives for pension provision especially for small businesses, a bit more generosity for pension contribution allowances- they are still quite modest.
It would not be a brave politician who would pare back the triple lock or further increase the pensionable age.
Re: Why young people are worse off than their parents — and what to do about it
Posted: Sun Aug 18, 2024 1:38 pm
by RetireJapan
I can't imagine a contributory state pension like the UK or Japanese one becoming means tested. That makes no logical or moral sense. The way they are set up is that you get a pension based on your contributions.
They are also not particularly generous (although the UK one is much better than the Japanese one).
I would like to see Japan increase the iDeCo contribution limits, and perhaps remove the lifetime NISA allowance (just keeping the annual one and allowing people to pay in indefinitely like the UK does). Not sure how likely it is, but we can hope.
Re: Why young people are worse off than their parents — and what to do about it
Posted: Sun Aug 18, 2024 10:09 pm
by Wales4rugbyWC23
RetireJapan wrote: ↑Sun Aug 18, 2024 1:38 pm
I can't imagine a contributory state pension like the UK or Japanese one becoming means tested. That makes no logical or moral sense. The way they are set up is that you get a pension based on your contributions.
They are also not particularly generous (although the UK one is much better than the Japanese one).
I would like to see Japan increase the iDeCo contribution limits, and perhaps remove the lifetime NISA allowance (just keeping the annual one and allowing people to pay in indefinitely like the UK does). Not sure how likely it is, but we can hope.
Maybe the one, and the only thing we can thank PM Kishida for increasing the NISA allowance limits, there was talk before he became PM of reducing NISA allowance limits. Making the Ideco allowance a bit more generous should definitely be in the in-tray of the next PM.
There really has been a sea change in the Japanese investment environment over the last decade. When you are now seeing the Japanese Post Office advertising for NISAs and Ideco, when before all you could there was open a savings account earning a paltry rate of interest.
Re: Why young people are worse off than their parents — and what to do about it
Posted: Sun Aug 18, 2024 10:45 pm
by Deep Blue
RetireJapan wrote: ↑Sun Aug 18, 2024 1:38 pm
I can't imagine a contributory state pension like the UK or Japanese one becoming means tested. That makes no logical or moral sense. The way they are set up is that you get a pension based on your contributions.
National Insurance is just another tax. The British Government is spending beyond its means so they need to cut back spending or raise taxes. People think their past contributions pay for their pension but this is emphatically not the case. Pension payouts come from the taxes/NI paid by the current workers.
It is already deeply unfair and I’d argue there is a moral and logical argument to fix that too, one that is at least as powerful as the arguments unfair or immoral to reform the system.
Re: Why young people are worse off than their parents — and what to do about it
Posted: Mon Aug 19, 2024 5:30 am
by Wales4rugbyWC23
Deep Blue wrote: ↑Sun Aug 18, 2024 10:45 pm
RetireJapan wrote: ↑Sun Aug 18, 2024 1:38 pm
I can't imagine a contributory state pension like the UK or Japanese one becoming means tested. That makes no logical or moral sense. The way they are set up is that you get a pension based on your contributions.
National Insurance is just another tax. The British Government is spending beyond its means so they need to cut back spending or raise taxes. People think their past contributions pay for their pension but this is emphatically not the case. Pension payouts come from the taxes/NI paid by the current workers.
It is already deeply unfair and I’d argue there is a moral and logical argument to fix that too, one that is at least as powerful as the arguments unfair or immoral to reform the system.
I think apart from pushing back the age when you can receive the pension, there is not much more that could be politically possible. Even that there has been considerable push back on. This is one of the dangers of having a state pension system that is based on 'pay-as-you go' and not funded. Unfortunately, most developed countries also have similar set up, just look how difficult it is to do pension reform in France.
Re: Why young people are worse off than their parents — and what to do about it
Posted: Mon Aug 19, 2024 7:15 am
by Deep Blue
Wales4rugbyWC23 wrote: ↑Mon Aug 19, 2024 5:30 am
Deep Blue wrote: ↑Sun Aug 18, 2024 10:45 pm
RetireJapan wrote: ↑Sun Aug 18, 2024 1:38 pm
I can't imagine a contributory state pension like the UK or Japanese one becoming means tested. That makes no logical or moral sense. The way they are set up is that you get a pension based on your contributions.
National Insurance is just another tax. The British Government is spending beyond its means so they need to cut back spending or raise taxes. People think their past contributions pay for their pension but this is emphatically not the case. Pension payouts come from the taxes/NI paid by the current workers.
It is already deeply unfair and I’d argue there is a moral and logical argument to fix that too, one that is at least as powerful as the arguments unfair or immoral to reform the system.
I think apart from pushing back the age when you can receive the pension, there is not much more that could be politically possible. Even that there has been considerable push back on. This is one of the dangers of having a state pension system that is based on 'pay-as-you go' and not funded. Unfortunately, most developed countries also have similar set up, just look how difficult it is to do pension reform in France.
I agree it is very difficult. The unfortunate fact is - the longer the UK leaves it the worse it gets and the harder to reform. At some point, it needs to be fixed.