UK Tories Plan To Increase Pension Age To 75

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IlliniDave
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Re: UK Tories Plan To Increase Pension Age To 75

Post by IlliniDave » Sun Aug 18, 2019 8:14 pm

Seems like the math is forcing something to change, and people living longer largely means they are old longer. I don't think expecting everyone to work to 70 and beyond is reasonable (and it would compel someone to hire them). That puts more burden on the individual (as jacob noted), but that's why we prize individual liberty so much--it empowers us to handle our responsibilities. It will be kind of amusing, but also sad, the first time I hear someone say, "I'm going to FIRE at 70."

In the same way the corporate world is weaning it's workforce off of pensions, governments may need to start doing the same thing. At least here in the US, the gov't is pretty good and maintaining an army and at some facets of law enforcement, but in most respects they are the very last people that should be counted on to handle money responsibly. Of course if it is left up to individuals to provide for their future selves, a number will fail, some through negligence, but some through no real fault of their own. So it's not a perfect solution.

bostonimproper
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Re: UK Tories Plan To Increase Pension Age To 75

Post by bostonimproper » Sun Aug 18, 2019 9:26 pm

I expect we're going in this direction in US, but I think it'll be a pretty costly mistake for political stability. As it is, average lifespan for men at the bottom 25% of income is between 75 to 78 years, about a 10-year gap in life expectancy compared to highest quartile. What happens to that population, and the family members charged with their care, if their main/only income source in Social Security gets pulled out from under them and they essentially never get any pay out before they die? Wealth inequality is already a huge political issue, essentially withholding pension payout from the poorest forced retirees is not likely to help.

classical_Liberal
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Re: UK Tories Plan To Increase Pension Age To 75

Post by classical_Liberal » Mon Aug 19, 2019 3:31 am

Social Security is one of those rare things in the US that is extremely popular across party lines. @bostonimproper is correct in that increasing age for eligibility will harm the poor, but in more ways than one. They not only have a lower life expectancy, they also tend to be unable to work younger as well, since many of the lower income service jobs require a working body, AND they rely more on the program for basic needs as opposed to "extra".

No one wants a bunch of 70 years olds living on the street. There is a huge push against the growing wealth inequality as well. I would bet dollars to donuts the eventual SS fix will be more on the end of taxing high earners vs decreasing benefits. Although there will be some of both, just not to that extreme. SS will simply become slightly more redistributionist than it is today.

bigato
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Re: UK Tories Plan To Increase Pension Age To 75

Post by bigato » Mon Aug 19, 2019 4:10 am

Other action that could be taken to help the math would be to increase usable life years within the lifespan, through public policy that makes it much easier to live a healthier lifestyle than not.
Also, consumerism and the overall inefficient lifestyle prevalent in modern society has a lot of slack that could potentially be used towards generating and accumulating resources to make retirement possible. That's basically ERE, except that stimulated by public policy somehow.

Sabaka
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Re: UK Tories Plan To Increase Pension Age To 75

Post by Sabaka » Mon Aug 19, 2019 8:51 am

One aspect where I think this policy would really fail is with public sector occupational pensions. As @crazylemon has said, the govt' here has already changed the qualifying age for full benefits to state pension age. If the new state pension age was moved up to 75, this would mean potentially saying to any young public sector workers that they would only be able to access their occupational pensions (without deductions) when they are age 75.

The lifeline for private sector workers is that currently their occupational pensions can be accessed in full from 10 years below the state pension age, so if the SPA was 75 that would mean from age 65. Although there has even been talk of this being changed in the future, so don't hold your breath.

Basically, don't trust the govt' and rely on yourself (and your community). :lol:

zocab
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Re: UK Tories Plan To Increase Pension Age To 75

Post by zocab » Mon Aug 19, 2019 1:14 pm

From an ERE perspective, this surely must be good: assuming that some old-age benefits (social security and equivalents) are paid out of taxes, increasing retirement age minimises the amount of taxes an ERE'r must pay both prior to, and during, retirement. (Or at very least, reduces the size of tax increases needed to cover these post-retirement benefits.)

My country of residence's social security equivalent is likely to be in a pickle about 10 years from now if no changes are made, but at least there is finally some talk of automatic age increases similar to Denmark. Seeing as life expectancy is increasing (modulo a few embarassing countries I wouldn't want to live in), it's only fair and logical to increase retirement age. The alternative is to increase taxes, which impacts younger people the most, which is most unfair.

If you don't support this: effectively you're telling younger people to pay more tax to fund the retirement of the older people who got to pay less tax because they didn't plan ahead to ensure their retirement would be self-funded. (Oh, and those people tend to vote more conservatively to reduce immigration, which again reduces tax paid due to less people working, and also makes their old age costs more expensive because insufficient workers due to insufficient immigration means increased labour costs affecting healthcare, old age care, food prices, etc.)

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Re: UK Tories Plan To Increase Pension Age To 75

Post by tonyedgecombe » Mon Aug 19, 2019 1:52 pm

Young people will want to retire before they fall off their perch as well, I’m not sure the current system should be rejected because it needs to be paid for. Really the biggest problem is the practicalities of it, many people nearing that age will struggle to provide any value to modern businesses.

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Bankai
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Re: UK Tories Plan To Increase Pension Age To 75

Post by Bankai » Mon Aug 19, 2019 2:37 pm

zocab wrote:
Mon Aug 19, 2019 1:14 pm
Seeing as life expectancy is increasing (modulo a few embarassing countries I wouldn't want to live in), it's only fair and logical to increase retirement age.
Fair - working and paying into the system for 55 years and enyoing benefits of it for 4 (if lucky to live to average age) is certainly not fair. Neither is changing rules throughout the game.

Logical - increase in lifespan doesn't imply increase in ability to work longer (health/work span). If anything, older folks nowadays are less bale to work since on average they are less healthy.

GandK
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Re: UK Tories Plan To Increase Pension Age To 75

Post by GandK » Tue Aug 20, 2019 1:38 am

Is (was?) the state pension in the UK truly designed as a retirement scheme, or is it "Old Age, Survivors, and Disability Insurance" like US Social Security?

If it's insurance like the US system was designed to be, it is reasonable to raise the access age as life spans increase, just like any other type of risk pooling scheme would be recalibrated if the variables changed. The problem over here is, people have come to see their insurance premiums as retirement fund contributions, so they object loudly to any publicly necessary tinkering. Many who can save further also use it as an excuse not to.

But if these are solo-owned pension pots into which people have deposited their own cash for their own future maintenance, even if the government is the death beneficiary, it seems unreasonable to delay access beyond what was initially promised.

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Re: UK Tories Plan To Increase Pension Age To 75

Post by tonyedgecombe » Tue Aug 20, 2019 1:48 am

It’s both of those, as is often the case politicians left it far too late to make changes, they were aware of the increases in life expectancy long before they did anything about it. For personal pensions the point you can start drawing down the pension is linked to retirement age, so as that is extended so is the date for personal pensions. The justification for that is the tax relief you get on pension payments which are an incentive to long term savings.

zocab
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Re: UK Tories Plan To Increase Pension Age To 75

Post by zocab » Tue Aug 20, 2019 1:08 pm

Bankai wrote:
Mon Aug 19, 2019 2:37 pm
Fair - working and paying into the system for 55 years and enyoing benefits of it for 4 (if lucky to live to average age) is certainly not fair. Neither is changing rules throughout the game.

Logical - increase in lifespan doesn't imply increase in ability to work longer (health/work span). If anything, older folks nowadays are less bale to work since on average they are less healthy.
Certainly changing straight to 75 would be unfair. But a gradual increase in line with increasing lifespan?

I'm not familiar with the UK system, but in most countries you aren't "paying in" to the system with the state-run pension/social security system. You're actually paying to cover current expenditures. If there are fewer active workers per pensioner in the past, then either the payments to pensioners have to go down, payments by current workers go up (not fair since they pay that all their life long), or you reduce the pensioner pool to bring ratios back into balance. That last idea only works by increasing pension age. The fact that the ratio of active workers per pensioner is going down is effectively proof that people are actually living longer.

For actual pensions where you pay into your own pot, then I can see things being different. But there it's fairly easy to calculate how much income a given pot of money can actually generate given an expected lifespan. As life expectancy goes up, you may have to work longer to ensure that you get the same retirement income over that expectancy. Many pension systems don't actually calculate your income in this way due to legislative restrictions, but it looks like the fairest way to me.

Logical? Well that depends. More and more jobs are desk jobs these days, physical fitness has little influence on that. That said, and again I'm unfamiliar with the UK system, but 65 year olds here seem in rather good shape, and often beat the kids in terms of fitness.

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Bankai
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Re: UK Tories Plan To Increase Pension Age To 75

Post by Bankai » Thu Aug 22, 2019 12:00 pm


shemp
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Re: UK Tories Plan To Increase Pension Age To 75

Post by shemp » Mon Aug 26, 2019 10:33 pm

jacob wrote:
Sun Aug 18, 2019 9:39 am
...
  1. Increase work span
  2. Increase taxes
  3. Decrease payouts
  4. Decrease lifespan
Only the first is politically viable...
I think option 2 is most politically viable short term solution, as long as it's not a straight increase but rather a change in system of credits and preferences that effectively acts as a tax increase for some but not all (divide and conquer technique). In particular, expect the top 1% to throw the next 9% under the bus in this way. Complicated tax codes are great at protecting politicians from blame. Option 3 is easiest in the long run, but in a backdoor way. In particular, cut medical spending on the elderly, which only affects the sick elderly, so another divide and conquer technique. Inflation manipulations another sneaky way to implement option 3. Reduced medical spending plus a series of flu pandemics could be a way to implement option 4 without risk to politicians. Again, divide and conquer since only some people die from flu, not evenly distributed.

Takeaways from above:

1) Upper middle class (top 9% in wealth right below top 1%) benefits heavily from tax-exempt retirement savings plans, pensions based on lifetime earnings (versus flat minimum subsistence level pension for everyone), tax advantages for homeowning and small scale landlording. Expect all of these programs to be under attack, as elite (top 1%) tries to deflect attention from themselves by placing blame on upper middle class (next 9%) who are typically hated anyway since they are the middle managers whipping everyone below them to work harder and/or landlords exploiting tenants.

2) When the going gets tough, the sick will be thrown under the bus, especially the elderly sick. Don't be old and frail.

3) Be prepared for pandemics.

4) Expect pensions to be less in real terms than you expect. Either inflation numbers will be manipulated, or pension will be more heavily taxed than now, or more of pension than now will be automatically deducted for medical spending (effectively a way of raising taxes on pensions without calling it a tax). Only larger pensions will be affected by higher taxes/deductions, in accordance with divide and conquer principles.

4) As taxes on income rise, a penny saved becomes more and more valuable compared to a penny earned (whether as regular income, pension, or passive dividends and interest and capital gains). So be prepared to convert financial assets that throw off income into real assets that allow reduced expenses: owner occupied real estate, fuel efficient motor vehicle, home garden, toolhome repair shop, etc. I would not expect ownership of businesses, whether as sticks or private equity, to ever be heavily taxed on ownership itself, since that is how the elite hold their wealth. Taxes will be on income, not wealth, since the elite can easily control their own reported income.

Society does not swing like a pendulum from equality to inequality. Rather, the ability of the masses to overthrow the elite varies as technology evolved, and this credible overthrow threat is what generates equality. Overthrow means kill or inflict great bodily harm on the elite and their henchmen without being killed or injured in return: all power boils down to the ability to kill or physically hurt without being killed or badly hurt in return.

From about 1800 to about 1940, power of masses relative to professional military grew, assuming guerrilla warfare with popular suport by the masses, due to cheaper and better lightweight rifle technology. Impact was greatest wherever such rifles were legally available and affordable to the masses (especially North America). Power of women relative to men grew for the same reason, because such rifles are "equalizers", in that they eliminate the male hand to hand fighting advantage of greatly superior upper body strength. Changes in social organization lag technology changes, so women's suffrage and policies to redistribute wealth didn't occur immediately. Since WW2, technology has given the advantage back to professional armies versus guerrillas. (Failures of Russia and USA in places like Afghanistan were failures of political nerve, not the military. Had Russia or the USA wanted, they could easily have exterminated 90% of the Afghan population, which of course would guarantee absolute submission of the survivors. This is how things used to be done, as the Old Testament of the Bible discusses over and over. This is how both the USA and Argentina dealt with native American resistance fighters. Etc, etc.)

There is little on the horizon that suggests the masses will ever again have the ability to overthrow the elite. Overthrow by the professional military, of course, is always possible if the elite shows signs of senility. Thus I would expect inequality to rise everywhere.

5) In the future, top 9% under top 1% in income will increasingly be those who keep the masses under control while being paid enough not to stage a coup: professional military officers and senior enlisted men, internal security forces, top regulators, propaganda experts.

6) Many workers who are highly paid and thus top 9% under top 1% in income today (doctors, lawyers, engineers, programmers, accountants, middle managers, owners of small businesses, etc) will be subjected to forces of competition (surplus of domestic skilled workers, cheap third world labor, robots) and pay will plummet eventually.

"Future has already arrived, it's just not evenly distributed": what I am predicting already exists in Russia, most African countries, etc.

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