The Pensions Triple Lock has to go

[Flammkuchen]

When it was introduced, the aim of the Triple Lock was to increase pensions faster than earnings as the state pension was low. The TL has been very successful: pensioners now have a higher standard of living and more disposable income than working families. A pensioner couple each getting the full state pension receive £20k per year, with any private pension income on top.

This is great for them, but it comes with a trade-off. In order to increase pensions by over 10% a year, there is less money to pay nurses, teachers or doctors. Highly skilled public sector workers have low pay and there is a recruitment crisis.

AIBU to think that now that on average pensioners have higher disposable income than those in work, a policy that aims to increase pensioner income by MORE than average earnings - and so keep increasing the income of pensioner households faster than working households - needs to be rethought? Even just linking the state pension to average earnings would be better.

You didn't mention capital gains in connection with unearned income though - how will you combine income tax, NI and CGT to harmonise earned and unearned income?
I notice you only have a response to one tiny part of my post.

Yes it is - plenty of links to OECD figures earlier in the thread - our State Pension are very low compared to most developed nations.

State pension will vanish entirely faster than you can blink if you means test it. Not noticed that tax thresholds and means testing thresholds don't get uprated with inflation? What do you think that would mean for people who retire 20 years from now? Do you understand compounding and fiscal drag?

And why would anybody make private savings if they'll be stitched up for it? Especially when the few people who do actually pay enough to fund their own state pension and those of others would be the ones to have it taken away. It's an absurd idea. In most countries it is linked to earnings anyway, so those who contribute more get a higher state pension. Here the higher earners are already getting a raw deal and you think the state pension will survive idiots trying to take it away from them entirely?

And what would you base your means test on? Assets? That would be hugely unfair to cash-poor people who live in more expensive areas. Income? Pre- or post-retirement? And again, location makes a big difference to outgoings.

We have huge problems with productivity. That is what needs fixing. And the unfunded public sector timebomb. State pensions are not the issue.

Yep. It seems beyond any politicians in the UK to comprehend that the purpose of the state is to benefit its citizens and improve their quality if life.

this Is just silly conspiracy theories to justify continuing to line your own pockets. Using government funds to pay for the state pension means they are not available for other purposes. That’s an unavoidable fact.

state pensions are about 10% of ALL government spending. It’s is an extremely significant part of government expenditure. Like it or not, if we keep paying pensioners more and more and more, we will have less for everything else.

same with the assertion about means testing. You must know that means testing doesn’t cost that much. Why do you think all other benefits are means tested? You don’t genuinely think it really will cost £50billion or so to means test pensions, do you?

Oh goody, another ageist, pensioner-bashing thread.

Why would I have to.combine income tax with capital gains tax? What fresh nonsense is this?

This is what happens when you means test. In this case it's pensioners.

www.ageuk.org.uk/globalassets/age-uk/documents/reports-and-publications/reports-and-briefings/money-matters/benefit-take-up-and-older-people--july-2022.pdf

No

You can't have any clue how much means testing would cost though because you haven't even thought about how it would work and what it would be based on - just some vague idea that it is done for other benefits - like most of your contentions based on nothing considered.
Pensions aren't like other benefits. At all, and means-testing as poster above points out could lead to a wide range of unintended consequences and perverse incentives - but you would just brush these aside as it's "not your job" to actually bother to apply any thought to that.

Define wealthy. I've asked this before and I never get an answer.

Exactly. By wealthy people usually mean someone slightly more well off than they are. 🙄 Also astonishes me how so few people seem to understand that income - and arguably illiquid assets, too, especially if your main one is your home! - are not "wealth" in any meaningful sense.

How much is means testing going to save as against how much it costs? and what about the people who need the pensions but are put off by applying for it if they have to be means tested?

People learned nothing from the child benefit fiasco which remains a net cost to the state: money going on administration instead of to children. Slow hand clap. Pointless to do the same with pensioners especially when it's impossible to come up with any fair test. Aside from the fact it would make the entire system collapse and shortly mean that nobody got a state pension at all. Perhaps that's why this keeps being stirred up: that may be the end goal, to make idiotic people engineer an outcome that's bad for them, out of spite, just like with Brexit. Like those poor, poor deluded fishermen. 🤦🏻‍♀️🙄

There is absolutely no sensible argument for means testing pensions. It's as absurd as suggesting it for disability support. Wrong mathematically, politically, socially, and morally.

F Mylife:
My Grandparents retired at 60. They’re now 83.
Thats 23 years of state pension plus their considerable private pensions, investments etc. No mortgage (they’ve never had one, bought their first house outright aged 19).
Meanwhile, I’ll never retire, let alone spend 23 years raking in a state pension plus the other benefits they get simply for being retired.
......................................

Are you not glad your grandparents are comfortably off?

No doubt you will inherit something eventually.

They were fortunate to be able to buy their house cash at a young age but most pensioners cannot do that; they have years of paying a mortgage.

Presumably your grandparents did work, or one of them did, and paid tax until they were 60. They still pay tax!

I'm 73 and worked from age 18 apart from a short while after having a child, until I retired. My husband died just after his 70th birthday and hadn't yet retired, he was planning to at Christmas but didn't make it. We both paid tax, had a mortgage and struggled when we were younger.

I can't see anything wrong in me now having my state pension plus small occupational pension and some of my husband's. I claim no state benefits and I pay tax, that doesn't stop on retirement. I am independent and will not be a burden on the state or anyone. You may well be the same at my age and be glad of it.

Don't resent people for reaping the benefits of their hard work.

Spare me. The current generation of pensioners have had it pretty good. It’s unlikely that the millennials will get to retire at all as the boomers state pensions and healthcare will have bankrupted the country (we are still borrowing to meet government expenditure at the moment of course so the younger generation will be paying off the boomers pensions for years to come)

I've worked since I was 16 paid NI I've worked while doing further and higher education. I will probably never get a state pension. Or it will be something stupid like 80 years old. This is the point the younger generations are making.

FFS you ridiculously simplistically (as you do) said you'd combine Income Tax and NI to equalise the tax between earned and unearned income - but you're missing the point that plenty of unearned income isn't subject to Income Tax or NI, but CGT - I was pointing out that you'd need to deal with that if your aim was to make tax apply equally to earned or unearned income.
I am tired of this now and I am off to bed - you have at least made me laugh with your combination of ridiculous over simplification combined with sneering superiority - maybe you are actually Liz Truss.

I wonder how you will feel when you retire? What an uncaring selfish lot some of you younger people are.
We're all going to hell in hand cart anyway.

There is absolutely no sensible argument for means testing pensions. It's as absurd as suggesting it for disability support. Wrong mathematically, politically, socially, and morally.
Agreed.

Why should less wealthy working age people be glad that well off retirees are getting a disproportionate share of government spending? You have entirely missed the point.

also if you are claiming the state pension you are taking state benefits and you are paying less tax than working age people because you don’t pay ni. You might see nothing wrong with wealthy people taking more and more from the state but the younger generation are understandably unhappy about that.

Millennials and below won't get a state pension (or will be told they will only get it when very very old) because they need to pay for the boomers generous pensions and healthcare which won't exist for us. Yipeee all with massive inflation , high house prices on low salaries. Hard work won't change that for us. Many boomers have purely got lucky on asset appreciation and generous pensions. Don't say it was all down to hard work it wasn't.

We won't get to retire 🤣🤣 that's the point. The retirement age is going up to 68 now. What age do you think it will be for millennials and gen z?

Don’t be ridiculous. How could means testing be wrong mathematically? or socially? Morally it’s disgusting imo that millionaires are happy to take money out the treasury (that the government is borrowing) to enrich themselves.

politcally is of course why it hasn’t happened- the current generation of pensioners vote in large numbers and tend to vote Tory.

It’s really not as per above.

Yes, it is. The data for multiple other countries was posted on other clone threads in the last couple of weeks if you care to look. There are only a few comparable countries that have a ponzi scheme pension like the UK. Blame the Government for that. The vast majority invest the money in a fund. And the most pay significantly more than the UK as a % of working salaries. And most also link it to contribution levels.

I'm talking about comparable countries here, so obviously not those with tiny populations etc.

You should be glad to see how the pensioners are enriching themselves on your taxes. Don’t worry if you can’t pay it all now though- the government is borrowing so you can pay it forever.

We haven’t got a fund and the contributions people pay wouldn’t pay for the state pension. That’s the point. You can’t compare that with countries that do have funds where people are paying contributions into a fund. If people are paying lots of money to have a high pension that’s one thing. It’s not what’s happening in the uK with the state pension.

Unearned income isn’t subject to capital gains tax- capital gains are subject to capital gains tax (it’s in the name).