Brendan Barber, in The Metro:
"This year we have celebrated the centenary of the state pension. It remains a key achievement, but its value has melted away since the link with earnings was ended by the last Conservative government."
On a more serious note, for a given level of total spending, we could easily have a Citizen's Pension of £151 for each pensioner at current spending levels (about 6% of GDP). All we'd have to do is increase the Citizen's Pension age to 66.5 years (and that can go for the public sector workers that Brendan B claims to represent as well, thank you very much) and Bob's your uncle!
There's a simple trade-off between tax burden on working population, retirement age and the level of the Citizen's Pension. Fast forward to 2038, using the ONS population pyramid and assuming level prices etc, we'd need a CP age of 74.5, which could be achieved by shuffling up the CP age by 3.2 months every year, which is pretty much in line with the increase in average life expectancy over the past century.
Muh, Far Right
1 hour ago
3 comments:
The problem is that increasing the retirement age will disproportionately hit the poorest (who die earlier). Maybe a better way would be to limit retirement to 20 years maximum and allow the poorest to retire at 50. All those who use their 20 years up, either have to support themselves or bugger off to Switzerland.
Mark, your calculations should also consider that not only do we live longer, we start work later. When the OAP started people left school at 14/15 (I can't quite pin down the date it was raised) and worked until they were 65 ie around 50 years working.
Nowadays with so many going to university and staying there until 22/23 they will only have around 43 years working life. Furthermore, they will have been net consumers of wealth longer, a double whammy, as well as running up their own debts.
Neil does make a valid point, especially as pensions are skewed by allowing pension contributions to be tax deductible, although some tax is paid later.
GS, agreed, tax relief for pensions is nonsense.
As to NH's point, Citizen's Pension is transfer from earners to old people. In the grander scheme of things, lower earners will get back more in pensions than they ever paid in tax; average earners will break even and higher earners will only get back a fraction of their income tax (a third? a half?) even if they live ten years longer*. So I just don't see a problem.
This effect would be even more marked - and rightly so IMHO - if the personal allowance were doubled.
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