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Raise the pensions age

Britain faces destitution because it refuses to admit the state pension is unaffordable
The current plans to raise the pension age are too timid. If we had stuck with Lloyd George’s approach, it would be approaching 100

Quite so M’Lord Hannan

The original age of the OAPension was set at when the rational person would have run out of their savings.

When Lloyd George introduced his budget, life expectancy was 49 for men and 53 for women. Now, those numbers are 79 and 83 respectively,

Those L-G ages are expectancy at birth, not the correct measure. We want expectancy at age 15 to 20. Once you’ve survived the childhood diseases which took half the young population. And that was about 70. So, therefore, the rational person would, over a working life, create savings which would carry them through to age 70.

The aim of the OAP was to compensate – deal with – that unfortunate occurrence of outliving your rational savings.

That would make today’s pension age about 80. Which is, therefore, about where it should be.

This will cause screaming that lots of people won’t live to gain their pension. Yes, that’s the point. Because that state pension is not, in fact, a savings scheme. Not in law it ain’t – it’s a benefit. Just like unemployment etc. A piece of social insurance. So, what is the insurance against? Living long enough to outlast your rational savings. So, it should be paid from the age where you should rationally save to.

BTW, this is the analysis of one Brad DeLong, economics professor at that notably right wing establishment, Berkeley.

19 thoughts on “Raise the pensions age”

  1. That analysis is certainly right. But the problem is now how do we get there from here? Clearly it wouldn’t be reasonable to change the pension age from 67 to 80 one year before it’s due to kick in. And we’ve already seen the WASPI wenches crying about how unreasonable it was to give them… *checks notes*… 25 years’ notice of their change in pension age. Even if we told today’s 20 year olds they’re not getting their pension until 80, they’ll only see it as part of the boomer conspiracy.

    So that’s why we’re left with a policy nobody really likes and which is increasingly expensive.

  2. “Unilateral variation

    In general, contracts cannot be changed unless both parties agree to the specific changes. However, there is an exception to this rule, if both parties agree in advance to the possibility of unilateral variation. This will normally only apply to certain specified terms in a contract and the changes permitted will often be limited in their scope. This may be commonly found in employment contracts where the employer can change minor terms of the employment unilaterally, such as staff uniform”.

    Saying “We are going to change the terms of the contract and you can get stuffed ‘cos we’ve given you twenty five years notice” is bollocks.

    Telling those signing up to National Insurance today that they will get a pension when they are 75 is legit, but telling those who signed up at 15/16 to get a pension at 60 and have had their money taken by HMG for decades under that promise, that they’ll have to wait an additional 6 years because HMG have spunked the money isn’t.

  3. How about offering a bonus if you defer drawing the state Old Age Benefits? Eg, get an extra x% for every year after Y that you don’t draw on it, and it pushes it more towards early deaths funding longer lifers? Though the underlying problem is that it’s unfunded, so people dying before they draw their pension isn’t leaving more money for other pensioners, it’s just reducing this year’s tax spend.

    And how do you deal with the people who do not are are incapable of any rational savings? There are people who have an negative net time assets. “For every year I’m alive I need to work two extra years to afford to stay alive. By the time I’m 60 I need to have worked until I’m 100 to afford to eat.”

  4. Trying to apply contract law to a situation where there is no contract is, at best, sophistry.
    Further, the ability for Gov’t to unilaterally change terms of pensions was always there, so if there were a contract this would have been one of the terms.

  5. TomJ @ 8.53.
    No attempt at sophistry (and I don’t appreciate the insinuation thanks very much), it is simply how I see it. They said “give us your money from the time you start work (in my case 16) and we’ll give you a pension at 65”. I didn’t ask for it, it was mandated. That was the deal. The fact that HMG can and does change the rules of the game late in the second half when they are one nil down doesn’t make it right.

    And regarding contracts, I had a discussion with a lawyer many years ago regarding Train Drivers working their rest days. If they choose to work rest days for some extra wedge, over a period of time it becomes an “implied term of contract” despite the fact that they are not contracted to work them. If I decided to stop working my rest days because I was pissed off about something, it technically constituted ‘illegal industrial action’ and I could be sued by my employer (highly unlikely but possible).

    Perhaps if more people jumped up and down a bit more at the strokes politicians of all stripes pull on us they might respect us a bit more and stop taking the piss out of everyone.

  6. No need to raise the age – just abolish it. And the winter fuel allowance paid annually to boot.
    If people run out of savings they can claim the rather generous Pension Credit Guarantee Credit, currently £182.60 if single, and also gets you free Council Tax and a free home if you’re a renter.

    I’d add £5/week to compensate the loss of WFA.

    What we’ve really been propping up all this time is unfunded entitlements.

  7. Perhaps if more people jumped up and down a bit more at the strokes politicians of all stripes pull on us they might respect us a bit more and stop taking the piss out of everyone.

    Object lesson currently in a French town near you.

  8. The pension, when introduced, was about sixpence (d) a week. Which would be just north of twenty quid today.
    Triple unlocking would be a remarkably brave policy, minister.

  9. Addolff: do you also think that you can sue when they raise the percentage of income tax? That’s also a “deal” under the same terms.

    Hint: it’s called a “pension” but it’s not – it’s pay-as-you-go, i.e. a pyramid scheme.

  10. What?!?
    In King Edward VII’s reign most people didn’t have savings which ws why Asquith/Lloyd George copied the Friendly Societies and introduced pensions for (almost) all those too old to work.
    Lloyd George wasn’t concerned with people outliving their savings, which was not a noticeable, let alone significant, problem (the middle classes had, even then, the option of using them to invest in government stocks for an income that would continue for themselves and their children or, if childless, buying an annuity).

  11. Bloke in North Dorset

    Even if we told today’s 20 year olds they’re not getting their pension until 80, they’ll only see it as part of the boomer conspiracy.

    And they’d have good reason to think it.

    In the late ’78s and ’80s there was a big discussion about the demographic timebomb and Maggie started to do something about it but was shouted down by the baby boomer generation who would be affected. That bomb is now going off and its not pretty.

    Its ludicrous that I started drawing my state pension last year on my 67th birthday, even though I’d been paying taxes for 52 years and NI for about 45. Giving people 35 to 40 years notice of the change was quite reasonable. Most people don’ts tart saving for the pension until they’re in their 40s anyway so if they still wanted to retire at 65 or whatever the age was they’d have time to make that adjustment.

    That said, I’ve always been sympathetic to the claim that those in manual jobs, especially outdoor ones, probably couldn’t work many more years so we’d have to find a way to support and or retrain them.

  12. jgh. In the States most people can starting taking their Social Security pension at age 62, but if you defer taking it the monthly payments will increase 8% annually until they cap at age 70. Obviously, someone who takes it at 70 will defer up to 8 years of payments, which could be a lot, but the actuaries say that on average people will collect the same amount whether they defer or not. A lot of financial planners say the breakeven is about age 82. If you defer collecting until 70 and live to 82, at that point the larger payments will put you ahead of the game. Of course, the payments cease when you die (subject to rules that the surviving spouse may collect the larger pension payment but not both), so collecting early may mean you’ve accumulated a fund you can leave your spouse or other heirs.

  13. I deferred my state pension for a year. If the life expectancy tables are correct I will live just long enough to get back in extra pension what I lost for that year.

  14. The fuckers are also increasing the minimum retirement age for a private pension from 55 to 57. Benefits include making you work longer/ keeping you economically active.

  15. I take the Addolff gambit: left school at 15 and was told to save for my old age in the form of taxes, including NICs. Taxes rather than NICs have done the heavy lifting and continue to do so. I would be more than happy to forego my state pension if you relieve me of paying income tax for the remainder of my life.

  16. “what is the insurance against? Living long enough to outlast your rational savings.”

    Even if that were true the size of your “rational savings” will have been altered by your sure (!?) knowledge that you’d get your state pension at 60/65/66/67/68/70 or whatever.

    Anyway, a prediction: all politicians’ burble about aligning pension age with life expectancy will cease once the scale of the decline in life expectancy due to – ahem – recent and ongoing events becomes clear.

    Anyway anyway; shouldn’t the Great Pension Panic start focussing on the recent severe declines in birth rates?

  17. The Addolff claim of unilateral variation does perhaps have a little more foundation in the mouths of those who have paid voluntary NI contributions. Compulsory contributions correspond to a collective contract enforced at the ballot box (and if a majority of your fellow voters say to you “you are too stinking rich to need the money so you’re not getting it” you have to lump it), but an offer that an individual is free to take up or decline is closer morally to the employment contracts of state employees. Then again, when push comes to shove, how safe will the pension rights in those be?

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