Time To Break The Triple Lock On Pensions?

[jake-the-peg]

In 2010 the Government introduced the 'triple lock' on pensions

A guarantee to increase the state pension every year by the higher of inflation, average earnings or a minimum of 2.5%.

Pretty much all of us working to pay for these can only dream of such a deal as average earnings slip compared to inflation.

Not only that but today we learn that those of us born in the 60s and 70s will be poorer in retirement than our parents.

http://www.bbc.co.uk/news/uk-25411181

Is it time to end the triple lock?

[New Judge]

And therein lies the difference, Jake.

In common with almost all other pension schemes the original deal with the State pension scheme was that there would be a direct relationship between contributions and payments. This deal has been broken because now, lumped under the term “pension”, people who have paid in nothing receive more than those who have made full contributions. (In case you doubt that, a person with the current requirement of 30 years contributions and who was contracted out of the additional State pension scheme receives £110pw. A person who has paid absolutely nothing is guaranteed £143pw and is also eligible for many other benefits which the person who has paid in cannot claim).

So as far as pensions go there certainly should be a distinction between “the deserving poor” and the “undeserving poor”. (These are not terms I would use, incidentally. I would prefer “State Pensioners” and “State Retirement Age Benefit recipients”). Those who have made their contributions should not have their payments threatened. It is scarcely their fault that State pensions have been treated as a giant Ponzi scheme and that their contributions have been used to pay current recipients instead of being invested on their behalf. They had no choice but to pay a considerable sum out of their taxable income (currently up to 12%) and most people could probably have gained a far better deal had they been left to invest those contributions themselves.

I will repeat that before attacking pensions a study needs to be undertaken to re-establish a proper link between pensions paid and contributions made. Whether the Exchequer has cash available to pay people who have not contributed and how much they can be paid is quite another matter.

[emmie]

but i do begrudge giving benefits to anyone who has contributed nothing to the pot, its wrong. There are exceptions of course.

[craft1948]

I need the 2.5% rise, how else can I afford to give my cleaner a pay rise?

[emmie]

indeed...

[emmie]

i hope they pay tax, and NI

[boxtops]

The feature on Radion 4 this morning about this reported that those in their 40s and 50s now didn't save - they were part of the Spend culture in the 80s, so didn't save, and spent shedloads on credit which still has to be repaid. I fell foul of that culture but fortunately redeemed myself sufficiently in time to be in a better position now (for the time being, at least). When you're 20, pension saving didn't seem important in those days.

[emmie]

because when you are 20, unless you have parents or even grandparents who beat it into you that saving for a pension is a good thing, or your company has a scheme, you don't think of it, no one likes to think of themselves aged 20 becoming 60 or older, that is old to a young person...
so most won't or can't do it. after all being at Uni is hardly time to start a pension, and when you finish, chances are you will be intent on paying back the student loan, so you could be 30 or over before starting one.

[ToraToraTora]

As usual WSC do better than hard working contributors. Those that have paid in deservedly get a state pension. The problem is that so does anyone else we just have another name for it. As a nation we cannot afford the huge WSC sector we have, simple.

[emmie]

what is WSC please

[Peter Pedant]

j-t-p

the difficulty with promises and saving
is that if you break the promise . . . ... no one will save.
simples.


Remember when you were 15 and you asked your Dad if you could go to a party and he said yes,
and then when the day came, he said you couldnt ?
so after that you didnt tell him, you just went to the party ?

same thing

[ToraToraTora]

It is what we spend the most money on emie, more than defence, NHS, police, even MP's wages pale into insignigicance, see if you can guess what it is?

[emmie]

wsc
pass

[Peter Pedant]

it is the total benefits bill - but they often chuck in the nhs cost just to bump it up and make people go ooo!

[emmie]

oooo, i still don't know,

[ToraToraTora]

Work Shy Scum

[emmie]

oh dear, no i wouldn't use that, that is awful. that is like saying we are all in this together...

[emmie]

i had periods when i was jobless, would that have counted, admittedly it wasn't too long, but in the 70;s the work started to get a bit thin...

[New Judge]

If you registered as unemployed you would receive NI credits for those periods. And that is where the link between contributions and payments begins to break down. If you register as unemployed for your entire adult life you are given NI credits for your entire adult life. Then, guess what? Not only do you receive the full State pension (because your NI record shows sufficient credits) but also, because you are "poor" your income is topped up by way of "pension credits" to (currently) £143pw. Bingo!

Short periods of unemplyment do not matter too much noe because one only needs 30 years (soon to be 35) NI contributions to receive the full pension. It used to be 44 years for men and 39 years for women. Many people were persuaded to make extra NI contributions to make up for lost time but those that did received no rebate when the years were reduced to 30. Another scam.

[emmie]

apart from the obvious, how do people register as unemployed for their entire lives.

[emmie]

the only way i see that is that if you are married, the man works and you are a housewife raising a family, and you don't work in actual paid employment, but he has contributed, if she hasn't, but still gets a pension
is that right.... i am confused.