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Restoring The Pensions Link To Earnings


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This subject seems to have gone by unnoticed in the media comments on the leaders debate last night. All 3 leaders mentioned restoring the link to earnings rather than prices for the state pension.

What does this mean?

If we have inflation or deflation doesn't matter... it simply means that the state pension will fall in real terms in line with everyone else's falling standard of living, but the party leaders all tried to imply that it would be a good thing for pensioners.

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This subject seems to have gone by unnoticed in the media comments on the leaders debate last night. All 3 leaders mentioned restoring the link to earnings rather than prices for the state pension.

What does this mean?

If we have inflation or deflation doesn't matter... it simply means that the state pension will fall in real terms in line with everyone else's falling standard of living, but the party leaders all tried to imply that it would be a good thing for pensioners.

:lol:

Fantastic.

Link to prices during the years of the China-led price deflation, then link to earnings during the current and coming years of relative wage deflation.

They'd better hope the oldies can't get as far as the polling station.

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I was earning £249,853 p.a. in my final salary year

& I have a friend in eastern Europe who can produce the papers to prove it.

He managed to prove that almost everyone east of the Urals was a former German citizen after the wall came down, so the Uk govt should be a doddle

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This subject seems to have gone by unnoticed in the media comments on the leaders debate last night. All 3 leaders mentioned restoring the link to earnings rather than prices for the state pension.

What does this mean?

If we have inflation or deflation doesn't matter... it simply means that the state pension will fall in real terms in line with everyone else's falling standard of living, but the party leaders all tried to imply that it would be a good thing for pensioners.

I am not sure who to despair at more sometimes, our leaders, or those that vote for them.

Thatcher dismissed any notion of linking the state pensions to earnings. She was wise enough to realise that such a promise is just a rod for your own back.

Changing demographics means that linking pensions to pre-tax earnings will place an ever increasing tax burden on those working. Many will quit the workforce.

And how do you estimate earnings? Is it for those in work, or for the economy as a whole, including unemployed people?

And as others have said, it is post tax earnings that are important, not pre-tax ones. If the former goes up, and the latter down, you could end up having to raise taxes again to pay for a more and more unsustainable benefit.

Why cant these leaders get real and tell it how it is. Workers must come first, there must be a limit on what can be taxed from them. Then once you have done that, you only spend what you raise in taxes. And if that means falling pensions, tough.

Sometimes I think that you should be allowed representation without taxation. Net receivers of benefits should have no right to a vote. That might change how things are run.

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Demographics: pension burden rises beyond what the economy can afford, while at the same time the pension itself shrinks.

Raising pension ages is the least painful solution. Today's pensioners are getting the best deal in history; those now in mid-life won't get anything like such a good deal 'cos there are too many of us. Today's young? Too early to say, except that retirement age is rising and that's likely to be a one-way movement.

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.... Net receivers of benefits should have no right to a vote. That might change how things are run.

That would finish off the Tories at a stroke. No pensioner vote!!

Anyway this is all academic, pensions will be halved by the IMF when it starts setting benefit levels in 2011. They will double the VAT on cat food as well.

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This subject seems to have gone by unnoticed in the media comments on the leaders debate last night. All 3 leaders mentioned restoring the link to earnings rather than prices for the state pension.

What does this mean?

If we have inflation or deflation doesn't matter... it simply means that the state pension will fall in real terms in line with everyone else's falling standard of living, but the party leaders all tried to imply that it would be a good thing for pensioners.

Would you have guessed it.........who do you think will benefit the most when wages are falling in real terms against higher than planned inflation, pensioners?

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This subject seems to have gone by unnoticed in the media comments on the leaders debate last night. All 3 leaders mentioned restoring the link to earnings rather than prices for the state pension.

What does this mean?

If we have inflation or deflation doesn't matter... it simply means that the state pension will fall in real terms in line with everyone else's falling standard of living, but the party leaders all tried to imply that it would be a good thing for pensioners.

I agree.

The best for pensioners would be to link pensions with CPI, as RPI will fall with housing costs.

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Capital Gains Tax was reduced to 18% in 2008 and some people are supposedly diverting income into capital. Could that lower average "earnings"?

In 2009 the Private sector was -0.1% and Public sector +3.8%.

http://www.timesonline.co.uk/tol/news/politics/article6999958.ece

Lots of shares etc not counted for some high earners in the private sector perhaps?

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It doesn't really matter what they link it too, the state pension is just another burden on UK plc which is going to continue dragging the average standard of living down over the medium to long term.

Its another area where I'd like to see some bold moves made, but the current crop can't see beyond the end of their nose.

Edited by Chef
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The best for pensioners would be to pay their way instead of sponging off the taxpayer :D

http://news.bbc.co.uk/2/hi/business/7091125.stm

"British pensioners receive a pension equivalent to just 17% of average earnings, the lowest level in Europe, and well below the average of 57%."

Sponging off the taxpayer?

Edited by campervanman
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Are you sure you're not comparing real wage increases with nominal pension increases? :unsure:

Average salary £18,396 £20,900 13.60% ONS Average mortgage size (new loans) £54,100 £112,000 107% Council of Mortgage Lenders Weekly state pension £66.75 £95.25 42.70% The Pensions Advisory Service

Read more: http://www.thisismoney.co.uk/historic-inflation-calculator#ixzz0lxsVVOyX

Ask the good people of thisismoney....i assume theyve done their homework.

Its true the pension here, compared to some of europe isnt great. My ancient grandmother was born in germany, emigrated here aged 25 or so after only a couple of years work in germany. Still gets a german state pension that is actually bigger than her english one! Although IIRC the german pensions blackhole is even larger than ours, so perhaps not a model to follow.

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Capital Gains Tax was reduced to 18% in 2008 and some people are supposedly diverting income into capital. Could that lower average "earnings"?

In 2009 the Private sector was -0.1% and Public sector +3.8%.

http://www.timesonline.co.uk/tol/news/politics/article6999958.ece

Lots of shares etc not counted for some high earners in the private sector perhaps?

Shares are counted. Nearly 50% was lopped off the shares I received under my employer's share scheme last year, and they show up as taxable income :angry: Now I need to figure out how to deal with that in my tax return :(

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