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State Pension Could Run Out Next Year


doahh
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What do people make or this? Posters here always knew it was a ponzai but this seems an odd claim. I had to check the posting date wasn't April 1st:

Millions face tax rises or 'derisory' state pension, report claims

A think tank claims to have discovered a "serious flaw" in the national accounts that within 12 months will leave the Government short of money to pay pensioners.

Mr Johnson claimed senior Westminster sources had privately admitted that state pension funding was in a perilous state, having viewed his research.

He said the pension would need to be "watered down to a basic subsistence" in future years unless urgent action was taken.

Millions of taxpayers under the age of 45 faced steep tax increases and would have to wait longer to collect a state retirement income, he claimed, while the under-35s should prepare for the state pension to be scrapped.

Millions of taxpayers under the age of 45 faced steep tax increases and would have to wait longer to collect a state retirement income, he claimed, while the under-35s should prepare for the state pension to be scrapped.

A spokesman for the DWP said reforms that will introduce a single-tier pension at around £155 a week would in time make the state pension more affordable, as it would end earnings-related top-ups.

Edited by doahh
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The report is just reporting a deficit in the Natinal Insurance Fund accounts.

It means that NI payments and more particularly government bonds bought with them alone no longer cover the State Pension payment ( ie the fund is no longer in surplus)

The Fund has always been a smoke and mirrors trick since the NI money has mainly been used by HMG to buy its own debt in the form of purchases of its own securities.

http://en.m.wikipedia.org/wiki/National_Insurance_Fund

Ironically QE has exacerbated the issue since interest rates mean low government bond yields which has increased the deficit.

Since the money has always spent the NI surplus money anyway in the past on other things the money ha never really existed

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I always knew those here bragging about paying 50%+ of their income into a pension scheme to save tax would get burnt by the government.

Doesn't it mean the opposite? It says that the state wont be giving you much, better sort it out yourself. If you do try and earn anything, we'll take it from you unless you do it via a pension. Pension terms are getting ridiculously good now, even if they limit higher rate relief.

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Time to means test the state pension by the looks of it. I always knew those here bragging about paying 50%+ of their income into a pension scheme to save tax would get burnt by the government.

The more means testing, the more civil servants required to run the more complex system. The more means testing, the less incentive for individuals to do anything other than spend the whole of their net income each month.

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Doesn't it mean the opposite? It says that the state wont be giving you much, better sort it out yourself. If you do try and earn anything, we'll take it from you unless you do it via a pension. Pension terms are getting ridiculously good now, even if they limit higher rate relief.

Do you really think future governments will resist the temptation to grab people's large private pension pots? I don't.

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Do you really think future governments will resist the temptation to grab people's large private pension pots? I don't.

I can hear it now - "As an emergency measure Income tax will now be levied on all private pensions at a higher rate until further notice."

What are you going to do? Vote for someone else?

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On pensions, you're f***** if you do, and f***** if you don't. Personally, I have little expectation of state provision remaining by the time I get there - and I doubt I'll be able to work until I drop either. That means I have to take the risk my own provision won't be completely wiped out by a future government.

Edited by StainlessSteelCat
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Do you really think future governments will resist the temptation to grab people's large private pension pots? I don't.

No, However there probably won't be many large pots for those who have already retired who would mostly have annuities or those who plan to retire in the next few years who will pocket the 25% tax free lump sum and drawdown rapidly. I suspect that those whose retirement is ten or more years down the line will be at most risk from such a raid.

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So it's back to the old ways then. Stop spending, have lots of kids to support you in your old age, save as much as you can.

>Millions of taxpayers under the age of 45 faced steep tax increases

My effective marginal rate is already 65%, I wonder how much steeper he is thinking of.

Corporate and Wealth taxes such as CGT, Mansion Tax etc. are more likely than income taxes. When you add in NI, the governments taxes everyone at least 40% on everything earned over the personal allowance, and at the cliff edges 65%. It would be difficult to get much more out of people.

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No, However there probably won't be many large pots for those who have already retired who would mostly have annuities or those who plan to retire in the next few years who will pocket the 25% tax free lump sum and drawdown rapidly. I suspect that those whose retirement is ten or more years down the line will be at most risk from such a raid.

Agreed on the latter, of which I am one. I'd love to put large chunks of my pay into a pension with a view to taking it out after 55 without buying an annuity. However, I don't trust future governments not to tax me to the hilt for doing so, or to force annuities once again.

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Time to means test the state pension by the looks of it. I always knew those here bragging about paying 50%+ of their income into a pension scheme to save tax would get burnt by the government.

Yeah, if people didn't save for a pension, they would spend the money right now. That's good for the economy and good for re-election!

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Time to means test the state pension by the looks of it. I always knew those here bragging about paying 50%+ of their income into a pension scheme to save tax would get burnt by the government.

I suspect saving 50-65% on their tax bill now will more than outweigh the loss of the state pension, which on average only pays out for about 15 years. It is inevitable that the state pension will be reduced or means testing introduced.

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Yeah, if people didn't save for a pension, they would spend the money right now. That's good for the economy and good for re-election!

They wouldn't have much to spend. For a higher rate tax payer putting £10,000/ annum into their pensions at best they would only get less £6,000/annum net and in many cases far less than that. If taxes were reduced then people would put less into their pensions and spend more.

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The unacceptable thing about the State Pension Ponzi scheme was the opposition to raising the age limit sooner. Clinging onto pension age at 60 until 2010 (and that included default pension for unemployed men) and then demanding an ultra generous tranasition period to raise to 67 and eventually 68.

This reminds of the Equitable Life saga, older boomers who had put in diddly squat were protecting their enormous windfalls, but of course in protecting guaranteed benefits for those at the top of the Ponzi scheme (annual bonuses were regularly up at 17% pa) it collapsed just as the state pension scheme is

Selfish boomers collapsing Ponzi schemes.. (a bit tongue in cheek of course :ph34r: )

Edited by crashmonitor
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