State pension should be linked to wages

[winkie]

17 minutes ago, Nick Cash said:

Yes there are lots of different people in life. But no-one knows what life will throw at them. Some people want to be self sufficient and take great pride in being so. Being self sufficient doesn’t preclude having family around, or having no health issues. 

Nobody is completely self-sufficient, everybody will need others one way or another.......no man is an island.

[Nick Cash]

14 minutes ago, winkie said:

Nobody is completely self-sufficient, everybody will need others one way or another.......no man is an island.

True.

But anyone hoping to live on just the state pension (beit linked to average wage or anything else) will have a struggle whether or not they are surrounded by family, friends or kindly neighbours.

[Trampa501]

6 hours ago, Nick Cash said:

True.

But anyone hoping to live on just the state pension (beit linked to average wage or anything else) will have a struggle whether or not they are surrounded by family, friends or kindly neighbours.

Yet again it will depend on accommodation costs. 

[kzb]

23 hours ago, Nick Cash said:

True.

But anyone hoping to live on just the state pension (beit linked to average wage or anything else) will have a struggle whether or not they are surrounded by family, friends or kindly neighbours.

Did they ever bring in that £100k cap on care costs, or has it been forgotten about again ?

[TenYearToGetMyMoneyBack]

40 minutes ago, kzb said:

Did they ever bring in that £100k cap on care costs, or has it been forgotten about again ?

Kicked into the long grass (again). Some months ago I was looking through some old video tapes and the news headlines after a programme were about reforming social care. That was at the tail end of John Major's Government. I predict that Labour will start talking about it shortly before losing the 2034 election.

p.s. I have asked before but aren't sure I got an answer about "Deferred Annuities". How come they have them in the USA but not in the U.K.? I recall that one of the original Government proposals was similar. Pay a lump sum for your social care upfront with the guarantee that you wouldn't have to pay more than a defined amount in the future.  

[kzb]

5 hours ago, TenYearToGetMyMoneyBack said:

Kicked into the long grass (again). Some months ago I was looking through some old video tapes and the news headlines after a programme were about reforming social care. That was at the tail end of John Major's Government. I predict that Labour will start talking about it shortly before losing the 2034 election

I am pleased to be honest, because it was a crap scheme.  Very unfair on areas with lower house prices -£100k off a house in Blackpool is a big proportion, in London, not so much.  It should be a percentage not a flat sum.

Also we were going to have a new social care tax of course, thankfully that never happened, in fact we got a cut in NI just recently.

 

 

5 hours ago, TenYearToGetMyMoneyBack said:

p.s. I have asked before but aren't sure I got an answer about "Deferred Annuities". How come they have them in the USA but not in the U.K.? I recall that one of the original Government proposals was similar. Pay a lump sum for your social care upfront with the guarantee that you wouldn't have to pay more than a defined amount in the future.  

Well I don't know anything about it, but I don't think they are anything to do with social care funding.

I don't see why you would want to do it either.  Why would you want to buy an annuity which starts paying at some future date, when you wouldn't know what was going to happen to you in the meantime ? 

If you want to "defer" purchasing an annuity, you are free to do so.  Leave your pension pot alone and buy an annuity if and when it suits you to do so.

[TenYearToGetMyMoneyBack]

10 minutes ago, kzb said:

Well I don't know anything about it, but I don't think they are anything to do with social care funding.

I don't see why you would want to do it either.  Why would you want to buy an annuity which starts paying at some future date, when you wouldn't know what was going to happen to you in the meantime ? 

If you want to "defer" purchasing an annuity, you are free to do so.  Leave your pension pot alone and buy an annuity if and when it suits you to do so.

Since all my late mothers care home fees came out of here pension there is definitely a link between pensions and social care funding. Maybe a younger, but now retired, colleague who declared "it is essential to spend all your pension before you get dementia" had a good point.

As for deferred annuities your last sentence might be the answer. I have no idea what the rules are regarding pensions in the USA. I do like the saying that "pensions are insurance against old age". I guess a deferred annuity is an insurance against living to 100 after drawing down all your pension by the age of 80.

p.s. Trying to do some research into US pensions I found 
 

"The Social Security nationwide pension benefits law, which is still in force today, was signed by President Franklin Roosevelt in 1935. According to this document, all persons whose age exceeds the officially established threshold are paid a cash benefit, the amount of which depends on the average level of wages."

If we have any members left in the USA maybe you could explain more. Google isn't helping as it is giving me UK search results even when I ask for the USA.

[scottbeard]

7 hours ago, TenYearToGetMyMoneyBack said:

p.s. I have asked before but aren't sure I got an answer about "Deferred Annuities". How come they have them in the USA but not in the U.K.? I recall that one of the original Government proposals was similar. Pay a lump sum for your social care upfront with the guarantee that you wouldn't have to pay more than a defined amount in the future.  

They do exist in the UK, but are not sold to the general public.  They are only used by DB pension schemes that are winding up, basically.

If a DB scheme winds up and is solvent it will buy an annuity for every scheme member - immediate annuities for current pensioners and deferred annuities for people not yet retired.

They are very expensive and would not be very attractive to the general public under normal circumstances (I assume you're only talking about them here as a way to hide wealth beyond the reach of care home fees....but aren't pensions already beyond their reach??)

[kzb]

2 hours ago, TenYearToGetMyMoneyBack said:

I guess a deferred annuity is an insurance against living to 100 after drawing down all your pension by the age of 80.

But that applies to all annuities, not just "deferred" annuities.

2 hours ago, TenYearToGetMyMoneyBack said:

I have no idea what the rules are regarding pensions in the USA.

I wonder if there is a difference in the tax treatment of annuities/pension saving between here and the US ?  There may be a tax reason why they have deferred annuities and we don't.  Just wondering.

[kzb]

1 hour ago, scottbeard said:

.but aren't pensions already beyond their reach??)

No I don't think so.  Your pensions are taken first, and if they don't cover the fees (which in the vast majority of cases they won't), they start on the other assets.  That's my understanding anyhow.

[kzb]

2 hours ago, TenYearToGetMyMoneyBack said:

p.s. Trying to do some research into US pensions I found 
 

"The Social Security nationwide pension benefits law, which is still in force today, was signed by President Franklin Roosevelt in 1935. According to this document, all persons whose age exceeds the officially established threshold are paid a cash benefit, the amount of which depends on the average level of wages."

I think this is referring to the US state pension ?

[TenYearToGetMyMoneyBack]

2 hours ago, kzb said:

I think this is referring to the US state pension ?

Yes. The point being that the suggestion at the start of this thread seems to be the norm in the USA.

4 hours ago, scottbeard said:

They do exist in the UK, but are not sold to the general public.  They are only used by DB pension schemes that are winding up, basically.

If a DB scheme winds up and is solvent it will buy an annuity for every scheme member - immediate annuities for current pensioners and deferred annuities for people not yet retired.

They are very expensive and would not be very attractive to the general public under normal circumstances (I assume you're only talking about them here as a way to hide wealth beyond the reach of care home fees....but aren't pensions already beyond their reach??)

If the company I work for, with several thousand DB pensioners, gets its way they will be doing exactly that.  However, the deferred annuities I am talking about in the USA typically don't kick in until a person is well beyond retirement age and are used as an insurance against running out of money in drawdown.

https://www.unbiased.co.uk/news/pensions/pack-your-retirement-parachute

[scottbeard]

6 hours ago, TenYearToGetMyMoneyBack said:

If the company I work for, with several thousand DB pensioners, gets its way they will be doing exactly that.  However, the deferred annuities I am talking about in the USA typically don't kick in until a person is well beyond retirement age and are used as an insurance against running out of money in drawdown.

https://www.unbiased.co.uk/news/pensions/pack-your-retirement-parachute

That's not a deferred annuity

That's putting aside money to buy an annuity later

The risk profile is very different because you are taking all the investment risk up until you buy it and all the annuity price risk.  The article bullish says they might be cheaper in future....Well yes, but they might be more expensive too.  And yes you might be ill and get a better rate, but if so that's because you're ill and likely to live less long  and get fewer payouts

[TenYearToGetMyMoneyBack]

18 minutes ago, scottbeard said:

That's not a deferred annuity

That's putting aside money to buy an annuity later

The risk profile is very different because you are taking all the investment risk up until you buy it and all the annuity price risk.  The article bullish says they might be cheaper in future....Well yes, but they might be more expensive too.  And yes you might be ill and get a better rate, but if so that's because you're ill and likely to live less long  and get fewer payouts

Agreed. It was a bad example

This https://www.pacificlife.com/content/dam/paclife/rsd/annuities/public/pdfs/guide/pacific-secure-income-client-guide.pdf

and this https://www.annuity.org/annuities/deferred/

Are real examples of deferred Annuities. Popular in the USA but for some reason not in the U.K. My question, since discovering them is why ? 

p.s. If people are wondering about the connection to the thread one of the Government proposals would have worked in a similar way. That proposal might have ore dated these

https://www.communitycare.co.uk/2021/09/07/government-resurrects-cap-care-costs-plan-four-years-ditching/ 

 

 

Edited December 18, 2023 by TenYearToGetMyMoneyBack
p.s.

[kzb]

6 hours ago, TenYearToGetMyMoneyBack said:

Yes. The point being that the suggestion at the start of this thread seems to be the norm in the USA.

Yes their state pension is indexed against average wage.  

The average state pension there is £310 a week, about £90 more than ours (41% more).

Once we get to £310 a week I wouldn't object to indexing against incomes after that point.

 

 

[kzb]

20 minutes ago, TenYearToGetMyMoneyBack said:

Are real examples of deferred Annuities. Popular in the USA but for some reason not in the U.K. My question, since discovering them is why ? 

My question is, why would anyone want one ?

[jiltedjen]

On daily mail now - boots private pension has just rug pulled thousands of their staff who hoped to retire at 60 (as per the terms and previous pension statements) and changed it without warning to 65 as their pension was sold to legal and general, who won’t honour that term as it’s too expensive. 

imagine your 58 now, and could afford to retire at 60 with your pension, planned accordingly, and suddenly told very late on told you now have to work until 65

at least over time all these schemes are rug pulling members. and people who were ‘alright jack’ about retirement ages will suddenly find themselves facing issues. 

imagine all those people happy for the scheme to go bust for newer entrants so they could retire early, now facing the reliability of it having to be secure for everyone.

or those who decided to work on 1 more year 61 year olds, who are now sorely regretting it. 

[scottbeard]

20 minutes ago, jiltedjen said:

On daily mail now - boots private pension has just rug pulled thousands of their staff who hoped to retire at 60 (as per the terms and previous pension statements) and changed it without warning to 65 as their pension was sold to legal and general, who won’t honour that term as it’s too expensive. 

imagine your 58 now, and could afford to retire at 60 with your pension, planned accordingly, and suddenly told very late on told you now have to work until 65

at least over time all these schemes are rug pulling members. and people who were ‘alright jack’ about retirement ages will suddenly find themselves facing issues. 

imagine all those people happy for the scheme to go bust for newer entrants so they could retire early, now facing the reliability of it having to be secure for everyone.

or those who decided to work on 1 more year 61 year olds, who are now sorely regretting it. 

Do you have a link to this?

Working in pensions there must be more to this than suggested - you can’t just take a guaranteed normal retirement age of 60 and change it to 65, even doing a buyout with an insurer. 

What you can do is withdraw a DISCRETIONARY ability to retire early at 60 with no reduction.  I wonder if that’s what they have done.

[kzb]

25 minutes ago, jiltedjen said:

On daily mail now - boots private pension has just rug pulled thousands of their staff who hoped to retire at 60 (as per the terms and previous pension statements) and changed it without warning to 65 as their pension was sold to legal and general, who won’t honour that term as it’s too expensive. 

imagine your 58 now, and could afford to retire at 60 with your pension, planned accordingly, and suddenly told very late on told you now have to work until 65

at least over time all these schemes are rug pulling members. and people who were ‘alright jack’ about retirement ages will suddenly find themselves facing issues. 

imagine all those people happy for the scheme to go bust for newer entrants so they could retire early, now facing the reliability of it having to be secure for everyone.

or those who decided to work on 1 more year 61 year olds, who are now sorely regretting it. 

They never had a legal right to claim the pension without reduction before age 65.  It was discretionary.

L&G have obviously decided the discretionary part was indeed discretionary and they have no obligation to pay it.

It's highly likely they can still claim the pension aged 60-64, but it will be reduced from the amount they would get if they waited to age 65 before claiming.

[cbathpc]

2 hours ago, kzb said:

Yes their state pension is indexed against average wage.  

The average state pension there is £310 a week, about £90 more than ours (41% more).

Once we get to £310 a week I wouldn't object to indexing against incomes after that point.

 

 

Do they also get free healthcare, travel, and energy bills like our pensioners?

I think younger people in the UK would be happier with the triple lock if pensioners acted somewhat grateful. But no, it wasn't enough to pull the ladder up behind them, they've gotta be smarmy about it as well

[kzb]

12 minutes ago, cbathpc said:

Do they also get free healthcare, travel, and energy bills like our pensioners?

Where are the free energy bills please, I must have missed that one ?

On healthcare, everyone in the UK gets it free not just pensioners.  There is one additional benefit for age and that is free prescriptions over age 60.

The pensioner bus pass in the US depends on the city in which you are resident.  You might get it free or half price depending on city. 

But then this benefit is variable within the UK on the same basis.  Persons in London get free access to the comprehensive TfL services from age 60, a very significant benefit.  If you live in the sticks you might well be able to claim a bus pass from state pension age, but there is one bus every second Tuesday.  Not a very significant benefit.

[scottbeard]

16 minutes ago, kzb said:

On healthcare, everyone in the UK gets it free not just pensioners. 

Yes but what non pensioners get isnt very relevant to your comparison of pensions between countries 

You just throw irrelevant facts and questions out all the time - I know your style now 

[kzb]

7 minutes ago, scottbeard said:

Yes but what non pensioners get isnt very relevant to your comparison of pensions between countries 

You just throw irrelevant facts and questions out all the time - I know your style now 

US pensioners have access to Medicare.

[TenYearToGetMyMoneyBack]

5 hours ago, kzb said:

My question is, why would anyone want one ?

Certainty that they won't run out of money in retirement. The same reason I have known people buy extra percent in a pension scheme using their redundancy money when that was being offered (about twenty years ago). That is related to the next point

3 hours ago, scottbeard said:

Do you have a link to this?

Working in pensions there must be more to this than suggested - you can’t just take a guaranteed normal retirement age of 60 and change it to 65, even doing a buyout with an insurer. 

What you can do is withdraw a DISCRETIONARY ability to retire early at 60 with no reduction.  I wonder if that’s what they have done.

Yes as discussed here   https://www.thisismoney.co.uk/money/pensions/article-12868055/Boots-pension-deal-Legal-General-early-retirement-plan.html

Until recently there were no written numbers for early retirement in the scheme I am in. Just a vague statement about an adjustment depending on market conditions which still applies today. That probably means both the health of the pension scheme and how desperate the company is to get rid of people. I have had to hear several times from a 70 year old former employee about how he retired age 50 with only a 10% penalty on his pension since he volunteered for redundancy. I don't know if that was in lieu of redundancy money but he admits he was very lucky. I can't imagine a company like L&G being so generous unless it is with their own staff     

 

[scottbeard]

45 minutes ago, TenYearToGetMyMoneyBack said:

Certainty that they won't run out of money in retirement.
 

Yes as discussed here   https://www.thisismoney.co.uk/money/pensions/article-12868055/Boots-pension-deal-Legal-General-early-retirement-plan.html

 

On the deferred annuity - why not just buy a normal immediate annuity?

On boots - it was as I guessed: a discretionary allowance to retire at 60 that was allowed to be withdrawn and was withdrawn.  Gutting for those involved but in line  the rules.   All scheme members can request the rules but few do and they are hard to understand but they are the legal basis of what you are entitled to.

2 hours ago, kzb said:

US pensioners have access to Medicare.

Indeed.  And THAT is relevant - and a better point to make in the first place I might note - though Medicare only pays part of medical costs whereas the NHS covers all of them.

So overall given the high costs of healthcare in retirement it’s by no means clear that US pensioners are better off