State pension should be linked to wages

[Insane]

2 hours ago, jiltedjen said:

If pensions were pegged to average wages, voting patterns would be for the greater good. People who have reason not to vote for policies which damages wages and productivity (no more voting for HPI)

Voting patterns might be a lot different if the young could trouble themselves to get off their backsides and walk a few hundred yards to a polling booth and place an X somewhere. Instead they just moan about the choices those who have bothered to vote make.

2 hours ago, jiltedjen said:

also we don’t end up with this situation of one generation crushing the younger generations.

Wows is me. Do you think with all the stress you put on yourself you will ever live to be old? 

2 hours ago, jiltedjen said:

imagine the old voting for tax cuts and investments, and house building as it brings average wages up and makes UK more competitive.

Who do the young (the ones who bother to vote) vote for that is any different to the older people? 

[scottbeard]

2 minutes ago, Insane said:

Voting patterns might be a lot different if the young could trouble themselves to get off their backsides and walk a few hundred yards to a polling booth and place an X somewhere. Instead they just moan about the choices those who have bothered to vote make.

+1

[kzb]

4 hours ago, jiltedjen said:

also pensions should be pegged to take-home pay after taxes. 

@scottbeard

OK since nobody else but me wants to deal in actual facts, I've had a quick try at this calculation.  If anyone disagrees with it, be my guest and show us why, but you've not shown any interest so far.

Bear in mind the triple lock was introduced in 2010, after a long period of declining pension to median income ratio in previous years.

The state pension in April 2010 was £97.65 /week (at 2010 prices).

The inflation factor from then to 2021/22 is 1.247, so this translates to £97.65 x 1.247 = £121.90 at 2021 prices.

Median real equivalised household disposable income of individuals (from ONS):

2010/11 = £29,165 p.a.

2021/22 = £32,349 p.a.

A factor of 1.109 increase.

Now, the basic state pension in 2021/22  was £137.60, so the real terms increase factor was 137.60/121.90 = 1.130.

So median disposable income increased by 10.9% and the pension increased by 13.0%.

If the pension had been increased by 10.9% instead of 13.0%, i.e. tracking disposable income as you want, it would've been £135.18, instead of the £137.60 it actually was as a result of being triple-locked.  So pensioners have gained £2.41 a week as a result of being triple locked instead of tracking median disposable income.  This is between 2010 and 2021 which is all I have found figures for.

So JJ (and others), the target of all your anger is £2.41 a week.  Perhaps a bit more by 2023, but I bet not much more. 

 Do you think you should move on from this, onto something more constructive perhaps ?

[scottbeard]

1 hour ago, kzb said:

@scottbeard

OK since nobody else but me wants to deal in actual facts, I've had a quick try at this calculation.  If anyone disagrees with it, be my guest and show us why, but you've not shown any interest so far.

Bear in mind the triple lock was introduced in 2010, after a long period of declining pension to median income ratio in previous years.

The state pension in April 2010 was £97.65 /week (at 2010 prices).

The inflation factor from then to 2021/22 is 1.247, so this translates to £97.65 x 1.247 = £121.90 at 2021 prices.

Median real equivalised household disposable income of individuals (from ONS):

2010/11 = £29,165 p.a.

2021/22 = £32,349 p.a.

A factor of 1.109 increase.

Now, the basic state pension in 2021/22  was £137.60, so the real terms increase factor was 137.60/121.90 = 1.130.

So median disposable income increased by 10.9% and the pension increased by 13.0%.

If the pension had been increased by 10.9% instead of 13.0%, i.e. tracking disposable income as you want, it would've been £135.18, instead of the £137.60 it actually was as a result of being triple-locked.  So pensioners have gained £2.41 a week as a result of being triple locked instead of tracking median disposable income.  This is between 2010 and 2021 which is all I have found figures for.

So JJ (and others), the target of all your anger is £2.41 a week.  Perhaps a bit more by 2023, but I bet not much more. 

 Do you think you should move on from this, onto something more constructive perhaps ?

Can you share a link to the source of where REAL incomes increased by 10.9% over that period?  Feels intuitively very high for a period where wages generally didn't get increases as high as inflation.

I am now off work for Christmas and so I can't easily check your calculations in detail until the new year as I don't have access to all my usual stats data.

[scottbeard]

1 hour ago, kzb said:

@scottbeard

OK since nobody else but me wants to deal in actual facts, I've had a quick try at this calculation.  If anyone disagrees with it, be my guest and show us why, but you've not shown any interest so far.

Bear in mind the triple lock was introduced in 2010, after a long period of declining pension to median income ratio in previous years.

The state pension in April 2010 was £97.65 /week (at 2010 prices).

The inflation factor from then to 2021/22 is 1.247, so this translates to £97.65 x 1.247 = £121.90 at 2021 prices.

Median real equivalised household disposable income of individuals (from ONS):

2010/11 = £29,165 p.a.

2021/22 = £32,349 p.a.

A factor of 1.109 increase.

Now, the basic state pension in 2021/22  was £137.60, so the real terms increase factor was 137.60/121.90 = 1.130.

So median disposable income increased by 10.9% and the pension increased by 13.0%.

If the pension had been increased by 10.9% instead of 13.0%, i.e. tracking disposable income as you want, it would've been £135.18, instead of the £137.60 it actually was as a result of being triple-locked.  So pensioners have gained £2.41 a week as a result of being triple locked instead of tracking median disposable income.  This is between 2010 and 2021 which is all I have found figures for.

So JJ (and others), the target of all your anger is £2.41 a week.  Perhaps a bit more by 2023, but I bet not much more. 

 Do you think you should move on from this, onto something more constructive perhaps ?

In fact the more I think about it the more these numbers must just be wrong.

The triple lock means pensions ALWAYS get an increase at least in line with inflation, whilst wages mathematically can NEVER increase more than pensions since wage increases is part of the triple lock.

For the cumulative difference over 11 years to be only 2% feels wrong.

Even if by some miracle the figures are right, with pensions costing £125BN per  year 2% is £2.5 BILLION in total, even only £2.41 a week.

 

[kzb]

48 minutes ago, scottbeard said:

Can you share a link to the source of where REAL incomes increased by 10.9% over that period?  Feels intuitively very high for a period where wages generally didn't get increases as high as inflation.

I am now off work for Christmas and so I can't easily check your calculations in detail until the new year as I don't have access to all my usual stats data.

https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2022

Now I have looked at this again, I did make a slight error, but I don't think it will make too much difference to the conclusion.

The link includes this paragraph:

Median income for retired households decreased by 1.6% in FYE 2022, from £26,300 to £25,900. In the 10 years leading up to 2022 (FYE 2013 to FYE 2022), retired household income has seen an average annual growth of 1.3%. Median income for non-retired households decreased by 0.3% in FYE 2022, from £34,100 to £34,000, following a 1.0% increase in the previous year, with an average annual growth of 1.7% in the 10 years leading up to 2022 (FYE 2013 to FYE 2022).

Household income is not limited to salaries and pensions of course.

However, in total disposable income, retired income had average 1.3% per year for ten years (=13.8%)

Non-retired income had 1.7% increase per year over the same period (=18.4%)

 

 

 

 

 

 

Edited December 22, 2023 by kzb

[kzb]

12 minutes ago, scottbeard said:

In fact the more I think about it the more these numbers must just be wrong.

The triple lock means pensions ALWAYS get an increase at least in line with inflation, whilst wages mathematically can NEVER increase more than pensions since wage increases is part of the triple lock.

For the cumulative difference over 11 years to be only 2% feels wrong.

Even if by some miracle the figures are right, with pensions costing £125BN per  year 2% is £2.5 BILLION in total, even only £2.41 a week.

 

It depends how many times the 2.5% minimum increase has been used over the time period in question.  Not too many times I bet.

There are 12.6 million pensioners, and if the £2.41 per week figure is correct, the triple lock on the basic pension costs about £1.6 billion.  Bear in mind SERPs is only indexed against inflation, it is not triple locked.  On the other hand the New state pension being introduced will increase it above £1.6 billion slightly.

Our prime minister just handed out £3.2 billion at the COP to foreigners.

[scottbeard]

19 hours ago, kzb said:

It depends how many times the 2.5% minimum increase has been used over the time period in question.  Not too many times I bet.

It also depends on how many times CPI was used in years when wages were lower than CPI or even negative.  Rather more I bet.

I'll look after the new year. 🙂

Meanwhile have a nice Christmas

[kzb]

18 hours ago, scottbeard said:

t also depends on how many times CPI was used in years when wages were lower than CPI or even negative. 

Granted, yes it does, but perhaps wages have not been below CPI that many times since 2010.

Especially disposable income, because that same government that introduced the triple lock also whacked up the income tax personal allowance to an unprecedented high. 

Also since then, the National Insurance threshold has been equalised to the tax threshold, which increased it greatly from what it was.

So take-home pay has likely increased significantly more than the ONS statistics on median gross incomes would imply.

Going forward, the NI rate is being reduced which specifically favours working-age people.  Means roughly £600-700 a year to someone around median income.

[kzb]

18 hours ago, scottbeard said:

I'll look after the new year. 🙂

Interested to see what you find, because the relevant statistics seem difficult to find without paying.

There is actually an error in what I wrote let's see if you can spot it.

[scottbeard]

On 21/12/2023 at 22:27, kzb said:

@scottbeard

OK since nobody else but me wants to deal in actual facts, I've had a quick try at this calculation.  If anyone disagrees with it, be my guest and show us why, but you've not shown any interest so far.

So median disposable income increased by 10.9% and the pension increased by 13.0%.

If the pension had been increased by 10.9% instead of 13.0%, i.e. tracking disposable income as you want, it would've been £135.18, instead of the £137.60 it actually was as a result of being triple-locked.  So pensioners have gained £2.41 a week as a result of being triple locked instead of tracking median disposable income.  This is between 2010 and 2021 which is all I have found figures for.

So JJ (and others), the target of all your anger is £2.41 a week.  Perhaps a bit more by 2023, but I bet not much more. 

@kzb I'm now back in the office, and your idea that the triple lock is only worth 2% over 13 years seems way off.

By my calculation, the triple lock has been worth 26% more than wages, or 9% more than inflation over the period since 2010, as calculated below, based upon Sep CPI and Jul Wages data:
    
2023    8.9    8.2    2.5    1.089    1.082    1.025    1.089
2022    12.6    5.8    2.5    1.126    1.058    1.025    1.126
2021    4.9    7.3    2.5    1.049    1.073    1.025    1.073
2020    1.1    -0.1    2.5    1.011    0.999    1.025    1.025
2019    2.4    4.0    2.5    1.024    1.040    1.025    1.040
2018    3.3    3.3    2.5    1.033    1.033    1.025    1.033
2017    3.9    1.6    2.5    1.039    1.016    1.025    1.039
2016    2.0    2.5    2.5    1.020    1.025    1.025    1.025
2015    0.8    3.5    2.5    1.008    1.035    1.025    1.035
2014    2.3    0.4    2.5    1.023    1.004    1.025    1.025
2013    3.2    0.7    2.5    1.032    1.007    1.025    1.032
2012    2.6    1.5    2.5    1.026    1.015    1.025    1.026
2011    5.6    2.9    2.5    1.056    1.029    1.025    1.056
2010    4.6    1.4    2.5    1.046    1.014    1.025    1.046
                               Total 1.758    1.521    1.413    1.914
                                Diff  1.089    1.258    1.355    
 

 

 

 

[scottbeard]

5 hours ago, scottbeard said:

@kzb I'm now back in the office, and your idea that the triple lock is only worth 2% over 13 years seems way off.

By my calculation, the triple lock has been worth 26% more than wages, or 9% more than inflation over the period since 2010, as calculated below, based upon Sep CPI and Jul Wages data:

I made an error above - using RPI not CPI.  Let's try again with CPI:

                                                                           Triple lock
2023    6.7    8.2    2.5    1.067    1.082    1.025    1.082
2022    10.1    5.8    2.5    1.101    1.058    1.025    1.101
2021    3.1    7.3    2.5    1.031    1.073    1.025    1.073
2020    0.5    -0.1    2.5    1.005    0.999    1.025    1.025
2019    1.7    4.0    2.5    1.017    1.040    1.025    1.040
2018    2.4    3.3    2.5    1.024    1.033    1.025    1.033
2017    3.0    1.6    2.5    1.030    1.016    1.025    1.030
2016    1.0    2.5    2.5    1.010    1.025    1.025    1.025
2015    -0.1    3.5    2.5    0.999    1.035    1.025    1.035
2014    1.2    0.4    2.5    1.012    1.004    1.025    1.025
2013    2.7    0.7    2.5    1.027    1.007    1.025    1.027
2012    2.2    1.5    2.5    1.022    1.015    1.025    1.025
2011    5.2    2.9    2.5    1.052    1.029    1.025    1.052
2010    3.1    1.4    2.5    1.031    1.014    1.025    1.031
                             Total  1.518    1.521    1.413    1.800
         Diff to Triple lock 1.186    1.183    1.274    
 

So basically from 2010 up to 2024 the Triple lock is more like 18-19% more than both CPI and Wages.   Still a far cry from 2%!  Note three years where the fixed 2.5% is highest too.

[kzb]

47 minutes ago, scottbeard said:

I made an error above - using RPI not CPI.  Let's try again with CPI:

                                                                           Triple lock
2023    6.7    8.2    2.5    1.067    1.082    1.025    1.082
2022    10.1    5.8    2.5    1.101    1.058    1.025    1.101
2021    3.1    7.3    2.5    1.031    1.073    1.025    1.073
2020    0.5    -0.1    2.5    1.005    0.999    1.025    1.025
2019    1.7    4.0    2.5    1.017    1.040    1.025    1.040
2018    2.4    3.3    2.5    1.024    1.033    1.025    1.033
2017    3.0    1.6    2.5    1.030    1.016    1.025    1.030
2016    1.0    2.5    2.5    1.010    1.025    1.025    1.025
2015    -0.1    3.5    2.5    0.999    1.035    1.025    1.035
2014    1.2    0.4    2.5    1.012    1.004    1.025    1.025
2013    2.7    0.7    2.5    1.027    1.007    1.025    1.027
2012    2.2    1.5    2.5    1.022    1.015    1.025    1.025
2011    5.2    2.9    2.5    1.052    1.029    1.025    1.052
2010    3.1    1.4    2.5    1.031    1.014    1.025    1.031
                             Total  1.518    1.521    1.413    1.800
         Diff to Triple lock 1.186    1.183    1.274    
 

So basically from 2010 up to 2024 the Triple lock is more like 18-19% more than both CPI and Wages.   Still a far cry from 2%!  Note three years where the fixed 2.5% is highest too.

Ahem, the mistake I made was comparing household income with pensions.  Of course household income includes pensioner households.  But I thought it wouldn't make a vast difference because pensioner households are a minority of households.

Also, it is equivalised disposable income.  The term equivalised could hide a multitude of sins.

Your columns don't have headings so I'm not sure what I am looking at.  But I imagine these are gross income figures and not disposable income figures.

The same year they introduced the TR they also whacked up the income tax personal allowance.  Since then they have also whacked up the national insurance threshold to the same as the tax threshold.  This is going to affect disposable income considerably.

I too was surprised when I got a figure of 2%.  It did seem too small and the true figure, if there is such a thing, will be higher than that.  But the next stage of the argument will be to look at the history prior to the TR in 2010.  I think we will see that pensions have basically recovered to an older proportion of income.  What you have now is not the all-time record.

 

[scottbeard]

31 minutes ago, kzb said:

Ahem, the mistake I made was comparing household income with pensions.  Of course household income includes pensioner households.  But I thought it wouldn't make a vast difference because pensioner households are a minority of households.

Also, it is equivalised disposable income.  The term equivalised could hide a multitude of sins.

Your columns don't have headings so I'm not sure what I am looking at.  But I imagine these are gross income figures and not disposable income figures.

The same year they introduced the TR they also whacked up the income tax personal allowance.  Since then they have also whacked up the national insurance threshold to the same as the tax threshold.  This is going to affect disposable income considerably.

I too was surprised when I got a figure of 2%.  It did seem too small and the true figure, if there is such a thing, will be higher than that.  But the next stage of the argument will be to look at the history prior to the TR in 2010.  I think we will see that pensions have basically recovered to an older proportion of income.  What you have now is not the all-time record.

 

My columns are just % increase in CPI, wages and 2.5%.  Then the same as multipliers. Then the better of them ie the triple lock.

[kzb]

10 minutes ago, scottbeard said:

My columns are just % increase in CPI, wages and 2.5%.  Then the same as multipliers. Then the better of them ie the triple lock.

So the second column (after the year) is the % increase in gross median income ?

[scottbeard]

9 minutes ago, kzb said:

So the second column (after the year) is the % increase in gross median income ?

It’s the annual increase in average weekly earnings figure as published by ONS.  You’ll have to Google it if you need more detail

[kzb]

@scottbeard  I've found this:

As I was saying, if your figures are roughly correct, the TR has still only recovered the position last seen in the late 1970's and early 1980's.

[scottbeard]

7 minutes ago, kzb said:

@scottbeard  I've found this:

As I was saying, if your figures are roughly correct, the TR has still only recovered the position last seen in the late 1970's and early 1980's.

Yes indeed that sounds about right

Which is rather different to us all “getting angry about £2.41 a week” as you suggested before 

What we have seen is wages being 0% real over that period and pensions 19% real.

is that right? Is that fair? That’s a matter of opinion.  Some may think yes and others no.  But the matter of fact is that the triple lock is not a trifling de minimis 

[kzb]

5 minutes ago, scottbeard said:

Yes indeed that sounds about right

Which is rather different to us all “getting angry about £2.41 a week” as you suggested before 

What we have seen is wages being 0% real over that period and pensions 19% real.

is that right? Is that fair? That’s a matter of opinion.  Some may think yes and others no.  But the matter of fact is that the triple lock is not a trifling de minimis 

We don't actually know that disposable income is "0% real".  You have not demonstrated that so far.

Also, if we go with 19% for now, that means about £23 a week increase in cash terms, before tax, over 14 years.  It's not megabucks.

[scottbeard]

12 minutes ago, kzb said:

Also, if we go with 19% for now, that means about £23 a week increase in cash terms, before tax, over 14 years.  It's not megabucks.

£23 is a lot more £0

As for disposable income…I suspect given the tax increases and housing cost increases in that 14 years it would be a reduction is disposable income for most workers but I shall leave you to research it if it interest you 

[kzb]

1 minute ago, scottbeard said:

£23 is a lot more £0

As for disposable income…I suspect given the tax increases and housing cost increases in that 14 years it would be a reduction is disposable income for most workers but I shall leave you to research it if it interest you 

Disposable income isn't really disposable income.  It's the money left after income tax and national insurance has been subtracted.  It makes it sound like your take home pay is all spending money.

However, income taxes for most have actually reduced, as I pointed out above.  The personal allowance for income tax and the NI threshold have been increased a lot compared to pre-2010.

[jiltedjen]

Daily Mail story about trying to revive UK stock market.

Including plans to “unlock billions in pension funds to UK growth companies” 

unlock? Untapped? you mean force them to invest in underperforming Uk? To sell profitable positions to buy dogs? 

and creating a UK based ISA for UK companies only.

its only a matter of time before the ‘untapped’ pension money is fed into damaged/rotting UK companies.

- how do we bail the UK out? 
- well who has all the money/wealth? 
- Well the old people have it all.

- OK so use their money to bail UK out. 

- wont they be annoyed? 
- we will just spin the wealth grab as investing in *chuckles* “growth bonds”, instead of bailing out companies.

The poetic justice will be the old having their stolen wealth, stolen from them, to invest in companies, which won’t grow, as the old have all the wealth, and have themselves killed the UK economy and salted the earth.

Pensions should be linked to wages, and UK pension funds should be linked to health of the UK. Perhaps if that was the case we would never of had idiotic moves like brexit, as those voting for it would actually suffer for their own actions. 

Equally what’s also interesting is that it’s normally the middle and upper middle classes that define a direction of a country, all those 45-55 somethings who are now actually leading companies, and are in government, are not finding themselves loaded, are not finding themselves in control of the narrative, and finding they don’t have the life they want.

those with fingers on the levers of powers are already changing the situation to suit themselves, they booted out boomer lover boris, and they will find a way to get hold of that boomer wealth.

if I had to predict how they will do it, they will bin triple lock, and then find ways of directing that boomer equity to benefit themselves.

seems that’s the plan. 

[Insane]

29 minutes ago, jiltedjen said:

- how do we bail the UK out? 
- well who has all the money/wealth? 
- Well the old people have it all.

- OK so use their money to bail UK out. 

- wont they be annoyed? 
- we will just spin the wealth grab as investing in *chuckles* “growth bonds”, instead of bailing out companies.

The poetic justice will be the old having their stolen wealth, stolen from them, to invest in companies, which won’t grow, as the old have all the wealth, and have themselves killed the UK economy and salted the earth.

You really have not got a clue about what you post have you. 

Anyone over the age of 18 can have and most do have money invested in pension schemes. The older people who are drawing their pensions that you want to see have their pension money stolen from them will not be effected as much as the young who need to see their pension investments grow over the decades ahead to give them a decent pension. 

I have said it before and will say it to you again be careful what you wish for as it is you and your age group who are going to be hit the hardest in your quest to destroy pension wealth. 

34 minutes ago, jiltedjen said:

Pensions should be linked to wages, and UK pension funds should be linked to health of the UK. Perhaps if that was the case we would never of had idiotic moves like brexit, as those voting for it would actually suffer for their own actions. 

Have also said this to you before. If the young had got off their back sides and voted in 2016 we would not have had Brexit but they were to bloody lazy so now as all they have left is to moan about the voting choices of those who bothered to vote. Blame the young not the older who voted Brexit. 

36 minutes ago, jiltedjen said:

Equally what’s also interesting is that it’s normally the middle and upper middle classes that define a direction of a country, all those 45-55 somethings who are now actually leading companies, and are in government, are not finding themselves loaded, are not finding themselves in control of the narrative, and finding they don’t have the life they want.

those with fingers on the levers of powers are already changing the situation to suit themselves, they booted out boomer lover boris, and they will find a way to get hold of that boomer wealth.

if I had to predict how they will do it, they will bin triple lock, and then find ways of directing that boomer equity to benefit themselves.

Such waffle.