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Zaranna

Restoring Earnings Link To Pensions

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Was talking about this with my husband this morning. What do the current proposals for restoring the earnings link to pensions mean? (Leaving aside for a moment whether it will actually happen and when).

1. Bankers and policymakers expect wage inflation.

2. Bankers and policymakers do not expect wage inflation.

3. They expect price inflation but not wage inflation.

Any thoughts?

Z

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Was talking about this with my husband this morning. What do the current proposals for restoring the earnings link to pensions mean? (Leaving aside for a moment whether it will actually happen and when).

1. Bankers and policymakers expect wage inflation.

2. Bankers and policymakers do not expect wage inflation.

3. They expect price inflation but not wage inflation.

Any thoughts?

Z

I'm maybe being cynical but what was it linked to before? Inflation? And they've been fiddling the inflation figures and keeping them low - but they realise the game is up on that so changing it to something that'll stay low - if we have immigrants doing cheap work then wage inflation won't happen?

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I'm maybe being cynical but what was it linked to before? Inflation? And they've been fiddling the inflation figures and keeping them low - but they realise the game is up on that so changing it to something that'll stay low - if we have immigrants doing cheap work then wage inflation won't happen?

Inflation. It is a better system to link it with earnings and it should never have been broken.

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What do the current proposals for restoring the earnings link to pensions mean?

1) You can now work to the glorious age of 69 in the private sector compared to 60 or 55 in the public sector.

2) Ladies get to work to the same age as men. Equality at last.

3) They cut your SERPS - second earnings related pension in half.

4) It becomes impossible to contract out so you cant get a rebate on you NI to help fund your pension. Instead the state will help you invest it via the "government" gateway. The state taketh away and then maybe dribbles something back. Amen.

5) Employers are forced to raise their wages to staff through compulsory contributions (3% tax on employment), resulting in even more jobs being offshored for the low skilled.

And they wonder why the economy just won't rebalance back to business investment. Invest in a high-cost over-regulated low-growth over-indebted uneducated chavhole?

Of course as you say we can ignore the actual restoration of the earinings link, since this won't happen unless Clownie Bronwnie is convinced he will lose the election and needs to shaft the incoming Conservatives.

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Was talking about this with my husband this morning. What do the current proposals for restoring the earnings link to pensions mean? (Leaving aside for a moment whether it will actually happen and when).

1. Bankers and policymakers expect wage inflation.

2. Bankers and policymakers do not expect wage inflation.

3. They expect price inflation but not wage inflation.

Any thoughts?

Z

They will attempt to contain wage inflation as much as possible. Wage deflation is likely preferable to them.

They will move the retirement age to fund some of the difference required.

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So, do you think the proposals are because they know wage inflation will not happen, so it's safe to restore the link (as it won't cost much more than the present system because wages are not likely to rise much); or that they know wage inflation WILL happen, so HAVE to restore the link (because prices and wages are going to rise, and otherwise pensions will be left far behind earnings?)?

Hmmm, could be either, I suppose?

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So, do you think the proposals are because they know wage inflation will not happen, so it's safe to restore the link (as it won't cost much more than the present system because wages are not likely to rise much); or that they know wage inflation WILL happen, so HAVE to restore the link (because prices and wages are going to rise, and otherwise pensions will be left far behind earnings?)?

Hmmm, could be either, I suppose?

The latter. I think it is a very positive and worthwhile thing they are doing.

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I think it is a very positive and worthwhile thing they are doing.

Somethng 'positive and worthwhile', from NuLab? I doubt it.

The simple fact is that if globalisation continues then either we find something new to do that's worth ten times as much as a Chinese worker, our standard of living drops to match that of an equivalent foreign worker, or we all end up on the dole. Wage deflation is far more likely than wage inflation in the next couple of decades, unless globalisation itself comes to an end.

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Somethng 'positive and worthwhile', from NuLab? I doubt it.

The simple fact is that if globalisation continues then either we find something new to do that's worth ten times as much as a Chinese worker, our standard of living drops to match that of an equivalent foreign worker, or we all end up on the dole. Wage deflation is far more likely than wage inflation in the next couple of decades, unless globalisation itself comes to an end.

If wages drop our cost of living would drop. So the pension would not need to be so great.

I think you are more likely to see wage inflation in other countries. Like China and India.

From the end of 2005:

Salaries rose by an average of 11.5% a year in India in the past five years compared to 7.5% in China.

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If wages drop our cost of living would drop.

You must live in a funny universe when reductions in wages reduce the cost of living. Certainly some things, like houses, would be cheaper, but anything traded on a global market would be just as expensive as before.

I think you are more likely to see wage inflation in other countries. Like China and India.

And what do you think will happen to the price of the things you buy if the average Chinese worker's wages go up to 25k a year?

You just don't get it, do you? For several decades we've been comparatively rich because a couple of billion people have been kept out of the global job market by communism. Now they're gagging to take our jobs for a fraction of the price: how can that _not_ cause a major drop in standard of living for British workers?

Edited by MarkG

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3. They expect price inflation but not wage inflation.

Any thoughts?

Z

I must admit this is what I thought when I first heard that they were re-introducing the link, but as I heard this morning it won't be until 2012 I now doubt it as they have enough trouble seeing past their elbows, let alone the end of an economic cycle.

Also gives them plenty of time to change their mind too of course!!

G-Man

Edited by G-Man

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You must live in a funny universe when reductions in wages reduce the cost of living. Certainly some things, like houses, would be cheaper, but anything traded on a global market would be just as expensive as before.

And what do you think will happen to the price of the things you buy if the average Chinese worker's wages go up to 25k a year?

You just don't get it, do you? For several decades we've been comparatively rich because a couple of billion people have been kept out of the global job market by communism. Now they're gagging to take our jobs for a fraction of the price: how can that _not_ cause a major drop in standard of living for British workers?

Um, so if the price of making things in china goes up, because of wage inflation, it means that manufacturing things in the UK is more competative.

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Um, so if the price of making things in china goes up, because of wage inflation, it means that manufacturing things in the UK is more competative.

And?

Wages are the same, the price of things has gone up. How is that reducing the cost of living?

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And?

Wages are the same, the price of things has gone up. How is that reducing the cost of living?

EDIT: Sorry, got mixed up. If their wages are inflating so are ours. I don't really see how buying goods that are more expensive from China alters the cost of living. Surely that is rent/mortgage and essential purchases. If our wages inflte as much as inflation. It should cover the rises in cost of living.*

If wages deflate so that the average person can not meet the cost of living do you think nothing would be changed?

Developing countries have under cut us at manufacturing for years as they have the rest of the developed world. Remeber the Tiger economies in the Far East. They develop at a fast rate, then crash, then level off. I can't see it being any different with China and India.

So I think you are being a bit melodramatic in your predictions.

* I fully realise someone may point out that the inflation figures currently appear to be fiddled!!

Edited by MOD

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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