Reidy's Bottle Of Grecian
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do you suggest 'Rich Tea' ?
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King for a day, but schmuck for a lifetime
The Lamborghini Reforms. It’s got a ring about it, hasn’t it? The Liberal Democrat pensions minister Steve Webb has said he is relaxed about the prospect of people cashing in their pension pot and buying an expensive fast car. What is telling is the flippancy. We’re not talking about the lottery, we’re talking about people’s income in retirement.
Let’s remember the context. Personal, direct contribution, schemes were promoted as an answer for an increasingly mobile workforce. They provided as good a pension as a final salary scheme provided there were low charges and a decent employer contribution.
There’s the rub. Employers. They are happy to contribute to a private pension because it is buying their workers an income in retirement. Now it’s a sports car fund, what interest or incentive do employers have to make any contribution at all? Further, why should this form of savings get preferential tax treatment compared to any other form?
The coalition has cynically scored a boost in tax revenues as a consequence of its changes. It is expecting £2bn a year in extra tax as people use this new freedom to raid their pension pots. George Osborne knows what he is doing – but he doesn’t care.
The wrapper that the coalition is putting on this is ‘freedom to spend your own money.’ No one can object to that, and no one does. Spend your pension how you want. But it should be a pension – an income for retirement. We compel workers to save for a pension because, given the choice, many – particularly young workers – wouldn’t. We give tax breaks to make it worth it. Then we compel you to buy an annuity. That’s the deal. And it’s the deal because we want to see the independence that a decent income of your own gives you in retirement.
The philosophical objections to Osborne’s scheme are individual and collective. On the one hand we are very bad at calculating our own life expectancy – most people get it between five and 10 years too low. That’s because at 65 life expectancy rises by six and a half hours every single day – two and a half years a decade. On the other pensions are a collective provision – we pool the risk when we buy an annuity and it pays a pension whether we live to 85 or 105.
It needn’t be this way. Osborne has form for being too clever by half, or, to adapt the line from ‘King of Comedy’, he’s often king for a day, but schmuck for a lifetime. This change will unravel as its impacts are mapped. We still don’t know how it will hit public sector workers – but rest assured it will.
Labour – with the union movement – needs to save our pensions.
- See more at: http://www.progressonline.org.uk/20...-schmuck-for-a-lifetime/#sthash.HDfLAwUT.dpuf
- John McTernan | 21 March 2014
| Comments: 4
The Lamborghini Reforms. It’s got a ring about it, hasn’t it? The Liberal Democrat pensions minister Steve Webb has said he is relaxed about the prospect of people cashing in their pension pot and buying an expensive fast car. What is telling is the flippancy. We’re not talking about the lottery, we’re talking about people’s income in retirement.
Let’s remember the context. Personal, direct contribution, schemes were promoted as an answer for an increasingly mobile workforce. They provided as good a pension as a final salary scheme provided there were low charges and a decent employer contribution.
There’s the rub. Employers. They are happy to contribute to a private pension because it is buying their workers an income in retirement. Now it’s a sports car fund, what interest or incentive do employers have to make any contribution at all? Further, why should this form of savings get preferential tax treatment compared to any other form?
The coalition has cynically scored a boost in tax revenues as a consequence of its changes. It is expecting £2bn a year in extra tax as people use this new freedom to raid their pension pots. George Osborne knows what he is doing – but he doesn’t care.
The wrapper that the coalition is putting on this is ‘freedom to spend your own money.’ No one can object to that, and no one does. Spend your pension how you want. But it should be a pension – an income for retirement. We compel workers to save for a pension because, given the choice, many – particularly young workers – wouldn’t. We give tax breaks to make it worth it. Then we compel you to buy an annuity. That’s the deal. And it’s the deal because we want to see the independence that a decent income of your own gives you in retirement.
The philosophical objections to Osborne’s scheme are individual and collective. On the one hand we are very bad at calculating our own life expectancy – most people get it between five and 10 years too low. That’s because at 65 life expectancy rises by six and a half hours every single day – two and a half years a decade. On the other pensions are a collective provision – we pool the risk when we buy an annuity and it pays a pension whether we live to 85 or 105.
It needn’t be this way. Osborne has form for being too clever by half, or, to adapt the line from ‘King of Comedy’, he’s often king for a day, but schmuck for a lifetime. This change will unravel as its impacts are mapped. We still don’t know how it will hit public sector workers – but rest assured it will.
Labour – with the union movement – needs to save our pensions.
- See more at: http://www.progressonline.org.uk/20...-schmuck-for-a-lifetime/#sthash.HDfLAwUT.dpuf
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Tom Watson
Under 45? You’re being screwed.
March 21st, 2014 |
“What do you think of Western civilisation?” A journalist once asked of Gandhi. “I think it would be a very good idea” he replied. I feel the same about George Osborne’s so-called pension ‘reform’. As I wrote yesterday, the Chancellor is not reforming Britain’s pensions industry. He’s unravelling it. But that’s not to say that we don’t need the kind of real change that could have been announced in the budget – we do. For too long, savers have been punished by a pensions industry that is too complicated, too unresponsive to the needs of retirees and too inflexible.
My friend Rachel Reeves, who is responsible for Labour’s policy on welfare and pensions, has worked tirelessly to expose the problems in the annuities market. She has written that £1 billion of pensioners’ hard earned money is lost every year by savers missing out on the best possible deal. That’s unforgivable and unsustainable. But the answer is to fix a broken and important market. Not to pull the rug out from underneath the pensions deal that protects individuals, families and the taxpayer alike. The kind of reform that Rachel has pushed for is what we deserve. A right to completely independent advice – so that everyone can shop around for the best deal. A cap on the fees – which are sometimes incomprehensibly steep – so that no-one has to fork over more than 0.75% of their hard-earned money.
And I would go further. If you have a pension pot that, once translated into annuity payments, would give you a return that is less than the Living Wage then you should be able to cash that in tax-free. Why? Because it doesn’t live up the pensions deal that is so important to securing our collective future – it doesn’t equip retirees with the salary replacement that insulates them and the taxpayer from risk. So yes, reform. Urgently. But that is not the same as the reckless, cynical and calculating manoeuvre we saw from the Government on Wednesday.
You see, George Osborne is not reforming pensions. He’s robbing Peter (Generations’ X and Y) to pay Pauline (Baby boomer) in an effort to boost consumer confidence and create a feel-good, short-term boom in the run up to the 2015 election.
Millions of Baby Boomers will be handed a tax-free lump sum – to ‘buy a Lamborghini’ in the words of the pensions minister. That money has been built up in a partnership between the worker, the state and the employer – it has been specially protected and had special tax treatment. It is a shared pot that was designed to create collective resilience in our economy. Now, it can disappear over night and the people that have supported the creation of Baby Boomers’ pension wealth – Generations X and Y – who have helped to support and protect these pots of money through their taxes and through their own payments into occupational pension schemes are faced with the prospect of being punished. Whilst their parents are snapping up buy-to-let properties with their injections of easy, tax-free cash, young people are struggling to buy a home of their own.
And whilst some moral hazard has been negated by lifting the basic state pension above the means-testing threshold, a myriad of other services are on a needs-must basis – social care, for example – many more older pensioners will find themselves in poverty having spent their pot too early. The taxpayer will foot the bill.
The Chancellor has stolen from young people in order to finance a giveaway for what remains of his ‘core vote’. In doing so, he has threatened the deal between savers and the state on pensions. He has added fuel to the flames of a housing bubble that excludes young homeowners to the benefit of amateur slum landlords. He has betrayed young people by leaving them to foot the bill further down the road. And he has sought to fundamentally undermine the collective principle at the heart of our welfare state. I don’t oppose the Chancellor’s annuity policy because I’m on the side of financial services. I oppose it because I’m on the side of fairness, of responsibility and of principle ahead of low politicking. Reform is essential. But it’s different from vandalism. And that is what Osborne is guilty of with this budget.
If you’re under 45, you need wake up and smell the coffee. You are being screwed. The Labour party also needs to wake up and smell the coffee. These people are the future. They need us to fight for them. PS Here’s the Buzzcocks, dedicated to Steve Webb.
Under 45? You’re being screwed.
March 21st, 2014 |
“What do you think of Western civilisation?” A journalist once asked of Gandhi. “I think it would be a very good idea” he replied. I feel the same about George Osborne’s so-called pension ‘reform’. As I wrote yesterday, the Chancellor is not reforming Britain’s pensions industry. He’s unravelling it. But that’s not to say that we don’t need the kind of real change that could have been announced in the budget – we do. For too long, savers have been punished by a pensions industry that is too complicated, too unresponsive to the needs of retirees and too inflexible.
My friend Rachel Reeves, who is responsible for Labour’s policy on welfare and pensions, has worked tirelessly to expose the problems in the annuities market. She has written that £1 billion of pensioners’ hard earned money is lost every year by savers missing out on the best possible deal. That’s unforgivable and unsustainable. But the answer is to fix a broken and important market. Not to pull the rug out from underneath the pensions deal that protects individuals, families and the taxpayer alike. The kind of reform that Rachel has pushed for is what we deserve. A right to completely independent advice – so that everyone can shop around for the best deal. A cap on the fees – which are sometimes incomprehensibly steep – so that no-one has to fork over more than 0.75% of their hard-earned money.
And I would go further. If you have a pension pot that, once translated into annuity payments, would give you a return that is less than the Living Wage then you should be able to cash that in tax-free. Why? Because it doesn’t live up the pensions deal that is so important to securing our collective future – it doesn’t equip retirees with the salary replacement that insulates them and the taxpayer from risk. So yes, reform. Urgently. But that is not the same as the reckless, cynical and calculating manoeuvre we saw from the Government on Wednesday.
You see, George Osborne is not reforming pensions. He’s robbing Peter (Generations’ X and Y) to pay Pauline (Baby boomer) in an effort to boost consumer confidence and create a feel-good, short-term boom in the run up to the 2015 election.
Millions of Baby Boomers will be handed a tax-free lump sum – to ‘buy a Lamborghini’ in the words of the pensions minister. That money has been built up in a partnership between the worker, the state and the employer – it has been specially protected and had special tax treatment. It is a shared pot that was designed to create collective resilience in our economy. Now, it can disappear over night and the people that have supported the creation of Baby Boomers’ pension wealth – Generations X and Y – who have helped to support and protect these pots of money through their taxes and through their own payments into occupational pension schemes are faced with the prospect of being punished. Whilst their parents are snapping up buy-to-let properties with their injections of easy, tax-free cash, young people are struggling to buy a home of their own.
And whilst some moral hazard has been negated by lifting the basic state pension above the means-testing threshold, a myriad of other services are on a needs-must basis – social care, for example – many more older pensioners will find themselves in poverty having spent their pot too early. The taxpayer will foot the bill.
The Chancellor has stolen from young people in order to finance a giveaway for what remains of his ‘core vote’. In doing so, he has threatened the deal between savers and the state on pensions. He has added fuel to the flames of a housing bubble that excludes young homeowners to the benefit of amateur slum landlords. He has betrayed young people by leaving them to foot the bill further down the road. And he has sought to fundamentally undermine the collective principle at the heart of our welfare state. I don’t oppose the Chancellor’s annuity policy because I’m on the side of financial services. I oppose it because I’m on the side of fairness, of responsibility and of principle ahead of low politicking. Reform is essential. But it’s different from vandalism. And that is what Osborne is guilty of with this budget.
If you’re under 45, you need wake up and smell the coffee. You are being screwed. The Labour party also needs to wake up and smell the coffee. These people are the future. They need us to fight for them. PS Here’s the Buzzcocks, dedicated to Steve Webb.
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