Let's talk about the true cost of ageing

[tzijlstra]

One of the biggest issues facing the budget of the UK is pensions. They are rising at an almost unsustainable level, for the coming two years they are expected to go up with 5 billion pounds a year. It is by far the biggest increasing source of expenditure in the social welfare budget, expected to go from 130 billion in 2012 to 155 billion in 2016.

 

George Osborne does not talk about this a lot, it is a factor he seemingly has no control over. The fact is though that this rise is set to continue well into the second half of this century. Projections have it that pensions as a percentage of GDP are about to inflate from 8,9% to 10,8% whilst simultaneously the cost of healthcare is set to inflate from 6,8 to 9,1% by 2061/2062.

 

These might seem like small numbers, but in real terms this is a rather devastating impact. In real terms that means pensions are going to quadruple in cost to the state by 2063. Quadruple. This leaves the state with a decreased ability to pay for anything other than pensions and we haven't even mentioned the consequent costs of healthcare which will follow a similar trajectory.

 

The reason for this increase is encouraging though: we are all living longer, children who enter primary school now will live to be 100 on average. Life is to be celebrated, but it is time that we face the reality of the enormous costs facing us and adjust our expectations to meet them.

[ivanava]

That expense can be cut by increasing the pension age, and cutting excessive public sector pensions. More money can be raised by getting the people on benefits into work.

[tzijlstra]

The rise is in state pensions, not public sector pensions which have already been farmed out and are being paid for by public service workers themselves (although they will likely need shoring up, this is what a lot of the bail-outs over recent years were really about).

 

The pension age going up is a given, but it will cause even more frustration over coming years, we will hit a point where it is simply impossible to issue state pension before the age of 75 and it isn't even 15 years away.

 

Getting more people into work is crucial indeed, the economy will have to grow extraordinarily fast over the coming half century, more wobbles of the kind we have just seen will cause an increasing amount of panic over these costs. Unfortunately there is very little that can be done about the increasing state-debt until then.

[ivanava]

The rise is in state pensions, not public sector pensions which have already been farmed out and are being paid for by public service workers themselves (although they will likely need shoring up, this is what a lot of the bail-outs over recent years were really about).

 

Everything that the public sector spends is paid from private sector tax. So cutting public sector pensions and the number of people receiving them will save money which can be used to fund the pensions of everyone.

 

 

The pension age going up is a given, but it will cause even more frustration over coming years, we will hit a point where it is simply impossible to issue state pension before the age of 75 and it isn't even 15 years away.

 

It might, but then the Old-Age Pensions Act 1908 provided for a non-contributory old age pension for persons over the age of 70.

It was changed to age 65 in 1925 and then in 1940 - men age 65, women age 60. We live longer healthier lives now so increasing it make sense.

 

Getting more people into work is crucial indeed, the economy will have to grow extraordinarily fast over the coming half century, more wobbles of the kind we have just seen will cause an increasing amount of panic over these costs. Unfortunately there is very little that can be done about the increasing state-debt until then.

If it grows to fast it will inevitably result in a crash, slow sustainable growth is better than rapid growth.

[rossyrooney]

The rise is in state pensions, not public sector pensions which have already been farmed out and are being paid for by public service workers themselves (although they will likely need shoring up, this is what a lot of the bail-outs over recent years were really about).

 

The pension age going up is a given, but it will cause even more frustration over coming years, we will hit a point where it is simply impossible to issue state pension before the age of 75 and it isn't even 15 years away.

 

Getting more people into work is crucial indeed, the economy will have to grow extraordinarily fast over the coming half century, more wobbles of the kind we have just seen will cause an increasing amount of panic over these costs. Unfortunately there is very little that can be done about the increasing state-debt until then.

 

 

More people are finding work but with the advent of zero hours contracts and employed tradesmen being made to go self employed, especially in the building sector, the future for employees is looking less rosy than it has done for years.

In the quest to destroy the unions since the eighties the pendulum seems to have swung totally to the right and employers now have the whip hand.

 

We seem to have returned to the "I'm alright Jack" era and unless some middle ground is found i fear that the rich will get richer and the poor will get poorer much quicker than ever before.

[tzijlstra]

Everything that the public sector spends is paid from private sector tax. So cutting public sector pensions and the number of people receiving them will save money which can be used to fund the pensions of everyone.

 

Your point is moot, I already stated that public spending would be under increasing pressure - it is irrelevant what public sector workers get in terms of pensions, their jobs are increasingly unaffordable anyway.

 

It might, but then the Old-Age Pensions Act 1908 provided for a non-contributory old age pension for persons over the age of 70.

It was changed to age 65 in 1925 and then in 1940 - men age 65, women age 60. We live longer healthier lives now so increasing it make sense.

 

Not sure why the 'but', it doesn't just make sense, it is inevitable. I presume you agree?

 

If it grows to fast it will inevitably result in a crash, slow sustainable growth is better than rapid growth.

 

Obviously, but even then we would need such a long sustained period of growth to make a difference that it is unlikely to have a significant impact, what would have a significant impact is a complete crash in the economy on top of what we have just experienced, which some analysts are fairly sure is still in the pipeline.

 

Anything that can jeopardise the economy should be tackled as soon as possible.

 

---------- Post added 11-05-2014 at 12:11 ----------

 

More people are finding work but with the advent of zero hours contracts and employed tradesmen being made to go self employed, especially in the building sector, the future for employees is looking less rosy than it has done for years.

In the quest to destroy the unions since the eighties the pendulum seems to have swung totally to the right and employers now have the whip hand.

 

We seem to have returned to the "I'm alright Jack" era and unless some middle ground is found i fear that the rich will get richer and the poor will get poorer much quicker than ever before.

 

There is no political colour that could have changed what we are facing. This is a purely demographic crash - the number of elderly is growing faster than the number of working people below them (ie in age) can support. The only thing that could and should have happened was that during the 80s-noughties this bubble should have been forecast (and was by many) and (very unpopular) alterations to policy should have been made then to begin and circumvent the issue at hand.

[ivanava]

Your point is moot, I already stated that public spending would be under increasing pressure - it is irrelevant what public sector workers get in terms of pensions, their jobs are increasingly unaffordable anyway.

 

What public sector workers cost and spend isn't at all irrelevant because they are funded from the same pot of money that pensions are funded from, decrease one and you can increase the other.

 

 

 

Not sure why the 'but', it doesn't just make sense, it is inevitable. I presume you agree?

Yes I agree the old age pension should rise and in doing so it will cut the number of pensioners so decrease the overall cost of pensions.

 

 

 

Obviously, but even then we would need such a long sustained period of growth to make a difference that it is unlikely to have a significant impact, what would have a significant impact is a complete crash in the economy on top of what we have just experienced, which some analysts are fairly sure is still in the pipeline.

And crashes are usually the result of unsustainable rapid growth, crashes are less likely if we have slow sustainable growth.

 

 

Anything that can jeopardise the economy should be tackled as soon as possible.

 

Over population is our biggest threat to a sustainable future.

[tzijlstra]

What public sector workers and spend get isn't at all irreverent because they are funding from the same pot of money that pensions are funded from, decrease one and you can increase the other.

So we agree.

 

Yes I agree the old age pension should rise and in doing so it will cut the number of pensioners so decrease the overall cost of pensions.

So we agree.

 

And crashed are usually the result of unsustainable rapid growth, crashed are less likely if we have slow sustainable growth.

So we agree.

 

Over population is our biggest threat to a sustainable future.

 

No it isn't, the biggest threat to a sustainable future is an unbalanced population and a government unwilling to take steps to address the issues resulting from it because it is unpopular.

[Gormenghast]

What steps would you take to balance the population Tim?

[ivanava]

So we agree.

 

 

So we agree.

 

 

So we agree.

Assuming you understand my post which contained many errors, which I think I have now corrected.

 

No it isn't, the biggest threat to a sustainable future is an unbalanced population and a government unwilling to take steps to address the issues resulting from it because it is unpopular.

 

That will only be a short term problem before balancing its self out. I might be poorer during my old age but at least it will be more balanced for my kids and grand kids as long as government policy changes from one of population expansion to a more sustainable population.