Is postponement of State Pension Age inevitable

[EmmDee]

Is postponement of State Pension Age inevitable

Yes

But this is missing the point that our economic development has been enormous and unimaginable since those days.

Only matched (if not exceeded) by (a) increase in life expectancy and (b) general population growth

I remember the talk of a leisure society on the back of the huge technological advances.

On "Tomorrow's World". But other than futurists, it has never been a topic for more immediate planning becasue it was never on the near horizon

So an argument can be made that society can afford not only to maintain the 65 retirement age but even to reduce it without adversely affecting the standard of living of those at working age.

Not sure the meanderings of Tomorrow's World or similar count as "the argument being made". There has been a pension concern knocking around since I did Leaving Certificate Economics - late 80's. So there is no question of "reduc(ing) it without adversely affecting the standard of living".

Of course even though society as a whole could afford longer retirement...

You haven't made that case...

...a situation where there is 2 workers for 1 pensioner could give rise to demands by the workforce for a bigger slice of the cake even if they are themselves enjoying more cake than ever due to economic growth.

A 2:1 ratio won't change the demands for the tax payers looking for a slice of the cake. It'll be the same as now. The difference is that we currently have 5:1 and therefore there is some scope to meet tax payers demands. Therefore a 2:1 ration means that there will be significantly increased transfer from tax payers along with a significant reduction in "the cake" and a reduction in their "slice"

 

[Duke of Marmalade]

Valid points EmmDee. I note in particular the population growth which has been spectacular by historic standards though not, I suggest, as spectacular as the technology induced economic growth.

I suppose I should rephrase the question as: "just because we will be living longer is it inevitable that we should be working longer?" If economic productivity was static this would be necessary if we wish to maintain our standard of living. But if we are enjoying huge economic improvements in productivity (as we have been) can we not think in terms of using the increased productivity to have more leisure including longer in retirement?

Framing the question in terms of the state pension brings in the concept of taxation transfers from the working population to retirees and these probably would be politically unsustainable if the ratio fell from 5:1 to 2:1 even if the increased productivity would enable the transfers without reducing the standard of living that the working population had been accustomed to.

 

[NoRegretsCoyote]

Productivity growth will also slow as the population ages.

Older people tend to demand a lot of labour-intensive services like health and social care. Difficult to automate these.

 

[michaelm]

"just because we will be living longer is it inevitable that we should be working longer?"

Initially yes methinks. But at some point there simply won't be enough work and we will have to look at some universal basic income model, shorter working weeks and earlier retirement, in the interest so social cohesion.

 

[EmmDee]

I suppose I should rephrase the question as: "just because we will be living longer is it inevitable that we should be working longer?" If economic productivity was static this would be necessary if we wish to maintain our standard of living. But if we are enjoying huge economic improvements in productivity (as we have been) can we not think in terms of using the increased productivity to have more leisure including longer in retirement?

The increased productivity has been used in society - just not to increase retirement. It's been used to significantly reduce the % of income spent on food, significantly decrease the cost of travel, increased holidays, social security, health care, infrastructure, technology ownership etc etc

The incresed productivity has been spent already.

 

[josh8267]

First off and lets not be fooling ourselves , We already have a very high no of people on disability pension in Ireland,, I did some work for a small Engineering Company after I retired

they were big into keeping the turnover of workers as low as possible Skill retention very Important ,
There contract and work pension was set up to retire at 65, there was a unwritten rule provided you were not missing work from underline health Issues you could stay on an extended contract and hold your clock card number in a lay off situation,

One of the first things the company found and you will see it first hand over in extreme politics Forum is Dog in the manger younger worker resentment towards people of retirement age,
The dog in the manger type will not eat the hay but the dog will not let the cow eat it just because he can stop her,

Dog in the manger type problems
Is he/she is watching and making sure there is no special treatment because of there age, I seen this just to give you an example I seen older worker having reached 65 and not yet 66 who had gone for a Prostate biopsy and had returned to work a day after later younger worker noticed he got a lighter job for a few days, not fair says he;
Same person could not understand why he has not retired to be honest I heard a member of management making the same remark,
He would have being one of there best Workers But you still have younger Members on and off the floor Questioning why he still needed to stay working

There are lots of companies in Ireland where the work was easy who would offer redundancy once people came up to 60 years old ,
I know some who never worked again just used the system to extend there welfare until the got to retirement,

Stevens Idea of paying into a pension and retiring early will not fix the reason given for increasing pensions I am afraid knowing how Ireland Works,


I Know people once the moved the age to 66 and forcing to draw unemployment for the first time Before Retirement with underline Health Issues
And have a private pension are asking themselves why wait until 66 why not go at 64, and use up all of there Benefit before I retire, never entered there head until the government put the thought in there heads,

If they have an underline health condition why wait until you were on unemployment before getting it looked after,

if they Government want you to draw unemployment benefit before retirement why not draw Illness benefit also before retirement also and retire 21 months before pension age if you have any health/ age related issues,

 

[Steiny]

Someone mentioned 66 being written in stone as future possibility... Is it not now 68 for most people? Also the number of credits you need and way it's calculated has been changed already... People have natural stopping times. The brain begins to slow long before 66 for most people and outlook is different. It's natural. A 70 year old won't be able for same role as 50 or 30 year old. Move into shorter hours and different more high level roles would be needed for such people...

 

[josh8267]

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[Steiny]

I can see a lot of people working later in the workforce and basically going off on sick certs... Stressed/depressed etc. Yes, people need to save for retirement. How does it factor that years ago most families only had one person working outside the home? Does the aging population still eat up those gains? Govt wants everyone in employment and paying into pension. As far as i can see, if you are civil servant, your pension prospects are still miles better than being in private sector paying money to irish life with no guarantees, tax benefits or not.

 

[josh8267]

I can see a lot of people working later in the workforce and basically going off on sick certs... Stressed/depressed etc. Yes, people need to save for retirement. How does it factor that years ago most families only had one person working outside the home? Does the aging population still eat up those gains? Govt wants everyone in employment and paying into pension. As far as i can see, if you are civil servant, your pension prospects are still miles better than being in private sector paying money to irish life with no guarantees, tax benefits or not.
[/QUOTE
I am enjoying

 

[josh8267]

As always with pensions, people leave it too late to do anything. People were told about these changes 8.5 years ago. There was awareness of it but most people decided to ignore it and only kick up a fuss when it impacted them.

The State doesn't tell you when to retire, they just tell you when you will start to receive the State pension. If you want to retire earlier, save the money yourself.

And the intention is for the State pension to be paid for the same amount of time for each generation so if we continue to live longer/ be kept alive by medical advances, you can expect the State pension to be paid out even later.

What can be done to reverse this? Pay more tax? The top rate is already 52% or 55% if self employed and earning over €100k. Should they pay even more tax? Or reduce other services. Where? Health? Education?

Or you can take responsibility for your own future and save some money for it.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

You are missing the point ,
The Government and supporters of extending the age to 68 make the point that we need more people working until they are 68 for lots of reasons leaving the state pension to one side,
Right now if the state had not forgone tax on my pension I would still be working , Company I worked for are finding it hard to replace the people retiring at present,not to mention the future,
So how about doing away with a few loopholes and tax breaks system,
I can only get a tax break on a % related to my age, Yet the company I worked for can put large amounts in to my pension and get tax relief and off set it against there profits,
There are lots of loopholes to allow Early retirement funded out of tax breaks,
If we want people to work longer , only allow tax break on pension that kick in at the same age as state pension,
Apply a pension levy on pensions the Government gave tax breaks if taken before state pension age,

The point I am making is You never know where the shoe pinches unless you are wearing it,
The people retiring today may not have the same breaks in life as people born after them,

 

[Steiny]

I think by and large young people working today will be worse off in retirement. Fewer companies offering the db and dc pensions of old. pensions in public sector are about as good as it gets. A company is not obliged to contribute towards your pension - if they do its a perk and 5pc is typical (talking about a private sector company). Factor in the cost of housing, 2 people out working and trying to pay for childcare, more commuting. these so called lucrative private pensions that you're talking about - Have you seen what you need to contribute to get at age 68 even?? Bearing in mind that it is in no way guaranteed, i think the tax break just mitigates the inherent risk of it being worth nothing at the end.

 

[josh8267]

I think by and large young people working today will be worse off in retirement. Fewer companies offering the db and dc pensions of old. pensions in public sector are about as good as it gets. A company is not obliged to contribute towards your pension - if they do its a perk and 5pc is typical (talking about a private sector company). Factor in the cost of housing, 2 people out working and trying to pay for childcare, more commuting. these so called lucrative private pensions that you're talking about - Have you seen what you need to contribute to get at age 68 even?? Bearing in mind that it is in no way guaranteed, i think the tax break just mitigates the inherent risk of it being worth nothing at the end.

I take your point I think we are getting our wires crossed,
I have seen this point made before on askaboutmoney
Do you know how much tax is foregone each year in pension breaks ,
Steve should be able to give us the figure,

 

[odyssey06]

Do you know how much tax is foregone each year in pension breaks ,
Steve should be able to give us the figure,

The 'real' figures are a lot more complicated and probably unknowable.
If you assume vast majority of retirees are going to stay resident in Ireland, then as they draw down their pension (which is larger due to tax breaks) they are spending that money here. It probably also means the state is spending less to support them in other ways.

 

[Steiny]

Ya, sorry. I see what you mean. Tax payable on the drawn down pension too of course. I think there are real human barriers to lots of people continuing to work past 65. People are living longer but those added years are not all healthy. The added years to life expectancy dont all translate to productive or even well years. Teachers, nurses, doctors, people in IT, people in outdoor jobs, engineering, science, retail, services industries where you are not sitting at a desk. People cannot work indefinitely in these roles or be as productive as they were. When you hear people in the esri talking about working into your 70s, you have to say it's ivory tower stuff, at least without change to the culture of the working world today.

 

[NoRegretsCoyote]

When you hear people in the esri talking about working into your 70s, you have to say it's ivory tower stuff, at least without change to the culture of the working world today.

Nonsense!

In the US nearly 20% of 70-74 year olds are in employment, and just under 9% of 75-79 year olds are! A full one in four white men aged between 70 and 74 is in a job.

See for yourself.

 

[odyssey06]

In the US nearly 20% of 70-74 year olds are in employment, and just under 9% of 75-79 year olds are! A full one in four white men aged between 70 and 74 is in a job.

Would be interesting to see whether they are full or part-time, how many hours per week are they clocking up, are they professionals \ running a business.

 

[NoRegretsCoyote]

Would be interesting to see whether they are full or part-time, how many hours per week are they clocking up, are they professionals \ running a business.

They of course have less working hours and do different kinds of work than people in their 20s.

But your working habits evolve over your lifetime anyway.

The ICTU proposition is something like "no-one-is-able-to-work-a-day-after-their-65th-birthday" which is just ridiculous.

 

[josh8267]

Nonsense!

In the US nearly 20% of 70-74 year olds are in employment, and just under 9% of 75-79 year olds are! A full one in four white men aged between 70 and 74 is in a job.

See for yourself.

In the US most Workers only have a few days holidays ,
No point talking about the USA we are in the EU what is happening in the EU that counts,
Yes I have seen workers in Manufacturing in USA well into there seventies but the culture not the same in Ireland in the work place
Over there as you get older you will be moved into areas suitable for your age,
I posted already on the dog in the manger culture in Ireland,
I posted about a company wanting to retain skill and the culture around why is he/she is being treated better than me,
How many on hear want to remove all tax breaks so they will have to work into there seventies,like the USA,

 

[NoRegretsCoyote]

No point talking about the USA we are in the EU what is happening in the EU that counts,

Indeed. The cultural gap between the USA (largely populated by Europeans) and the old continent makes all comparisons impossible.