What do you consider a low income in retirement?

Is it possible to generalise? Some will own their homes outright, others will rent. Council tax varies enormously. Fuel bills will be affected by the size and energy efficiency of your home. Some will need to use a car because they don’t have access to public transport, others will not. Some will consider holidays a necessity, others won’t. Some will consider a pet, with attendant costs, essential. The list goes on.

I think it depends where you live, whether you have housing costs and so on.

Unless there is to be a total overhaul of the tax and benefits systems, however, a means-tested universal pension (I assume that is what you are suggesting?) will never work. It would entirely remove the incentive to pay into an occupational or private pension if every pound over the universal one is clawed back and given to those who don't pay or who have spent their own savings. People would be better putting their money under the mattress, and everyone would claim the free pension, making it less affordable.

I really don't know what the answer is. Something has to be done to ensure that nobody is left cold and hungry in old age, and too many people earn too little to have enough left over to provide for the present, never mind the future. On the other hand, it is patently unfair that someone who spends as they go is given money when someone else on the same income saves and has their money used to pay for the first one. It's the Ant and the Grasshopper, isn't it?

I'll be accused of communism or something, but I think we should increase tax substantially and progressively, so that there is enough to ensure that everyone who pays in is given a decent pension on top of whatever they are able to save for themselves. I can't put a figure on that, sorry - something akin to the earnings of someone on minimum wage? Or should it be a bit less to be fair to those who are working? I also think that minimum wage should rise so that someone on a 40 hour week earns enough to live decently - not just scrape by, but have enough not to worry about food and bills, and be able to go to the pub, cinema, football, whatever now and then. It's not much to ask, is it?

Sorry, cross posted GSM. I wasn't ignoring you

Germanshepherdsmum

Is it possible to generalise? Some will own their homes outright, others will rent. Council tax varies enormously. Fuel bills will be affected by the size and energy efficiency of your home. Some will need to use a car because they don’t have access to public transport, others will not. Some will consider holidays a necessity, others won’t. Some will consider a pet, with attendant costs, essential. The list goes on.

Housing may be the one area where we cannot remove benefits - not until the housing situation is addressed. However, there is some balance between rent and the upkeep that comes with ownership.

It is interesting to see just how people prioritise when living on benefits - and how people feel it their right to criticise! If someone likes holidays they will go without something else. If they have enough to live on they would still be able to do that although I imagine if that were their only income the holidays would be cheaper.

However, I asked the question because I don't know the answer; the hive brain of GN might do (smile)

Doodledog Thu 30-Mar-23 09:40:31

Not means tested, Doodledog, Universal. Just as everyone got the same Family Allowance in the past, everyone would gets the same pension.

It is interesting to see just how people prioritise when living on benefits - and how people feel it their right to criticise! If someone likes holidays they will go without something else. If they have enough to live on they would still be able to do that although I imagine if that were their only income the holidays would be cheaper.

But people can't prioritise if they know their future income will be lower if they save when they are working, can they? If someone wants to prioritise a comfortable retirement and do without holidays in youth, they could well find that they are deemed to be 'able to afford' things that would have been free if they had spent their money as they earned it.

Or is your hypothetical universal pension to be genuinely universal and not means-tested?

Ah, you've answered whilst I was posting. Well, that would bring its own problems, as it's hard to set a pension at a rate that people could live on with no extra money when most (?) are topping it up from other income, and be fair to both.

Also, many people would hate the idea of older people living above a subsistence level . We are always being told that pensioners 'don't need' this and that, or that giving benefits (in cash or in kind) to older people is taking it from the mouths of working age people. The idea of intergenerational unfairness is ingrained now, whether or not it is true (or more specifically, whether or not the figures chosen to back up one view or another are representative of real life for the average person).

I don't think you can be 'completely' fair, ever, just continually aiming at fairer and, I believe, cheaper. I think this would cost less overall.

If a pension wasn't a "benefit" people would be given more agency and less stress straight away. Those are very valuable but often not taken into account by those who haven't had them taken away.

I'm not sure I have much time for anyone who thinks older people should only subsist. Why take such an extreme and cruel way of thinking into account?

We all live in echo chambers because of the flawed press and the internet. "Intergenerational unfairness" is just another culture war to distract us from the reality of general inequality. Not everyone believes it to be true.

Don't worry if you can't come up with a figure. Someone else may be able to and that will create its own discussion.

This might help?

www.raisin.co.uk/budgeting/how-much-money-do-you-need-to-live-comfortably-uk/

I'm not sure I have much time for anyone who thinks older people should only subsist. Why take such an extreme and cruel way of thinking into account?

I don't know, but every time there is a discussion about pensions, or about things like prescriptions, TV licences, bus passes etc there are those who insist that most pensioners 'can afford' to pay for them. My view is that none of us knows what others 'can afford' - I don't even know what that means. Is it being able to find the money, even if you have to so without something else? Can you claim to be unable to afford something if you run a car or have a pet? Should you have to show a bank statement before getting on a bus with a pass? I could go on, but I hope the point is clear.

I think it used to be the case that older people were deemed to have 'done their bit' and getting an' OAP special' at the local cafe, or a cheap shampoo and set on Tuesday afternoons were just to make their lives a bit nicer, and to encourage them not to want appointments on Saturdays. It didn't matter whether they 'could afford' to pay a bit more. It's the same with older people ranting about young ones buying coffee from coffee shops . So many people seem resentful of different generations. I blame Cummings and his Nudge Unit.

But that's a different thread. I need to get off the sofa and check that the butler has polished the family silver properly and decanted the wine for tonight. He's earning minimum wage, but he doesn't half cut corners.

Why do you think this universal pension‘would cost less overall’ DaisyAnne? Surely it would be a higher pension than at present and it would be increased to a level that many people don’t need because they have other income and savings.

I need to get off the sofa and check that the butler has polished the family silver properly and decanted the wine for tonight. He's earning minimum wage, but he doesn't half cut corners

hahaha

I can recall being told as a young kid that I must show respect and politeness to "my elders and betters" and that one day it would be my turn to garner that level of respect.

Well I for one am not going to swallow all this intergenerational twaddle. I am very conscious of the huge contribution I have made to the community throughout my lifetime. By being (unselfishly) childfree my taxes have gone to pay towards the offspring of almost everyone else but I have had no comparable "subs and handouts" myself.

Some people live alone, some rent, some own their homes and have to upkeep. Distances to shops, needs of a car? Too many factors to assign a number.

Germanshepherdsmum

Why do you think this universal pension‘would cost less overall’ DaisyAnne? Surely it would be a higher pension than at present and it would be increased to a level that many people don’t need because they have other income and savings.

. . . a level that many people don’t need because they have other income and savings

This is exactly what I was getting at. Should pensions be set at what people 'need', and what does that mean, anyway? Couldn't they be looked at as a reward for a lifetime of contribution?

Far too complex a calculation for me to make, with far too many variables. You'd need a department full of professional accountants to even begin to address this, and even then, there's no guarantee that the "universal" figure that they came up with would suit everyone. Also, if it genuinely reflected what is needed to provided the sort of "living income" you describe, I believe that the public purse would be hit very hard. It would certainly exceed the current, basic State Pension, which frankly, is so low I don't know how anyone can comfortably survive on that alone. I know I couldn't...

Previous lifestyle should be taken into account, we all know people who lived to spend it all so as not to leave anything as inheritance or as savings to be taken into account for benefits or care home fees. I think the acronym is SKI, spending kids inheritance. There used to be threads on this on mse. Others with similar incomes chose to save if they could

There is no one size fits all. I have two relatives who had important jobs in hmrc. They knew to spend their money, so they could claim everything possible. Some do know how to work the system

So are you suggesting that people's lives are monitored to see how they spend their money? How would that work? Would we have no freedom to spend as we chose, and would some things be deemed more 'worthy' than others? What would be the point of having money if you couldn't spend it as you chose in case it was used against you later?

karmalady

Previous lifestyle should be taken into account, we all know people who lived to spend it all so as not to leave anything as inheritance or as savings to be taken into account for benefits or care home fees. I think the acronym is SKI, spending kids inheritance. There used to be threads on this on mse. Others with similar incomes chose to save if they could

There is no one size fits all. I have two relatives who had important jobs in hmrc. They knew to spend their money, so they could claim everything possible. Some do know how to work the system

How could previous lifestyle be taken into account? People all have different wants and needs. Some save, some spend.

I want to have pets, give generously, travel frequently, drive lovely cars -- yet I very very rarely want to eat away from home whilst at home, shop, watch tv, drink coffees out, own a mobile, move house for any reason. I don't believe I should be told /required differently to fit another lifestyle.

yes, that is why it would be so difficult to be fair. Perhaps lifetime income should be taken into account. I would say impossible tbh. Its not going to happen

Good point DaisyAnne.

It is interesting to see just how people prioritise when living on benefits - and how people feel it their right to criticise! If someone likes holidays they will go without something else. If they have enough to live on they would still be able to do that although I imagine if that were their only income the holidays would be cheaper.

My mum spent her whole life on a low income. She never had any money but managed to go on holidays. She did this by never having a car. She walked everywhere until the year before she died, so didn't even pay to take the bus. She didn't use the heating, ate very cheap food (living on beans and lentils long before it was regarded as healthy eating). She would unpick worn out clothes and make them into something else as well as reknitting wool. Her gas cooker when she died was the one she had when I was 17.

Her holidays, as DA said, were not lavish. Budget package hols to Spain etc. But as long as it was sunny she was happy. But I'd defy almost anyone in the UK to survive on her income, even without the holidays.

But we can't take lifetime income into account. What if someone has provided for their retirement and it is lost through no fault of their own (the pensions scandal from a few years ago for example).

It has to be the conditions people are living in the present.

GagaJo

But we can't take lifetime income into account. What if someone has provided for their retirement and it is lost through no fault of their own (the pensions scandal from a few years ago for example).

It has to be the conditions people are living in the present.

We would still come back to having to subsidise people who hadn't provided for their retirement - it's that or let them starve. And then we get into 'deserving and undeserving' territory.

Why not use tax to ensure that we all save for retirement? The more we earn, the more we pay, so it's fair, and everyone who's paid in gets the same. If someone has saved they will have more in retirement and something to leave behind, and if they haven't they won't, but everyone will be warm and fed. That seems fair to me.

Doodledog Why not use tax to ensure that we all save for retirement? The more we earn, the more we pay, so it's fair, and everyone who's paid in gets the same.

Am I understanding you correctly?

-The more one earns the more taxes they pay - that's how taxes work currently. People pay taxes on their earnings.

-Everyone who has paid in gets the same. How is that fair if people have paid in differing amounts not a same amount?

It isn’t my idea of fairness.