Well, if it is a "boost" to the state pension, it's only part of the story, isn't it? A lot of us with final salary schemes get it too courtesy of the taxpayer and it's often not insubstantial - 1.5k p.a. on mine (and I know enough people with bigger ones).

The relationship between savings rates and interest rates is to some extent cyclical. We can't always get real returns like we were doing a few years ago. Deposit savings are not "no risk". If we always want a real return, we need to be in other investments too.

Thanks Mark,

Any chance you could ask Dot why taxpayers should pay for further increases in the state pensions when most workers are currently experiencing large (3.1% per annum in the September LFS, excluding increases in pension contributions) real terms cuts in pay.

Surely it would be fair for pensioners to share in wage cuts as well as wage increases?

The coalition has already brought in the triple guarantee for the basic state pension, which is completely unfunded. Current taxpayers have to pay for all of the benefits.

Furthermore, of the £100bn welfare in 2010, £75bn went to those over 60. How much more does Dot want? For all the discussion about benefit claimants, it does seem strange that the focus has been on the young and the workshy, when the vast majority of benefit payments go to the elderly.

I wonder how long it will take the young to realize where the money from the cuts to EMA, increases student fees, excise duties and VAT is going?

So, in other words, the difference for the single state pension would have been £1.42 a week! Is it really worth to kick up a fuss about that?

Structural Deficit?......Osbourne's economic policies have more holes in them than a cheese graters, and are less useful.

We are now in a stagflation economy, and will be for another ten years at least.

The lid on wage claims, pensions and benefits can only be held down for a limited period or around 2 to 3 years, otherwise this government will face protests similar to what has been seen in Greece within the lifetime of this government.

Today it was announced RPI increased to 5.6% - the highest it has been since 1991

(the coalition new as soon as they colluded to sieze power that their policies would increase inflation dramatically) .. the coalition tries to con us on that inflation is now running at 5.2%

Now, if the government allows railways to use RPI inflation rate to calculate legal rail fair increases

and the government uses RPI for othe private sector contracts and pricings -

then RPI is still the figure that should be used for pensions and benefit increases - any other figure is dishonest and discrimination

Maybe pensioners should take the government to court as they have not changed rail fare calculations inflation figure - so the government is discriminating against pensioners and those on benefits and giving unequal treatment to private sector bodies

time for this to be tested in court - if inflation is 5.6% for railways - it is 5.6% for pension

This report is getting down to brass tacks. This Tory lead government will have effectively reduced State Pensions by 25% over the next 10 years by moving them off the RPI and linking them to the CPI. This follows Thatchers robbery of pensioners in the 80's when she removed State Pensions links with the old Cost of Living index and let them ' float '. i.e. The Tory government decided what any increase would be. The net result of that was basic State Pensions today would have been at least 150 pounds per week. We have all been robbed and they are doing it again. They are the most uncaring shower in power I have ever known in my 71 years.

asdasdads

Well, what a fine person you are! You want the elderly, trying to survive on a basic state pension to take a share of the pain do you? Many of these older folk will have had their belly full of pain in the austerity 50's and the three day week 70's and watched the value of their future pension rapidly diminish under Thatcher. Most of these pensioners will have paid taxes all their lives or looked after the kids, the next generation, taxes which will have paid for your education, the NHS that looked after you and the welfare state that might have kept you from the abject poverty you now would like to inflict upon them.

Pensioners are among the poorest, most deprived individuals in the UK, living on one of the lowest state pensions in Europe and pensioner inflation is currently running at about 11% and you would like to make them even poorer by taking a share of the weight of your shoulders! That is really big of you mate (or madam) I really do pity you. You must be really sad.

Jeez. Give me f****** strength!!!!!

It is not often that I agree with this paper, its editorial comment or the opinions of those who read it to be honest.

However as a pensioner I am personally well aware that though my CPI based increase is going to be marginally less than it would have been had it been based on RPI its still a damned sight more than many younger people can look forward to and I am very grateful for it.

DavRob8

Get a job in the Pension Service as I have & you'll get a whole new perspective on "pensioner poverty". I bought into the sweet little old granny schtick before I started there. Never dealt with a more grasping whiney bunch in all my life & I've worked in an estate agency!

There's a well orchestrated campaign near where I live for additional parking near the bus station - it's run by a vocal pensioner group who want to be able to park their cars up all day so they can go out for free on the bus.

Universal benefits such as Winter Fuel Allowance & free bus passes are a luxury we can't afford and an obscentity when EMA has been abolished. They should be linked to receiving Pension Credit - you know, that income related benefit that you can get despite having £30k+ in the bank - "oh that's not for me Love, I want to leave something to the Grandkids" well get your bony old fingers out of my pocket if you want that right.

All in it together - don't make me laugh

DavRob8 - There has been a very large polarisation amongst the old, but the idea of a ubiquitous pensioner poverty needs a very large pinch of salt. Take a look at this link.

http://www.maturetimes.co.uk/node/11247

This is, of course, not to make any value judgment on individuals, many of whom likely worked hard. But at the CSR, pensioners got a pretty decent deal compared to everyone else. Don't get me wrong, I thank them for their forbearance on losing the swimming pass. But things like bus passes, fuel payments, TV licenses, eye tests a protected NHS - they have a cost. And this is before the small matter of that house price hyperinflation.

There are real arguments to be had about who benefits. My Dad owns two cars, yet still gets the bus pass, at a time when my fares are up 20%. Is it right that fuel payments go to the dead? (and no, I'm not making that up). Maybe it is right to spend in this way, but the idea that pensioner = no cuts at all seems to me to be stretching the point a long way.

When the Euro first went into circulation in 2002,its value was 1.42 to the Pound. In 2008 the Pound plummeted rapidly to about 1.10 Euros.
For those retired to a Eurozone country this meant a 23% fall in the value of their pensions, not over 10 years, but overnight. The Pound has risen to about 1.14 Euros, which still represents a fall of 20% in less than 3 years.

Just think how an essential 3-night inspection of the Ritz hotel in Paris by one or more of your local council members or officers must now be taking much more of the council tax you pay.

ToolMySweetAss

You don't mention where you live so I'm not sure what kind of grasping 'pensioners' you are talking about. Sounds to me like retired stockbrokers. Cars? Not many pensioners on a state pension have those out here in the real world matey. And even if they did, what's wrong with park and ride? It reduces the pensioner's carbon footprint dunnit? £30,000 in the bank? Wow, I wonder how many pensioners have that much.

What is happening here is basically fascism.

Times are tough so lets identify a culprit. Can't blame the Jews so lets try pensioners and blame them. EMA banished? Blame the pensioners. Tuition fees up? Don't blame Clegg, blame the pensioners. If only they would all top themselves everything would be ok wouldn't it?

Additionally, don't try teaching your granny to suck eggs. You may have spoken to the odd pensioner on the end of the phone at the DWP but I have worked with them all my life, face to face as a Social Worker. So has my wife. Before you come on here telling us all how well 'whiney pensioners' are doing you should try a bit of personal contact with older people. Living alone, in a cold house, spouse dead, friends all dead or too ill themselves to see them. Terribly alone and poor.

Then when you have done a bit of that for a few years, and maybe seen a few die along the way, then come on here and spout your nonsense. Until then grow up and realise that, god willing, you will be a pensioner one day and then we can all blame you.

Davrob8 -

'I have worked with them all my life, face to face as a Social Worker'

Don't suppose that you have considered the possibility that maybe you have just been exposed through your work to a relatively small cross-section of pensioners?

Have to say though, it is a bit quick to be dropping the F-bomb - even by CiF standards.

As a pensioner I shop around and save a fair bit each week. Grow vegetables and cook from scratch cheap cuts of meat.

Home has wall insulation, double glazing and the loft has the latest deepth of insulation recommended.. Changed to a fuel efficient boiler a couple of years ago so that has saved on the amount of fuel used as well.

So inflation for us can take a back seat.

http://research.dwp.gov.uk/asd/asd6/2009_10/pi_series_0910.pdf

the DWP ? Ha , they're a caring bunch. Theiving b'tards. I shan't elaborate but I their your tricks

thieve and their

asdasdasd

One of the reasons that the state pension should be increased, and not decreased, is that those receiving it have had to pay for it all their working lives.

Recipients of the benefits you mention have never paid a penny in. Agreeably, though, they probably join you in an entitlement for doing nothing culture.

ToolMySweetASs

Universal benefits such as Winter Fuel Allowance & free bus passes are a luxury we can't afford and an obscentity when EMA has been abolished.

You should do some research, in this case on funding, before making such unfounded statement.

Bus passes and travelcards and senior railcards (and student cards for that matter) are funded through a deal brokered with the transport companies. In return for the companies running late at night and on unprofitable routes, the government pays them a lump sum and gets the travel concessions for groups like pensioners. This benefits the government because it enabled it to reduce the state pension: if the concessions were not available, the basic state pension would have to increase.

I personally think the logic behind winter fuel allowance is sound: by paying towards the fuel bills, the government saves NHS costs by keeping old people out of hospital. However, I think it should be paid direct to the fuel companies.

As stated, the basic state pension has had to be paid for by recipients over a period of forty years. Those in receipt of EMA, which is a hand out, have paid nothing: they are able bodied enough to get a Saturday job or else ask their parents to pay. A group of children, the oldest 10 and in charge, came round to my sister's house offering to clean the inside and outside of her two cars, £5 for one and £8 for two. She was delighted. Teenagers aged 16-18 are quite capable of doing the same.

This comment was removed by a moderator because it didn't abide by our community standards. Replies may also be deleted. For more detail see our FAQs.

As a person under pension age who has worked within the pension protest movement over many years & had experience of trying to help benefit claimants, it has been the norm for the majority of pensioners to under-claim and this can be shown re the proportion paid back into the treasury each year from the assessed amount to the actual. It has taken years to to bring down the Government figure of 700,000 & higher who should be receiving more & do not.

The real cost of keeping pensioners alive - we still have some of the highest winter excess deaths from cold in Europe & Scandinavia - comes from the chaotic way money is paid out.

The administration costs of providing benefit each week are exactly the same whether someone gets 5p or 50 quid. Government after Government still award a whole 25p per week for the over 80's, an amount not changed since 1971, a ridiculous sum where administration cost to implement it and ensure payment far exceed the amount any pensioner may gain.

If costs are a worry then scrap the pension system, pay 2/3rds of the meridian wage and tax those whose income merits it. Base it as other countries do on a period of residence to qualify and with the money saved help those with seriously disabled children to pay their horrific winter bills.

@Davrob8: That is why I am commenting on the basic state pension and not the pension credit.

The pension credit guarantees a level of income to pensioners. Someone who genuinely cared about pensioner poverty would want to increase the pension credit and decrease the universal basic state pension.

The basic state pensions is hugely regressive: the poor die many years before the rich, so collect far less in benefits from the basic state pension. Increasing the basic state pension age compounds this problem. Therefore universal transfers to pensioners cannot be justified by appealing to equity: increasing state pension benefits whilst raising the retirement age is equivalent to a tax cut for the rich.

Are pensioners poor?

http://www.hmrc.gov.uk/stats/personal_wealth/table13-4-2005-07.pdf

In 2005, those aged under 54 had an average wealth of £48,000, those between 55-64 £70,800, 65-74 £75,200, and 75+ had £95,000. So it seems odd to suggest that "Pensioners are among the poorest, most deprived individuals". On average this is not true.

Now how much have previous generations paid to the government relative to how much they will receive in benefits?

The OBR provide the answer on page 115 of:

http://budgetresponsibility.independent.gov.uk/wordpress/docs/FSR2011.pdf

Those aged 65 in 2008 can expect to receive £223,100 more in benefits than they paid in taxes.

Clearly if some receive more than paid, others will pay more than they receive: someone aged 20 in 2008 can expect to pay £157,000 more than they will receive.

Furthermore, demographers and actuaries have been very clear for many years that the British public is not saving enough for their retirement. It is well known that the basic state pension is completely unfunded, so stating that "had to pay for it all their working lives" misses the point. They paid for previous generations to retire.

Unfortunately now the baby boom has come to retire, the younger generations who will support them in their retirement are poorer than earlier generations, so it will make paying for these universal unfunded benefits like the basic state pension very difficult.

Now it's clear why these benefit transfer occur, pensioners vote.

In a way it's funny that the coalitions falsely compared the deficit to the situation in Greece, (look at the real interests, there has never been any danger of default.) But Nick Clegg's appeal to voters over the triple guarantee is straight out of a Greek politicians' playbook, (recall Greeks used to retire a 95% of average income on their state pension). Clegg's proposal is completely unfunded and we are cutting services to the rest of society to pay for it.

The demographic sustainability of our state pensions system is doubtful, the reforms of the coalition have likely made this worse, for more details example see: http://www.pensions-institute.org/workingpapers/wp0413.htm

Who cite:

"The demographics of the next 30 years may be written in our stars, but the agequake will still come as an enormous shock when it erupts in earnest. Around 2020, tremors will give way to shockwaves. The agequake will hit Richter nine, shaking western economies to their foundations" (Wallace, 2001, p.171)."

This has been coming for a long time.

It's pretty apparent that western Europe is going through a demographic crisis, of which the financial crisis and sovereign debt crises are mere symptoms.

Until then grow up and realise that, god willing, you will be a pensioner one day

And there lies the rub. It's a near certainty that the state pension will not exist when todays youngsters reach their twilight years.

My civil service pension will increase by 5.2%, whereas my ex-pals who still work and pay tax will see a 5.2% fall in their real income - for the 5th pay-freeze year in a row.

This comment was removed by a moderator because it didn't abide by our community standards. Replies may also be deleted. For more detail see our FAQs.

DavRob8,

Facism? Can't blame the Jews?

Boom, argument over....................

asdasdasd

Any chance you could ask Dot why taxpayers should pay for further increases in the state pensions when most workers are currently experiencing large (3.1% per annum in the September LFS, excluding increases in pension contributions) real terms cuts in pay.

Those workers are suffering what pensioners had to suffer for years.
That is, since the earnings link was abolished by Margaret Thatcher.
Because of that pensions are so low that many pensioners die each
year from hypothermia because they can't afford to heat their homes.

Your suggestion would effectively be a death sentence for thousands
more of this country's elderly.

ToolMySweetAss

Universal benefits such as Winter Fuel Allowance & free bus passes are a luxury we can't afford and an obscentity when EMA has been abolished.

The question is, how many people do you want to die?

On average our cold weather kills rougly 25,000 pensioners a year.

Life is not a luxury.

asdasdasd

It's pretty apparent that western Europe is going through a demographic crisis, of which the financial crisis and sovereign debt crises are mere symptoms.

The demographic crisis argument doesn't take account of productivity.
The economy is enormously more productive than it once was.

For example, it used to be relatively less common for women to work.
Most women did not do full-time jobs, but were not counted as being
unemployed because they were not seeking work. That is no longer
true. Many more women work and so there are more people who are
paying into the system.

And they are more efficient at doing that work. To put it another way,
what someone can do in a lifetime's work today, might have required
several lifetimes of work in the past. This increase in efficiency and
productivity should make it easier to support the old.

@ultrasound

Once more, I am not suggesting we should reduce the pension credit. The best way to reduce pensioner poverty is with means tested benefits such as the pension credit.

This is not what recent governments have done. They have increased universal pensions, which are given to everyone.

As the evidence I present above suggests, on average pensioners are more wealthy than the rest of the population. So it seems odds that you prefer to take money from investing in the education of the poorest young people, for example scrapping the EMA, a means tested benefit, to give to some of the wealthiest people in the country.

But clearly means tested benefits for the poor pensioners or the young do not win votes. Benefits for all people over the age of 60, regardless of income does. The parallels with Greece are clear.

Yes, I agree if we have rising productivity then unfunded pension liabilities become more affordable.

However the most recent labour productivity bulletin from the ONS states:
"The headline measure of whole economy labour productivity, output per worker, decreased by 0.2 per cent in the second quarter of 2011 compared with the same quarter a year ago."

This is mainly due to the decline in north sea oil and gas. But overall recent productivity growth in the economy has not been great.

Irrespective of this Blake's analysis in the paper I linked to above suggested in 2003 that even given robust growth (which has not occurred) the current state pension system was unsustainable. He suggested five alternative solutions:

"the current generation has to:
1. accept a cut in its real pensions or
2. contribute more whilst in work or
3. work harder or
4. work longer and retire later or
5. accept more immigration."

Are these options possible?

1. appears to be politically impossible. The basic state pension is set to increase in real terms.
2. This is happening in the form of higher taxes
3. This, given the productivity statistics, does not appear to be possible.
4. This is happening, but it's very regressive, it benefits the rich at the expense of the poor, both within generations, and across generations.
5. Cameron has officially ruled this out, but given that Europe is in an even worse state than the UK, there is a possibility we will be saved by a wave of immigration. But I doubt the UK would be very grateful.

@asdasdasd - your earlier point that the proposed rise in the basic state pension is "completely unfunded" is 100% incorrect and misleading.

As you know, all basic state pensions are paid out of the National Insurance Fund, into which everyone's NI contributions and employer NI contributions (real money) go each week, fortnight and month. The NIF currently has a surplus balance in it of around £40 billion. The actual cash balance in the NIF Investment Fund, held by the Debt Management Office has a cash surplus balance as at the end of September 2011 of over £37 billion - again real money.

The government prefers to use smoke and mirrors to make people think that NI is the same as taxation but it is not. It is accounted for separately and the money is held separately. This can be verified by the following government websites:
www.hmrc.gov.uk ; www.nao.gov.uk ; www.gad.gov.uk ; www.dmo.gov.uk - so don't let any politicians make you believe the money for the state pension is not there. The politicians like to use the NIF as a cash cow and as the surplus is ring fenced and cannot be directly used for non pension related purposes, it is loaned to the government for non pension purposes and the government pays interest to the NIF for the use of its money.

North of the border, The Scotsman newspaper is reporting tonight that Osborne may well be wriggling out of the commitment to increase pensions and benefits by the full rate of CPI inflation and may well use a lower target such as 4.3% which was the figure the Treasury had calculated inflation was predicted to have reached by September, 2011.

Any responses, Mr Miliband?

The problem with pensions and various benefits is that they benefit the better off the most.

I get free passes, I have a good pension so when I go to the opera or ballet, or theatre I travel free.

Over the last year I have carried out an experiment and paid for my travel: it has cost an average of £50 a week, thus the pass is worth £2,500 to me or about £3,000 of pre tax income.

Better off pensioners also benefit as the poorer pensioner tend to die younger.

the pensions system as a whole is a system where by wealth is transferred from the lower socio economic groups tot he better off. There is a large tax subsidy for pension contributions and pension funds, but this is only of benefit to those with enough money to pay in.

Of course, pension funding should be encouraged but the real problem, that of pensioner poverty has not really been addressed by any government.

This is really not a boost to state pensions at all.

The relevant inflation index used to up-rate state pensions understates the "basic" increase in the cost of living by a substantial factor as the cost of "essentials" ( food, energy etc. ) is increasing far faster than the relevant index.

Pensioners will be able to afford LESS goods and services, after this increase and will be poorer.

The "increase" in pension is an example of money illusion.

Government appears to have lost control over inflation. In part, this is due to the Governments own policy of letting sterling depreciate and thus put up the UK cost of imports, which includes oil and imported food etc.

On the question of why tax-payers should pay this increase to state pensioners, it is because those same tax payers will eventually become state pensioners themselves and, unless they are in the top 5-10% of earners, they will need the monies generated by their own state pension - however nugatory - for survival purposes..

@PeterMorris, thanks.

Yes, there is a national insurance trust fund, but note I was referring to increases in the basic state pension, as required by the triple guarantee. These increases were not promised when people were paying in their national insurance contributions. Has the government increased the size of national insurance trust fund to meet the future liabilities of the pension increases?

As far as I am aware they haven't. Hence these changes are unfunded.

Likewise, when the eligibility requirements for the basic state pension were reduced to 30 years, did the government add sufficient funds to the account to pay for the expected increase in liabilities due to the changes?

Again, as far as I am aware they didn't.

The balance of the fund has fallen rapidly, in March 2009 it was £53bn, today it's £37bn, a reduction of 30% in two and a half years.

Furthermore, the fund is 100% invested in UK government gilts, which currently have 0.37% real return over 25 years. If the NAO conducted a full actuarial review of the expected liabilities of the fund discounted by the real rate of return on gilts, I would very surprised if the fund is sufficient to meet it's liabilities, even before the recent changes, let alone after implementing the triple guarantee.

Therefore the increases to the basic state pension will have to be funded out of general government expenditure, taxes and service cuts in other areas.

Today's pensioners will receive far more in benefits than they have paid in taxes (not just NI) over their lifetimes, as the OBR report I linked to explained. The argument that pensioners have paid for these benefit increases is simply not credible.

@quickie

To be completely clear: if you really cared about pensioner poverty, and paying for the "essentials" you would argue that we should increase the means tested pension credit.

Increasing the basic state pension is a stunningly inefficient way to address pensioner poverty.

Some pensioners are rich, some are poor. The basic state pension pays the same to all. If the government actually wanted to reduce pensioner poverty they campaign on a triple guarantee to the pension credit.

They have not done this, because it is not a vote winner.

Increasing the basic state pension at the same time as increasing the retirement age is extremely regressive as I have explained above: the rich live for much longer in retirement.

Young people should know but they probably don't or don't want to know that pensioners despite being on a miserable low pension have to pay their rent and they have to pay council tax.

People in receipt of other benefits ie. ESA or JSA etc get their rent and housing benefit paid.

My mum could have retired 3 years ago but due to miserable state penison has to carry on working.

No doubt those who are non-penisoners probably focus on the fact that she is taking a job away from one of them.

No wonder the elderly are dying in our NHS because our society in general treats the older generation like pariahs.

Just remember you will be a pensioner one day - although then again maybe you won't if the govt carries on raising the retirement age there will soon come a time when pensioners won't exist.

Maybe that's their long-term goal!

A few things to point out:

- I want to live in a society that looks after those in need whilst at the same time encouraging those who can or are willing to to save.

- Its only about the top 10% of tax payers who pay more into the system than they take out (as it should be in a progressive tax system/society - google this and you will find it somewhere). So please stop talking about paying into the system and wanting your contributions back or anything like that - only those in the top 10% can make that claim (spuriously!) and they clearly do not rely on the State as heavily.

- Pension credit is a huge barrier to saving, especially for those on lower incomes (i.e. why should I bother saving if it just means I get less from the State). It is also very complicated to administer and millions of pensioners who are entitled to it do not claim it (for a multitude of reasons but high up the list is pride)

- Given the points above I support the current government proposals of a universal pension (i.e. getting rid of S2P and radically increasing BSP). This is just bringing forward the previous governments proposals as they have already set S2P such that it will be pretty universal by 2040 - but this is not soon enough for the worse off in society. there are some issues around the edges to sort out as some who have accrued a high level of S2P (like me) will massively lose out. However, those who lose out will be higher earners (i.e. earning at or above the UEL) and so are likely to have additional retirement savings in any case.

@AnActuary

Interesting, a few thoughts

1) I'm not sure how much the state should spend in order to relieve peoples' pride.
2) I'm sure the pension credit does create perverse incentives for saving for those on low incomes. However, I fail to see why this justifies increases the universal pension. Surely a better designed means tested benefit would be more effective at addressing pensioner poverty.
3) Regarding the proposed changes to the state pension, but how expensive will they be? Will the proposed changes to the state pension be fully accounted for and included in the national debt? Are they sustainable in the long term?
4) What assumptions regarding productivity growth rates did they make?
5) What is the net present value of the 'triple guarantee', discounted at the real interest rate on long term government debt?
6) Given the current real interest rates, growth rates and increases to life expectancy is there any expectation amongst actuaries that the state will be able to meet the states expected liabilities?

asdasdasd - the current governments proposals are designed to be cost neutral (i.e. abolishing S2P and redirceting the resources covers the cost of the increased universal pension).

On some of the other points:

- no idea what the cost of the triple gtee is. However, without it the value of the BSP was declining over time and given that the majority of pensioners in the country rely on this (or minimum pension credit) and will on the universal pension if introduced, I feel it is important that it maintains its purchasing power.

- I understand what you are saying about peoples pride, but again I repeat I want to live in a society where those in retirement have a pension that at least provided a decent level of income.

- With regards to the state being able to meet state pensions. this has been and always will be an issue. However, as a society I feel it is a cost that has to be borne.

- Refering to means testing again. If it is not abolished it will make a mockery of auto enrolment/NEST which starts to get phased in from April 2012 - 2016. Those on low incomes will be forced to save (if they do not opt out) but will get no benefit from it.

- To give you an anecdote on how perverse means testing benefit are consider the following. I was advising a client who wanted to introduce a pension scheme (which they did do). However, they had to go through a very expensive exercise of engaging IFAs to contact their employees and tell those of a certain age/income (there was a fine balance) to consider very carefully wether to join the scheme as by doing so they may not gain anything due to means testing. Given this there was a very low take up rate for those above around age 45-50. So instead of these individuals savings themselves (and getting a decent contribution from the employer in question) we the tax payer will be paying for their pensions through means testing. So on the face of it means testing may look like it is saving the tax payer money, but it is far from clear (and the cost of administering means tested benefits is very high). I have come across a number of similar examples to this.

AnActuary – I’m inclined to agree with an awful lot of what you say. Yes, pensions are a price we pay for a society. This is the fundamental point. Indeed, we could ask why the too big to fail private finance sector has failed to give us pension products people have confidence in. But……

I suspect that pensions in themselves are a bit of a red herring here. What people are talking about more are the extras – the fuel payments, the bus pass, the eye tests, the TV license and so on. I think that the point being made is that all these various bells and whistles are additions at a time when everyone else is taking pretty severe cuts. Others have mentioned EMA, something I was never a huge fan of. But why should Granny, just back off her third holiday get a fuel payment, whilst poor families lose EMA? Why should my fares be ramped up 20% whilst my Dad (who owns two cars) get a bus pass? This argument is not something exclusive to pensioners – is a council tax freeze sound policy when the wealthy are likely to benefit most?

Of course these are political, not actuarial questions and it may very well be that many think that people should be protected absolutely by dint of being a pensioner. Fine – but it is not really an argument I agree with. By all means address real pensioner poverty – it’s just that the bells and whistles don’t to me seem to be a particularly good way of doing that. I would accept, by the way that, for example, the fuel payment is perhaps a reflection of bills being too high for everyone, rather than any sense of entitlement.

I would also add that I’m not overwhelmed by the argument about pride. Are people too proud to cash the fuel payment? Use their bus pass? Claim free prescriptions? Doubtful.

JedBartlett - completely agree about the bells and whistles and feel they should have been changed ages ago (but the grey vote are the most likely to turn up at the ballot box so politicians are v wary of doing anything to upset it).

I have always thought a good start (and cheap to administer) would be to get rid of all the bells and whistles for anyone who is a higher rate tax payer in retirement (not a huge saving but a start). Also anyone who has say over £200K in non main home assets also loses all the bells and whistles (again easy to administer as anyone in this position has to complete a tax return in any case).

The pride point is slightly more subtle than you think. There are many pensioners out there who will not apply for something out of pride (i.e. do not want to seem in need - noting that a lot of current pensioners are from (by definition I suppose) a previous generation where people were ashamed of receiving benefits). note that anyone who can claim pension credit is amoung the poorest pensioners and I have no objection to them getting the bells and whistles (it is the situations you describe that anoy me).

AnActuray - Interesting ideas, and likely good ones. I think it is the siituations that annoy both of us that are the real issue here.

There is a wider point that you touch on - house price inflation. It may very well be that granny in a 14 bedroom mansion does not have lots of cash to spare. But living in a house worth £X,000,000 - she is not poor in any meaningful way. It may well be that she never asked for her house to inflate (albeit I would bet she didn't complain). Is it right for the taxpayer to fund care for the elderly whilst the elderly person has very substantial assets. Taken to its end-point that is not far from a tax-payer funded inheritance. As I say, I guess that granny may not feel wealthy, but that is not much consolation to the young priced out of housing and being asked to fund bells and whistles for the asset rich.

These are difficult questions, and of course not every pensioner is sitting on a pile of asset inflation. But I think we agree that it is pensioner poverty as distinct from pensioners that we need to sort out.

Fuel poverty ‘will claim 2,700 victims this winter.

Are disabled people on included in these figures?

At least pensioners are protected from benefit cuts, unlike the disabled.

State pension payments is expected to rise by 5.2% in April 2012 in line with September’s inflation figure, as measured by CPI

Right wing whingers and Trolls will be out in force to complain, that benefit recipients and disability benefit fakers should receive no such increase

Because Hard working peoples wage rises have not risen by 5.2%

I have Cerebral Palsy and diabetes and neuropathy.I was born a very low birth weight baby in the late fifties,but at least my feet haven’t ballooned today.

The sun is shining her in the North-East today, even on the feckless and disability fakers.

Spoke to soon the sun has gone in!

Damn.