Tuesday, 17 December 2013

"Those born in the '60s and '70s likely to be no better off in retirement than their predecessors-unless they inherit"

From the Institute for Fiscal Studies:

Inherited wealth looks like the only major factor that could act to make individuals born in the 1960s and 1970s better off in retirement than their predecessors, on average.

When compared with those born a decade earlier at the same age, these cohorts: have no higher take-home income; have saved no more of their previous take-home income; are less likely to own a home; probably have lower private pension wealth; and will tend to find that their state pensions replace a smaller proportion of previous earnings.

These are among the main findings of a new report by IFS researchers published today, funded by the Joseph Rowntree Foundation, the IFS Retirement Saving Consortium and the Economic and Social Research Council.

I've not read the full report, I assume that they also mention some of the causes: insanely higher rents and house prices, higher levels of tax on output and employment, tuition fees etc etc.

Monday, 9 December 2013

"It's grim"

From City AM:
REAL wages are still falling, on average, and nobody seems to know what to do about it...
There is a growing body of evidence – including an excellent new report from Towers Watson – that shows that rising non-wage employment costs are crowding out wages and are the primary structural cause of depressed wages.
Employers are paying more to employ people – but the staff aren't noticing because hidden taxes and especially employer pension contributions are crowding out wage hikes...
As the Towers Watson paper shows, this represents a transfer from those without pensions or with defined contribution pensions – typically low income or younger workers – to those with final salary pensions – older workers and pensioners.
I don't believe in generational warfare, but young people struggling to afford housing are also taking a pay cut to finance generous pensions of a sort that will never be accessible to them.
It's grim. Auto-enrolment will cut pay packets further in the years ahead.
As per usual, as long as Heath sticks to facts, figures and micro-economics, he makes good sense. He glosses over the fact that price-inflation is a deliberately engineered by governments to help transfer wealth from savers to landowners, and to act as a handy ex post justification for Home-Owner-Ism ("It's the only asset which beats inflation"), but hey.
One thing which is not clear, and probably not to him either, is his throwaway remark "I don't believe in generational warfare".
Does he mean he doesn't believe it exists (as in "I don't believe in God") or does he accept that it exists (having just provided plenty of evidence for it) but that he thinks it is A Bad Thing (as in "I don't believe in capital punishment")?

Friday, 6 December 2013

Reader's Letter Of The day

From The Evening Standard (6 December, page 71):

Osborne's Autumn Statement was the latest in the series of giveaways for the Baby Boomers, homeowners, landlords and financial sector funded by slaps in the face for the under-forties.

He actually boasted that house prices were set to boom just in time for the next election, which is the whole point of his Help To Buy scheme. He announced more council-house sell offs.

He placed a cap on working age welfare spending while confirming that current old age pensions would continue to rise faster than wages*. He admitted that he would continue to run significant deficits for the foreseeable future.

He promised a real-terms reduction in Business Rates to enable commercial landlords to push through higher rents in future and subsidies for large residential landlords.

I suppose the only good news is that he has generously given today's young a few extra years in which to pay off the higher rents and mortgages and the ballooning national debt by announcing increases to the state pension age.

Mark Wadsworth, Young People's Party

(Thanks to Joe Momberg for assistance, this is the sanitised version of my post of yesterday).

* It gets worse. Since compiling that list, it turns out that the Lib-Cons want to withdraw benefits from under-25s who lack "basic skills". I bet they wouldn't dare do that to pensioners, would they? And it's a Catch 22 - having got the necessary bit of paper, the Lib Cons will then be able to refuse to pay them benefits yet again on the grounds that they are now qualified and clearly not trying hard enough to find a job.

We got a mention in The Daily Mash!

YOUNG people have announced plans to lower the pension age by several decades once they're in charge.
When asked how they felt about working for another 45 years before getting a state pension, all under-25s favoured amending the law as soon those who made it get old and feeble.
Nail artist Emma Bradford, aged 19, said: "I have to retire at 70 to pay for my granny to retire at 62? Yeah, sounds perfectly fair to me. Or here's another plan: how about we wait until all the government are dead, then just switch it back?"
22-year-old trainee lawyer Tom Logan said: "This government telling us what's going to be happening in 2063 is like a mayfly making big plans for next month.
"So if they're in power until 2020 at the latest, and me and my mates get into government in 2040, that still gives us what, 20 years to change that back?
"Pretty sure we'll manage it. It'll be our second priority after legalising euthanasia."
Treasury Secretary Danny Alexander said: "We cannot ignore the deficit, so the only responsible thing to do is to leave all our unpaid bills for young people who can't get jobs.
"There is a slight risk that, when they've got all the money and power, the younger generation may act in their own selfish interest. But our society holds the elderly in such esteem that I think we can discount that."

Thursday, 5 December 2013

"And the meek shall inherit nothing"

Today's Awful Statement was just more Baby Boomer cherries on top of the Home-Owner-Ist cake.

There's been a flurry of measures over the past few months to ensure that wealth continues to trickle upwards from poor to rich, from the productive economy to landowners and from young to old recently, such as cranking up Help To Buy to ensure that today's buyers take out the largest mortgages possible, selling off student loans (with the implication that interest rates will be increased) and an effective veto on Council Tax increases.

But Osbrown really cranked it up today:
- a cap on working age welfare spending but current old age pensions guaranteed to rise faster than wages;
- an increase in the state pension age for everybody under 40 (i.e. for those who don't consider any major party worth voting for any more);
- shifting wind farm subsidies from onshore to offshore (offshore is even more expensive than onshore);
- just as a little consolation prize for the large landowners who were coining in the onshore wind farm subsidies, there will be tax breaks for fracking instead (which will be about as popular as onshore wind farms);
- more council house sell-offs (how many under-40s have a council house?);
- insurance companies to acquire infrastructure that should rightfully be nationally-owned;
- more subsidies for buy-to-let landlords;
- a Business Rates freeze to ensure that commercial landlords can push through higher rent increases in future;
- a paltry and gimmicky married couple's allowance (which will paid by the single and cohabiting);
- and just in case you weren't paying attention, the deficit is to stay at six or seven per cent of GDP for the time being, but no probe's there, those people who now have to work until they're seventy will have plenty of time to stump up the taxes to start repaying it, won't they?

None of this is a coincidence, is it?