Are people really ‘over-saving’ for retirement?

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Defining what makes an ‘adequate’ retirement income is always going to be tricky. It’s inherently difficult to know exactly what people’s spending choices and needs are likely to be, or how they will adjust to stopping work.

Add in the changing nature of retirement, where increasing numbers of people are working past their State Pension age, it becomes even harder.

New paper, new ideas?

The Institute for Fiscal Studies (IFS) recently published a paper investigating a new method of looking at retirement incomes. It identifies an ‘optimum’ level of pension saving for each couple household. Instead of income band, this is based on a range of personal circumstances (e.g. number of children) and an
assessment of spending patterns. It then evaluates whether people have saved below, at, above or the ‘optimal’ level required to achieve a comparable standard of living for their retirement. Continue reading “Are people really ‘over-saving’ for retirement?”

Squeezing the rich pensioners

When Andrew Dilnot published his proposals on funding social care, he envisaged that a better, fairer system would require extra funding from public expenditure, and observed that since older people would be the principal beneficiaries, it would be preferable if this was raised by taxes which older people contribute to so that not all the cost would fall on the younger population.

Since then, a variety of ideas have been floated from a range of different quarters.   But the discussion has also become conflated with views about intergenerational fairness as the Government tries to bear down on public spending, and comments about the ‘generosity’ of some universal benefits received by pensioners.   There has long been a rumble of complaint that rich pensioners receive the Winter Fuel Payment.   Frank Field waded in, arguing that before we find more money for older people, we should be looking at the poverty and the shortage of opportunities for children.   The Lib Dem think tank CentreForum published a paper looking at the tax reliefs available to older people and their exemption from National Insurance if they are working over State Pension Age.   Now, in the margins of the Lib Dem and Labour Conferences, the appropriateness of pensioners’ benefits has again bubbled up, though the Coalition Agreement specifically protects these till 2015. Continue reading “Squeezing the rich pensioners”