Portrait photo of Barbara Castle (Photo credit: Wikipedia)
These charts have been kindly donated by Citywire and their New Model Adviser team (to whom we should be very grateful).
Each one of them surprised me.
I dedicate this little blog to one of my heroes, Barbara Castle. If we had kept to her vision , much of the mess we are digging ourselves out of today, would never have been created. (see slide six)
Lesson one – it benefits us not our kids!
The impact of the flat rate state pension outlined in the DWP’s White Paper is interesting. Most of the benefit will be felt over the next 35 years. By around 2050, those with lower pensions will outweigh those with better pensions. Fine for us, not so fine for our kids!
Lesson two – it really will be simpler (though not for a few years)
The second graph shows how, once the transition from the current system has been completed (say by 2040), we all end up with the same state pension (the black bars are what would have happened if we carried on as we do today. This really does support the simpler/fairer story peddled by the DWP.
Lesson three; reports of the death of pension credit are exaggerated
Pension credit will be available to far fewer people but it won’t disappear over the hill any time soon.
Lesson four; women won’t reach pension parity with men for 25 years.
That said, they look likely to continue to enjoy their pensions for longer!
Lesson five; the single tier pension is not tinker-proof!
The graph above shows how easily the new pension could be downgraded if the triple lock was removed and far worse , the earnings link was broken
.Lesson six; never forget the harm that was done to the basic state pension over the previous thirty five years!
The small upturn in the real value of your pension in recent years in no way compensates to the damage done to it since its high watermark in the late 1970s.
We are going to stay with the triple lock for many years to come if we are to get back to the expectations of Barbara Castle!
Lesson seven; the demographic time bomb has been defused!
Anyone who thought that we could not afford our state pension promises can think again, While we see a slight acceleration in the percentage of GDP allocated to providing this pension in the next 50 years, projected expenditure is remarkably stable and is likely to reduce over time as a result of the switch to the single tier pension.
Related articles
- Hats off to Steve Webb for our new pensions system! (henrytapper.com)
- VIDEO: New state pension ‘to be simpler’ (bbc.co.uk)
- Ministers unveil new pensions con (morningstaronline.co.uk)
- A straightforward pension scheme for all (telegraph.co.uk)
- Single Tier pension plans (number10.gov.uk)
- Pensions Q&A: Simon Read explains the proposed changes projected for 2017 (independent.co.uk)
- Flat-rate pension to cost couples £1,500 a year (telegraph.co.uk)
- New state pension ‘set for 2017’ (bbc.co.uk)
- Saga: It is essential we have radical reform of the state pension (telegraph.co.uk)