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145

The long wave

Wealth and retirement

0
terms
4
notes

Hills, J. (2015). The long wave. In Hills, J. Good Times, Bad Times: The Welfare Myth of Them and Us. Policy Press, pp. 145-180

157

The equity issue--and the challenge for polices in a range of years--is not simply of one fortunate generation versus another. It is about the advantages of the better-off half of baby-boomers compared to_both_ poor baby-boomers and to those members of younger generations who do not stand to inherit. It is one thing to be one of a small number of grandchildren of owner-occupiers living in the South East of England, and quite another to be one of a large number of grandchildren of tenants or even of owners in parts of the country with low house prices.

—p.157 by John Hills 6 years, 7 months ago

The equity issue--and the challenge for polices in a range of years--is not simply of one fortunate generation versus another. It is about the advantages of the better-off half of baby-boomers compared to_both_ poor baby-boomers and to those members of younger generations who do not stand to inherit. It is one thing to be one of a small number of grandchildren of owner-occupiers living in the South East of England, and quite another to be one of a large number of grandchildren of tenants or even of owners in parts of the country with low house prices.

—p.157 by John Hills 6 years, 7 months ago
170

[...] while it makes sense to protect state pensions, better-off pensioners could contribute more through the tax system. But the politics of this are fraught--when George Osborne announced the end of the extra tax-free allowance for those aged over 65, it was instantly condemned as a 'granny tax'. Other proposals that might affect better-off pensioners often face objections where some low-income pensioners who would be affected are held up in front of them as a kind of political and fiscal human shield.

—p.170 by John Hills 6 years, 7 months ago

[...] while it makes sense to protect state pensions, better-off pensioners could contribute more through the tax system. But the politics of this are fraught--when George Osborne announced the end of the extra tax-free allowance for those aged over 65, it was instantly condemned as a 'granny tax'. Other proposals that might affect better-off pensioners often face objections where some low-income pensioners who would be affected are held up in front of them as a kind of political and fiscal human shield.

—p.170 by John Hills 6 years, 7 months ago
172

Up to a basic level, it can be argued that there are public benefits from encouraging pension saving, as otherwise the state and taxpayer could end up having to do more of the job. But tax relief is worth most to the highest paid and goes disporportionately to them. For instance, a higher rate taxpayer putting £1,000 into a pension pot at age 40, and paying basic rate tax in retirement, would get an eventual net return back of £5,500, compared to only £4,150 for a basic rate taxpayer, of £3,900 if either had invested in a tax-free ISA getting the same underlying return on investment.

didn't really consider this angle before, good point

—p.172 by John Hills 6 years, 7 months ago

Up to a basic level, it can be argued that there are public benefits from encouraging pension saving, as otherwise the state and taxpayer could end up having to do more of the job. But tax relief is worth most to the highest paid and goes disporportionately to them. For instance, a higher rate taxpayer putting £1,000 into a pension pot at age 40, and paying basic rate tax in retirement, would get an eventual net return back of £5,500, compared to only £4,150 for a basic rate taxpayer, of £3,900 if either had invested in a tax-free ISA getting the same underlying return on investment.

didn't really consider this angle before, good point

—p.172 by John Hills 6 years, 7 months ago
178

[...] The issue is not just between a lucky generation of baby-boomers now approaching retirement who got the best pension deals and benefited most from the house price boom, and a younger 'jilted generation' who have little. Many baby boomers have little wealth, and only a minority enough to see them through retirement without state pensions playing a major role. And a significant proportion of younger people stand to gain a great deal from inheritance and lifetime help from parents and grandparents. The conflict of interest is ultimately between the more affluent half of the baby-boom generation and poorer members of their own generation and younger households with the 'wrong' relatives, for whom advantage will not cascade down the generations.

the whole idea of young people being 'helped' by their parents has a lot to do with wage suppression and rising (rentier-led) inequality, which makes the idea that parents are graciously supporting their kids a bit dubious to say the least ... a little bit disappointed that he didn't go more into why the younger generation isn't doing so well, cough neoliberalism (or maybe he did and i can't remember idk)

—p.178 by John Hills 6 years, 7 months ago

[...] The issue is not just between a lucky generation of baby-boomers now approaching retirement who got the best pension deals and benefited most from the house price boom, and a younger 'jilted generation' who have little. Many baby boomers have little wealth, and only a minority enough to see them through retirement without state pensions playing a major role. And a significant proportion of younger people stand to gain a great deal from inheritance and lifetime help from parents and grandparents. The conflict of interest is ultimately between the more affluent half of the baby-boom generation and poorer members of their own generation and younger households with the 'wrong' relatives, for whom advantage will not cascade down the generations.

the whole idea of young people being 'helped' by their parents has a lot to do with wage suppression and rising (rentier-led) inequality, which makes the idea that parents are graciously supporting their kids a bit dubious to say the least ... a little bit disappointed that he didn't go more into why the younger generation isn't doing so well, cough neoliberalism (or maybe he did and i can't remember idk)

—p.178 by John Hills 6 years, 7 months ago