There are two ideas that Harper could put into his budget on Thursday, the first is to link the age a person can collect a pension with longevity and it should appeal to the Harper bunch. They will argue personal responsibility and sustainablilty are the keys to pension reform and that this is an idea that could work.
The second idea is The Chancellor's "simplification" of pensions which will hit existing pensioners the most. The simplification is done by freezing of the age related income tax personal allowance. Specifically the move to freeze age-related tax allowances will hit less wealthy retired people. The Government says this is a measure to 'simplify' the tax system but the reality is that this is really just a revenue-raising exercise.
Figures published by Treasury show that, come next April, in Britain, some 4.41 million pensioners will be worse off in real terms, with an average loss of £83, as a result of the freezing of the age-related income tax personal allowance.
These ideas on the face of it appear to be reasonable, but they do not take into account human nature and past experience. My prediction look for Harper to put some this idea or variations of it up as he fights to destroy the Canadain safety net and take us to a more US based model of government.
The following was taken from a story written by Toby Helm in the guardian.co.uk, on
Students graduating this summer in Great Britain, can expect to wait until they are at least 71 before receiving a state pension – three years longer than under current plans – following a budget decision to link retirement ages to changes in life expectancy.
The move by chancellor George Osborne to create an automatic link between longevity and the pension age means that tens of millions of people under 50 who expected to retire in their middle to late 60s will have their state pensions shunted between one and three years further back.
While on the face of it that sounds sensible,this move may create uncertainty about retirement planning. In short, depending on your age, you won't know when you will be eligible to receive your state pension.
Analysis by the country's leading experts in longevity and public sector pensions, Club Vita, suggests that a child born today will have to wait until 74 at the earliest for a state pension. Club Vita is a sister company of Hymans Robertson, a key player in advising on reform of all public sector schemes.
The Government in Britain has already increased the age when people can get the pension and the latest review could mean those currently aged 20 to 30 could be forced to wait until they reach 70 or older. Indeed one estimate this week suggested that a child born in 2012 will have to wait until they reach 80 not 74 as stated above.
"Our analysis suggests that the state pension age will need to rise to 68 and over for those currently aged below 50," said Club Vita's Steven Baxter. "This would accelerate the current plans, bringing forward the rise [to 68] from 2046 to around 2030.People must start preparing for retirement earlier to make up for life expectancy increases and poorer investment returns, a new study have found. In the study it was discovered that only a quarter of those in their fifties have enough saved for retirement.
As they have not saved enough, many baby boomers face making the hard decision of either delaying their retirement and working for longer, in some cases into their 70s, or retiring with an inadequate income. The research found that a third of those in their fifties had no retirement savings at all.
Those currently in their fifties have greatly benefitted from increases in health and life expectancy that no other group of retirees have to the same extent. A man retiring at age 65 now has a life expectancy of 82 and a woman of 85. This means planning to support oneself on a retirement income for a longer period of time.
At the same time the value of savings has dropped, market returns have gotten poorer, company pensions have been axed, the value of the state pension has fallen in real terms and inflation has been higher than expected. Experts now say that many in their fifties have not saved enough in pensions in order to retire comfortably.
In Wednesday's budget Osborne announced that the state pension age will be adjusted automatically "to take into account increases in longevity".
Currently life expectancy is rising by around 2.5 years every decade, meaning ever increasing costs. This rate of increase is expected to continue for the next 10 years before slowing. Ministers argue that the pension system will become unaffordable without reform.
Setting the stage for further conflict with unions, Osborne made clear that the retirement age for public sector workers would also have to climb to reflect future rises in the state pension age. Since the research shows that the majority of people do not know have much they have saved for retirement. In fact figures show that Britons are currently chronically under saving for retirement and the sooner someone starts saving, the less they have to contribute to a pension each month. The Government has created the auto-enrolment scheme, which starts to roll out from October, in an attempt to encourage Britons to save more.
Pension experts and groups representing the elderly say ministers will need to take into account the number of healthy years somebody is expected to spend in retirement, as well as life expectancy.
"This gap between full and 'healthy' life expectancy has been widening as the number of years spent in ill health at the end of life has increased," said Baxter. "When increasing state pension age, the issue of whether the extra time before state pension age is spent in good health, with people able to work, needs to be considered."
Michelle Mitchell, Age UK's charity director, said: "Age UK recognises that as life expectancy increases it is reasonable to consider increases to the state pension age and longer working lives; however this decision has been based on no published detailed analysis.
"Average life expectancy must not be the only factor that is considered as, at the moment, the huge disparities in healthy life expectancy across the country means that the poorest socio-economic groups will be required to sacrifice proportionately more of their retirement."