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THE European Commission is calling for Spain to increase State retirement age even further because the Social Security pot is running dry. Vice-president of the EC's department of economics, Ollie Rehn, says the country needs to raise minimum pension age higher than the relatively recently-approved 67 years 'in line with higher life expectancy' and to 'guarantee that the government will be able to pay State pensions'. According to Rehn, Spain's Social Security fund is 'in deficit' and that it paid out 10.1 per cent of its GNP in pensions in 2010, which will rise to 13.7 per cent in 2060 – above the average for the rest of Europe as a whole. He has also caused for index-linking of State pensions to be scrapped.
So what will happen when life expectancy increases to 90 years of age, will the Spanish have to retire at 75? What happens to the natural cycle of job positions if the older population retire that much later? It blatantly obvious to evryone that the problem isn't with the retirement age but more with the lack of social security contributions from the younger generation that aren't filling up the pot. I think there should be more iniciatives to create work and investment instead of crippling the older generation and making them pay for it! I don't quite understand the EU, they try to fix a problem without fixing the origin of the problem and will inevitably generate new problems in the future by doing so.
The only chances are of retireing at an age when you can still enjoy life to the full will be by taking out a private pension, something the majority can't afford to do.
Any views on this?
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Ian : EOS TEAM MEMBER
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www.eyeonspain.com/blogs/ianandspain.aspx
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I don't think this is any different from here in the UK - it is something that is going to have to be rethought in countries with this type of benefit. The UK is going to go very quickly up to 70 as a retirement age, and I don't think that even then pensions will be affordable unless they really can get rid of all the top ups, and cut welfare spending elsewhere. And get everyone working of course. The top and bottom of it is that the baby boomers promised themselves generous pensions, free bus passes and prescriptions etc and they simply cannot be afforded. In Spain, the natural job cycle does not apply, sadly, since there are no jobs for anyone. How many of the young Spaniards leaving Spain will actually return? This will be the real problem I fear.
You also talk about private pensions as though they were out of reach. I don't believe this to be the case for those in work. If young people could be persuaded to start a pension as soon as they are working, they would at least have something to go alongside any state pension. A very small amount put away, plus the tax relief generously donated by the state, would add up nicely. Then plus any employers contribution they manage to get over a working life. It is a question of planning - which I agree - is very difficult when the goal posts keep moving!! But then again, if we were a truly aspirational society, we would assume we would have to look after ourselves rather than the 'cradle to grave' approach we Brits tend to see as our right.
Interesting times.......................
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Good points Roly, very true. But those who now don't have time to start a worthwhile private pension will be the ones who pay the price. I have taken the point of view that you can't sit around hoping the country will look after you in your later years, you have to make sure of that yourself.
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Ian : EOS TEAM MEMBER
www.eyeonspain.com/blogs/ianandspain.aspx
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There is no excuse in UK not to have an occupational pension now that firms have to offer a pension to all staff. The firm puts in a generous amount as well as the employee, so anyone who opts out is mad! Do firms in Spain not have occupational pensions?
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There is a very good reason why people shouldn't have to have this new government pension scheme and that is while the starting point is 1% of your months pay is not so bad and your boss chips in with another 1%, come 2018 this will rise to 5% and your boss chips in 3%, so i suppose if the boss has say, 100 people working for them, he's going to absorb the cost..is he?...and when the boss one way or the other has to put up the price of goods to cover these extra costs.......who moans then?
If you stop and think about it it's just another tax in the making for the government.
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It can only be a good thing if it means in the future that people will hve more than the state pension to live on. You'd have to be a fool to opt out!
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Try telling that to a person who is already struggling to make ends meet now thanks to the way everything has shot up that they have to cough up some more out of the already shrinking monthly pay packet.
Try telling a 25 year old that he has to save for old age, they won't even save for tomorrow.
From an employers point of view to cover the extra costs i might just sack 2 / 3 people.
Who knows what someone that employs 10 or 20 thousand people will do.
You pay into the state pension weekly etc, and to a little know what you will get when you retire, pay into any private type of pension and the government starts introducing money into the economy again, or changes the rules like they have done a few times before, then you will find out how good this idea was, and how much you wont get back.
What's going to happen in about two years time when the interest rates start to rise and this government has given more people the chance to buy a house vie there stupid loan system and which they can barely afford now, and on top of all this have to...HAVE TO.....pay for a pension.
Never yet seen a government that hasn't come up with a good idea for the workers who can't really afford it, or fixe's things when they ain't broke.
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baz1946,I appreciate what you say, but these days young people are more aware of the need to save towards their retirement, and don't want to end up like their parents, reliant on a state pension. They only have to look at the pensions received by people who worked for the railways for example, to see the benefits. The amount they put in can be affordable,( might even persuade them to give up smoking) and knowing the employer puts more in is an added incentive. The opt out if you don't want to contribute to a pension scheme is a good idea and I bet very few will fail to take advantage of this opportunity.
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And the amount you put in, and the employers contribution, is tax deductible. Someone on £200 a week would pay £2 but only have £1.60 deducted. After they have been there a while, and earn say £400 a week, the cost is £12 a week but only £9.60 (about the price of a pack of fags and a small beer in UK) taken out. Sorry, but the cradle to grave attitude in UK must change. My Dad (not a public servant, government employee, railway worker or whatever) scrimped to take out a private pension. This virtually doubles the state pension and, as he'll be 92 next month, has certainly been worth it. I was lucky in that the Army started my pension but I made sure I continued to pay into another pension scheme when I left at age 46. And, although the Spanish get a bigger state pension, don't they pay more into the system than the NI payments in UK? Totally agree with camposol, I think you'd be daft to opt out of the scheme. In about 20 years time the number of over 70s in UK is forecast to double but those under (who pay the taxes to pay the state pension) is forecast to fall by 15%. Not so many people paying for a lot more people.
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Of course your a fool not to save for your later years, but have you tried to tell this to a person of about 20 / 25 years old, they are like we were, "Never going to get old like you are Dad", i stopped telling the young lads i employ years ago to save a little because sooner or later it makes a lot. Try telling them that buying a house is a thousand times better then renting....see where that leads you.
This is for the most part a government thought up and run idea, anyone got any idea how well the government is doing right now with all it's great get Britain back to work ideas then?.
Sure any amount on top of your state pension is better then no amount, but sadly the British people have very short memorys when it comes to remembering back a little, it's bad enough to pay into a totally private pension only to find the government dips it's grubby little fingers in it by the time you get it, but to invest in anything with a tinge of government advice or help you could find they dip fingers, hands and the whole arm in it by the time you need it.
And as for no money in the pot for later years because the over 70's will increase while the workers will fall has no bearing on any future state pension payments, and you all know the reason why that is happening.
Again i say if any employer has to pay out, say £50.00 a month.....(And that might be roughly about the minimum amount as well)..... for every person they employ, who thinks they wont put up the cost of the item they produce by perhaps double to cover the costs, and you can also forget any tax relief the nice Mr tax man gives you...1% relief in...extra.5% out. Sorry but never a free lunch anywhere.
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Interesting thread.
I ask, why retire? Surley the objective of life is to be the best you can be, and as we all know what makes us smart is we know what we dont know.
Maybe there will come a day when I no longer am capable of using my brain to solve problems, and that day might be the trigger for retirement.
I may be lucky as my work is what I always wanted to do and as such find it fun rather than a chore.
I say keep working as long as possible at an activity that makes a difference.
Rossetti
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Yes why indeed, but should you be a scaffolder up and down ladders all day do you want to be doing this at what the government would have you be.....could you be doing this at 70 years old, all very well them telling you that you now cannot retire at 65 but look around at some poor souls who have been at the grindstone for years, another 5 years doing the same kind of work could kill them...which brings in another argument, has some sneeky git in government thought of this and what a way to save on pension payouts once again.
Millions of jobs are not in front of desks but hard heavy dirty manual jobs which that are hard enough to be done at 60 and over, and a struggle at 65, never at 70plus.
Just another not well thought out idea that our governments just know will work.......but not for them.
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First, I am really on the right wing side of the argument and believe that people need to be able to pay for themselves in their old age BUT taking the point from baz - I worry more about some professionals carrying on too long. Surgeons for example. Fancy being operated on by a 67 year old surgeon - at the weekend? Or even teachers in the classroom at 67 or 70.
But, with a generation not wanting to contribute anything to the costs of care homes for themselves (funny that, because I always believed you worked, got a nice house etc etc so that you would be comfortable in your old age - not to hand on to your children!!!), we are not far from the brink!!
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To me the solution has to be flexible working. When you are 20 - 40 you work long hours to pay for your house, children's education etc. By the time you're in your sixties most people's costs have gone down and we can afford to work shorter hours. Some older people work as trainers passing on the benefit of their experience to the next generation, policemen become security consultants or you can just get a part time job in B & Q or somewhere similar.
That's how it works in the UK. Spain's labour market may still be to rigid but it will have to change if we are ever going to get out of this mess.
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David
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Baz,
at no tme am I nor would I suggest that people in physical or mundane jobs carry on beyound current regulations. I'm just suggesting that many of us and I include myself do not want to retire. For us that work with acculated wisdom should keep working as long as possible.
For many that may require a different tact but as we age we gather the wisdom and knowledge that many aspire too. We either teach or continue to lead in our respective professions. We cannot ever have enough knoweldge and we have a responsibilty to pass it on.
I hope that as many seniors as possible keep working imparting their knowledge and wisdom to as many as they can.
Rossetti
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Yes Rossetti agree fully about having the wisdom when you're older but it's a shame that with many the body dont see it this way with what work that person is doing, governments here and everywhere have put no thought into this at all except to keep folk at work longer to put more into the system, and i have said this many a time if the country and system was run correctly we wouldn't have half the mess we have now.
Again and again they mess up with the economy then come up with schemes that make it look like we did it all wrong, so you will have to pay for it via your taxes, or some other scatter brained idea. Notice it's not mentioned so much that we dont save, but WE are living longer.
I also fully agree, that as you do, many love the work they are doing but i for one if i was a bricklayer and come up to retiring / pension collecting age only to be told i can't until i turn 70 and if you dont like that then go get a job in B & Q for another 5 or 6 years, i think i would be a bit miffed, which is basically what the governments are doing, and remember this massive money problem is not of the workers doing either.
I also fully agree that everyone should save, perhaps via a private pension or buying your own house, but not when any government tells you to, or has a hand in the running or organizing it.
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Why not give the young of today the same chance to work as we old ones had. When I left school work was easy to find and we all worked at least 45 hours a week. But now the old are keeping their jobs thus depriving to young of any chance of work When they come to retire what chance have they got? This passing on experience by the older generation has been done well before the age of retirement . Let's not be selfish and let the young in on the game. Retire for the good of the young
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Baz 1946-A private pension is not as good as an occupational pension, as the company usually puts in much more than the worker. As it's taken out of the pay before you receive it, you don't miss it, plus you have options of getting a lump sum etc
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Baz 1946-A private pension is not as good as an occupational pension, as the company usually puts in much more than the worker. As it's taken out of the pay before you receive it, you don't miss it, plus you have options of getting a lump sum etc
Yes it is certainly good that a company puts in an amount, perhaps over and above what your contribution is, no argument at all with this, but my reservations are when a government, especially ours, has a hand in someway with a person's pension, which you will have to save for about 30/40 years before you know the true value of it.
I just dont trust anything they do or say and you can't say it's just me saying this because they go all out to prove it every time one of them opens their mouth, every last one of them.
Thats why, for my part i do everything myself, this way if any mistake has been made, it has been of my doing and not helped along by others who lets face it have never been in the real world, done any sort of manual work in any workplace, and haven't a clue what goes on outside those stone walls they sit in and jump up and down waving paper while shouting and smirking at each other.
A private pension payment is taken out of your pay without missing it really when you think about it, ie: direct debit every month, hopefully after a few months it becomes the norm, a lump sum can be taken out at the end of the term, i think 25% of the total tax free.
No doubt i am well out of line with my way of thinking, trouble is you will have to wait and save for 30/40 years to find out the truth.
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