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Q&A: what is the state pension 'triple lock' guarantee?

Q&A: what is the state pension 'triple lock' guarantee?

by Michelle McGagh May 03, 2017 at 10:48

This updates an article first published on 19/6/13.

The debate about the future of the pension 'triple lock' that determines how much income pensioners receive from the government has reared its head again. As a result this expensive guarantee may be closer to the chop than ever before.

What is the ‘triple lock’?

The triple lock was introduced in 2010 by the Conservative-Liberal Democrat coalition government. It was a guarantee to increase the state pension every year by the higher of inflation, average earnings or a minimum of 2.5%.

The idea behind it was to protect pensioners from meaningless increases in the state pension, such as the 75p a week rise in 2000, and to make sure their income was not eroded by the gradual increase in the cost of living.     

What is happening to it?

At the moment nothing is happening to the triple lock, but it does not look likely to survive another five years intact if Theresa May is elected prime minister in the general election on 8 June.

How does it affect my state pension?

The triple lock allows your state pension to keep growing at a rate that allows you to purchase the same amount of goods as last year.

If the triple lock is replaced with a link to average earnings and inflation is higher than average earnings then the value of pension income will be eroded, meaning pensioners will be able to buy less with their money.

Why do they want to remove it?

As is usual with guarantees, they cost money. And this guarantee is very expensive; £45 billion over the next 15 years.

This is on top of the large bill already paid out for pensioner benefits. The cost of the state pension was due to increase to 6.6% of gross domestic product (GDP) in 2016, rising to 8.5% by 2060. After that the bill is forecast to  fall slightly to 8.1% of GDP as the benefits of the new cheaper, single-tier state pension are felt.

The fact is the UK is an aging society and with a lot more people living into their eighties and nineties, the government has to pay the state pension for much longer than originally envisaged. In short, it can’t afford the triple lock.

Who is taking it away?

The prime minister Theresa May has not been drawn on whether she will continue the triple lock if she wins another term in office.

While her silence has led to speculation that she will withdraw the guarantee, others think she will not want to anger the 'grey vote' and instead may alter the triple lock and make it less generous.

These fears are compounded by the government-commissioned review of the state pension that was published earlier this year.

In his final report on the state pension, John Cridland, former director of the Confederation of British Industry, recommended scrapping the triple lock.

As well as speeding up increases to the state pension age, Cridland said the triple lock should ‘be withdrawn in the next parliament’.

Cridland said this was necessary to reverse the rising cost of state pensions with projections from the official budget watchdog, the Office of Budget Responsibility (OBR), suggesting the triple lock would add 1% to the overall state pension bill as a proportion of GDP over the next 20 years.

‘Under our recommended timetable, state pension spending would be 6.7% of GDP in 2066/67, which is a reduction of 0.3% compared to the principal OBR projection. If the triple lock is withdrawn, spending will be further reduced to 5.9% of GDP by 2066/67,’ he said.

The Organisation of Economic Co-operation and Development (OECD), which represents 35 countries around the world, has waded into the row over UK pensioner benefits, stating that the triple lock was ‘putting one group in society [pensioners] on a pedestal over another’.

Mark Pearson, deputy director of employment at the OECD, questioned whether it was fair to ask working age people to pay more instead of asking soon-to-be pensioners to work longer before they can claim their state pension.

While the Conservatives have kept quiet about their exact plans for the triple lock, Labour has said it is committed to continuing the guarantee through the next parliament should it gain power.  

Labour leader Jeremy Corbyn insisted the party would not 'move the goalposts'.

What can be done?

At the moment no political party has proposed a solution to our inability to foot the costs of a triple lock, while ensuring pensioners have sufficient income to live each year.

But pensions are such a vote-winner that we could see a change in the game yet.

Former Lib Dem pensions minister Steve Webb fought hard for the triple lock when he was in the coalition government but he has had a change of heart since he lost his seat and became policy director at pension provider Royal London.

He has proposed a ‘middle way’ for the guarantee to reduce the expense. This involves retaining the triple lock for those who retired before 8 April 2016 but offering those who retire after this date increases in line with earnings only. This would save an estimated £3 billion a year by 2028.

Webb’s argument is that newer pensioners are on average £100 a week better off than those aged over 75s and the money saved could be better spent helping more elderly pensioners.

Another former pensions minister, Ros Altmann, has said a 'double lock' should be brought in that drops the link to 2.5% but uprates the state pension by the higher of earnings or inflation.

However, the independent Institute for Fiscal Studies has said that even a double lock would not solve the cost problem of the state pension and that the value of the state pension would eventually outstrip earnings and prices.

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Comments  (115)

  • nickle: 

    You not saying how much they owe and how fast its increasing.

    2 years ago it was 5,010 bn, rising at 734 bn a year.

    Hint, that's why the state is bust.

    Its a Ponzi.

    16:02 on 19 June 2013

  • Jonathan: 

    As " UK is an aging society" doesn't that mean that eventually there will be so many pensioners that they will be able to vote in whoever they like that will ensure they get a top notch pension?

    16:20 on 19 June 2013

  • nickle: 

    Does it? Why don't they just then vote for 200K a year pensions, ljnked to inflation

    Perhaps its because voting for something doesn't mean you get it.

    The problem is that the state has taken the money and spent it. Now there is the debt that's accrued as a result. The state can't pay that because the UK economy can't pay it. So the pensioners will ask for more, vote for more, but they won't get more. They have been defrauded.

    16:32 on 19 June 2013

  • part timer: 

    What is a rich pensioner?? less than £15k or £ 25k £50k 250k per year no one as said what amount this is yet. So much talk without any defintion

    16:38 on 19 June 2013

  • Jonathan: 


    They aren't the majority yet but when I'm a pensioner they will be. At that time we will all vote for £200K pension.

    Don't worry about whether the state has or hasn't got any money left. Don't you know the government just creates bits of paper it calls debt (bonds and gilts) then gets the Bank of England to create a load of money to buy this debt? So there will never be a time when there is not enough money to fund anything.

    16:42 on 19 June 2013

  • nickle: 

    Of course there will be.

    Where its gold, pounds sterling, or leaves, what matters is what you can buy with the money.

    So if you have promised 10 times GDP a year to pensioners, you can't pay them.

    ie. 100 quid a week = 100 starbucks coffees. [Or your preferred measure of purchasing power].

    So as soon as you print up goes inflation. Now because its inflation linked, er, you have to print more. You can't print enough to pay because you've promised more than the economy can generate.

    16:51 on 19 June 2013

  • nickle: 

    What is a rich pensioner?? less than £15k or £ 25k £50k 250k per year no one as said what amount this is yet. So much talk without any defintion


    They won't define it that way.

    15K a year = fund of 450K. They will use the 450K, because that's a big number and it means you must be rich. We'll have 5% as a one off payment (soon to be repeated) so we carry on being paid.

    16:52 on 19 June 2013

  • George Morley: 

    Part timer asks "What is a rich pensioner?" Well , that as he says has not been defined but I can tell you what is a poor pensioner and that is one that lives in a Commonwealth country or various others around the world that are frozen. These pensioners make up just 4% of all pensioners worldwide and receive no annual increases ever from the day that they leave the UK or when they reach pensionable age after emigrating. This is implemented by a regulation that imposes the freezing when the annual increases are voted in parliament but affects just certain countries with no logical reason for doing so. The government have hidden behind a lie suggesting that a bi-lateral or reciprocal agreement is necessary but this is just not so. It is purely up to the MP's in parliament to remove the regulation and restore the indexing of the pension to all recipients who after all have all paid into the NI fund in the same way while working but this minority have been discriminated against for over 60 years by successive governments. A shameful history and so unnecessary and unjust. with the Fund having a surplus of over 28 billion GBP at this time.

    The government just have to manage the finances better by stopping the aid to countries who fritter it away or fill the pockets of the corrupt politicians and the like. Charity begins at home with your own people and when the finances are in a fit state then by all means help others but in a controlled way.

    16:59 on 19 June 2013

  • Jonathan: 


    We have a fiat based currency. We don't need any assets behind it. That all ended years ago when the gold standard ended. Ok, we will have inflation but we can just add a few zeros on the end of our notes.

    17:07 on 19 June 2013

  • martyn of sheepy: 

    Euthanasia will be the answer soon. What a mess.

    17:10 on 19 June 2013

  • nickle: 

    George, its going to happen here. They will freeze the pension.

    Jonathon. You are not thinking it through. They can print as much as they want. They still cannot deliver on pensions that come to more than GDP when those pensions are inflation linked.

    Or are you proposing removing the link with inflation, then having lots of inflation, and paying 100 quid a week in pensions when that buys half a cup of coffee?

    17:11 on 19 June 2013

  • nickle: 

    ie. If you have inflation, as fast as you print, the debts get bigger, quicker.

    17:12 on 19 June 2013

  • Jonathan: 


    If they do freeze the pension we can just vote them out and vote someone in who isn't going to freeze it (that's how democracy works).

    It will also be fine if we vote for higher taxes for the working and lower spending on other things we don't need like education, defence etc. After all who would want to invade a country full of pensioners?

    Also, there is a well known time delay between printing money and inflation occurring. this delay effectively means we can indefinitely print money. We just need computers with enough bits to store the large numbers we need. But I'm sure by the time I retire that sort of machine will exist.

    17:42 on 19 June 2013

  • Jane Davies: 

    nickle, you say if they do freeze the pension then vote them out and vote for someone who is isn't going to freeze. We thought we did that the last time. We had David Cameron and Steve Webb, Webb by the way tabled an EDM to end the frozen pension discrimination for the 4%, both pledged to end this injustice. Once in power all those pledges disappeared and Webb in particular, because of his EDM and condemnation of this insidious policy, has proved what liars and hypocrites they are. They ALL make promises to get votes...then do the opposite.

    17:56 on 19 June 2013

  • nickle: 

    martyn of sheepy

    You mean the lIverpool care pathway.

    The state, helping you from the cradle to the grave, as fast as possible,

    18:01 on 19 June 2013

  • Ted York: 

    I'm surprised by the comment by someone as experienced as Ros Altmann. Even the experts cannot agree or conclude what constitutes an accurate measure of inflation, especially for pensioners. Perhaps that needs to be seriously, and honestly, addressed first before suggesting the 2.5% element of the triple-lock be jettisoned?

    22:52 on 19 June 2013

  • RobtheFox: 

    Many of the posters on this thread are familiar names and given that George Morley and Jane Davies - also familiar names - have touched on the frozen pensions issue I will not reiterate what it relates to as it has appeared many times before.

    Whether it is triple lock, pad, Yale, mortice, combination or any other kind of lock it remains for the frozen pensioner...deadlock..... with the intransigent government of the day and as it has been for sixty odd years.

    The battle continues as IDS misleads the House into thinking that to remove the clause (Clause20) from the new Pensions Reform Bill will cost between £650 and £700 million. It would not and, in the first year the cost would be ZERO. In subsequent years it would be negligible initially but rising albeit slowly with the passage of time.

    By the way George, i have seen sufficient of your postings to know that when you say "Charity begins at home..." you are more than aware that our pensions and the uprating of them ain't charity; they are our right. Thought I'd mention it as we wouldn't want any other posters to be confused!!

    05:03 on 20 June 2013

  • nickle: 

    Rob, you might think you have the right.

    The state thinks pensions are welfare, and as such charity, and therefore optional.

    The welfare cap is all about a pensions cap.

    The cause is the Ponzi nature of the pensions. Nothing to do with longevity. If the NI had been invested a median wage earner would have had a fund of 627K. State pension costs 152K. Even those 152K payouts can't be afforded because they are bust

    You have to read between the lines when you hear words from politicians. They are nuanced with many meanings. They are thieving lying scum.

    08:19 on 20 June 2013

  • RobtheFox: 

    Oh dear, nickle is confused!.

    Charity is the provision of help to the needy or poor; it is almsgiving

    Under the terms of the NI Act the government is required to provide a pension, irrespective of need or financial status, to all those who have qualified to maintain an acceptable standard of living and, under the 1992 Social Security Administration Act, the Secretary of State is required to make an order each year to increase the basic State Pension to maintain its value "in relation to the general level of prices obtaining in Great Britain. It is only available to those who have qualified by making the relevant NI contributions; it is not, therefore, charity.

    09:33 on 20 June 2013

  • nickle: 

    I'm not confused.

    You and I have paid for it. It is in my opinion, therefor a contract. Under the law, that's an enforceable contract.

    However, the government has other views.

    1. Pensions come under the welfare budget.

    2. The government is now talking about a welfare cap.

    The two are connected. They cannot afford to pay the pensions that you and I have paid for. Pure and simple. Not that its easy to find this out. The debts/liabilities/accrued rights do not appear on the states books. However, let me point you this way.


    Page 4, at the bottom. That's two years old, and the number is increasing at 734 bn a year.

    They cannot afford to pay. They won't pay.

    That's why the pensions = welfare is being driven home. Then separately, lets cap welfare (its the scroungers). Then when its too late people discover their pensions are capped.

    e.g Pensioners who have saved, don't need a pension because they are rich. Just like fuel or free tv.

    There's an agenda going on. That agenda is you not getting a pension.

    10:27 on 20 June 2013

  • RobtheFox: 

    Yes, it is a contract and under the law the government is required to meet that contract for those who qualify and are within the shores of the UK; under EU law it is required to meet that contract for those eligible under the European Convention of Human Rights legislation. Those living in a random select group of countries are not covered by any legal requirement and either country can scrap the arrangement. There is no requirement for the UK government to pay any pensions to non UK residents - save those in the EEA but they have been payable world wide since since 1955.

    The point at issue is the uprating of pensions - not the payment of them - and this is not covered for those living outside of EEA and that select group and it is for that parity we campaign.


    The NI fund is ring fenced; the surplus is, as at 31st May 2014, some £28,485 Billion - you can check this by looking at the Monthly Accounts of the NI Fund on the Government website

    10:50 on 20 June 2013

  • nickle: 

    I quite aware of the overseas issue.

    Now on this contract.

    If it's a contract, then why haven't people been able to enforce the reitrement at 65? That was in the contract.

    Ah yes, the government will change the contract when it suits.

    On the surplus. Not that hoary old chestnet. 28 bn pays for 5 months of pensions.

    Its yet another word picked to deceive.

    It does not mean assets > liabilities by 28 bn.

    It just means they have a small bit of cashflow in the bank, loaned to themselves.

    Check the link I posted for you. It's got a reasonable (2 years old) estimate of the current or present value of the debt.

    The debts are not on the books. Period.

    11:12 on 20 June 2013

  • RobtheFox: 

    As you are aware of the overseas issue are you accepting that the frozen pension policy is discriminatory.

    The government contract is that it will pay a retirement pension but the age at which it becomes payable is not defined in the law but a Social Security Order Up until recently it has been 65 (men) and 60 (men).

    Hoary old chestnut or not the SURPLUS remains a fact; the system is 'pay as you go" with current NI contributions designed to meet current NI claims. Estimates reveal a shortfall in the present financial year which the government actuaries put at around £1 billion. The Actuaries also calculate the fund will begin to recover lost ground thereafter and the surplus will begin to rise again.

    The interest the government has to pay on the borrowings from the ring fenced NI Fund are in the order of £1.5 billion a year - sufficient to meet the claim at least twice over in itself.

    The stumbling block is the will of government to abolish this historical but irrational product of history and it is against that we battle..

    12:03 on 20 June 2013

  • nickle: 

    The overseas policy is fraud and theft. Pure and simple.

    If you pay for X, you should receive X.

    For oneside to unilateraly change the rules to not pay, is theft.

    The problem is that the thieves just changed the law to suit.


    Hoary old chestnut or not the SURPLUS remains a fact; the system is 'pay as you go" with current NI contributions designed to meet current NI claims.


    It won't. The debts are too large. You still need to work out what the debts are and when they are due. Then you can see that taxation cannot meet the future payouts.

    I've posted the link. They owed 5,010 bn two years ago. Actuarial calculation. Even takes into account not paying out to overseas pensioners. That debt was increasing (the present value) at 734 bn a year.

    Your 1 billion is bogus.

    Even the surplus is bogus.

    Get out some paper. Write, I rob owe Rob 1 billion pounds. Sign it. You're a billionaire. You own a debt worth 1 billion. Just like the surplus. The state owes the state.

    12:38 on 20 June 2013

  • George Morley: 

    Yes , of course, Robthe Fox, you are absolutely right about the word 'charity' and I was'nt really using it in the literal sense but the sentiment that you should look after your own before giving anything away which I hoped was the way in which it would be interpreted but it does give the wrong mt wessage to those who don't see it that. way like the DWP who don't see anything wrong in the way that they have handled the pensions over the years and seemingly refuse to put it right which by so doing would bring the country into line with the rest of the world who are working stop discrimination and reduce poverty.

    13:24 on 20 June 2013

  • RobtheFox: 

    Sorry but you are so way of the mark with your logic I really cannot afford any more time to keep trying to educate you.

    The NI Fund is a separate ring fenced Fund - the surplus is loaned to the Debt Management Office who, in turn, are allowed loan it to the government.

    The abuse of the system is the government's declaring it a surplus before paying all legitimate claims - ie frozen pensions - and that is what we are campaigning against about.

    Both the interest and the surplus are not bogus -its existence has been confirmed in an FOI statement

    But as I said earlier your reasoning is wide of the mark and, sorry again, but I'm afraid that when you resort to such idiocies as in your last paragraph it is probably better to leave you to live in your own financial world.

    13:28 on 20 June 2013

  • nickle: 

    The NI Fund is a separate ring fenced Fund - the surplus is loaned to the Debt Management Office who, in turn, are allowed loan it to the government.


    All of this is perfectly correct. It's the conclusion that you have drawn from this that's wrong.

    The fund is not an asset. You can't loan yourself money to create an asset.

    As I pointed out, with a link to the ONS document on the matter. the state is heavily indebted for pensions, and they are off the books.


    It's only 6 pages, so it can't take you long to read.

    When you've read it, tell me is the surplus sufficent to pay the accrued rights of people to the state pensions, etc?

    To give you the relevant number. The state pension liability for pensions entitlements that people have already paid, was 5,010 bn two years ago. It was rising at 734 bn a year. The numbers are all in the paper.

    How does the NI fund of 45 bn get anywhere near paying off that debt?

    Now I'm quite aware that its going to come from future taxpayers, or at least that's what you have said the plan is.

    However, the statement it should be paid, is different from it can be paid by future taxpayers.

    I'm pointing out that it can't be paid. It's too big and rising too rapidly to be every paid.

    Now work out the consequences.

    16:56 on 20 June 2013

  • George Morley: 

    Nickle - if all of what RobtheFox has said is correct - which is what you have said. How can his conclusions be wrong ? The fund is in surplus and the surplus is borrowed. If the surplus is not borrowed then it could be used for the pensions - right ? The debt that the government have is outside of the NI fund.

    17:34 on 20 June 2013

  • nickle: 

    All of what he says is not correct.

    There is a fund. It is made up of IOUs from the government to the government and its 45 billion. That's the size of the fund.

    However, the size of the debt is well over 5,010 bn pounds.

    How does a fund of IOUs to yourself pay a debt of 5,010 bn pounds growing at 734 bn a year?

    His arguments is look there is a fund, and because there is a fund it must be sufficient for the debts. You can't come to that conclusion unless you quantify the debts.

    So perhaps RobtheFox can tell us how much they owe?

    I know because I've read the ONS document on the size of the debts. It also states that these debts are all off the books. That's why the official debt doesn't included them. That's just Gilts.

    George, have you read the ONS paper? Link above. 6 pages. Won't take long.

    17:50 on 20 June 2013

  • RobtheFox: 

    George, thank you for your comment supporting my postings; I had intended to cease commenting but ....

    I suspect that we differ because I believe nickle is reading and interpreting the ONS document incorrectly; these figures are not a debt as such but an assessment of what would be the sum total of the government's financial pension obligations if all became immediately payable.

    They will not, of course,

    The document warns that the amounts should not be used as a component of assessing actual present liabilities.

    Briefly, this means that. for example, a person of say 30 years of age with the minimum number of qualifying years has an entitlement to approximately 25% of the full pension rate or about £27.50 a week. Of course it is not payable now but when he or she attains retirement and claims their pension it will be and so, must be treated as an obligation but not part of the government's current accounts.

    18:09 on 20 June 2013

  • nickle: 

    No they are not the total payments due immediately.

    They are the present value of the accrued rights. That's a debt or liability, its the same thing (see any dictionary) and its the number that should be booked in the accounts under FRS17 and GAAP.

    If we follow your logic (dont' know what school of accounting) then you have to explain why the borrowing is booked as a debt.

    Its an obligation that isn't immediately due. Just like the pensions. The future payouts are far higher than the present value - just like the pensions.

    Why should you ignore FRS17 and GAAP when it comes to government accounts? Its the Bernie Maddoff accounting principles.

    If you want to know how the number is derived, follow the link I've given. The details are all referenced in the Appendiix.

    So why do you not believe the ONS?


    These previous ONS articles have included indicative quantifications of these assets, obligations and net worth


    Perfectly sensible.

    They quote the excuse


    Future state pension benefits are not recognised as a liability as they are only entitled to be paid as they fall due”.


    So by that logic, why are they including the borrowing?

    Very simple. If they include the pensions, then its clear they can't afford to pay.

    That's the purpose of accounts. To show what profits and losses are being made, and whether or not the organisation is bankrupt.

    Or is it that the pensions aren't a contract? The civil service pension is definetly a contract. Why is that omitted?


    new supplementary table indicate a total Government pension

    obligation, at the end of December 2010, of £5.01 trillion


    This is a present value. It rises above inflation because of the triple lock.

    It also rises because of demographics. More rights being accrued, compared to pensioners in receipt of pensions getting older.


    31 March 2005, at £1.347 trillion


    5 years latter, 5.01 trillion.

    That's an increase of 734 bn a year.

    Here's a hint, its shows that its unsubstainable. It's more than current total spending at 722 bn, and its more than current tax receipts at 600 bn,.

    End result will be bad.

    18:53 on 20 June 2013

  • George Morley: 

    Nickle said : All of this is perfectly correct.

    Then Nickle said :All of what he says is not correct.

    Now I'll leave you to make up your mind what you really mean and then I won't come back anyway . ok. We are talking about the state pension. Nothing else - no other pensions schemes to confuse you.

    19:58 on 20 June 2013

  • nickle: 

    George this is the bit that I said was correct.


    The NI Fund is a separate ring fenced Fund - the surplus is loaned to the Debt Management Office who, in turn, are allowed loan it to the government.


    Now which bit of that means that this fund, is sufficent to pay the pensions?

    Now read again the bit I quoted. Which bit of loaning yourself money that you don't have, makes an asset.

    e.g. Get out some paper and write on on it.

    I, George Morley, owe George Morley 45 billion pounds. Signed, George Morley.

    Bingo. you've done what the government has done. Loan itself money. Exactly what Rob wrote, and exactly the bit I agree is true.

    Now, do you feel rich? Simple yes or no.

    If the answer is yes, lend us a tenner. If the answer is no, you aren't a multibillionaire, why is this 45 bn an asset when its the state doing it, and not you?

    20:23 on 20 June 2013

  • George Morley: 

    Don't start that stupid line. You are obviously unable to understand the situation. Just divorce yourself from any other financial interest and look at the National Insurance Fund and the state pension only. and then you may get somewhere..Look at it in isolation.

    20:45 on 20 June 2013

  • nickle: 

    OK. No problem at all..

    1 How much is owed by the state for state pensions?

    2. How much does the state have in its fund?

    Is 1 bigger than, or less than 2?

    Is that analysis a reasonable one? its the accounting one. GAAP and FRS17.

    Now, we have the figure for 1.

    Social security pension schemes (i.e. unfunded state pension scheme obligations): £3.843 trillion

    Note, that is trillion, not billion.

    How much in the fund (worthless because you can't owe yourself money)?

    28.5 billion

    So 3,843 billion owed, with 28.5 bn of rather dodgy assets.

    Now, which bit of the situation don't you understand?


    [http://www.ons.gov.uk/ons/dcp171766_263808.pdf] for the debt

    [http://www.dmo.gov.uk/reportView.aspx?rptCode=D6A&rptName=10103402&reportpage=CRND/Market_Values] for the fund

    21:03 on 20 June 2013

  • George Morley: 

    Suggestion for you.

    Read : http://www.gad.gov.uk/Documents/Social%20Security/GAD_Report_2012.pdf

    02:12 on 21 June 2013

  • RobtheFox: 

    Thank you, George, for posting that link; I hope nicle follows it and then, perhaps, he will get a better understanding of the frozen NI Funded State Retirement Pension issue.

    In his last posting he asks the following questions.

    Q1. How much is owed by the state for state pensions?

    A. In respect of the NI funded pensions the answer is nil.

    (Note -other public pensions are funded from general taxation).

    Q2. How much does the state have in its fund?

    A. £28.485 billion as at 31st May 2013

    Q.3 Is 1 bigger than, or less than 2

    A. Less than.

    The remainder of his posting therefore falls.

    However, as this seem to be Q & A session I will ask not only the questions but also provide the answers...

    Q.4 - In 2013/14 what is the predicted income to the NI Fund?

    A. - £88 Billion

    Q.5 - In 2013/14 what is the predicted expenditure from the NI Fund?

    A - £92 billion

    Q.6 - Is 4 bigger than or less than 5

    A. - Bigger

    Q.7 - What is the shortfall?

    A. - £4 billion

    Q8 - How will this shortfall be met?

    A - From the known £28.485 surplus in the fund.

    Q.9 - Have there been shortfalls in previous years?

    A. - Yes

    Q.10 - Were these shortfalls met from the Surplus in the NI Fund?

    A. - Yes, these have also been met from the surplus which three years ago was over £50 billion

    Q.11 - Will there be a shortfall in future years?

    A. - Yes, it is predicted, as shown in the link given by Mr Morley, that a continuing but decreasing shortfall will continue for some three to four years.

    Q.12 - Will the surplus currently be sufficient to meet the predicted shortfall over that period of time?

    A - Yes.

    Q.13 - Could the cost of meeting the claims of the frozen pensioners and uprating pensions world wide (given as £650 million) be met in the current and succeeding years - ie is funding still available from the surplus to meet the increase over the years of predicted further shortfall?

    A - Yes.

    Q.14 - nickle's figures tell a different story. Is there an explanation?

    A. - I believe so in that I think nickle is either making a very basic mistake in seeking to combine other State Pensions, which are payable from General Taxation, with the State Retirement Pension which is actually funded from the entirely separate National Insurance Fund.

    Either that or he is confusing the fact that the insured population are currently contributing to a scheme by which the government is placed under an obligation to pay a pension. The figures, i believe he is asking us to accept are simply projections of the current cost were these pensions all to become payable immediately. They will not. They are solely a reflection of an obligation that it will not be met until the recipient reaches retirement age and claims; at that point the obligation becomes a liability on the government and consequently a debt. While such figures may well have their uses in accounting and actuarial predictions they do not constitute the current true state of balances.

    05:31 on 21 June 2013

  • nickle: 


    Re the set of accounts


    I've read it. I've read the previous versions too.

    Now, I do know what's in the accounts and I know what's not in the accounts.

    What's missing is the amount that they owe.

    So can you tell me from the accounts how much in the way they have accrued in the way of liabilities?

    For example, if you have 15 years of entitlements, that 50% of a pension they owe you. Lots of people have accrued entitlements. GAAP and FRS17 state clearly that has to be reported.

    From the accounts you've linked to, can you tell me where that figure is?

    08:46 on 21 June 2013

  • nickle: 



    he will get a better understanding of the frozen NI Funded State Retirement Pension issue.


    It's fraud.


    Q1. How much is owed by the state for state pensions?

    A. In respect of the NI funded pensions the answer is nil.

    (Note -other public pensions are funded from general taxation).


    How its paid, doesn't change it from being a debt to not being a debt.

    Gilts are paid from taxation. They are a debt. Pensions are paid from taxation. They are a debt.

    Under all the accounting standards they are a debt/liability.

    Except if you are the state trying to hide the mess.


    Q.3 Is 1 bigger than, or less than 2

    A. Less than.




    Spending on pensions? 144.6 billion a year. That's the cost of servicing the debt.

    So the 28 billion (not the 45 claimed) is going to last 71 days. Then the assets are gone.

    That's just paying current pensioners. They owe pensions that will still be being paid in 100 years time.

    Its a debt. Get over it.

    If you pay for something up front, to receive in the future, its a debt. It appears as a liability in any normal set of accounts.

    The state doesn't.

    The reason is simple. If people saw how much they owed, they would work out that the state is bust.


    The figures, i believe he is asking us to accept are simply projections of the current cost were these pensions all to become payable immediately.


    Not the case.

    The numbers (from the ONS) are the present value of the pension debts/obligation/liabilitty/contract.

    Do you know what a present value is?

    Do you have any accounting experience?

    08:54 on 21 June 2013

  • nickle: 


    144 bn a year spending on pensions (From the link I provided)

    From the ljnk you provided

    84 bn a year contributions.

    Which bit of bankrupt don't you get?

    08:54 on 21 June 2013

  • nickle: 

    If you are interested, this is how the ONS work out the debt.

    They have details on the age, sex, and overseas status (the fraud bit Rob), and number of year's entitlement of everyone in the system.

    You can get this in a summary form from the DWP, if you FOI then.

    So lets examine the cost of two types of people. First someone who is already retired.

    The DWP know their age, and we have tables of life expectancy by age and sex. So if they are 70, and getting a full pension, we need to work out by how much that will increase in the future, discount it back today, and multiply by the probality of paying out that money. The last bit is just the odds they are still living. 99% to 71, 97% to 72, .... 0 for 120 The growth and the discount rate to present value. Well the proper way to do it is to say that we grow using the triple lock. That's at 2.5%. The discounting to present value is then inflation - the target 2%. So you can just use the difference. 0.5%.

    The ONS however uses 0.3%, which makes the resulting estimate smaller. Dodgy in my books. They also then throw in AA corporate bonds, and assume no default. Again its to make the numbers smaller. They have no assets.

    Then for all those that are retired, you add up the numbers.

    For those that are overseas, and this is for Robin, they freeze the pensions at the current level. Evil in my book.

    Now for those that haven't retired, its the same thing, except the payments do not start until their retirement date. Mortality takes account of sex and age. If you have 15 years entitlement the cashflow is 15/30 or 50% of a state pension, because that's what you've already paid for.

    Total up, and add to both.

    Same for civil service pensions.

    This is standard actuarial maths to calculate the liability.

    The dodgy bit from the ONS, is to discount using AA corp bonds. They should be using the growth in the payouts less inflation.

    So this isn't as Rob has claimed, about it all being paid immediately. The borrowing isn't paid immediately, but its the equivalent number to the borrowing. They are measured in the same way.

    It's just a measure of how much debt the state is in.

    What I'm curious about is why you don't want these numbers reported? Please enlighten me.

    13:00 on 21 June 2013

  • George Morley: 

    Nickle,Gilts are paid from taxation. They are a debt. Pensions are paid from taxation. They are a debt. You say.!

    The state pension is not paid from taxation. It is paid from contributions which are not taxes and they go into the NI fund.

    If you have got this wrong then your whole argument is suspect.

    As you cannot grasp this I do not intend to return to comment as I have better things to do in the real world.

    14:36 on 21 June 2013

  • nickle: 

    Queue someone saying that NI is a tax.

    Why should how a debt is paid change the debt?

    For example, if you have a mortgage, you still have a mortgage if you pay for it out of wages, standing on a street corner selling your flesh, or dealing in cocaine.

    For example, if I pay money to Equitable life for a pension, do they not owe me a pension?

    If you buy a sofa from DFS, buy now, pay later, do you not owe DFS money for the sofa to be paid back in the future?

    You're not very convincing when you say that how something is paid makes it a debt or not.

    I did raise one other thing that you haven't commented on. You brought up the fund, with its 28 bn in 'assets'.

    I pointed out that spending on current pensions is 145 bn a year. That 28 bn doesn't last long does it? It's hardly a surplus if it runs out in a couple of months.

    I'm really quite interested by the way in your opinions. It's interesting that you deny that you are owed a pension for your contributions. I find that quite odd. We've Rob saying that look its really evil that foriegn pensioners are denied the upgrade for their pensions, even though they have paid for them. I agree. However both of you are arguing that its not a debt, so I presume that means you accept not being paid a pension. I don't understand that argument of yours.

    14:50 on 21 June 2013

  • nickle: 


    better understanding of the frozen NI Funded State Retirement Pension issue.

    So let me ask you a question on this.

    1.You say the state pension isn't a debt.

    2. Why then are you concerned about the frozen pensions?

    If its not a debt, it doesn't have to be paid in full, and yet you are concerned that these pensions aren't being paid in full?

    My argument is that it is a debt, and that it should be paid in full.

    You are arguing against yourself Rob.

    My view is that both the foriegn pensions, and the UK pensions, are a debt. However by denying that they are, it makes it even more likely they will default

    15:09 on 21 June 2013

  • RobtheFox: 

    nickle -

    I feel we are going round in circles quibbling of the technicalities; this is a pity because the strange thing is that I think you, George Morley and I plus, no doubt many others are agreed that the Frozen Pension Policy is wrong!

    While, many more years ago than I care to remember, I undertook some accountancy training sufficient to meet my work needs I would be the first to admit that not everything I learned then has been retained in the memory.

    However, I do recall one tutor advising that whenever you ask an accountant a question the reply will begin "Well, it all depends...".

    I do not propose to dwell further on this issue and will conclude by saying that I believe those words from my tutor are appropriate in this context - it all depends on the bases from which you are working.

    As far as I am concerned, and for that matter I think George Morley also, it is the ring fenced National Insurance Fund information that is relevant to our argument. To wit that information, supplied by the government, confirms that the NI Fund was in surplus by around £50 billion about four years ago, has decreased by virtue of expenditure on claims against the fund has exceeded income from NICs to its present level of £28.485 billion, will almost certainly diminish over the next two to three years but still show a surplus and, according to the Government Actuaries, then start to increase once more. The current estimated cost of unfreezing at £650 million is well withing the limitations of both the current and estimated surpluses

    Your view, I believe, and I do not suggest that you are incorrect in your figure work, is that the cost of the government's pension obligations should in effect cover all currently individuals from age sixteen upwards be they under normal retirement age, when the figure is an assessment or in retirement when actual cost plus anticipated cost can be incorporated.

    This, I believe, in your view ( and no doubt some accounting circles!) constitutes a debt. I will not argue the niceties of such a case. The truth of the matter, though, is that the total cost of your calculations does not have to be met in one go, and it is the role of the government to ensure that, at any given time, it is in a position to pay that part of the overall cost that has become due. This is why the Pension Reform Bill is currently making its passage through both Houses at Westminster and why the age at which a State Retirement Pension becomes payable has been increased.

    This is not dissimilar to mortgages - a £100,000 mortgage is a debt from the outset, the mortgagee is unlikely to have such a sum available at the outset . The monthly sum required to meet the agreed payment proposals is set and the responsibility for providing that sum rests with the mortgagee - in the case of your pensions situation the mortgagee is the government (but they can't actually be done for default!).

    I think that we should agree to differ on our interpretations and, for my part at least, concentrate on our continuing efforts to repeal this iniquitous policy. - the government is waiting for my submission to the Scrutiny Committee considering the said Reform Bill!


    04:51 on 22 June 2013

  • nickle: 

    I feel we are going round in circles quibbling of the technicalities; this is a pity because the strange thing is that I think you, George Morley and I plus, no doubt many others are agreed that the Frozen Pension Policy is wrong!


    Its wrong, and its fraud. I've always said that.

    Now, I'll still push the point. A surplus is just another name for a profit. The government won't' use the correct accounting word for the same reason it won't admit to the debt.

    This is where I can't understand your position. First, you say that the frozen pension policy is wrong. People have paid in and are owed a pension. Notice the word owed. It means there is a debt. Then for some odd reason you won't admit that the pension is a debt. That's strange because you want the Frozen pensions to be treated as a debt,.

    Gilts don't have to be paid in one go. Pensions don't have to be paid in one go. Nowhere have I every claimed they did. That means to me you haven't understood the problem.

    It's entirely the mortgage scenario. 30 years of 100,000s worth of mortgage means 200,000 of payments. How do you determine if that mortgage can be paid off? Typically it means comparing income with the debt payments over time.

    Same with the pensions. You need to know if you have now the income to pay, and in the future the income to pay.

    So let me turn it round. Ask you a question, because it does relate to your campaign too.

    What numbers do you need to get together to work out if the pensions are affordable. Hard numbers, not % of GDP waffle. No one pays a percentage of GDP for anything.

    Outline how you would work out if the state can honour its debts/obligations/liabilties/contracts/moral obligations ....

    10:39 on 22 June 2013

  • RobtheFox: 

    When I wrote THE END I hoped it would signify to you that as far as I was concerned I could see no value in pursuing the discussion. I sought to be polite in inferring that all the relevant information supporting the case against frozen mentions was within my postings but it was your choice to ignore it.

    For the record I have only used the word "debt" once in these exchanges and that was in response to a reference made in one of your postings.

    Secondly I have maintained that the payment of a pension is an entitlement gained by contribution qualification. The government meets that entitlement in the payment of the basic state pension.

    I have never claimed that uprating is a right but I hold that the practice of freezing in some countries but not others, albeit held in the European Courts of Human Rights not to be in breach of the law, is, nevertheless, discriminatory.

    If you read the penultimate paragraph of my last posting you will realise that I have already referred to the similarity in mortgages and pointed out that it is the mortgagee that has to ensure there is sufficient income to meet to the monthly repayment and a continuing inflow to meet future installments as they became due. How the mortgagee finances those installments is their own problem. I also said that the funding of pensions was a problem for the government to solve; I am not, and have no wish to be, a member of the government.

    Should you decide to make further postings the probability is that I shall not respond as your latest offering merely confirms the view I expressed in my opening paragraph .

    12:04 on 22 June 2013

  • nickle: 

    Rob, I agree entirely with your comments on the Frozen pensions. It's discrimatory. It's theft. It's been legalised by the state. It's wrong and its evil.

    Now I've agreed with your points.

    Perhaps you can comment on my issues.

    My issue is how do you find out whether or not the state can pay the state pension? I think to do that you need to know how much they owe, hence the debt question.

    Why this is connect with the valid issue you raise, is that the states excuse for not paying the upgrading, is it can't afford it.

    If it can't afford it, then the follow up question is, can the even afford the state pension for poeple in the UK.


    How the mortgagee finances those installments is their own problem. I also said that the funding of pensions was a problem for the government to solve;


    I'm asking a subtle variation on this.

    Not how they fund it. For I care they can send MPs out to be rent boys and tarts to raise the cash.

    What I care is can they fund. For example, lets say the state pension is upgraded to 2 million a year a year per pensioner, linked to inflation. An extreme case to prove the point. That results in payments that exceed the GDP of the UK, to pensioners. The UK economy cannot make those payments. If the economy can't then the state can't, and the pensions are a bust.

    So my view, in order to tell, you need the debts and the distribution of pensions over time. Then if the taxation needed to pay the pensions is high enough, then you run into problems.

    1. The people paying the tax will revolt.

    2. The tax take will fall.

    Now the connection with your issue, is that the non payment of upgrades is a pretty good pointer we are there. In spite of the surplus (2 months of cash for 100 years of payouts), they won't pay.

    I'm pointing out the connection. They won't upgrade frozen pensions because they are bust.

    12:18 on 22 June 2013

  • HenryAtkin: 

    Gentlemen, interesting posts. I would only add that one should also consider what happened to state pensions in Greece and Argentina when they called in the IMF. State pension can and do get slashed.

    The first priority of government is to remain solvent and avoid a likelihood of calling in the IMF for support. We are a long way from that situation but no doubt The Treasury have to consider the effect of future rising interest rates on our ability to service all public spending including pensions. As a UK pensioner I don't feel hard done by over the past few years and I wouldn't consider it too much of a hardship to be linked to average wages instead inflation if it helps to improve our debt reduction. Over the year's I recall several changes and call's for change between CPI, RPI and wage inflation.

    08:35 on 23 June 2013

  • Harry Brooks: 

    Just to widen the discussion slightly — I have posted this before but it bears repeating:

    We already have more 65-years-olds than 16-year-olds in Britain (10 million people - roughly 16% of the population - are over 65). By 2033, it will be 15.5 million, and by 2050 it is expected to be 19 million. That's a lot of voters, and I don't know that I would want to threaten their income. At the same time, the cost of providing pensions and other benefits to the aged is becoming truly alarming so, it's a hell of a conundrum...

    For a bit more info about the ageing population, and how much is spent on benefits, have a look at:


    09:23 on 23 June 2013

  • Michael O'Hare: 

    For pensioners who have paid up and get cheated out of pension increases because they live overseas, what is to stop them coming back to U.K. every few years to get a pensions catch-up?

    10:39 on 23 June 2013

  • RobtheFox: 

    Michael O'Hare - on their return to the frozen country the UK State Pension reverts to the level at which it was originally payable; the increase that may have been payable for the stay in the UK ceases.

    11:13 on 23 June 2013

  • Harry Brooks: 

    Re: pensioners who leave the country: why do they tell the government they've left? Can't they just go off and still have their pension paid into a UK bank account from which they can BACS it anywhere?

    11:18 on 23 June 2013

  • RobtheFox: 

    Harry Brooks there is nothing to stop them. If they wish to break the law and face the possible consequences...fine, repayment of overpayment, loss of future pension.

    The other point of course is why should they be put to the inconveniences and risks your suggestion and that of Michael O'Hare involve?

    11:43 on 23 June 2013

  • Harry Brooks: 

    RobtheFox — fair point but I bet a decent accountant could advise them how to do it without breaking the law (I assume that if they are going off to live abroad they can afford to consult an accountant). It's like multi-nationals dodging corporation tax. It's not evasion (criminal), it's avoidance (legal).

    11:53 on 23 June 2013

  • RobtheFox: 

    Harry - three points.

    I hope you are not making the mistake of thinking that because people have retired abroad they are all in a financial position to consult an accountant or adviser, I would suggest that many and probably the majority were not.

    Many. including myself, despite lengthy correspondence with the International Pensions Service, DWP and HMRC were not aware of the frozen pension policy until we actually received the notification of our entitlement.

    The claim form for one's pension - and one has to claim - requires you to state your permanent address - and the definition of permanent in this case is where one normally lives.

    12:48 on 23 June 2013

  • Harry Brooks: 

    RobtheFox — yes I actually stated that I assumed they were well-off enough; don't know how you missed that. Also, as far as I know, you only have to claim your State pension once (when it starts) so, surely you give your UK address then, and move abroad afterwards. Or give a relative's address. There's always a way. Come on; governments slalom round the people's wishes. Why not slalom round theirs?

    13:57 on 23 June 2013

  • Michael O'Hare: 

    I agree with doing anything necessary to frustrate an amoral policy, but also take the point that the policy itself needs changing.

    Maybe this is something that could unite expats with voting rights. To organise the targetting of marginals would need a lot of organising, but that was a ploy used effectively in the 80's and 90's. Expats are still voters, the ultimate in the eyes of a politician! As a united voting group you could make a change

    14:16 on 23 June 2013

  • RobtheFox: 

    Harry I did not miss the point you made and I stated that I hoped you were not making the mistake in your assumption that all of those involved were in fact well-off.

    I was simply pointing out that, from my involvement with Frozen Pensioner organisations and, for example, the knowledge that Australia is having to subsidise the UK expat pensioners by over £70million a year to keep them above the poverty line underscores my response.

    If by "slalom round" you mean break the law by not declaring moving abroad or giving a relative's address and not the one where you reside then that must be a personal decision and, as I said earlier, be prepared to accept the possible consequences. I was not, and am not, prepared to put the financial well being of my wife and dependent son at risk by such an irresponsible course of action. Nor to I consider it reasonable to invite, indeed, expect, others to do the same.

    I suspect that if the current 550,000 expats who are affected by this ruling had sought to slalom round it even the DP might become suspicious at the absence of claims from overseas and, that their figures for the number of UK citizens resident abroad were at total variance with those for the country concerned.

    14:42 on 23 June 2013

  • RobtheFox: 

    Michael - for what I think was the first time, the International Consortium of British Pensioners took advertising space - both local newspaper and a prominent street side advertising hoarding - at the Eastleigh by-election. I believe the possibility of fielding candidates in some marginals is under consideration; clearly such projects cost money!

    Second point is that not all ex pats have the vote - it is only retained for 15 years - and while, again, there are moves to to get this right restored a large number are disenfranchised. Also the electoral system adopted in the UK creates difficulty for overseas voters in that the timescale between the closing of nominations and voting day makes it almost impossible to organise a postal vote...again, however this area of campaigns is being looked at.

    14:58 on 23 June 2013

  • Harry Brooks: 

    Robthe Fox — people must do what they think fit. But the whole world is crooked — bankers, politicians, the NHS, the press, the police, etc — why should expats miss out? On the other hand I ask myself why they would want to live in Australia? So maybe I just don't understand anything...

    Anyway, I'm bored with this now — and I'm a bit busy — so, I'll leave it all to you guys.

    14:59 on 23 June 2013

  • RobtheFox: 

    Harry -

    I agree it is wrong for expats to miss out but even if the whole world is crooked it is not a justifiable argument either for or against the frozen pension policy

    You ask why should they want to live in Australia.

    Many reasons....how about lived and worked in UK for 45 years, recently widowed, only surviving family being a daughter who married an Australian and emigrated there...why stay in the UK?

    But more to the point why then freeze the pension?

    And for Australia you can substitute any of 120 frozen countries and for the reasons almost as many totally different but perfectly justifiable ones which are no concern of the government.

    Perhaps if you had adopted a more responsible approach to the problem, busy or not, you might not have become bored.

    15:38 on 23 June 2013

  • Harry Brooks: 

    RobtheFox — you know: it's that kind of snide, condescending comment at the end of your post that makes me despair of these fora.

    And 'fora' is not a misspelling. It's the plural of 'forum'.

    16:20 on 23 June 2013

  • nickle: 

    We already have more 65-years-olds than 16-year-olds in Britain (10 million people - roughly 16% of the population - are over 65). By 2033, it will be 15.5 million, and by 2050 it is expected to be 19 million. That's a lot of voters, and I don't know that I would want to threaten their income. At the same time, the cost of providing pensions and other benefits to the aged is becoming truly alarming so, it's a hell of a conundrum...


    It think its been acknowledged.

    However, to be slightly flippant, so what?

    There is an old adage, you can't get a quart out of a pint point. Yes, they can vote to get a pint, but they can't vote to get a quart. Even if they have been promised a quart, they are going to have to make do with a pint of milk.

    Next, the cow being milked may well object to standing their and being milked.

    16:28 on 23 June 2013

  • RobtheFox: 

    Harry, my comment was neither snide nor condescending but it is the kind of comment that I believe someone seeking to extol the virtues of breaking the law deserves.

    Initially I thought you were not aware of the implications of your suggestions and made allowances for that in pointing out the shortcomings

    17:27 on 23 June 2013

  • nickle: 

    However, its interesting your reaction to the perfectly legal deprivation of assets, when it comes to not upgrading overseas pensions.

    Now maybe I have you wrong, so can you clear it up.

    1. Should the overseas pensions be upgraded?

    2. Since its gone to the supreme court, that means no upgrading is the legal position. It's the law.

    What's the difference between getting morally what's yours, and Harry's position, which is keep quite.

    17:59 on 23 June 2013

  • RobtheFox: 

    1. Overseas pensioners already receive index linked uprating in EEA countries and sixteen others not within the EEA.

    2. The Supreme Court or as it was then the High Court, ruled that it was not a legal matter but a parliamentary one. The Grand Chamber at the Court of Human Rights determined that the UK was not breaking any law but it would not be illegal for uprating to be implemented world wide. Again, a matter for parliament.

    3.The difference being that Harry is employing illegal practices in relation to claiming one's pension by making statements he knows not to be correct.

    I am not.

    18:26 on 23 June 2013

  • nickle: 

    What's harry has suggested is making no statement. No statement can never be incorrect.

    18:31 on 23 June 2013

  • RobtheFox: 

    Completing a claim form for one's pension one has to sign to say :

    1. I declare that the information I have given on this form is correct and complete as far as I know and believe

    2. I understand that if I knowingly give false information I may be liable to prosecution or other action

    3. I understand that if i fail to promptly notify the Department of a change in circumstances I may be liable to prosecution or other action

    That constitutes a statement

    18:55 on 23 June 2013

  • nickle: 

    Not an enforceable contract.

    When one side unilaterally changes a contract, the otherside has the right to the same.

    Sign it, revoke it.

    19:05 on 23 June 2013

  • RobtheFox: 

    But one side is not changing any contract

    So, sign it, revoke it and get nothing...up to you

    19:24 on 23 June 2013

  • nickle: 

    You're going to get nothing anyway. Remember, as you say, if its not a debt, there is no obligation to pay.

    That's why they have screwed overseas pensioners. It's going to be extended to the UK on top of their existing changes.

    e.g RPI to CPI

    60/65 to 67,68,...

    20:11 on 23 June 2013

  • Jane Davies: 

    The bottom line here is that over half of expats get annual cost of living increases the rest don't. This is discrimination. All have paid into the state pension scheme under the same terms. ALL should be up-rated annually or ALL should be frozen. End of discrimination, discrimination is illegal and the new commonwealth charter declares all commonwealth countries are opposed to it.

    20:55 on 23 June 2013

  • RobtheFox: 

    Jane Davies, I think that most of the posters on here accept that the current frozen pension policy is wrong.

    What has dominated the thread has been differing views on the financial ability to factor in any uprating and, more recently, the wisdom or otherwise of providing incorrect personal information in relation to a state retirement pension claim.

    Where I think we also differ is in the opinion that the frozen pensioner is not going to get the uprating but if we accepted that argument then the ICBP might just as well pack in the campaign. Fortunately, and your comment confirms that we do not accept the argument; the fight will go on, despite the doubters.

    01:58 on 24 June 2013

  • Jane Davies: 

    Rob, my comment was said with tongue in cheek...we know that to freeze all expats will never happen. I'm being mischievous! I'm just sick and tired of the unfairness of this pension scandal that the government have got away with for decades.

    03:16 on 24 June 2013

  • George Morley: 

    I must just drop back in here and say that this will fester and annoy and hopefully drive the DWP crazy. We are not about to stop and we will keep on writing and getting in their hair and jamming their inbox. They have now run out of excuses as the ones that they have used for years have been disproved and withdrawn following an admission by them. I bet that they wish that the Freedom Of Information had never been introduced.

    03:52 on 24 June 2013

  • nickle: 

    What has dominated the thread has been differing views on the financial ability to factor in any uprating


    And you missed my point.

    The problem is the financial ability to pay any pensions. You will come to the opposite conclusion if you deny the existence of the debt. The state owes people a pension for their money. it's a debt.

    However, until you quiantify the debt, you will come to the conclusion there is money to pay foreign pensions, when in fact there isn't the money to pay UK pensions.

    So Jane, its going to happen to UK citizens as well

    08:23 on 24 June 2013

  • nickle: 

    George. On the FOI front.

    They deny the existence of any debt. They deny the existence of any calculations as to future cash flow projections.

    They are lying.

    08:24 on 24 June 2013

  • Jane Davies: 

    It is happening to UK citizens, nickle, it's happening to us! We are still UK citizens.

    16:40 on 24 June 2013

  • Jonathan: 

    Logically, if you move out of the UK you should get more pension as you can't claim other benefits and you can't call on the NHS and other expensive services that cost the UK tax payer money.

    16:49 on 24 June 2013

  • Jane Davies: 

    Thank you Jonathan......each expat pensioner saves the UK taxpayers around £7,000 a year, there are 1.1million expats so if you do the math that's a hefty sum. Oxford Economics did a study last year and found that when informed of the freezing policy many people were put off leaving to live overseas once retired so lifting the freezing for just 4% of pensioners would mean many more would retire abroad therefore the savings would be even more. This is a no brainer, but the idiot Webb dismisses this important survey as he can see no further than his stupid nose.

    19:23 on 24 June 2013

  • nickle: 

    How do you get the 7,000 figure?

    22:40 on 24 June 2013

  • Jane Davies: 

    Nickle, go to http://pensionjustice.org/information-centre/ go to "Mythbusters" scroll down to "up-rating British pensions will cost too much money" click for info.

    01:12 on 25 June 2013

  • nickle: 

    OK. Lets bust the myths on the myths busters site for you


    All pension payments are made from a special fund, built up from NI Contributions. This fund, by law, can only be used for Contributory benefits, primarily pensions. As at 2013, the fund has an enormous surplus – almost 3 times the minimum recommended by the government actuary. - See more at: http://pensionjustice.org/information-centre/#sthash.nUIdE99d.dpuf


    The fund has 25 bn pounds in it. It's all money lent to the government by the government.

    1. Can you owe yourself money to create something valuable?

    Is 25 bn a lot of money? In some ways yes. In the context of government spending no. The pension payouts are 144 billion a year.

    2. So how long will this fund last? Answer 70 days. In the context of a 20 year retirement for current retirees, that's not long. GIven that some people building up rights will be receiving money in 100 years time, its even less.


    In fact, by choosing to retire abroad, each ‘frozen expat pensioner’ saves the taxpayer about £7,700 per year in health care, pension and age related costs. This nets out at £3 billion annually. Unfreezing pensions would encourage even greater numbers to retire overseas, potentially saving the taxpayer as much as £7 billion over the next 20 years. - See more at: http://pensionjustice.org/information-centre/#sthash.nUIdE99d.dpuf


    So they've missed off the tax. They even advocate cancelling completely state pensions for the overseas. That's part of the 7,000 savings. So they have included things such as pensions as a savings, but want that increased and left off taxation from pensioners.

    Still immoral and evil behaviour from the state in my opinion.

    Now back to the basic problem. They are going to do the same to British residents. What the state has done to overseas pensioners they willl do the same here.

    They are bankrupt. Which bit of being bankrupt don't you get?

    08:37 on 25 June 2013

  • RobtheFox: 

    Jane thank you for giving nickle the link to Mythbusters.

    I don't wish to seem rude but his reaction does not surprise me. While giving links to various sources, including government ones which he feels support the scenario he paints and expecting us to treat them as gospel he decries those including government ones that have shown another aspect of the situation citing such links as government denial and lies. In my opinion Jane, with the best will in the world one cannot accept such inconsistency in selecting what one will believe or not believe.

    He said of one of my postings earlier that I had missed the point. No, I had simply disregarded it, simply because his blinkered view left no room for correcting his misconceptions.

    He now cannot understand the background to the average £7,000 that is not spent on a frozen pensioner as being a saving to the UK. I do not know what it is that makes people think that if I have an operation costing £1,000 in Timbuktu and which I pay for myself rather than on the NHS it does not constitute a saving to the latter.

    I always hesitate in saying I shall not be posting on here again but, at this juncture, I cannot visualise doing so.

    Jane you may wish to take the same view - after all you are dealing with someone who is so pernickety about debt, liability and obligation terminology and yet calls the government bankrupt...a term only applicable to individuals and partners.

    09:45 on 25 June 2013

  • nickle: 

    I'm not inconsistent. You're inconsistent.

    The pensions are a debt. So they should be paid and that includes overseas pensions.

    That's my position on what should happen.

    However, you state quite clearly that pensions aren't a debt. If they aren't a debt, why are you then complaining that overseas pensions aren't paid.

    That's where you are inconsistent.

    So lets analyse the 7,000.

    2,000 a year for health care. Accepted. It's a saving.

    Pensions. Er, why are pensions a saving? They are only a saving if they aren't being paid?

    Tax. You're taxed in the UK. If you are overseas you aren't. Where's the figure for the lost tax?

    The state is bankrupt. The state cannot afford to pay its debts, and one of those debts is pensions. It's stated defaulting.

    1. Overseas pensions

    2. CPI not RPI

    3. 67/68 instead of 60/65 as a retirement age

    Roll on. Next it will be means tested

    Next it will be capped.

    It's not that they won't pay, its that they can't pay.

    Ron, with all due respect, you cannot come to any conclusion about being bankrupt (like Greece, Argentina) without quantifying the debt.

    If we extend your logic, that states don't owe pensions and can't go bust. then the state can offer 500K a year inflation linked pensions to all, for no cost.

    10:07 on 25 June 2013

  • RobtheFox: 

    1. No. Because I view the subject from a different angle does not mean I'm inconsistent.

    2. You say pensions are a debt. I do not disagree but qualify that by stating they only become a debt on the date they become payable. Prior to that they are, in this case, an obligation on the part of the government to make payment if and when a valid claim is submitted. If the government accepts the obligation when the IP is 16 years old it does not become a debt (currently) until age 65 years. If he should pass away prior to that date there is no debt.

    3. A debt has to be agreed (through recourse to law if need be) between both parties. The government has agreed that payment of pensions overseas is a debt and makes payment. What the government has not agreed is that the annual uprating in frozen countries comprises a debt; therefore we campaign. I have always been consistent on that point.

    4 You accept that £2,000 may be the cost of healthcare...although you do not identify the source of your information.

    5. I accept that the inclusion of the word "pensions" could be misleading. I have alerted the ICBP with the suggestion that they either remove or amplify the statement. However, the other benefits - there are around some dozen or so..WFA, Bus Pass, Free TV for the over 75's etc certainly suggest the the £7.700 now quoted is not too wide of the mark.

    6. All UK citizens are assessable for UK tax irrespective of where they live. Some of course, will not be liable as their income, (state pension, for example), will be within their personal allowance, others may be entitled to Double Taxation Relief. However, for some it is deducted at source in the UK. To say that pensioners abroad are not taxed is incorrect.

    We have been over the remainder of your posting before. The adjustments that have been made on Retirement Pension Age and RPI and CPI are perfectly logical and reasonable given the demographic changes; adjustments that were perhaps delayed too long. But with these and no doubt other measures including the Pension Reform Bill the government is clearly aware of the problems.

    12:15 on 25 June 2013

  • nickle: 

    1. By your logic. The borrowing only becomes a debt on the dates on which payments are made.

    You've never explained why the obligation to pay back borrowing is a debt, but the obligation to pay back pensions not.

    2. On the question of not making it to 65, and so losing everthing. That's correct.

    However, on the numbers I've posted, the ONS numbers, that is taken into account. We know the life expectancy of the mass of people. We know how many will make it to 65,66,67,... The payments that are included in the debt numbers take this into account. ie. We don't know the life span of an individual, but we do know the life span of the masses.

    3. The problem is that you've denied that pensions are a debt. See point 1 of yours. Now you are saying overseas pensions are a debt. See point 1 where you say pensions aren't. That's inconsistent.

    4. http://www.ukpublicspending.co.uk/ and the uk population of 63 million. I think you can do the maths.

    5. Now you fall into the government trap. That trap is that pensions are welfare. If they are welfare, then its only for UK residents, and you defeat your own argument. If the pensions are debt, that isn't the case.

    6. Only on their UK income. Why did the link Jane provide leave off tax receipts?

    7. It's not demogaphics, its the Ponzi nature of the debt.

    e.g. If a median wage earner had put their NI into the FTSE, they would have a fund of 627K. The state pension costs 152K. The difference is 475K. That's more than enough to handle any demographic issue.

    Given a fund, its yours. Doesn't matter where you live.The problem is that the pensions are debts, and the state can' pay, not won't pay. Hence you, if you are overseas will be defrauded by the state.

    See Janes argument. Look there is 25 bn of money to pay this. Except that 25 bn only pays 70 days of pensions As large as 25 bn is as a sum of money, its peanuts compared to the amount the state owes.

    Look too at NI receipts and pension spending. Compare the two.

    13:12 on 25 June 2013

  • RobtheFox: 

    I am sorry but you are just going round in circles.

    All the aspects you have now raised have been covered previously so for your answers just go back and read through all the previous postings.

    If it is then still beyond your comprehension, as it seems to be at present, that I'm afraid is your problem.

    I am satisfied that my grasp of the situation is more than adequate in relation to the frozen pensions policy and there is nothing to be gained by further comment.

    13:47 on 25 June 2013

  • nickle: 

    I'm not surprised you are going round in circles.

    In your point 2 you say its not a debt. Then you claim it is a debt.

    If you want to move the discussion on, here's an idea.

    I won't push you on it being a real debt, or an obligation or your pick of words.

    Ask yourself, do they have the cash flow available to pay the pensions in the future, given that you can't make pension smaller by printing, because its inflation linked.

    13:54 on 25 June 2013

  • RobtheFox: 

    You see, you can't even read what I said which was....

    ....I'm not surprised YOU are going round in circles.....

    but point 2 - no I don't

    No, I have no wish to move the discussion on.

    The answer to you final paragraph was made known to you ages ago...go back and look at the declared SURPLUS in the NI Fund and the Government Actuaries Forecast for its future balances.


    14:18 on 25 June 2013

  • nickle: 

    Surplus 25 billlion

    Time the surplus is spent - 70 days.

    The surplus is only enough cash to last 70 days, let alone a 20 year retirement.

    The surplus that would be needed to make it safe would be over 5 trillion.

    http://www.ukpublicspending.co.uk/ lists the spending

    144.6 billion on pensions per year. 25 bn doesn't go to pay that off.

    http://www.guardian.co.uk/news/datablog/2010/apr/25/tax-receipts-1963 lists the NI receipts

    104.1 bn (and its not just for pensions).

    So that's 145 bn against 104 bn.

    There is no surplus in income either.

    That's the hard facts.

    14:30 on 25 June 2013

  • RobtheFox: 

    Your figures suggest that you are including Public Service Pensions which are funded from General Taxation not the NI Find which is ring fenced.

    15:35 on 25 June 2013

  • nickle: 

    Still bust.

    Spending > expendiure.

    Assets < liabililties

    The two conditions are met, hence taxation has to be diverted to pay for the pensions.

    15:59 on 25 June 2013

  • RobtheFox: 

    Not so - if you scroll back you will see where I pointed out that although spending currently exceeds income the surplus has been sufficient to cover that shortfall. It will also cover the predicted shortfall over the next couple or three years when The Government Actuaries Department advise it will once again start to rise.

    No diversion of general taxation to the NI Fund has been required for over a decade.

    16:23 on 25 June 2013

  • nickle: 

    For how long can that surplus cover the short fall? Days, weeks, months, years?

    09:11 on 26 June 2013

  • Ted York: 

    I have to take issue with RobtheFox regarding the change in uprating of pensions from RPI to CPI being sensible. It is hardly logical to move to CPI when its reflection of inflation is no more accurate than RPI. The point of any uprating is to keep pace with inflation, irrespective of whether we decide any pension is affordable or not. The move to CPI is just a manipulation to reduce costs.

    The arbitrary way in which the indices can be changed is a bigger scandal in my eyes than whether some people living abroad should receive an uplift or not, because if the index used doesn't attempt to reflect inflation as accurately as possible then it value will gradually diminish anyway for any recipients, wherever they live.

    Of course, the other point is that those living overseas may well experience different inflationary effects from those living in the UK so it is difficult to see how any such pensioners can receive accurate uprating unless different upratings are applied to each country.

    If other pensioner benefits are reduced for wealthier pensioners is the threshold for determining what is wealthy going to also going to change over time, just as the uprating index may? If so, it could be a signal to people that there is even less incentive to subscribe to a private pension (as if governments haven't undermined pension-saving enough already!), resulting in an even greater crisis in the future.

    10:08 on 26 June 2013

  • nickle: 

    The move to CPI is just a manipulation to reduce costs.


    Correct. From some of the reported (but off the books figures such as the House of Lords accounts), they had a drop in their pension liabilities. That was 15%.

    So people lose out, civil servants, by 15% on that change alone. Since it was retrospectively applied to existing rights, it's a default.

    In general, with inflation measures, your inflation measure is different from mine, because I spend money on different things than you.

    In the past there was an additional measure, the Rossi index that applied to benefits. It reflected benefit claimants spending. However it got completely out of line with RPI, being much higher. The government couldn't stomach the fall out of paying small amounts to pensioners and large amounts to the Philpots etc, so they broke that link


    If other pensioner benefits are reduced for wealthier pensioners


    You've falling into their trap. Define pensions as welfare, not something that people have paid for. Then means test.

    10:44 on 26 June 2013

  • RobtheFox: 

    Nickle -

    please note my previous posting - the current surplus is sufficient to more than cover the shortfall between now and when the Actuaries forecast that Income from NI contributions will once again exceed expenditure.

    Ted Yorke -

    the move to CPI is just a manipulation to reduce costs. Exactly, just what the government intended.

    - it is accepted that those living overseas may experience different inflationary effects and that to calculate separately for individual ones is unrealistic. That is why it is the rate of the increase in the UK that is applied to the fifty or so countries in which the UK pension is currently also uprated.

    10:53 on 26 June 2013

  • nickle: 

    The surplus is 70 days of payouts. It's not an asset either.

    You cannot owe yourself money to make an asset.

    I've give you the example. Write out that IOU to yourself to 20 bn. Bingo, you're a billionaire.

    Why when the state does the same, does it make anything that is worth anything?

    11:28 on 26 June 2013

  • nickle: 

    Rob, you're also contradicting yourself.

    1. CPI change is a cut.

    That's absolutely clear. They have cut pension payouts, and the reason is that income doesn't collect enough to pay.

    2. It's going to get worse. The increase in the numbers from the ONS shows just how fast the debt is rising. That shows going forward its going to get worse. The demographics is that more claimants will want paying back for the money they have paid in.

    11:37 on 26 June 2013

  • RobtheFox: 

    Surplus in the NI fund -


    Page 19 Table 8

    I am not contradicting myself - a cut is a manipulation and I never said otherwise.

    11:43 on 26 June 2013

  • Harry Brooks: 

    Sorry to butt in but is this going anywhere?

    11:53 on 26 June 2013

  • nickle: 

    I've seen the report Rob.

    It's a cash flow report. It's nothing about what is owed.

    You're still missing out on answering why owing yourself money makes something that its valuable.

    12:13 on 26 June 2013

  • nickle: 

    In 2012-13, payments out of the Fund are estimated to exceed receipts by £6.5 billion


    Yep, a good sign of a major problem. Recepts < Payouts.

    12:14 on 26 June 2013

  • RobtheFox: 

    No Harry it is not going anywhere further as far as I am concerned.

    My concern is the State Retirement Pension which is payable from the ring fenced National Insurance Fund and the implications for those living in countries where it is frozen and not index linked.

    I have given the links to the NI Accounts that show a surplus is "banked' with the DMO and now given the link to the Actuaries Report. I leave it now to others to draw their own conclusions concerning the National Insurance Fund .

    12:42 on 26 June 2013

  • nickle: 


    25 bn in the account. Money the state has loaned to itself.

    Current pension spending by the state at 144 bn a year.

    That 25 bn won't last long. It's an insignificant amount compared to what is owed.

    However, we have people who think the state doesn't owe anybody anything for their pension.

    That's why the state doesn't pay foreign pensions. It thinks it doesn't owe anybody anything, so don't upgrade them. That's why they are paying out less and less, because they can't afford to pay out what was promised.

    Given the size of what they owe, its going to get worse.

    That's an unpleasant and nasty scenario for the vast majority that have been forced to depend on the state for their retirement.

    The numbers are all there.

    The facts are there, with the cuts that have already taken place. It's going to get far far worse.

    Or you take the position, its not a debt, and if its not a debt, it won't be paid.

    12:50 on 26 June 2013

  • Maria via mobile

    Do you know how much went into the Nhs and welfare contributions 2014/15 paid by the people an estimated 109billion raised surplus was 23billion and that increases every year.fund surplus was discussed 2003 Paul Forum said a significant amount was being sortied away in government stocks.Ruth Kelly financial secretary said surplus should be retained to accommodated for unforseen circumstances,does she mean like know for the NHS I doubt it.I am old enough to remember Nye heaven ,he said the worse thing that could happen was government to get there hands on the Nhs and welfare,one of the civil servants thought it was allright to lend and borrow from other departments.Not out of national insurance money it's not.Surplus has dropped down since 2003 wonder were it's gone can't find any green papers requesting loans,and this is what you have to do.Amazing the right hand doesn't know what the left ones doing,

    21:19 on 26 August 2016

  • Mr Debonair: 

    Just realised that Citywire are showing this out of date article on the homepage.

    Interesting article but could we not have this more current?

    13:58 on 25 April 2017

  • Ryan via mobile

    I have never given pensions too much thought as I thought it did not effect me. (Aged 27)

    Would it be made much simpler if all the money accrued and received from UK tax payers through national insurance would be ring fenced into one pot.

    This way there should be enough money there to find any pensions. On the basis that one person paid into the pit for a certain number of years and this then entitles them to their pension to withdraw in their senior years.

    No loss is incurred by the government through rises in pension payments Vs what was paid in by the public as the money should have been sitting in an inflation linked account increasing in value in line with inflation.

    This is a basic idea and I can see this simple view being scuppered if, 1/ we allow people who have never paid NI contributions to take a pension over the value they paid in,

    2/ the money received at the time by government was not wisely invested or put in a safe haven account to allow it to rise with inflation creating a shortfall.

    Although we are a placate and have good values, morals as a nation, I believe it is only fair pensions are funded for this region contributed thus eliminating whatever defecit, shortfall we have.

    10:28 on 28 April 2017

  • Anonymous 1: 

    Let's be clear, the triple lock only applies to the basic state pension, other pension credit built up through NI payments are increased at CPI or Zero at September 2016.

    18:56 on 03 May 2017

  • jo lyall: 

    mm just wondering why. I am due to retire and have saved all my life for my old age but now I have my old age pension and a private pension my old age pension will be 197.00 a week and my private pension will be 200.00 per month after tax. BUT BECAUSE I SAVED more in my life time to supplement my old age pension I am now going to pay tax on my private pension again even though it is taxed a source. Is that fair

    20:18 on 03 May 2017

  • Anonymous 2: 

    the government is taking the money from the wrong people If you put to a scheme you should be able to get out what you put in with interest.

    20:29 on 03 May 2017

  • Nobby Jones: 

    It always irritates me when people talk about the average pensioner, because if that group is viewed as being well off, it certainly doesn't include me. First of all, report the facts correctly as only pensioners retiring after 2016 get the triple lock applied to their full pension. Those retiring before that date only get the 2.5% on the basic pension of £122.30 and a lesser amount on the remainder; what this means is that, year on year, the gap between both groups widen. In addition to the older retired losing out as stated, these individuals, including myself, are losing out as a result of years of NI paid, with most working and paying contributions for fifty years compared with those retiring now who only need to have worked for 35 years before being eligible for a full pension. Also, many of my generation do not get a full pension of £159.55 so then have to claim the means tested pension credit. For those, like myself and an 84 year old colleague of mine, who, wishing to have a better quality of life continue to work, which then renders them ineligible for the Pension Credit. This again penalises the pre 2016 retirees as those retiring now get the larger amount and can earn as much as they like without penalty; obviously all parties have to pay income tax.

    21:09 on 03 May 2017

  • ChrisD via mobile

    Didnt realise so many of us had nothing better to do than rant on all day. Lol

    08:38 on 07 May 2017

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