Weekend reading: a big government pensions report and a FIRE-side chat update
byThe InvestoronMay 23, 2026
What caught my eye this week.
Apparently Britain is under-saving for retirement. I know! You’d hardly get that impression if you hung around Monevator for a week or two, where we debate whether gilts have the edge over cash if you’ve already filled your ISAs and The Accumulator once spent a winter watching telly in a fat suit to save on his heating bills.
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Brilliant links. Unique and idiosyncratic. Widely cast and well chosen. Thank you 🙂
AWoCS and Trend Labs: just so much info now everywhere, and just so many ideas / opportunities competing for attention.
The lever point, IMHO, is to try to act on frameworks, rather than on explanations or models.
Explanations describe what / how something is (state).
Models claim insight into causes and relationships between states, based on priors, updated for evidence (causation/ effect).
Frameworks, though, go above and beyond both to help with how to create and to test models and to differentiate credence between explanations.
A new framework changes how you look at information itself, and how you make choices based on it. Once you’ve been given a new framework you can’t unsee it. It literally changes your worldview.
It’s something fresh and different, like receiving a hand written note on high quality paper, as opposed to just a different set of words on a page or screen, to use Ben Carlson’s example from advertising in ‘Stories v Statistics’/AWoCS.
In general, when it comes to residential properties, VAT is not applied to a new build property or to a 100% rebuild of a property, as they are zero-rated.
However, if the property is only partially destroyed, VAT would normally be charged on the rebuild and, therefore, consideration of this needs to be taken into account when deciding how much to insure a property for.
On the basis that no one can predict a full or partial loss of a building, it may be prudent to consider including the VAT element within the building sums insured.
Additionally, if the residential property has outbuildings, swimming pools, etc., these can also be subject to VAT for rebuilding purposes and, therefore, it is normally recommended to include the VAT element for all outbuildings of this nature.
If your block is completely destroyed, is demolished to ground level and has to be rebuilt – these costs do not attract VAT.
If your block is 90% destroyed and Insurers decided to rebuild your block rather than knock it down and rebuild it totally – these costs would attract VAT at 20%.
In a recent First Tier Tribunal (FTT), it was agreed whether or not VAT should or shouldn’t be added to the Declared Value provided to Insurers, is dependent on your Insurers stance and how their policy is written.
Having reviewed several products we found that some Insurers expect VAT to be included, others don’t, and some Insurers are completely silent. This I am afraid opens a minefield….
Unless your Insurance Policy states how your Insurer reacts to this situation I recommend that you should contact them to obtain their advice….better to be safe than sorry!
In the FTT case mentioned above they held that it was reasonable to include VAT in the sum insured.
Brilliant links. Unique and idiosyncratic. Widely cast and well chosen.
Thanks so much, cheering to read as I languish in bed feeling fatigued after my Shingrix vaccine and trying to finish the Moguls post after getting a dead arm from the injection yesterday… 😉
As I’ve said before I reject at least 80% of what I read re: the links, so it is appreciated.
@TA — Wow, there’s a huge difference in cost re: VAT or not, and from what you’ve written here it sounds a bit random. (Or at the least the nature of the destruction requiring re-construction must be random). (Good thing you’re doing without that swimming pool, eh? Still the helicopter pad may bite you later… 😉 )
@ermine — Welcome, and indeed the [Nerdy] badge is a compliment around these parts! I do however like to give the more casual reader fair warning before they make any sort of drive by… 😉
Regarding insurance values , I insure an industrial property and was advised to have a desktop revaluation of the rebuilding cost , last year, it significantly increased to over twice the actual resale value, with the benefit of a good lease. Bizarre , I was not surprised that the insurance premium rose about 15% … however the premium fell about 20% this year !
You have to go with the advice but the premiums seem independent , to some degree , of the underlying facts.
Crikey, that Zoe Williams Guardian article on the triple lock is self -serving slop, isn’t it?
“Why, when pension benefits and the state pension amount to £178bn annually – which is greater than the housing benefit, disability benefit and unemployment or low-income benefits bills combined – do we never talk about the triple lock?”
People talk about the triple lock all the time. Why does she feel the need to pretend that they don’t?
What I don’t get about the repeated idea of ending the triple lock is that most people arguing for this don’t even seem to understand that it benefits younger people, by pushing their future state pension up. Furthermore, because it’s a flat-rate payment, it helps poorer people disproportionately more.
It’s almost as if the Leftists who wrote for the Guardian don’t understand the first thing about personal finance.
I’m not particularly arguing that the triple lock must stay: I’m pointing out that many people arguing against it haven’t thought the consequences through properly, and for a good number of them, these consequences are harmful to what they profess to believe is right.
The SP isn’t exactly generous now, for sure, but tell me, what investment legally guarantees me in advance the highest return over the next 12 months out of RPI inflation, average earnings or 2.5%? Because, if there were one outside of the SP Triple Lock, then the common refrain would then be that it must be too good to be true. Benefits Britain may be a problem principally of working age benefits (or not, according to ones persuasions and priors) but, arithmetically, if something can’t continue indefinitely, then it won’t. The Triple Lock falls into that category.
Puzzled that the otherwise excellent “Clearer Thinking” ‘Where to find academic papers’ piece in the links above doesn’t explicitly mention either ArXiv (aka the Archive) or SSRN, with 2.4 mn and 1.5 mn free to access research papers respectively.
Erratum: My bad. I should have first read @AlCam’s Part 4 of his misnamed trilogy (over on the link to @ermine’s SLIS). It’s CPI now used, and not RPI, in the Triple Lock (since 2012). So, just slightly less unsustainable.
It also occurred to me that at a 2.7% real terms yield to maturity, 30 year US TIPS (obviously if held to maturity to avoid duration / interest rate risk on the secondary market) might be close to the ‘too good to be true’ proposition that is the Triple Lock for the SP over here.
I’ve never heard a reasonable explanation that the triple lock is sensible or sustainable on a perpetual basis. What I did hear that sounded plausible was that it was designed to ratchet state pension up to a level where it was fit for purpose, say half of median salary or something, but then you would have to chop off the 2.5% bit and just go with linking to earnings or inflation, probably inflation..
Not yet. I’ve been more interested in IBTL ETF as a possible risk off hedge to US (and specifically US tech) dominating large cap global equities than I have been in the $TIPS ETF; but, on the other side of the ledger, the latter obviously carries much less duration risk. Problem is, in a real, big crisis all correlations tend (at peak panic) to go for a while towards +1. You end up having to accept Peter Lynch that more money was lost trying to dodge the crashes than in them.
most people arguing for this don’t even seem to understand that it benefits younger people, by pushing their future state pension up. Furthermore, because it’s a flat-rate payment, it helps poorer people disproportionately more.
I challenge the first part of that assertion because there is a trend to push the SP up with time, it’s already one and a half years above where it was when I were a lad, assuming it’s predicated on a typical 20 year retirement that’s already a 7.5% degradation, and there’s more where that came from.
I challenge the second part of your assertion by the simple fact that poorer people don’t live that long. To wit
In 2018 to 2020, males living in the most deprived areas were living 9.7 years fewer than males living in the least deprived areas, with the gap at 7.9 years for females; both sexes have seen statistically significant increases in the inequality in life expectancy at birth since 2015 to 2017.
It’s almost as if those commenting about the Leftists who wrote for the Guardian don’t understand the first thing about the big picture.
On the second challenge though, it would be good *while it lasts* for poorer people for the reason JTE outlines. In line with the argument that TI uses about IHT not being an issue, *because you’re dead* when it happens. I’m possibly assuming here that poor people are actually making it to state pensionable age? Maybe that’s not the case based on the stats outlined by Ermine? In which case, yes it’s a crap deal
@Rhino #13 I sort of hear what you say that the extra money would be better while it lasts (about half as long as for rich people), but the second objection is more serious for poor people because their healthspan is also lower. It’s quite a serious malus, too, in that ONS doc
Male disability-free life expectancy at birth in the most deprived areas was 17.6 years fewer than in the least deprived areas in 2018 to 2020;
I know people at the lower end of the income scale desperately hanging on in crappy jobs until they get their SP, the increase of about a year ad a half is a serious detriment to one lady’s life working shop jobs, on her feet a lot. I’d say she is in half decent health, so it’s doable, but the men at the lower end of the income scale, OMG it does show there, I’d retire some on medical grounds, particularly those still working manual jobs.
It’s not just the length of life, it’s the quality of it.
I’d personally love to see the 2.5% uplift go, on the grounds of sustainability. It was a good way to slowly drag what was a parsimonius SP up to a better level, but Cameron should have made the 2.5% sunsetted on reaching half median earnings IMO. It has done its job. Now the right wing press would scream blue murder if it was canned. I’d rather have a SP for the rest of my life once it’s started, rather than it be seriously degraded halfway through.
@ermine (#12 and 14)
I was going to say something similar, but you were far more eloquent than I would have been.
However, the SP has improved in terms of the typical period for which payments are made. For example, in 1981 a 65yo male could expect to live another 14 years (ONS, cohort ex, principal projection), whereas in 2026 a 67yo male is projected to have a life expectancy of 18.5 years. To reduce that to 14 years (for consistency with 1981), the SP age would need to be pushed back to 72 or 73.
For 60yo females in 1981, life expectancy was 21 years, while in 2026 at 67yo it is projected to also be 21 years.
Apart from the voting patterns of those of SP age and above, I have always wondered why the the right wing press appear to show so much support for those surviving solely on the SP since surely that ideology would suggest that their lack of savings or investments indicates that they were either lazy or spendthrift!
Comments on this entry are closed.
Brilliant links. Unique and idiosyncratic. Widely cast and well chosen. Thank you 🙂
AWoCS and Trend Labs: just so much info now everywhere, and just so many ideas / opportunities competing for attention.
The lever point, IMHO, is to try to act on frameworks, rather than on explanations or models.
Explanations describe what / how something is (state).
Models claim insight into causes and relationships between states, based on priors, updated for evidence (causation/ effect).
Frameworks, though, go above and beyond both to help with how to create and to test models and to differentiate credence between explanations.
A new framework changes how you look at information itself, and how you make choices based on it. Once you’ve been given a new framework you can’t unsee it. It literally changes your worldview.
It’s something fresh and different, like receiving a hand written note on high quality paper, as opposed to just a different set of words on a page or screen, to use Ben Carlson’s example from advertising in ‘Stories v Statistics’/AWoCS.
Re: underinsurance and rebuild cost assessments
I discovered my building was massively underinsured when I dug into this some years ago.
There’s yet another hidden insurance trap though. The rebuild cost on your insurance may well exclude the cost of VAT on the rebuild.
That’s fine if your entire building burns down. A rebuild from scratch does not include VAT.
But in the event of partial damage, then rebuild includes VAT.
It’s a huge grey area and potentially exposes householders to a large uncovered risk.
Here’s some details:
https://www.rebuildcostassessment.com/post/should-vat-be-included-in-rebuild-costs
In general, when it comes to residential properties, VAT is not applied to a new build property or to a 100% rebuild of a property, as they are zero-rated.
However, if the property is only partially destroyed, VAT would normally be charged on the rebuild and, therefore, consideration of this needs to be taken into account when deciding how much to insure a property for.
On the basis that no one can predict a full or partial loss of a building, it may be prudent to consider including the VAT element within the building sums insured.
Additionally, if the residential property has outbuildings, swimming pools, etc., these can also be subject to VAT for rebuilding purposes and, therefore, it is normally recommended to include the VAT element for all outbuildings of this nature.
https://www.flat-living.co.uk/to-vat-or-not-to-vat/
If your block is completely destroyed, is demolished to ground level and has to be rebuilt – these costs do not attract VAT.
If your block is 90% destroyed and Insurers decided to rebuild your block rather than knock it down and rebuild it totally – these costs would attract VAT at 20%.
In a recent First Tier Tribunal (FTT), it was agreed whether or not VAT should or shouldn’t be added to the Declared Value provided to Insurers, is dependent on your Insurers stance and how their policy is written.
Having reviewed several products we found that some Insurers expect VAT to be included, others don’t, and some Insurers are completely silent. This I am afraid opens a minefield….
Unless your Insurance Policy states how your Insurer reacts to this situation I recommend that you should contact them to obtain their advice….better to be safe than sorry!
In the FTT case mentioned above they held that it was reasonable to include VAT in the sum insured.
@Delta Hedge — You write:
Thanks so much, cheering to read as I languish in bed feeling fatigued after my Shingrix vaccine and trying to finish the Moguls post after getting a dead arm from the injection yesterday… 😉
As I’ve said before I reject at least 80% of what I read re: the links, so it is appreciated.
@TA — Wow, there’s a huge difference in cost re: VAT or not, and from what you’ve written here it sounds a bit random. (Or at the least the nature of the destruction requiring re-construction must be random). (Good thing you’re doing without that swimming pool, eh? Still the helicopter pad may bite you later… 😉 )
> DB compared with State Pension
AlCam sez thanks for the shout out, and he wears his Nerdy badge with pride!
@ermine — Welcome, and indeed the [Nerdy] badge is a compliment around these parts! I do however like to give the more casual reader fair warning before they make any sort of drive by… 😉
Regarding insurance values , I insure an industrial property and was advised to have a desktop revaluation of the rebuilding cost , last year, it significantly increased to over twice the actual resale value, with the benefit of a good lease. Bizarre , I was not surprised that the insurance premium rose about 15% … however the premium fell about 20% this year !
You have to go with the advice but the premiums seem independent , to some degree , of the underlying facts.
Crikey, that Zoe Williams Guardian article on the triple lock is self -serving slop, isn’t it?
“Why, when pension benefits and the state pension amount to £178bn annually – which is greater than the housing benefit, disability benefit and unemployment or low-income benefits bills combined – do we never talk about the triple lock?”
People talk about the triple lock all the time. Why does she feel the need to pretend that they don’t?
What I don’t get about the repeated idea of ending the triple lock is that most people arguing for this don’t even seem to understand that it benefits younger people, by pushing their future state pension up. Furthermore, because it’s a flat-rate payment, it helps poorer people disproportionately more.
It’s almost as if the Leftists who wrote for the Guardian don’t understand the first thing about personal finance.
I’m not particularly arguing that the triple lock must stay: I’m pointing out that many people arguing against it haven’t thought the consequences through properly, and for a good number of them, these consequences are harmful to what they profess to believe is right.
The SP isn’t exactly generous now, for sure, but tell me, what investment legally guarantees me in advance the highest return over the next 12 months out of RPI inflation, average earnings or 2.5%? Because, if there were one outside of the SP Triple Lock, then the common refrain would then be that it must be too good to be true. Benefits Britain may be a problem principally of working age benefits (or not, according to ones persuasions and priors) but, arithmetically, if something can’t continue indefinitely, then it won’t. The Triple Lock falls into that category.
Puzzled that the otherwise excellent “Clearer Thinking” ‘Where to find academic papers’ piece in the links above doesn’t explicitly mention either ArXiv (aka the Archive) or SSRN, with 2.4 mn and 1.5 mn free to access research papers respectively.
Erratum: My bad. I should have first read @AlCam’s Part 4 of his misnamed trilogy (over on the link to @ermine’s SLIS). It’s CPI now used, and not RPI, in the Triple Lock (since 2012). So, just slightly less unsustainable.
It also occurred to me that at a 2.7% real terms yield to maturity, 30 year US TIPS (obviously if held to maturity to avoid duration / interest rate risk on the secondary market) might be close to the ‘too good to be true’ proposition that is the Triple Lock for the SP over here.
I’ve never heard a reasonable explanation that the triple lock is sensible or sustainable on a perpetual basis. What I did hear that sounded plausible was that it was designed to ratchet state pension up to a level where it was fit for purpose, say half of median salary or something, but then you would have to chop off the 2.5% bit and just go with linking to earnings or inflation, probably inflation..
@DH have you bought a bunch of those US TIPS?
Not yet. I’ve been more interested in IBTL ETF as a possible risk off hedge to US (and specifically US tech) dominating large cap global equities than I have been in the $TIPS ETF; but, on the other side of the ledger, the latter obviously carries much less duration risk. Problem is, in a real, big crisis all correlations tend (at peak panic) to go for a while towards +1. You end up having to accept Peter Lynch that more money was lost trying to dodge the crashes than in them.
@Jonathan the Evil #7
I challenge the first part of that assertion because there is a trend to push the SP up with time, it’s already one and a half years above where it was when I were a lad, assuming it’s predicated on a typical 20 year retirement that’s already a 7.5% degradation, and there’s more where that came from.
I challenge the second part of your assertion by the simple fact that poorer people don’t live that long. To wit
It’s almost as if those commenting about the Leftists who wrote for the Guardian don’t understand the first thing about the big picture.
On the second challenge though, it would be good *while it lasts* for poorer people for the reason JTE outlines. In line with the argument that TI uses about IHT not being an issue, *because you’re dead* when it happens. I’m possibly assuming here that poor people are actually making it to state pensionable age? Maybe that’s not the case based on the stats outlined by Ermine? In which case, yes it’s a crap deal
@Rhino #13 I sort of hear what you say that the extra money would be better while it lasts (about half as long as for rich people), but the second objection is more serious for poor people because their healthspan is also lower. It’s quite a serious malus, too, in that ONS doc
I know people at the lower end of the income scale desperately hanging on in crappy jobs until they get their SP, the increase of about a year ad a half is a serious detriment to one lady’s life working shop jobs, on her feet a lot. I’d say she is in half decent health, so it’s doable, but the men at the lower end of the income scale, OMG it does show there, I’d retire some on medical grounds, particularly those still working manual jobs.
It’s not just the length of life, it’s the quality of it.
I’d personally love to see the 2.5% uplift go, on the grounds of sustainability. It was a good way to slowly drag what was a parsimonius SP up to a better level, but Cameron should have made the 2.5% sunsetted on reaching half median earnings IMO. It has done its job. Now the right wing press would scream blue murder if it was canned. I’d rather have a SP for the rest of my life once it’s started, rather than it be seriously degraded halfway through.
@ermine (#12 and 14)
I was going to say something similar, but you were far more eloquent than I would have been.
However, the SP has improved in terms of the typical period for which payments are made. For example, in 1981 a 65yo male could expect to live another 14 years (ONS, cohort ex, principal projection), whereas in 2026 a 67yo male is projected to have a life expectancy of 18.5 years. To reduce that to 14 years (for consistency with 1981), the SP age would need to be pushed back to 72 or 73.
For 60yo females in 1981, life expectancy was 21 years, while in 2026 at 67yo it is projected to also be 21 years.
Apart from the voting patterns of those of SP age and above, I have always wondered why the the right wing press appear to show so much support for those surviving solely on the SP since surely that ideology would suggest that their lack of savings or investments indicates that they were either lazy or spendthrift!