Weekend reading: should retirement be retired?

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• 1 Ben July 20, 2019, 12:19 pm

  “Only a fifth of investors held their nerve during 2018 stock market tumble”

  Really? What about all those pension savers that didn’t even notice the ‘tumble’, I read Monevator and i didn’t notice the ‘tumble’.

  Plus 35% of respondents moved into riskier investments, did they ‘lose their nerve?’.
• 2 weenie July 20, 2019, 12:21 pm

  Thanks for the shout out, TDM.

  I really like the idea of Life Two – I do see my retirement as the second chapter of my adult life.

  Interesting link about the DB transfers and the hazard of ‘early spenders’ being destitute in later life. I wonder if, in the event of the state pension being means tested, would such calculation look into whether someone has carelessly spent their CETV already?
• 3 dearieme July 20, 2019, 1:07 pm

  “No central heating, old gas stoves, furniture and furnishings from before the moon landings.” Oi! There’s no need to be so personal!

  “Landmark court judgment will likely shake up public sector pension schemes”: therefore a hard-headed government (ho, ho) would say that the courts have torn up the deal so the whole issue is reopened. (A hard-headed government would have put a clause to that effect in the original agreement.)

  DB transfers: I can see good arguments for people with more than one DB pension fancying a transfer of one. I can see a good case for a couple with DB pensions from the same firm transferring one of them. I can also see a case for people stopping being like cartoon cats with dollar signs in their eyes, and stopping behaving like infants offered more jelly.

  But I can’t see how Mr Tapper is so omniscient that he can conclude that the same thing is good for all of us.
• 4 The Details Man July 20, 2019, 1:47 pm

  @Ben – ‘markets move and investors did stuff’ isn’t quite as sexy a headline 😉

  @Weenie – you’re most welcome. Interesting thought on means-testing. I don’t know the answer to your hypothetical question. But if social care is anything to go by, expect a right pig’s ear of it.

  @dearieme – I was commenting to somebody the other day that the public sector pension ruling will mean taking from one pocket to put into another. Cynicism aside, it’s that the legal change to the schemes was unlwaful. How that will be amended (probably can’t) or rectified will see. Regardless, it was rather silly of the government to take on judges (among others) like this. Cruisin’ for a bruisin’.

  With Mr Tapper, he is a strong advocate for pensions mean pensions. And that today’s DC schemes are really savings vehicles rather than a pot for creating an income in retirement. I’m sympathetic to that. Also worth bearing in mind that he’s forthright, something that I feel is sadly lacking in the pensions world.
• 5 Vanguardfan July 20, 2019, 2:03 pm

  Great links this week, thanks.
  Re the legal ruling about public sector pensions. Do you have any ideas how this might pan out?
  I have skin in this game having just missed out on ‘transitional protection’ by a matter of months. My understanding of the ruling is that the govnt has landed themselves with this headache by giving older pensioners over-generous protection! I am a bit confused though, as all over the private sector DB pensions have become closed to new entrants or stopped entirely, and I don’t see how that’s not discriminatory for the younger workers?
• 6 Gentleman's Family Finances July 20, 2019, 2:15 pm

  There has been a transformation of fortunes for pensioners over the last 30 years – rising pensions, benign inflation and rampant house price inflation.
  Those trends can’t continue but we’ll see how things loom for our retirements too late to do anything about it.
• 7 Gentleman's Family Finances July 20, 2019, 3:28 pm

  Not loom but hiw things look – but maybe looming is the right way to think of it – under funded pensions/savings are a juge problem for millions!
• 8 Ben July 20, 2019, 3:50 pm

  @The details man.

  I dispute the fact that 80% even traded over the period (beyond regular investments).
  I wouldn’t be surprised if 80% of ‘investors’ even realised they were invested in the stock market, especially since auto enrollment.
• 9 The Details Man July 20, 2019, 4:02 pm

  Hi Vanguardfan – it will be quite a while before we know how it will all pan out.

  For those none the wiser, in 2015, the Gov’t moved most public sector workers into new pension schemes that are less generous. However, members close to retirement were allowed to stay in the old scheme and not moved across. Judges and firefighters took the Gov’t to court arguing that this was disciminatory to younger members and won. In June the Supreme refused the Gov’t leave to appeal.

  The matter will now be passed back to the employment tribunal which will determine how the discrimination should be remedied for the firefighters and judges. The Gov’t is likely to want to put everyone onto the 2015 schemes and ‘make up’ the younger members so they are put back in the same position as older members. This will at least save the Gov’t from an immediate cash outflow that a lump sum compensation would cause. However, untangling the change will take a lot of time and they’ll have to work scheme by scheme, member by member. This is before we even get to the impact on all the other schemes such as NHS PS, Police pensions etc. which the Gov’t have acknowledged are effected by the ruling. The estimated cost is around £4bn a year and the time cost in man hours will be huge. This will somehow have to be funded from elsewhere.

  The Gov’t were strongly warned that this move was discriminatory at the time. But they pressed on regardless. Thus the utter mess we now have.
• 10 The Borderer July 20, 2019, 5:01 pm

  Michael Kitces “The Problem With FIRE: Human Beings Aren’t Meant To Be Idle For Life” puzzles me.

  I remember the old joke about the Spaniard and the Arab discussing ‘manana’. The Arab says their phrase ‘Bukra Inshallah’ is similar, but without that desperate sense of urgency.

  In my retirement, it’s certainly Bukra Inshallah.
• 11 Haphazard July 20, 2019, 9:01 pm

  It’s not just kippers.

  Boris Johnson was questioned about his claims on the EU before the referendum. I never understood why this did not cause more of a reaction at the time. You can watch it here:
  https://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/news-parliament-2015/eu-referendum-evidence-15-16/

  One of the links above mentions the daft language in job adverts. I receive job adverts from the civil service. They keep advertising for people to help with Brexit (and with very short application deadlines!). So far as I can tell, no knowledge of the EU, or indeed anything else, is required. Instead, the advert says that you will be “assessed against behaviours”, one of which is “delivering at pace”. What you deliver, presumably, is immaterial. Bit like working for DPD.
• 12 Seeking Fire July 20, 2019, 9:44 pm

  Many thanks for the article and the links. For me the most impactful piece of information is the chart in figure 3.1, which shows not pensioner poverty but the fact that over 25% of children in the UK apparently live in poverty. Have I read that wrong, if so apologies? If so that seems absolutely shocking. I know that what is classed as poverty is a moving target. None the less for them to be the highest category in that chart is very sad. And also economically a waste for the UK as I understand that there is a strong correlation between children who are not in poverty, educational achievement and then your career. Given the population is ageing rapidly and we are likely to be increasingly dependent upon our ‘relatively fewer’ children, this seems an urgent issue. Which no doubt will not get addressed. Tonight thank god it’s them instead of you.
• 13 The Details Man July 21, 2019, 12:49 pm

  @ Haphazard – thanks for sharing, gave me a good chuckle. “Delivering at pace” sounds ideal for Jofra Archer…

  @Seeking Fire – thank you, I had big shoes to fill! Sadly your reading of the graph is correct. There are two principal reasons that children are the most likely to be in poverty. First, housing costs (the graph shows absolute poverty after, rather than before housing costs). Children are obviously the least likely to own a home and the least likely to live in a household that owns a home. Rising housing costs have had a disproportionately large effect on those on the lowest incomes. Second, working-age benefits have reduced drastically in real terms. For example, the benefit freezes, the benefit cap, removal of the housing benefit family premium and generally the ‘hostile environment’ to benefit claimants. These disproportionately effect children as households with children typically rely on benefits for a large proportion of their income.
• 14 allthegoodnamesaretaken July 21, 2019, 1:38 pm

  @seeking fire: yes, you’ve completely mis-read it, but don’t worry, most people do 😉

  https://continentaltelegraph.com/economy/just-watch-the-exploding-logic-here-about-child-poverty/
• 15 MarginalGainsDwayne July 21, 2019, 2:27 pm

  One thing we all forget about retirement that I’ve recently noted on my holidays is how big an impact the stress of work has on us. I noted that my heart rate on a long (15 mile walk last week) was over the course of the day lower than that on a typical working day. What you are buying is the release from the stress of working, although I guess you need confidence in your returns to get the full gains.

  I imagine those in poverty never get that, but if you have the income, I think that freedom from even minor daily stress may drive that higher happiness index.
• 16 The Details Man July 21, 2019, 3:27 pm

  @allthegoodnamesaretaken – I mean this in the nicest possible way, but seeking fire did not read the chart incorrectly – you have. The chart shows absolute poverty not relative poverty which is what your link discusses. I specifically chose the absolute poverty chart from the IFS (there is an equivalent relative poverty chart) for some of the reasons outlined in that link. I’d caution you to take absolute care to read the chart title in future…
• 17 MrOptimistic July 21, 2019, 3:31 pm

  When I started work there was a compulsory retirement age of 65 for men. Don’t know how the compulsion was enacted but at the end of the month of your 65th birthday you were out. Don’t know if there was some legal block to continued employment elsewhere but no-one paid much thought to that as 65 was OLD and who would take their luck at getting there for granted by trying to continue.
  Now ‘retirement’ seems to mean voluntarily giving up paid employment to loaf around on your pension and not much else. No longer a very useful description.
• 18 JimJim July 21, 2019, 5:10 pm

  @ MrOptimistic
  In my line of work, which is a little bit of manual and a little bit of administration with a lot of toleration of people who are not ready to learn, The statistic I rely upon for a healthy retirement is the rise in fatal accidents of the over sixtys… http://www.hse.gov.uk/statistics/pdf/fatalinjuries.pdf
  It seems that the closer I get to this the more likely I am to die from my work activity, Perhaps I should consider a safer occupation in my dotage???
  I can see a good argument for letting people rest after the age of 65, unless you are an actuary and advise the government.
  Jim
• 19 allthegoodnamesaretaken July 21, 2019, 5:11 pm

  @The Details Man, and I’d caution you to read the footnotes where it explains that this is relative poverty, i.e. inequality not absolute poverty. We abolished that in the UK in about 1960.
• 20 The Details Man July 21, 2019, 5:56 pm

  @allthegoodnamesaretaken – Nope. I’ll give you the benefit of the doubt that you aren’t trolling. So I’ll offer one more reply. The chart shows an absolute poverty measure – thus the title of the chart. If you take the time to read the IFS report, it sets out a detailed discussion on different poverty measures. There is also no such thing as absolute poverty being ‘abolished’. The measure shown in the chart is based on ‘Households below average income’ as defined by the DWP, it being a measure of poverty fixed at 2010/11. An absolute measure requires some baseline. You may disagree with that as a measure of poverty, as it’s your prerogative to do so, but it is not a ‘relative’ measure as you incorrectly assert.
• 21 allthegoodnamesaretaken July 21, 2019, 6:58 pm

  @The Details Man, with all due respect the title can say what it likes, but the data does not show absolute poverty: https://continentaltelegraph.com/uncategorized/gordon-brown-and-the-terrors-of-modern-child-poverty/
• 22 allthegoodnamesaretaken July 21, 2019, 7:00 pm

  And here: https://continentaltelegraph.com/economy/the-crazed-claim-that-poverty-has-increased-in-the-uk/
• 23 SeekingFire July 21, 2019, 10:04 pm

  Many thanks TDM and All the good names are taken for your responses. I guess having read the above links, the comments and studied the chart again I would say

  – It is good, I guess that poverty levels, whether you say relative or absolute, seem to have reduced for children, all and indeed pensioners.

  – It does seem to re-emphasise what seems to have been governmental priorities over the past decade, which is seeking to improve the standard of living of pensioners. I understand the politics behind such a move as well as the very genuine reasons

  – I am not sure those families who are struggling to put food on the table would care one jot whether they have absolute or relative poverty. They would see themselves as poor. And I would agree.

  – But I also take the point that as overall standards of living has generally increased decade by decade, perhaps what one would consider to be poor today is not considered to be ‘as’ poor for the previous generation. That doesn’t mean that we should consider them not to be poor

  BTW TDM, good luck with your new job. Hope it all goes well.
• 24 dearieme July 21, 2019, 11:06 pm

  @MrO: “When I started work there was a compulsory retirement age of 65 for men.”

  I’ll bet there wasn’t, not as a matter of law. The age for State Pension was 65 for men. Your employer might have had his own compulsory retirement age of 65. But there was no general compulsory retirement age of 65.

  Certainly in the early 1970s I knew university people with an employer’s retirement age of 67 and of 70. Doctors often worked on after 65. Judges notoriously seemed to go on for ever. I doubt that ministers of religion all retired at 65, and government ministers didn’t either. When I was a boy I never heard of a farmer retiring as early as 65.
• 25 Ste July 21, 2019, 11:37 pm

  @allthegoodnamesaretaken
  Sorry, but you are misreading your own sources. They all talk about a) relative poverty being a measure of inequality rather than deprivation, and then contrast it with b) an income baseline set at a specific year as a valid measure of absolute poverty. However b), the absolute measure, is exactly what The Details Man is showing in the figure, and Seeking Fire’s interpretation that absolute child poverty is at 25% or higher is correct.
  The site you’re quoting multiple times seems to have constructed somewhat of a strawman by claiming absolute poverty measures are not being used in the UK. They are (see figure above), and they paint a pretty grim picture of the progress to better living standards in the UK post-recession.
  Hope this helps clear up the confusion 🙂
• 26 The Borderer July 22, 2019, 5:20 am

  Re: Poverty

  https://fullfact.org/economy/poverty-uk-guide-facts-and-figures/
• 27 Simon July 22, 2019, 6:45 am

  P.S. Normal service will resume next week with The Investor back in the seat – so look forward to more Brexit rants and fewer tenuous links

  Brilliant!
• 28 Simon July 22, 2019, 6:59 am

  @jimjim that pdf of fatalities is absolutely fascinating. Any idea why France has 6 times as many work related fatalities as us. I guess by reading that pdf most of ours are farmers.
• 29 MrOptimistic July 22, 2019, 8:59 am

  @dearieme. That must be true but not for the mundane world of paid employment we were all destined for. It may have been a failure of imagination to some extent, who could or would want to, but I think large swathes of employment would not have been available post-65 with no discrimination defined.
• 30 JimJim July 22, 2019, 9:00 am

  @Simon
  I study these each year, In the U.K we seem to be pretty good in terms of Europe at controlling work risk. Cyprus is better but no one else where it comes to death, this could be an anomaly due to the size of the island and the rarity of death at work. It could also indicate that health and safety law is better managed in the U.K. Construction and agriculture/fisheries vie for the top spot year in – year out in terms of total numbers killed. However Agriculture has it year in year out for numbers killed per 10,000 workers by a long way.
  What interests me is the exponential risk in growing old at work. Even new recruits, the area we concentrate most heavily in terms of both training and law seem an under represented group.
  Also of note is the gender imbalance for death by accident at work. A steady 95% male for as long as records show! So much for equality!
• 31 Tim Worstall July 22, 2019, 10:40 am

  “Sorry, but you are misreading your own sources. They all talk about a) relative poverty being a measure of inequality rather than deprivation, and then contrast it with b) an income baseline set at a specific year as a valid measure of absolute poverty. However b), the absolute measure, is exactly what The Details Man is showing in the figure, and Seeking Fire’s interpretation that absolute child poverty is at 25% or higher is correct.
  The site you’re quoting multiple times seems to have constructed somewhat of a strawman by claiming absolute poverty measures are not being used in the UK. They are (see figure above), and they paint a pretty grim picture of the progress to better living standards in the UK post-recession.”

  I’m the bloke from the website being quoted. So, to actually clear this up.

  In British government speak relative poverty is less than 60% of median household income, adjusted for household size. Usually, but not always, measured after housing costs, and always after the impact of tax and benefits. It’s a measure of inequality.

  In that same BritGovspeak absolute poverty is less than 60% of median income (all the same housing, tax, benefits inc) in some base year in the past. At present, usually the 2010/11 tax year.

  It’s still a measure of inequality of course because it’s relative to median household income.

  As you might have noted, we’ve just had a truly horrible recession. Incomes go down in recessions. Thus this “absolute poverty” might be expected to rise. Not because inequality has risen – it hasn’t, it’s fallen a bit since G Brown was Chancellor – but because the median income, everyone’s incomes in fact, is lower than it was in 2010.

  Not entirely sure whether 2019 median still is lower but you can understand the effect at least.

  Absolute poverty in the global sense is less than $1.90 a day. This does not exist in the UK and hasn’t done for near a century.

  Finally, why do children have a higher poverty rate than the general population? Well, incomes tend to rise with age, right? And it’s the younger people who have the children too. So, children are going to naturally be – of course, this is by and large, on average – parts of families with younger breadwinners and thus lower incomes. Given that we are using that relative measure of poverty then naturally the child poverty rate will be higher than that of the population.

  The only way out of this is that wages don’t rise as you gain experience and promotions. Unlikely really….
• 32 dearieme July 22, 2019, 11:06 am

  @MrOptimistic: if someone was obliged by his employer to retire at 65 what was to stop him working for a new employer? For most of my life employers have argued that it was hard to find good employees. (That’s consistent with my experience.) So why would they turn down the chance to hire a good worker who happened to be 65? I suspect the answer is no more complicated than most 65 year olds not wanting to work on, and some being unfit to work on. Which is fair enough but it won’t do to call it compulsory. “Lacking the enterprise or desire to work on” might fit the bill.
• 33 dearieme July 22, 2019, 11:10 am

  Ah! I’ve realised why some employers would be reluctant to hire someone over 65. Because it might make it more difficult to get rid of current employees at 65, some of whom the employer might well want to see the back of.

  And of course trade unions might have obstructed such hirings too. (People under 40 presumably have no idea how pernicious the unions were In Olden Times.)
• 34 B0b July 22, 2019, 12:48 pm

  @JimJim Yes re agricultural injuries and deaths. I live in a very rural area and I wonder if it is partly because farmers and workers often work alone. My farmer nieghbour has fields scattered all over the hills. Also, being a sole worker with just the odd itinerant hand, farmers may be subject to risks that employers would not tolerate. No disrespect intended to any farmers.

  @TheDetailsMan I agree with the possibility that the Government may seek to consolidate all future statutory pensioners. A difficult job covering about thirty peices of legislation. As a staff association rep,I lobbied parliament in the 2010s to recommend this sort of package. Else potential retirees would no recover from a sudden change. Some professions accrued more benefits in later career. (This had been introduced to encourage people to stay longer in the days when we had careers. There was a real chance experienced staff would jump ship.)
• 35 weenie July 22, 2019, 2:20 pm

  @MrOptimistic and @dearieme

  @MrO: “When I started work there was a compulsory retirement age of 65 for men.”

  Until 2011, there used to be a Default Retirement Age which employers could impose. It was implemented at the last place I worked at, where one of the guys was “retired” at 65, he certainly did not choose to leave.

  @dearieme – “what was to stop him working for a new employer?”

  Other employers at the time would have probably had their own Default Retirement Age set, so he would have not been offered a job due to his age.

  Them days were different back then, without the anti-ageist regs we have nowadays!
• 36 MrOptimistic July 22, 2019, 5:19 pm

  It is true, however, that for most people it would have seemed peculiar not to retire at 65 having staggered over the finishing line. Death in your 50’s was not regarded as ‘tragically young’, it was quite normal. Swathes would gratefully retire earlier of course, civil servants for one. Mind you, I remember the Express or similar having as it’s front-page headline, “Elizabeth Taylor turns 40′ or some such thing. Age was accelerated then 🙂
• 37 Duncurin July 22, 2019, 6:33 pm

  When I was a GP trainee in the early 1980s, my trainer who was about 60 had never got on with his senior partner but was patiently waiting for him to retire. When the senior partner still showed no signs of retiring at the age of 80, my trainer belatedly took the plunge and set up as a single-handed GP.

  In the 1990s GPs were outraged when Kenneth Clarke introduced a retirement age limit of 70 for NHS GPs.

  Nowadays you would be hard pushed to find a GP still practising over the age of 60.
• 38 dearieme July 22, 2019, 9:59 pm

  “Nowadays you would be hard pushed to find a GP still practising over the age of 60.”

  I know one: she took a 24 hour retirement and then went back to work part time. The reason was, sorry to be controversial, love of the job. Whether she returned to being senior partner at the practice I’m not sure.
• 39 Duncurin July 22, 2019, 10:25 pm

  @dearieme
  I imagine that her partners can’t believe their luck that she wants to stay, will have taken a lot of responsibility off her hands, and will still be greatly influenced by her views.

  Being a GP remains a satisfying and rewarding job, but one that is also highly stressful: due in no small part to the demands of the contract with the NHS, and a GMC that has no interest in considering the doctors’ point of view.

  The average age at which GPs retire has fallen from 60 in 2012 to 58 now. I was a little ahead of the curve and bailed out at 57. I did the best I could during the years I practised, but that part of my life is now over. A sympathetic colleague suggested that any doctor has only a certain number of consultations in him or her. Once they are used up, it’s time to move on.
• 40 dearieme July 23, 2019, 10:46 am

  “A sympathetic colleague suggested that any doctor has only a certain number of consultations in him or her. Once they are used up, it’s time to move on.” I find that plausible: it’s a commonly mentioned principle of physical courage. (How good the evidence for it is I don’t know.) Perhaps my chum had some years of working part time, or not working at all, when her children were young. I didn’t know her then.

  In Olden Times in the universities it would sometimes be the case that a lecturer in his fifties would have become fed up with teaching and research. He might then devote his time to administration, financial work, or the like. Now, however, the universities are plagued with swarms of damsels claiming to be “HR professionals” and that sort of thing, or accountants with steely eyes and bad breath who seek to dominate the financial jobs. What becomes of the disenchanted dons I don’t know.

  The upshot is that universities are now run by amateurs, by which I mean by people who have never written a lecture or a book, designed an experiment, or drafted a research grant application; people, in short, who will have developed no instinct about how a university discharges its function in society. Jolly well paid, though, these amateurs.
• 41 Factor July 23, 2019, 1:02 pm

  @TDM

  A bean-counter like yourself, albeit now retired, I wonder whether we should steel ourselves for a “breathogram”? 🙂
• 42 Getting Minted July 23, 2019, 9:39 pm

  “Only a fifth of investors held their nerve during 2018 stock market tumble” according to a Schroders’ report. I noticed the drop in the market in that quarter and especially in October but I didn’t feel any inclination to react to it. I’m surprised to be in the minority here. 2018 as a disappointing year but it didn’t compare with 2001-2002 or 2008.
• 43 MrOptimistic July 23, 2019, 11:22 pm

  @Getting Minted. You have to wonder how they got that number. Does it include all those in company DC schemes? I reckon most retail investors either didn’t notice or didn’t react because they didn’t know what to do.
• 44 Getting Minted July 24, 2019, 1:10 am

  @MrOptimistic. The research covered “those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last 10 years.” I think their research methods will have likely excluded DC scheme members. I think those who didn’t react did the right thing this time.
• 45 Aidan Williams July 26, 2019, 2:45 pm

  “Millennials need £80k more in retirement than their grandparents”…if they want to retire at 65.

  The real tragedy for millennials isn’t the later retirement age, it’s the demise of DB workplace pensions.

  And millennials are starting their careers much later too, losing out on income/pension savings and incurring student debt. Many of their grandparents would have left school at 15.
  https://researchbriefings.files.parliament.uk/documents/SN04252/SN04252.pdf
  “Overall participation in higher education increased from 3.4% in 1950, to 8.4% in 1970, 19.3% in 1990 and 33% in 2000”

  Thanks for the posts @TDM, I feel a mega Johnson Brexit rant in the making, the storm clouds are gathering. 😉