Boris Johnson, an adviser to the British Prime Minister, has other ideas for getting the UK back on track, with pensions now a major controversial area.
The Prime Minister is helping to get out of the crisis caused by the epidemic, but Treasury Secretary Rishi Sunak is increasingly keen to impose financial security. How this tension is resolved will determine Johnson’s legacy in terms of Brexit, and the timing of the next general election.
The debate over cost is one of the key sectors in decline; Question about pensions. The government is pressuring financial conservatives to drop the so-called “triple lock” on the state’s basic pension. The policy, which has been in place since 2010, confirms that pensions will increase in line with inflation, whether average earnings or a 2.5 per cent increase or whatever.
Critics say the “triple lock” is uncontrollable, tying the hands of the treasury when it has to fund other priorities, and exacerbating intermediate imbalances. However, Johnson wants to keep a promise from his constituency to keep this promise.
Former Prime Minister Theresa May handled the “triple lock” and later announced changes that would place a greater burden on those who fund social security for the elderly. But after the setback he quickly backed out of his plan in 2017, but a miscalculation split the very old vote, which contributed to the loss of a parliamentary majority. Johnson, whose political instinct is rarely wrong, is wary of making a similar mistake.
The problem today is that the recovery from the epidemic is a sharp increase in profits, which has risen 5.6 percent over the past three months and is expected to rise to even higher levels, costing the Treasury an additional ில்லியன் 4 billion (.5 5.5 billion). Pension payments.
This increase is clearly an exception – due to a combination of fundamental effects, but it will add significantly to government spending when there are other pressing demands on the budget.
While the elderly are certainly vulnerable during epidemics, it is difficult to secure such a large increase for those who can benefit more from rising property and stock prices and those whose pensions are higher than their income.
However, UK pensions are not generous by international standards. Today a retiree (current retirement age is 66, but rising) can earn up to $ 212 in Ireland, $ 254 in the Netherlands and $ 366 in Denmark, compared to $ 180 per week, although workers in these countries spend more years qualifying for the requirement. On average, the UK’s net exchange rate (the last share of profits covered by pensions) is only 28.4 per cent of compulsory pensions – well below the OECD average of 58.6 per cent.
However, if there is a reason to reconsider “Triple Lock”, now is the time. Not only is the design flawed, but its costs are unsustainable over time. With low productivity growth and the UK population moving in large numbers, it does not make sense for government pensions to rise to higher levels, no matter what happens to the economy or other income. As many businesses are still struggling with Brexit, the Treasury has yet to do more when it comes to lowering the tax base.
In 2015, the Financial Research Institute proposed “soft income insurance,” which would link state pensions to a fixed percentage of average income, which is happening in Australia. Something like this – which will protect pensions from erosion but ensure that they do not continue to rise in relation to income – needs to be reconsidered, as a parliamentary committee has already stressed.
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