New UK minimum wage constitutes a pay cut for pensioners
By Koalemos
@Asylum (47893)
Manchester, England
February 17, 2016 11:25am CST
I left school at the age of 16 and retired at the age of 65, with the interim 49 years spent working.
During this period I constantly paid income tax and national insurance out of my wages. The national insurance contributions entitled me to draw a pension from the government on reaching retirement age.
It was no surprise to me to discover on retirement that my state pension falls well below a living wage in the UK, but I did manage to accrue a decent amount of savings which are currently supplementing my income.
The government has now announced a rise in the national minimum wage as of 1st October this year. However, there appear to be no intentions of increasing the pensions accordingly.
With all companies being obliged to pay higher wages, it is inevitable that prices will soon follow suit and this will result in inflation. Effectively this in turn shall reduce the purchasing power of the pension that I receive and also diminish the value of my savings.
It may not be possible for the government to reduce my pension directly, but they are effectively doing so indirectly instead.
As of 1st October the lowest amount that it is legal to pay any worker for a 40 hour week will be double my weekly pension.
14 people like this
14 responses
@BelleStarr (61101)
• United States
17 Feb 16
My Social Security is in a similar position since I took it at age 62 but my husband still gets more than the average worker would make in a week. We also both have private pensions from the companies we worked for in addition to our savings. In the U.S. we don't have faith in Social Security out lasting our lifetime so we need to provide for ourselves. he lower gas prices have helped but wee can't count on that lasting. It is a sad thing when seniors work all their lives to be forced into poverty in their elder years.
2 people like this
@Asylum (47893)
• Manchester, England
17 Feb 16
@BelleStarr I would have expected taxation on a high private pension, but since mine combined with the state pension totals less than some people are paid for not working I was rather shocked at being taxed.
2 people like this
@BelleStarr (61101)
• United States
17 Feb 16
@Asylum Yes we are taxed on our private pensions as well. We did not contribute to them they were 100% funded by our employers. We put our money into 401K and 403B accounts.
1 person likes this
@allknowing (137844)
• India
18 Feb 16
Here in India they are regularly decreasing interest rates on bank deposits - the only income for those who have retired with constant price increase of commodities surviving would be difficult.
*Why are you running away and from what 
1 person likes this
@Asylum (47893)
• Manchester, England
18 Feb 16
@allknowing I did consider turning him round so that he cannot run off the page to the left.
1 person likes this
@allknowing (137844)
• India
18 Feb 16
@Asylum Tell him to go to discussions that you normally like - that simple
About interest rates I think our Government is slowly doing that.
About interest rates I think our Government is slowly doing that.1 person likes this
@ElizabethWallace (12074)
• United States
18 Feb 16
So there is no automatic cost of living increase built into your system? Our has one, but social security is based on a consumer price index that has no basis in reality for retired people. My teaching pension has a 2% cost of living increase based on the first pension check. It does not compound. So in twenty years, this amount will be in effect close to nothing.
1 person likes this
@Asylum (47893)
• Manchester, England
18 Feb 16
We do have an annual assessment, but it rarely makes a great deal of difference.
Your reasoning on the simple interest accrued on your pension is exactly right. If you have a 5% rise each year and live around 50 years into retirement, which has been done on occasions, then that 5% would equate to around 0.5%.
1 person likes this
@Asylum (47893)
• Manchester, England
18 Feb 16
@ElizabethWallace Exactly, we cannot predict the standard or cost of living at any given time in the future, so we are unable to legislate for the unknown.
1 person likes this
@ElizabethWallace (12074)
• United States
18 Feb 16
@Asylum A relative worked as a chauffeur for a very astute bank tycoon during the depression. In his will, the rich guy left a house, a car and a pension to each household employee. He did not intend that they would ever have to work again, but after a few years, the money was not even enough to cover groceries. I figure if this financial genius could not get it right, we are all in trouble.
1 person likes this
@celticeagle (168367)
• Boise, Idaho
18 Feb 16
That certainly puts a cruel irony to the entire thing doesn't it? At least you have the pension is about the only positive thing I can see. Better off with it than without it but not by much.
1 person likes this
@Orson_Kart (6850)
• United Kingdom
18 Feb 16
I think you are one of the lucky ones!
The new state pension sucks for those if us who are in our 50's as the additional SERPS is being scrapped and the flat rate max applies. I asked for a projection and they told me I will be almost £50 worse off per week because of the changes. That is a lot of money, more than a 25% cut.
The barstards! 
1 person likes this
@Asylum (47893)
• Manchester, England
18 Feb 16
Even worse, they have the audacity to insist that you work longer.
This is unacceptable because over your working life you have paid tax and insurance which has helped to provide benefits for many people who have no intention of ever working. Now they expect you to continue working longer so that you can support these people for longer.
@arthurchappell (44998)
• Preston, England
17 Feb 16
pretty cruel blow for all pewnsioners sadly
1 person likes this
@Asylum (47893)
• Manchester, England
17 Feb 16
It is not really a great benefit to the workforce either. I often used to disagree with such large increases while I was still working.
The prices of goods will rise and as we both know they will over compensate for the increased labour costs, so the new pay rates will be negated before the next rise is introduced.
3 people like this
@arthurchappell (44998)
• Preston, England
17 Feb 16
@Asylum the national minimum wage is an invite to companies to pay the bareminimum they legally have to and not a penny more
1 person likes this
@Asylum (47893)
• Manchester, England
17 Feb 16
@arthurchappell This is no doubt true, but when the minimum rises it gives companies the incentive to reduce their work force to recoup some of the extra wage costs.
@garymarsh6 (23404)
• United Kingdom
18 Feb 16
It is an absolute disgrace what the government pay out in pensions we are at the bottom of the European league as far as Pensions go. Greece they get 97% of their salary in pension and Spain pays out nearly four times the amount of pension we receive in the UK. Bearing in mind the state of the UK economy it is a disgraceful and contemptible way of treating pensioners who after all have contributed to their pensions throughout their working lives via NI contributions,...... GRRRR
1 person likes this
@Asylum (47893)
• Manchester, England
18 Feb 16
I had a moderate wage while working, but it amounted to about treble what my pension is.
We pay large portions of our wages into tax and NI during our lives. We never begrudge supporting the genuinely sick or those searching for work, but end up also supporting people in their 20s and 30s who have no intention of ever working. Now those people have a better income than I do, which I seriously begrudge.
1 person likes this
@MarshaMusselman (38865)
• Midland, Michigan
17 Feb 16
We have the same problems here. Seniors don't get raises with social security right now, yet they now have to pay additional healthcare from those same funds. I'm old enough to retire ut may have to wait up to seven more years.
1 person likes this
@JamesHxstatic (29413)
• Eugene, Oregon
18 Feb 16
Our Social Security here in the US has gone two years now with no increase due to low inflation. My wife and I both collect it and are glad to have it, but use our savings too.
1 person likes this
