{"id":1109,"date":"2016-04-06T17:29:48","date_gmt":"2016-04-06T17:29:48","guid":{"rendered":"http:\/\/weknow0.co.uk\/?p=1109"},"modified":"2016-04-06T17:34:22","modified_gmt":"2016-04-06T17:34:22","slug":"i-dont-know-who-the-winners-and-loser-of-the-2050s-will-be-and-neither-do-the-ppi","status":"publish","type":"post","link":"https:\/\/weknow0.co.uk\/?p=1109","title":{"rendered":"I don’t know who the winners and loser of the 2050s will be and neither do the PPI"},"content":{"rendered":"

For a brief period this week, before the Panama leaks brought everyone back in the room, one of the BBC’s main headlines <\/a>was that a change to the UK State Pension was projected to make around\u00a0three-quarters of people currently in their 20s and\u00a0two-thirds of those currently in their 30s worse off than under the current arrangements. Figures of \u00a319,000 and \u00a317,000 “over the course of their retirement” were bandied around.<\/p>\n

The reason the analysis<\/a> had been carried out by the Pensions Policy Institute (PPI) was that the Department of Work and Pensions (DWP) is required to carry out an impact assessment of\u00a0such proposed\u00a0changes and had given the PPI the task.<\/p>\n

First of all, the full summary of the analysis, coverage<\/a> of which on the BBC has at least started to become a little more measured by today, is as follows:<\/p>\n

\"PPI<\/a><\/p>\n

As you can see, the numbers that came out were weekly losses of up to \u00a317 per week for some groups and weekly gains of up to \u00a313 per week for others. These numbers were themselves based on complicated projections about how benefit changes would be phased in and also how much the State Second Pension would pay people many decades into the future (the DWP paper can be found here<\/a>). They were then aggregated by multiplying by the number of weeks in retirement until the pensioner was expected to die, based on the current State Pension Age timetable<\/a> and the principal projections from the ONS 2015 Life Tables<\/a>. The total amounts expected to be paid to people in retirement, however, were not (for those in their 20s this would be around 24 x 52 x 155.65 (the start rate for the\u00a0new State Pension)\u00a0as a minimum = \u00a3194,250 in 2015 terms). Neither was any explanation made of just how many years people were being projected to live. For \u00a317 a week to translate into \u00a321,000, the person currently in their 20s will need to be in retirement for nearly 24 years. It is not clear exactly when this person is expected to retire: the current tables only go up to a date of birth of 6 April 1978 (when\u00a0State Pension Age is expected to be 68) with a vague intention to increase it\u00a0to 69 by the late 2040s.\u00a0An assumption of a retirement age of 69\u00a0looks consistent with the projections, which\u00a0indicate a life expectancy at that age of 22.95 years for males and 24.81 years for females born in 1995.<\/p>\n

And that last bit leads me on to why this particular news story\u00a0is in my view\u00a0just\u00a0foolish. I tend to get a bit crotchety whenever anyone projects anything as a fact to a date beyond my personal life expectancy (less than 33 more years, according to the ONS). We are talking about people being worse off in the 2050s and 2060s. Here are a few more projections for you with those kinds of timelines:<\/p>\n