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State Pension Blog: disaster strikes

In the fourth part of Greg Kingston's blog, the organisers throw a spanner in the works, taking his budget for the week down to single figures.

 

by Greg Kingston on Jul 05, 2012 at 09:14

State Pension Blog: disaster strikes

Greg Kingston (pictured), along with 100 of his colleagues at pension provider Suffolk Life, has accepted a challenge from his employer to live off £70 a week. That's how much charity AgeUK says a typical pensioner has left after bills, council tax etc. Here's yesterday's blog in case you missed it.

Disaster.

I was all set to write about food today. I’m fortunate to enjoy the sorts of meat that are not popular these days – liver, kidney – and that are therefore cheap. They formed the bulk of the meat in my shopping basket for this week.

I do the majority of the cooking in my household anyway, so I’m used to choosing the ingredients. We also grow our own vegetables: at this time of year there’s a regular supply of lettuce, Swiss chard, radishes and bok choi. 

So I was looking forward to rather smugly announcing how much money I’ve been able to save, and how well I’ve been able to eat.

Big Brother strikes

Instead, my already fragile budget has been hit by a shock. The organisers of the challenge delivered a message overnight:

'One of the various things we talked was whether you could manage to save anything out of your £70 budget – after all, if you were a real pensioner living on the basic state pension, you would need to save for holidays and emergencies.

'Well, as luck would have it, such an "emergency" has happened. During last night, you experienced a power cut. As a result, your fridge was without electricity for several hours, and it failed to keep all your food fresh. You have "lost" food to the value of £3, which can no longer be eaten and has to be replaced.

'Now, we don't want you to really throw any food away – that would be too wasteful. However, your spending budget has reduced to £67 for the week.'

A tight budget gets tighter

I don’t want to get too bogged down by the details – in reality I’d consider claiming against my electricity provider, or the food would still be edible etc. This challenge is to operate within a single week, and the harsh reality is that my remaining £10.22 has now been reduced to just £7.22 with two days remaining.

At this stage the amounts don’t seem important. I didn’t spend anything yesterday, a feat I’m set to continue to the end of the challenge. What is important is the overwhelming sense of a lack of control, the fact that I can’t influence or improve my position. It is incredibly frustrating.

This turn of events brings into focus the wisdom of previous decisions, and my visit to the cinema along with the refreshments I bought that sparked the anger of some commentators yesterday. As I mentioned at the time, I did feel pretty down after than that.

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19 comments so far. Why not have your say?

Gareth Thompson @cssgareth

Jul 05, 2012 at 09:35

Firstly, those that were being negative yesterday are those NOT taking part in this challenge. It's alright for them to comment of the pressures of living on a pitiful salary whilst sipping their mochachocafrapalicious from the fancy coffee shop.

I think what you're doing is admirable, and the fact you're highlighting the pressures to other companies through twitter is great. I'm sure it's not getting much return from their twitter accounts, but at least you're doing your bit to raise awareness.

Here's to hoping you find a few quid behind the sofa!

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golfalot

Jul 05, 2012 at 12:18

I have just finished posting on yesterday's blog but I am going to repost it here as Gareth Thompson's opening post is exactly the type of post I was referring to....

Hello Greg,

This blog is interesting but I am sure your inevitable conclusions will be that £70 a week is not enough to live on - particularly if you want to watch new release films and purchase confectionery items with a 600% mark up!

For £1 of your £70 you could have watched loads of very recent movies at home on DVD from Lovefilm (for a week ) and eaten your fill of microwave popcorn.

Or you could have had a day out for free by jumping on a bus (for free), going for a swim (for free), getting back on the bus (for free), going to a local authority museum / park / event (for free) etc. etc.

Other contributors have pointed out the AgeUK are not unbiased and would like to see pensioners income increased. Therefore why would you go to them to ask their opinion on what a pensioner has left to spend?

It would be interesting to know what AgeUK's top brass are earning in salary and pension benefits and how many employees are on 50k plus p.a. before we take their opinions on pensioner poverty as gospel. Please do publish this - if they will reveal it to you.

The number of living pensioners who went through WW2 is decreasing dramatically and therefore the argument that.... 'I fought against The Hun for you, Sonny Boy' (and are consequently deserving of a good pension), holds less and less weight.

The current crop of pensioners have had it very good for the majority of their lives and into old age as well. A lot of the improvements in their living standards throughout their lives has been built on the back of borrowed money, which the unborn will have to repay.

the money they claim to have paid in to the system is diddly squat in terms of what they are going to have back.

Therefore we should perhaps be looking at the current generation of over 65's with a little less respect and a little more disdain for what has happened in their time. Maybe they should be the ones giving up their seats on the bus for us (I joke of course).

Finally Greg, it is my opinion that the cinema trip (story) is a little sensationalist and designed to create controversy. You could just have well written that you were feeling horny in your old age and so visited your local sex shop where you spent some of your pension on DVDs and toys. '' Oh, woe is me! I have just blown £20 and now have very little to live on for the rest of the week ''........Well in that case don't visit the sex shop, bookies, cinemas, or other venues where spending is entirely luxurious and discretionary.

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Greg Kingston

Jul 05, 2012 at 12:25

@golfalot -snap. I'll post my reply here too (slightly edited to make sense on this blog entry)

Thanks for the long comment golfalot.

Any questions for Age UK really should be directed towards Age UK - they provided guidance on the amount for the week at the request of my employer and nothing more.

It seems there are a lot of cynics out there. I agreed to this challenge long before I was able to attract the interest and support of Citywire to help publicise it. My goal is the challange itself, and not the publication of it - that said, I'm extremely grateful for Citywire to give me such a great platform to help spread awareness.

The cinema trip is certainly not designed for sensationalism - my tickets were booked (and paid for!) in advance of this week. It was my choice to bring the cost of them into this week as I thought that in doing so it would be more accurate and representative.

You are of course entitled to your opinion and to share it. I'm sorry that the truth is a little less exotic than your imagination! You therefore might find this update interesting, particularly the closing paragraphs... The findings I've expressed there might well be the lasting impression left on me after this challenge...

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Inge Jones

Jul 05, 2012 at 12:25

Well I was one of the people smiling at the idea of even considering buying £7-worth of popcorn and drink on a limited income, but I also want to say how much I appreciate and am enjoying this series. What's more it is *free* enjoyment for me, which is quite important at this point in my life :) Well, yes I pay for my internet connection, but that is fixed price and budgeted for - and non-negotiable lol! I guess I could be reading it at the library though, if they don't get closed...

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golfalot

Jul 05, 2012 at 13:27

Thanks Greg,

I am enjoying the post and as I said I do find it enjoyable reading. I just think that the £70 budget should have been higher and that AgeUK should not have been the ones who provided this figure.

I also think that if your cinema tickets were bought before the challenge started then the expenditure on the tickets and consumption of overpriced snacks should have been discounted. Including them actually makes it LESS 'accurate and representative'.

I have a round of golf booked for this Saturday that is going to cost £30 but would not have included that if I were on the challenge. Otherwise it is not a blog about whether can you survive on £70 but rather can you keep up all of your existing commitments on a greatly reduced budget.

My criticism is well intentioned. I am not trying to knock you but simply ask you to consider these points before concluding at the end of the week that it is too hard to live on a state pension. Age UK would love to hear that.

I have read your last paragraphs:

'' I’m comfortable with the decisions I’ve made so far this week, and have learned that when you’re living on the breadline there will always be others with more money who believe they have the right to tell someone with less how to act and how to spend their money ''

GUILTY: I do this. I see families in my community who would describe themselves on the so called 'breadline'..... who do not work, have as many kids as they want, have Sky TV, smoke, drink, play the lottery, have numerous dogs and cats (and goats), get a larger home for free than I can afford to buy or even rent, complete with larger garden and get that home maintained for free.

Why shouldn't I be able to 'tell' them how to spend it. Not that I ever would really tell them directly, for the simple reason that would get my head kicked in!

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Inge Jones

Jul 05, 2012 at 14:04

Golfalot, I am not sure I agree with you that the amount should have been higher. It depends on whether the person is entitled to any other meanstested benefits. In my case, I have more than the £16K savings limit and will be receiving only the basic state pension. Unless we assume I will be gradually spending my savings on household bills (which I most certainly do not want to do!) by the time I have paid for fuel and my telephone line (even if I give up internet) I am pretty sure there won't be more than £70 left.

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Mark22

Jul 05, 2012 at 14:48

The difficulty with the amount is that whatever you choose, some people will have more and some people less. The frightening thing to consider is that if the "average" is £70, the chances are there are a lot more people with less than more. So if Greg runs out before the end of the week, so will lots of others.

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golfalot

Jul 05, 2012 at 15:05

Hello Inge,

You have more than 16k in savings but have no other income stream at all, other than the basic state pension?

Is that correct? No private or public pension? No SSP / SERPS? No spousal income? No dividends? No interest? No part time job income? No rent a room income? No winter fuel allowance?

Basic state pension for a single person is £107.50. Pension credit would increase this to £142.70 per week. All index linked from now until death and all provided for 'so say' circa 10% NI contribution for you per annum (assuming you were employed). This NI plus employer's contribution also apparently went on NHS and the provision of numerous state benefits. (Truth was mostly borrowed money funded all of this).

Not a bad deal me thinks (£142.70 X 52 WEEKS A YEAR = £7420.40 X 30 YEARS = £222,612) And that's without index linking.

I would never be as rude as to ask what the sum is that you have saved and invested but it would be remiss of me not to point out that if you are just above the 16k threshold then get rid of a grand or so (perhaps a trip to your local cinema?) and your weekly pension will leap in value.

If you have, say, 100k invested and are still just surviving on the basic £107.45 a week, then I dare say you are right and £70 is all you have left (from the £107.45) - in which case you would have to use some of your £100k to pay for your popcorn.

I do not know you but there are plenty of pensioners near me pleading poverty who are living in £600k plus properties but refuse to sell up and downsize.

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golfalot

Jul 05, 2012 at 15:41

@mark22

''if the "average" is £70, the chances are there are a lot more people with less than more. So if Greg runs out before the end of the week, so will lots of others.''

1. The average is not £70. It was a figure arrived at by AgeUK using a finger and the prevailing wind.

2. Greg is purchasing premium entertainment, food and beverages that are beyond the means of his newly imposed fictional budget.

3. 'Avearge' is a widely misunderstood and misused term that can be used subjectively to sway the reader. Even if £70 were the 'average', the number above and below this would depend on whether this were a mean, mode, or median average.

Anyway it is not an 'average' as per point 1.

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Inge Jones

Jul 05, 2012 at 16:40

Golfalot, that is correct, I have no other pension. For most of my adult life I have been a stay-at-home mother or had quite low paid or part time work, as I was admittedly too lazy at school to get any significant qualifications. Savings are mainly from inheritance from my parents, and the sale of a larger home, which I was prudent enough to put aside for a rainy day, knowing I didn't have many other income opportunities. Yes of course, that is precisely what does come out of the savings, occasional luxuries. But I know I have to keep plenty back in case for example I need a new fridge! I freely admit that I am part of the reason young people today are having a tougher time, as I was pretty much of the mindset that the welfare state would pick me up if I fall, and so was not "hungry" to make something of myself. I didn't draw heavily upon benefits over the years, as I was doing a bit of (registered) childminding, and letting rooms in my home at times (I have a smaller home now, so cannot do that in the future). I think being paid £107 a week for doing nothing, especially as most of the pension contributions were paid by the state in the first place as Home Responsibility credits, is downright generous and I will feel lucky to have it. I feel sorry for the younger people - trying to live on under £65 a week at the same time as trying to be upbeat and well dressed at job interviews, and have the money to get to them.

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golfalot

Jul 05, 2012 at 17:59

Wow. That was an amazingly honest post Inge. Kudos to you.

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james horton

Jul 05, 2012 at 18:23

It's very unlikely that food would spoil because the fridge was without electricity for a few hours. If it was in the freezer compartment and thawed out, the best thing would be to cook and use it up within two or three days. Raw meats could also be cooked and re-frozen quite safely. I work on a budget of five pounds per day for food and all my other day to day requirements and I live quite well on good, wholesome food. It can be done simply because I have no other choice.

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HETTIE1

Jul 05, 2012 at 18:49

I,am a 66 femail, have worked since i was 15, i had one child, at THAT TIME NO CHILD BENIFIT, it started when my son was 14 years old at £1. a week,

as you cannot claim for any years not worked bringing up a child, as child benifit only came in for first child, as i said , so my state pension is reduced due to having not enough stamps on, so if there had been child benifit then i would now have a full state pension, but as i worked all my life apart from few years when child older, so have a company pension and have never had any kind of benifits

am glad to say

but who said about the younger pensioners , just remember , all the child benifits today, but not then,

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Paul Barrett

Jul 06, 2012 at 01:18

Your experiment is NOT representative of how pensioners who are on the sosche live.

They have far more disposable money than a pensioner who has worked hard and saved hard and has a small private pension.

Those people are idiots and have only themselves to blame for NOT screwing the system like all the lazy pensioners have done who now get EVERYTHING for free having made no useful contribution.

I would add that I am one of those idiots.

You should be looking at how much pension credit a pensioner who does not have sufficient contributions to have a state pension receives.

Such a pensioner will be in receipt of

Housing benefit

Pension credit

Winter fuel Allowance

Free travel pass

Full Council Tax benefit

Free Council house most probably with tenancy for life.

Free NHS

Alone this can value up to more than £16000 gross.

My pension is not £16000 and I have to pay for everything plus in 16 years my mortgage won't be paid off and I will be evicted and the flat repossessed.

Plus there will be free personal care and free care home when required.

Additional benefit for disability.

I know of a scrounging pensioner who has been in receipt of additional diability benefit as she supposedly has agrophobia!!!!

Unbe -uckingbelievabe!!

Doesn't sem to stop her going out shopping mind you!!

This pensoiner hasn't worked a day in her life and has a very nice lifestyle.

She is on equivalent income of about

£24000

You are therefore not having a true experiment.

See how you can live on full means tested benefits and you will find you can have a nice lifestyle without any worries.

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HETTIE1

Jul 06, 2012 at 11:23

I do know what you mean, but as today people work , but much better on benifits, need to change the benifits system , my own view , it sounds hard but , we should all have to pay into into the system , stamps and such before we can claim benifits, maybe it would help

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Hotrod

Jul 06, 2012 at 12:34

@ Paul Barrett

I can empathize with anyone in your situation. I see many instances where state support is manifestly unfair. If you add in Motability cars and government grants for home improvements, lifestyle choices appear to be even more divergent, and what is so galling is that some of the undeserving view honest wage earners as a bunch of brainless oxon.

But there it is. That's life as they say. It's no good harbouring grudges, we just have to shrug our shoulders and move on.

As regards your own personal situation, I think things will probably turn out quite a bit better than you imagine.

When you get to the point where you can no longer afford to pay the mortgage a number of options maybe available. After all you should have some positive equity in the property by that time. It maybe that a bank or an insurance company would be willing to exchange the leasehold for a reduced rent. It would depend on the terms of the lease and the time left to expiry. In any event I think it highly unlikely that you would be turned out in the street. If you are honest and upfront about your financial situation the powers that be will help you find alternative accomodation which you can afford.

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James B. Johnson

Jul 07, 2012 at 15:12

Golfalot

Just how many pensioners do you think are going to live for 30 years!

What a load of golf balls.

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golfalot

Jul 07, 2012 at 18:38

@ James B. Johnson.

Although I assume your question is rhetorical (lack of question mark), I will answer it anyway.

The answer is.... an ever increasing number.

People used to retire at 65 and be dead a couple of years later. For my generation half can expect to see 95 and teenagers today will have a majority seeing 100.

It is not 'golf balls' as you put it. You would had to have been living in a cave not to be aware of this. It is the central reason why the status quo cannot continue.

Sorry to be the one to break this bad (or good) news to you.

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Hotrod

Jul 08, 2012 at 21:22

I've just had a "gander" at the ONS website. According to official statistics: Male citizens of English origin who reached the age of 65 between 2008 -2010 can anticipate living for another 18 years giving a total life expectancy of 83 years.

This figure has increased from 78 years when they were born.

The website does not provide a breakdown of the percentages of the population who will undershoot or exceed this figure, but it seems to me that you will certainly need above average health to reach the age of 95.

As regards the younger generations who are maturing, I feel that it is by no means certain that the upward trajectory of rapidly increasing life expectancy will continue at its present pace, given that young people today are experiencing self-induced obesity and binge drinking epidemics, also sports people and atheletes are testing themselves to extreme limits.

Improvements in medical intervention, notably, the treatment of cardiovascular disease is a significant factor which has increased life expectancy, but the duration of quality life free from ilness is what matters most.

If increasing numbers of people end up as cabbages in old people's homes, the whole exercise of deferring death seems rather pointless.

Which brings me back to the touchy subject of how all this can be paid for.

The Govt. have said that they hope to introduce legislation which would limit the cost of long term care to £35,000 (approx 1 year's expense) which seems to me rather simplistic, as those with a small pot of savings would pay disproportionately more than millionaires, who due to their healthier options in pre-retirement life stand a greater chance of outliving them.

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