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How to fix the pensions triple lock but still protect pensioners from high inflation

The reintroduction of the pensions triple lock means the increase in weekly payments could vastly outpace earnings growth

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The triple lock increases some benefits payments by inflation, earnings or 2.5%, whichever is highest. Max_Z / Shutterstock

Plans to increase state pension payments in line with inflation have been reinstated by the UK government and are supported by both of the contenders for the Conservative party leadership. But even if inflation was not always at the 40-year high we are currently seeing, a more sustainable way of calculating pensioners’ state income is needed.

The pensions triple lock was first introduced in the June 2010 budget. It means annual increases in payments are made in line with the highest out of earnings growth (6.2% as of May 2022), price inflation (currently 9.4%) or 2.5%.

The triple lock was suspended for one year in April 2022 as the end of the COVID-19 furlough scheme inflated average earnings growth. The government is now bringing it back in time for the annual update in pension and other state payments, which will come into effect in April 2023. The annual increase will be set by the government in the autumn. With inflation high and rising (the Bank of England expects it to reach 13% by October), it will be the measure used for the increase.

Inflation of more than 10% will see the value of a full basic state pension climb past £155 a week, while that of the new state pension – available to those reaching the state pension age since April 2016 – will increase to more than £200 a week. Since earnings are currently growing less quickly than inflation, a rise in pension income will be greater than any increase in average earnings. In other words, people receiving state pension payments will typically see stronger income growth than those relying on earned income.

As a result, the current period of higher growth in prices than in earnings has brought the triple lock into question. This is because it protects the value of state pensions when earnings growth is weak (as it is now) but will also continue to increase with any subsequent recovery in earnings.

A recent report from the Office for Budget Responsibility (OBR) shows why this approach is unsustainable. While inflation is spiking at the moment, the OBR believes it will average 2% over the long term and that average earnings growth will be around 3.8%. But it also thinks the triple lock will imply an average annual increase of 4.3% for pensions. This is because of volatility in the two sets of figures: while often earnings will grow faster than prices, on occasion that is not the case.

Unexpected expense

As such, maintaining the triple lock would see the value of the basic state pension and new state pension continue to grow faster than average earnings, pushing up government spending on state pensions. Overall, the OBR report projects that state pension spending will increase from 4.8% of national income in 2021–2022 to 8.1% in 50 years time, an increase of 3.2% of national income, which is equivalent to more than £80 billion a year in today’s terms. This is despite further rises in the state pension age. And the use of the triple lock will be a key driver of this increase, not average earnings growth.

When the triple lock was first introduced in the June 2010 Budget it was not expected to be this expensive. If the triple lock had been used over the 19 years prior to its launch, from 1991 to 2009, it would only have been more generous than increases in line with average earnings growth on three occasions. And so, overall, it would have caused state pension increases averaging just 0.1% a year more than if it was calculated using average earnings indexation.

In contrast, over the 12 years from 2010 to 2021, since the policy was first implemented, triple lock indexation would have been more generous than average earnings indexation on eight occasions, according to my calculations based on ONS figures. This would have caused state pension increases averaging 1% a year faster than average earnings indexation.

As such, the triple lock has already been significantly more expensive than expected. It was initially estimated to have cost £450 million in 2014–15, but subsequent OBR analysis suggests that it actually cost six times more – or £2.9 billion. This is clearly not sustainable, particularly amid the current economic downturn.

Older man at laptop with phone
There are more sustainable ways to calculate state pension payments in the current economic environment. astarot / Shutterstock

Finding more sustainable solutions

One solution put forward in the Conservatives’ 2017 general election manifesto was to move to a double lock, where the pension would increase by the greater of growth in prices or earnings. So the 2.5% underpin would no longer exist. In recent years inflation has been greater than earnings or 2.5%, and sometimes both earnings and inflation have been below 2.5%. So the triple lock has been more generous than earnings indexation, and a double lock would also have been more generous than earnings indexation (but not as generous as a triple lock).

But over the period from 2010 to 2021, a double lock still would still have seen the state pension increase by an average of 0.7% a year more than average earnings growth, according to my calculations. So while it would not be as expensive as the triple lock, it’s still not fiscally sustainable over the longer term.

Another option is to move to directly link pensions to average earnings. This was legislated by the Labour government in 2007 following the recommendations of the Pensions Commission. Such a policy could be fiscally sustainable over the long term, if implemented alongside state pension age increases due to rising longevity. But it would mean that in periods where earnings growth was running below inflation (such as now) there would be a real squeeze on pensioners’ incomes.

There is an alternative that would both be as generous as (but not more generous than) earnings indexation over the long term, but that would also preserve the real (inflation-adjusted) value of state pensions in years in which earnings were not keeping pace with prices. Instead of a triple lock, the government could set a target level for the state pension relative to average earnings – let’s say that pensions should be worth 25% of average earnings every year. If this target was 10% more than current pension payments, for example, the government could set a longer-term strategy for meeting that target by increasing payments in smaller annual increments. If prices grow faster than earnings one year, the government could make pension payments price-indexed and then adjust in subsequent years to remain on track for the target, if needed.

This would preserve the real value of state pensions without locking in unsustainable increases at times when earnings are growing faster than prices (as happens under a triple or double lock). It would protect pensioners from inflation while following a target. For whoever ends up being chancellor in the autumn, this could be a way to help improve long-term public finances.

The support of the Economic and Social Research Council (ESRC) is gratefully acknowledged (grant reference ES/W001594/1), as co-funding from the Centre for the Microeconomic Analysis of Public Policy (ES/T014334/1) at the Institute for Fiscal Studies. Over the last three years, I have also received research grants from the following parties, who may be interested in the topic and findings but who have had no material interest in this work nor any engagement with it: • Centre for Ageing Better • Department for Work and Pensions • Social Security Administration • Nuffield Foundation • As part of a consortium of funders of research into retirement and savings: Age UK, Aviva UK, Association of British Insurers, Association of Consulting Actuaries, Canada Life, Chartered Insurance Institute, Department for Work and Pensions, Interactive Investor, Investment Association, Legal and General Investment Management, Money and Pensions Service, and Pensions and Lifetime Savings Association. I am Deputy Director at the Institute for Fiscal Studies. In addition I am a member of the Social Security Advisory Committee and of the advisory panel of the Office for Budget Responsibility.

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Nonprofit Blood Donation Service Starts Matching Unvaccinated Patients With Donors

Nonprofit Blood Donation Service Starts Matching Unvaccinated Patients With Donors

Authored by Allan Stein via The Epoch Times (emphasis ours),

Swiss…

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Nonprofit Blood Donation Service Starts Matching Unvaccinated Patients With Donors

Authored by Allan Stein via The Epoch Times (emphasis ours),

Swiss naturopathic physician George Della Pietra believes people worldwide should be free to choose whether to get a COVID-19 vaccine injection or not.

He believes the same should hold for those receiving transfusions with “vaccinated” blood.

“The problem is right now we have no choice,” said Della Pietra, founder of the nonprofit Safe Blood Donation service in 2021, matching unvaccinated blood recipients with donors in 65 countries.

“It was very clear from the beginning that the COVID hype was way out of control,” Della Pietra said. “It was not as dangerous as they say it was.

“As a naturopath, I can make no sense of this pandemic, which was never really a pandemic. It leaves space for so many explanations.”

Della Pietra believes that an mRNA injection is more dangerous than the pharmaceutical companies are willing to admit. He said the growing numbers of adverse reactions are reason to question their safety and effectiveness.

Data from the Centers for Disease Control and Prevention (CDC) showed that vaccinated and boosted people made up 58.6 percent (6,512) of the COVID-19 deaths in August—up from 41 percent in January.

We can no longer say this is a pandemic of the unvaccinated,” Cynthia Cox, the Vice President of the Kaiser Family Foundation told The Washington Post in an article on Nov. 23.

Nearly 70 percent of the world’s 8 billion people have received at least one mRNA injection for COVID-19 since the vaccines began rolling out in 2021 at the height of the virus’s spread.

Each of the three primary mRNA COVID-19 vaccines contains COVID-19 “spike protein” fragments, which bind at the cellular level to stimulate an immune response to the virus.

Della Pietra believes these spike proteins produce “classic symptoms”—namely blood clots—that “horrified” him.

“I’ve never seen anything similar—and I’m not talking only about spike proteins,” Della Pietra told The Epoch Times in a phone interview.

It’s unbelievable because we never had this problem before. It’s been only two years. They want to keep the narrative [that an mRNA vaccine] is not dangerous.”

A man looks at his phone while donating blood at Vitalant blood donation center in San Francisco on Jan. 11, 2022. (Justin Sullivan/Getty Images)

Although donated blood and plasma must undergo a cleansing process before transfusion, Safe Blood Donation says this is not enough to remove all mRNA ingredients.

“I’m talking about graphene oxide and non-declared inorganic components in the vaccine, which we can see in the blood. When I see them, I have no idea how we can get rid of them again,” Della Pietra said.

Looking at the abnormalities in vaccinated blood, he said, “OK, we have a problem.” People are receiving the vaccine “more or less through the back door.”

“You can not avoid it anymore.”

In the United States alone, there are approximately 16 million units of donated blood annually. Of those units, about 643,000 are “autologous”—self-donated—and the number is increasing yearly, according to BloodBook.com.

Della Pietra said that, to his knowledge, Safe Blood Donation, based in Switzerland, is the first unvaccinated blood donation service of its kind.

“So, there is no blood bank with mRNA-free blood yet, not even with us,” Safe Blood Donation states on its website.

“And, although we have already asked hundreds of clinics, at the moment—at least in Europe—all of them still refuse to allow the human right of free blood choice with them—or at least do not want to be mentioned because otherwise, they fear reprisals.”

A nurse works as employees donate blood during a blood drive held in a bloodmobile in Los Angeles on March 19, 2020. (Mario Tama/Getty Images)

Della Pietra said the main goal of Safe Blood Donation is not to start an mRNA-free blood bank. Rather, it is to make it possible to match unvaccinated blood donors and unvaccinated recipients, “which we bring together in a clinic (medical partner) that allows the choice of blood donor.”

Medical website Seed Scientific said that blood banks and biotech companies will offer as much as $1,000 monthly for blood donations.

While Della Pietra said there are no unvaccinated blood banks, he sees the demand for unvaccinated blood rising.

This is why I decided to do [SafeBlood Donation]. I wanted to make a network for unvaccinated people looking for a blood donor because they need it—whether they have scheduled surgery or an emergency,” he said.

Safe Blood Donation began working in the United States about a month ago, building an infrastructure of medical partners.

However, in the current medical environment, central blood banks such as the Red Cross do not segregate their blood donations based on their vaccinated or unvaccinated status.

Rendering of SARS-CoV-2 spike proteins binding to ACE2 receptors. (Shutterstock)

“The American Red Cross does not facilitate designated donations for standard blood needs, as this process often takes longer and is more resource intensive than obtaining a blood product through our normal process,” the Red Cross told The Epoch Times in an email.

In a small number of situations, there is an exception for rare blood types where compatible blood types are extremely difficult to find. A rare blood type is defined as one that is present in less than 1/1000 people.

“We want to emphasize that the Red Cross adheres to all donor and product requirements as determined by the FDA to ensure the safety of the blood supply and is committed to continuing to provide life-saving blood products for patients across the country.”

The National Library of Medicine said that “across study sites, the average hospital cost per unit transfused was $155 and the average charge per patient was $219.”

Still, the Red Cross, which provides 40 percent of the nation’s blood donations, said “no studies” demonstrate adverse outcomes from transfusions of blood products collected from vaccinated donors.

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Tyler Durden Sun, 12/04/2022 - 20:55

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Pedestrians choose healthy obstacles over boring pavements, study finds

Up to 78% of walkers would take a more challenging route featuring obstacles such as balancing beams, steppingstones and high steps, research has found….

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Up to 78% of walkers would take a more challenging route featuring obstacles such as balancing beams, steppingstones and high steps, research has found. The findings suggest that providing ‘Active Landscape’ routes in urban areas could help tackle an “inactivity pandemic” and improve health outcomes.

Credit: Anna Boldina

Up to 78% of walkers would take a more challenging route featuring obstacles such as balancing beams, steppingstones and high steps, research has found. The findings suggest that providing ‘Active Landscape’ routes in urban areas could help tackle an “inactivity pandemic” and improve health outcomes.

[A copy of the paper and images can be downloaded here]

Millions of people in the UK are failing to meet recommended targets for physical activity. Exercising “on the go” is key to changing this but while walking along a pavement is better than nothing it causes no significant increase in heart rate so only qualifies as mild exercise. Walking also fails to significantly improve balance or bone density, unless it includes jumping, balancing, and stepping down.

But would adults opt for such ‘fun’ routes if given the choice? A University of Cambridge-led study published today in the journal Landscape Research suggests that with the right design, most would.

Previous research on ‘healthy route choices’ has focused on people’s likelihood of walking instead of using transport. But this study examined how likely people are to pick a more challenging route over a conventional one and which design characteristics influenced their choices.

Lead author, Anna Boldina, from the University of Cambridge’s Department of Architecture, said: “Even when the increase in level and extent of activity level is modest, when millions of people are using cityscapes every day, those differences can have a major positive impact on public health.”

“Our findings show that pedestrians can be nudged into a wider range of physical activities through minor changes to the urban landscape. We want to help policy makers and designers to make modifications that will improve physical health and wellbeing.”

Boldina began this research after moving from Coimbra in Portugal – where she found herself climbing hills and ancient walls – to London, which she found far less physically challenging.

Working with Dr Paul Hanel from the Department of Psychology at the University of Essex, and Prof. Koen Steemers from Cambridge, Boldina invited almost 600 UK residents to compare photorealistic images of challenging routes – variously incorporating steppingstones, balancing beams, and high steps – with conventional pavements.

Participants were shown images of challenging and conventional tarmac routes and asked which route they would choose. The researchers tested out a range of encouraging / discouraging parameters in different scenarios, including crossing water, shortcuts, unusual sculptures and the presence / absence of a handrail and other people. Participants were asked to score how challenging they thought the route would be from 1 (as easy as walking on level tarmac) to 7 (I would not be able to do it).

Eighty per cent of the study’s participants opted for a challenging route in at least one of the scenarios, depending on perceived level of difficulty and design characteristics. Where a challenging option was shorter than a conventional route, this increased the likelihood of being chosen by 10%. The presence of handrails achieved a 12% rise.

Importance for health

The WHO and NHS recommend at least 150 minutes of ‘moderate’ or 75 minutes of ‘vigorous’ activity spread over a week, including a variety of activities aimed at enhancing bones, muscles, and agility to stay healthy. In addition, adults over 65 are advised to perform strength, flexibility, and balance exercises.

Boldina said: “The human body is a very complex machine that needs a lot of things to keep working effectively. Cycling and swimming are great for your heart and for your leg muscles but do very little for your bone density.”

“To improve cardiovascular health, bone density and balance all at once, we need to add a wider range of exercises into our routine daily walks.”

Psychology of choice

Co-author Dr Paul Hanel said: “Children don’t need much encouragement to try out a balance beam but we wanted to see how adults would respond, and then identify design modifications which made them more likely to choose a challenging route.”

“We found that while embarrassment, anxiety, caution and peer pressure can put some adults off, the vast majority of people can be persuaded to take a more challenging route by paying careful attention to design, safety, difficulty level, location and signage.”

The proportion of participants who were willing to pick a more challenging route varied from 14% for a particular balance beam route to 78% for a route involving wide, low stepping stones and a log with a handrail. The least intimidating routes were found to be those with wide, steady-looking balancing beams and wide steppingstones, especially with the presence of handrails.

The researchers suggest that routes that incorporate more difficult challenges, such as obstacle courses and narrow balancing beams, should be placed in areas more likely to be frequented by younger users.

The participants expressed a range of reasons for picking challenging routes. Unsurprisingly, the study found that challenging routes which also acted as short cuts appealed. Up to 55% of participants chose such routes. The researchers also found that the design of pavements, lighting and flowerbeds, as well as signage helped to nudge participants to choose more challenging routes. Many participants (40%) said the sight of other people taking a challenging route encouraged them to do the same.

The participants who picked conventional routes often had concerns about safety but the introduction of safety measures, such as handrails, increased uptake of some routes. Handrails next to one steppingstones route increased uptake by 12%.

To test whether tendency to choose challenging routes was linked to demographic and personality factors, participants were asked to answer questions about their age, gender, habits, health, occupation, and personality traits (such as sensation seeking or general anxiety).

The researchers found that people of all levels of activity are equally likely to pick a challenging route. But for the most difficult routes, participants who regularly engaged in strength and balancing exercises were more likely to choose them.

Older participants were as supportive of the concept as younger ones but were less likely to opt for the more challenging routes for themselves. Nevertheless, across all age groups, only a small percentage of participants said they would avoid adventurous options completely.

The study applies the idea of “Choice Architecture” (making good choices easier and less beneficial choices harder) plus “Fun theory”, a strategy whereby physical activity is made more exciting; as well as some of the key principles of persuasion: social proof, liking, authority, and consistency.

Future work

The researchers hope to run experiments in physical test sites to see how intentions convert into behaviour, and to measure how changes in habits improve health. In the meantime, Dr Boldina continues to present her findings to policy makers.

Critics might question the affordability and cost effectiveness of introducing ‘Active landscape routes’ in the current economic environment.

In response, the researchers argue that installing stepping stones in a turfed area can be cheaper than laying and maintaining conventional tarmac pavements. They also point out that these measures could save governments far greater sums by reducing demand for health care related to lack of exercise.

Reference

A. Boldina et al., ‘Active Landscape and Choice Architecture: Encouraging the use of challenging city routes for fitness’, Landscape Research (2022). DOI: 10.1080/01426397.2022.2142204

Media contact

Tom Almeroth-Williams, Communications Manager (Research), University of Cambridge: researchcommunications@admin.cam.ac.uk / tel: +44 (0) 7540 139 444


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Tesla’s Chinese Rivals Set New Records

Tesla’s Chinese EV rivals are putting pressure on the market leader with monthly records.

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Tesla's Chinese EV rivals are putting pressure on the market leader with monthly records.

Tesla's competition in the electric vehicle market has been heating up over the past two years as more EV manufacturers ramp up production and deliveries.

Elon Musk's Austin, Texas-based company has seen its share of the EV market shrink from about 79% in 2020 to 75.8% in June 2022 to about 65% today as rival automakers continue to ramp up their factories.

Tesla  (TSLA) - Get Free Report still has a lot of good news to report through the first three quarters of 2022, as it is well on its way to delivering 1 million EVs with 908,000 delivered in the year through Sept. 30 after delivering 343,000 in the third quarter. The company also rolled out its newest EV on Dec. 1 with the delivery of its Semi Trucks.

While Tesla's top competitors in the U.S. hold small percentages of the market -- Ford  (F) - Get Free Report, 7%; Kia, 5%; Chevrolet, 4%, Hyundai, 4% -- these companies and smaller ones are setting records at delivering EVs as they increase production.

Ford reported in November that it had a 103% year-over-year increase in EV sales. Kia in the same month said it had a 133% increase in sales year-over-year. Volkswagen reported in November that it had reached its delivery benchmark of 500,000 units a year earlier than expected after recording  a 25% year-over-year increase in deliveries in October.

Shutterstock

Pressure from Chinese Rivals

Tesla is seeing increased pressure coming from China, and not just from covid pandemic-related restrictions and factory closures. Chinese rivals Nio  (NIO) - Get Free Report, Li Auto  (LI) - Get Free Report, and BYD all had impressive numbers for November.

BYD reported that it sold 113,915 fully electric vehicles in November, which was a 147% increase year-over-year. It also sold 116,027 plug-in hybrids, which was a 164% year-over-year increase.

Nio on Dec. 1 reported it delivered 14,178 vehicles in November, a new record-high delivery amount, for an increase of 30.3% year-over-year. Cumulative deliveries of Nio vehicles reached 273,741 as of Nov. 30.

Nio's November deliveries consisted of 8,003 premium smart electric SUVs including 4,897 ES7s, and 6,175 premium smart electric sedans including 3,207 ET7s and 2,968 ET5s.

Nio said that it plans to further accelerate production and delivery in December.

Li Auto on Dec. 1 said that it delivered a record-high 15,034 EVs in November for an 11.5% year-over-year increase. Cumulative deliveries through November reached 236,101.

Li Auto SUV Sales

“We set another monthly record with 15,034 deliveries in November," Yanan Shen, co-founder and president of Li Auto said in a statement "In particular, Li L9 has been the sales champion of full-size SUVs in China for two consecutive months since it commenced delivery, establishing it as a top choice for six-seat full-size family SUVs in China."

Shen said that the Li L9 SUV in November received the highest safety rating for tests on the driver and passenger sides from the China Insurance Automotive Safety Index.   

NIO and Tencent Holdings on Nov. 28 entered into a strategic cooperation agreement to further deepen partnership in the areas of autonomous driving related cloud services, intelligent driving maps and digital ecosystem to provide users with experiences beyond expectation, according to a statement.

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