Pension?

[Mr Badger]

Ive always seen traditional ones as a scam tbh. My mum and dad paid into them for years and while dad reached retirement, he died not long after. All the money paid in meant nothing and we had nothing from either. Same with mums pensions, although she never reached retirement dying at 58.

I won't see retirement so Im putting money into a savings account that will hopefully cover funeral etc.

First, I'm sorry to hear that your parents died at a comparatively young age. Unless you know exactly when you are going to die though, it's sensible to consider average life expectancy when making long term financial plans.

Pension schemes should not appear to be a scam and there should be benefits on death. In the old school defined benefit schemes (depending on the exact scheme rules) there would be a widow/widower/dependants pension and potentially a return of employee contributions on early death. Most companies would also have a linked death in service lump sum payment of something like 4 x salary. In the now much more common defined contribution pension schemes, your pot of money would presumably go to your estate if you died before accessing it.

 

[darkgen]

Best option IMO is just leave the state pension as it is but change taxation so those retirees with big pensions simply pay more tax. What's said above would lead to more taxpayer funded government bloat and complication, as would any other kind of means testing.

Agree, it will likely end up a shambles and individuals will hide, obfuscate actual income / savings in later life. The tax thing, I agree with and covered in my previous post to last.

 

[throwaway4372]

Basically Govt has to raise the tax money without using the types of taxes that make life difficult.
- income tax, ni, vat: make it hard to cover the cost of living, pay rent, save a deposit, invest for retirement
- stamp duty: makes it harder to relocate to further prospects, care for family, downsize
- cgt: makes it harder to save for retirement, but isa helps somewhat
- inheritance tax: doesn't impede your life at all, you pay at the end

Govt also has to live within means.

 

[jaybee]

There is a dedicated pension thread here.

 

[Begbie]

A decent option IMO is just leave the state pension as it is but change taxation so those retirees with big pensions simply pay more tax. What's said above would lead to more taxpayer funded government bloat and complication, as would any other kind of means testing.

Just give 0 pension, and give out disability benefits instead to those that can't work.

Lower taxes to reflect this, and give the public the choice to splash it now or protect themselves for their future. They can choose to work till death, or save and invest to stop working sooner. Give the people the choice.

 

[darkgen]

Just give 0 pension, and give out disability benefits instead to those that can't work.

Lower taxes to reflect this, and give the public the choice to splash it now or protect themselves for their future. They can choose to work till death, or save and invest to stop working sooner. Give the people the choice.

You've discombobulated me! Think you meant to quote @DarrenM343

 

[throwaway4372]

Just give 0 pension, and give out disability benefits instead to those that can't work.

Lower taxes to reflect this, and give the public the choice to splash it now or protect themselves for their future. They can choose to work till death, or save and invest to stop working sooner. Give the people the choice.

Problem is people are dumb, so will not plan properly, they'll get old and unable to work and have nothing, then the state will have to step in because we don't let people die, and we're back where we started.

 

[mac1]

Yeah same. 16 years in games industry, there was no company pension scheme, and I had no spare each month to start a private one. Whish I'd started putting something away though.
Putting a fair amount in now these days, but I'm not gonna be able to retire at 55.

I think starting to contribute a decent amount early always was the way to be able to retire at 55. If that theory still olds true now I don’t know.

For someone starting their working life now I’d always advocate maxing out pension contributions but if that would allow them to retire at 55, who knows.

 

[throwaway4372]

I think starting to contribute a decent amount early always was the way to be able to retire at 55. If that theory still olds true now I don’t know.

For someone starting their working life now I’d always advocate maxing out pension contributions but if that would allow them to retire at 55, who knows.

The problem is the first ~10 years of income are used on rent/deposit.

 

[Begbie]

Problem is people are dumb, so will not plan properly, they'll get old and unable to work and have nothing, then the state will have to step in because we don't let people die, and we're back where we started.

Maybe, or maybe it'll help people work things out on their own rather than being held by their hands throughout their lifes.

 

[200sols]

Too many old people and not enough workers. Even with significant tax rises now the sums don't add up and thats before AI destroys the jobs market.

 

[HACO]

Too many old people and not enough workers. Even with significant tax rises now the sums don't add up and thats before AI destroys the jobs market.

We’re doomed…

 

[Mr Badger]

Too many old people and not enough workers. Even with significant tax rises now the sums don't add up and thats before AI destroys the jobs market.

There's always a 1970s movie solution such as Logan's Run or Soylent Green. Failing that, why not a good conspiracy theory involving assisted dying for people without a job or sufficient assets...

 

[mejinks]

First, I'm sorry to hear that your parents died at a comparatively young age. Unless you know exactly when you are going to die though, it's sensible to consider average life expectancy when making long term financial plans.

Pension schemes should not appear to be a scam and there should be benefits on death. In the old school defined benefit schemes (depending on the exact scheme rules) there would be a widow/widower/dependants pension and potentially a return of employee contributions on early death. Most companies would also have a linked death in service lump sum payment of something like 4 x salary. In the now much more common defined contribution pension schemes, your pot of money would presumably go to your estate if you died before accessing it.

It would have been nice to have received something from either pension pot but even after 25 years, we didn't see a penny. I don't know exactly when I will die but I have a number of comorbidities which will mean I won't see retirement. In fact, I will be overjoyed to see 50 at this rate.

 

[Mr Badger]

It would have been nice to have received something from either pension pot but even after 25 years, we didn't see a penny.

They both paid into legit UK pension schemes for 25 years and received absolutely nothing on death? Sorry, but that really doesn't sound right at all.

I don't know exactly when I will die but I have a number of comorbidities which will mean I won't see retirement. In fact, I will be overjoyed to see 50 at this rate.

That's certainly not an enviable position, but hopefully you can prove them wrong. If not, then I suppose in a way you get the last laugh if you can spend all your money first.

 

[slinxy]

The state pension will exist, it will be political suicide for any government to get rid of it. The uproar that still happening when they (imho rightly) equalise the age for men and women and moved winter heating aid to means tested. It all depends on what the state pension is like after all the changes.

The issue is that originally the state pension was setup as a “bonus” once someone reached a certain age, and it was setup way higher than the average age people was expected to live to. Over time, people are living longer and the age that people start to receive it has been lowered.

Too many people are relying on it, if they did get rid of it then what? Keep giving 67+ year olds job seekers allowance?

There would be a massive ruckus if it went to means tested, the people who can afford to be without it, are also the people who would have paid a larger amount towards it. People with better paid jobs that are putting more into the pensions are the same people who have larger savings, that would unlikely qualify for job seekers allowance if they were out of work for a period of time and the same people who are likely to have private health care. This would be the final straw.

The only fair way for a massive reform could occur is if they drew a line in the sand and said, everyone born after this date, when you start working.. NI or what ever they want to call it will be taxed at a flat rate regardless on how much you earn. Then when you retire, the pension will be means tested.

 

[adam cool dude]

The state pension will exist, it will be political suicide for any government to get rid of it. The uproar that still happening when they (imho rightly) equalise the age for men and women and moved winter heating aid to means tested. It all depends on what the state pension is like after all the changes.

The issue is that originally the state pension was setup as a “bonus” once someone reached a certain age, and it was setup way higher than the average age people was expected to live to. Over time, people are living longer and the age that people start to receive it has been lowered.

Too many people are relying on it, if they did get rid of it then what? Keep giving 67+ year olds job seekers allowance?

There would be a massive ruckus if it went to means tested, the people who can afford to be without it, are also the people who would have paid a larger amount towards it. People with better paid jobs that are putting more into the pensions are the same people who have larger savings, that would unlikely qualify for job seekers allowance if they were out of work for a period of time and the same people who are likely to have private health care. This would be the final straw.

The only fair way for a massive reform could occur is if they drew a line in the sand and said, everyone born after this date, when you start working.. NI or what ever they want to call it will be taxed at a flat rate regardless on how much you earn. Then when you retire, the pension will be means tested.

There will come a point where the government will simply not be able to pay out the pension unless something drastic changes.

In my opinion the government should be forcing private companies to do more because current minimum contributions are terrible.

When you think about it the basic state pension is around £250k over 20 years. Not including inflation.

The vast majority of people in this country will not have a 300k pension pot to withdraw from when they hit retirement age. The ones that do will suffer because they saved whereas the ones that don't will get it for free.

When people are paying 500-600k for a roof over their heads that is where all the pension pot money is going.

It is all well and good saying there will be uproar but when there is zero money there is little that can be done.

 

[fez]

The state pension will exist, it will be political suicide for any government to get rid of it. The uproar that still happening when they (imho rightly) equalise the age for men and women and moved winter heating aid to means tested. It all depends on what the state pension is like after all the changes.

There needs to be a complete agreement across parties to do something unpopular about.

The issue is that originally the state pension was setup as a “bonus” once someone reached a certain age, and it was setup way higher than the average age people was expected to live to. Over time, people are living longer and the age that people start to receive it has been lowered.

The biggest issue isn't that people are living another 5 years or whatever, its that they cost an absolute fortune to keep and have done for increasing periods of their lives. The average person is not healthy. The average person is being kept alive at great expense and the think this is fine because "they have paid their taxes". The average person doesn't pay nearly enough in taxes for everything they get from the state.

There would be a massive ruckus if it went to means tested, the people who can afford to be without it, are also the people who would have paid a larger amount towards it. People with better paid jobs that are putting more into the pensions are the same people who have larger savings, that would unlikely qualify for job seekers allowance if they were out of work for a period of time and the same people who are likely to have private health care. This would be the final straw.

Rightly so. Its enough of a **** take already that when you are financially sensible you are punished at every turn. Save too much and lose your job? Don't worry, we'll be there when you have blown through that. Spent every penny you earn? No worries, heres your handout.

The only fair way for a massive reform could occur is if they drew a line in the sand and said, everyone born after this date, when you start working.. NI or what ever they want to call it will be taxed at a flat rate regardless on how much you earn. Then when you retire, the pension will be means tested.

Thats not fair. Like it or not, the black hole that is getting larger by the day won't magically disappear if we kicked the can down the road until a new generation comes through. It needs addressing now. Fundamentally we need a tax reform to tax the mega wealthy and multi-national companies properly and we need to look at how care and medical costs are paid.

People should not be able to protect their wealth as they age and die to the detriment of the future generations. Things like winter fuel allowance being means tested is a great example of how unwilling the older generation are to actually play ball. **** everyone else, what about me eh.

 

[postbox]

There will come a point where the government will simply not be able to pay out the pension unless something drastic changes.

In my opinion the government should be forcing private companies to do more because current minimum contributions are terrible.

When you think about it the basic state pension is around £250k over 20 years. Not including inflation.

The vast majority of people in this country will not have a 300k pension pot to withdraw from when they hit retirement age. The ones that do will suffer because they saved whereas the ones that don't will get it for free.

When people are paying 500-600k for a roof over their heads that is where all the pension pot money is going.

It is all well and good saying there will be uproar but when there is zero money there is little that can be done.

If you force private companies too much then they will consider reducing staffing and / or hiring (or just invest in AI) - the NI increase / threshold decrease has already messed everything up which was painfully obvious to everyone apart from Rachel from accounts it seems.

 

[fez]

If you force private companies too much then they will consider reducing staffing and / or hiring (or just invest in AI) - the NI increase / threshold decrease has already messed everything up which was painfully obvious to everyone apart from Rachel from accounts it seems.

Indeed. The issue with any sort of blanket change to the way companies have to account for staffing is that most companies will just reduce staffing if the sums don't make sense. You need to encourage business and entrepreneurship to grow the pie. Its a tricky business without essentially allowing businesses to operate without checks and balances but currently we are putting far too much of a burden on small businesses in an environment where a lot of the small/mid sized ones are already struggling.