How much will your monthly pension be?

[rubberduck]

in reality though they've not 'payed into' anything - it isn't like there is a big pot of money waiting for them to collect a pension from but they're reliant on future tax payers... the vast majority will not have been net contributors to the tax system (relative to spending per tax payer) through their lives - they've simply paid their taxes (including a tax that has some weak link to social security)

I don't think it is wrong to start slashing the amount paid out or to introduce some form of means testing

Excellent post and quite right. For consitency, people saying they have 'paid in' should be slapped down on this forum in the same way people who use the term 'road tax' by the pedant squad. Of course, road tax exists i.e. a taxation to use your vehicle on the road... Indeed, it is actually a more useful term than 'vehicle excise duty' as it is not directly proportionate to the amount of emissions your vehicle emits as it does not take in to acount useage. For example, an equivalent car that does twice as many miles as another does not pay twice as much... Morover, a car could do many tens of thousands of miles per year but pay nothing as it has not been used on public highways.

What they of course really mean when they use the 'roadtax was abolished 1937 thicko!' argument is that the money that came from this taxation was no longer ring-fenced to be reinvested in public highways. Of course it still went in to the government pot, a proportion of which was invested in to public highways so the only actual change is that the investment was not necessarily directly proportional to taxation... Quite a leap from 'road tax' i.e. a tax to use your vehicle on the road (a fully logical term) being abolished. I remember that Dimple chap being particulalry galling over this point and even created a nauseating signature about road tax being abolished so 'STFU'....

But coming back to the original post by Dowie I think I read that in order to be a net contributor to the system you have to be earning an average of around £36,000 per year.... Easy to see in reality why lots of people aren't really 'paying in' at all. Moreover, there is certainly no ring-fencing of the money as it is all dependant on future generations taxation.

 

[Deleted member 66701]

How do you access the money without paying huge amounts of tax on it?

I do pay tax on it.

 

[Mr^B]

I do pay tax on it.

I was referring to the huge amounts of tax you need to pay if you withdraw/access your pension fund before you are 55. Not the standard tax one would pay on capital gains (for example).

Now we have established that this income isn't actually from a pension, it's something else, it's all fine - you may carry on.

 

[Deleted member 66701]

I was referring to the huge amounts of tax you need to pay if you withdraw/access your pension fund before you are 55. Not the standard tax one would pay on capital gains (for example).

Now we have established that this income isn't actually from a pension, it's something else, it's all fine - you may carry on.

Yeah, sorry, I should have been clearer.

It's a private investment that I'm using to fund retirement.

 

[Deleted member 66701]

amigafraud2003

LOL!

 

[Combat squirrel]

Iv had a pension since I was 16, my dad was keen to get me on a good pension asap, he started paying in until I worked full time, then I took over, I think the last letter I read expects around 1200 a month income on today's money when I retire. That's not including my state and previous employer pensions, I work for myself now, so am glad I have it.

 

[semi-pro waster]

in reality though they've not 'payed into' anything - it isn't like there is a big pot of money waiting for them to collect a pension from but they're reliant on future tax payers... the vast majority will not have been net contributors to the tax system (relative to spending per tax payer) through their lives - they've simply paid their taxes (including a tax that has some weak link to social security)

I don't think it is wrong to start slashing the amount paid out or to introduce some form of means testing

That is perhaps an easier attitude to take on a theoretical level than a practical one and there may be a distinction to draw between moral and legal.

If people have "paid into" a system and understood that they would receive XX from said system then if they've made plans for retirement based on that assumption it becomes much more difficult to say afterwards "well you should have foreseen that we might have to alter what you're going to receive once you're not really in a position to make alternative arrangements, sorry old bean, tough luck and all that". There's a reason why we try not to have laws with retrospective effects and redefining the rules of the game after a player has withdrawn from the field is a bit problematic. Legally one probably can change the level of pension payments at any time but there is presumably a risk that a constructive obligation has been formed if one were to attempt to change something that has become established as practice and given rise to valid expectations on the part of the recipients.

Of course you're right that there's no pension pot in terms of the state pension it's a huge (and growing) unfunded liability so it seems certain that action will have to be taken at some point but there are choices about how you do it and how best to ensure fairness (subjective as that is).

 

[chief barker]

amigafraud2003

Seems so

 

[inferno]

Company has no pension scheme at all. I get 1 months salary for every year I work. If I finish my career at this company I'll get something around 350K, a nice amount but nothing like If the money was being invested and it's all subject to change anyway so can't count on it.

I think when I come to retire we are going to see serious issues arising, I am saving for pension but most of my friend don't have a house let alone pension!

 

[Raymond Lin]

Whichever way I look at it there is always someone better off than me and some people worst off.

My work scheme sucks, but at least mortgage will be done in 5 years or so and then will put everything into pension.

 

[BigT]

Company has no pension scheme at all. I get 1 months salary for every year I work.

I don't think that's legal to not have an auto enrolment scheme in place and in any case it isn't very smart by your employer. If that extra month's salary was given to you as pension contribution and not salary not only is it more tax efficient for you but they wouldn't pay stuff like NIERS on it.

http://www.thepensionsregulator.gov.uk/en/employers/

 

[Azza]

In theory as things stand at the moment if I stayed at my current employer for another 27 years my work pension would be at ~£30,000 pa.

But whether I stay there that long is a different matter, it's incredibly doubtful. Have to see in a couple of years when we've decided what we want to do house & family wise.

Then there is my SIPP which I'll have to decide what to do closer to the time.

 

[vincent1989]

in reality though they've not 'payed into' anything - it isn't like there is a big pot of money waiting for them to collect a pension from but they're reliant on future tax payers... the vast majority will not have been net contributors to the tax system (relative to spending per tax payer) through their lives - they've simply paid their taxes (including a tax that has some weak link to social security)

I don't think it is wrong to start slashing the amount paid out or to introduce some form of means testing

you know that and I know that but that's not representative of the country as a whole now is it? I agree on principle but I think if you've been told for say, 30 years, that this is what your tax pays in to, this is what you're getting, then that's what you should get and as I've said if that means my generation has to pay the price, live a little more humbly so that we can fill that black whole and our children/grand children aren't the ones left carrying the can then that's what needs to happen. Unless my situation drastically changes it's likely I'll be working till I drop anyway, as long as it's not my brain that goes first that is.

I don't feel it's wrong to say to someone who is under the impression they've been paying in for 10 years (someone like myself), that actually the system we use is currently hugely underfunded, impractical and 'unfair' and we need to put you on something that is well funded, practical, means tested etc and you may have to contribute a bit more but your putting less/no burden on your progeny.

but it all comes down to government leadership making and taking tough decisions, realistically it's one of those things that needs to be cross party, so the message is clear and it can't be used as an electioneering tool but there's not enough spine between then to show a bit of backbone and do something like that.

 

[muon]

Company has no pension scheme at all. I get 1 months salary for every year I work. If I finish my career at this company I'll get something around 350K, a nice amount but nothing like If the money was being invested and it's all subject to change anyway so can't count on it.

I think when I come to retire we are going to see serious issues arising, I am saving for pension but most of my friend don't have a house let alone pension!

I think you might be misunderstanding it. That sounds very close to a career average salary scheme.

A £350k pot in todays money isn't easy to make via a private pension. You are underestimating how good that actually is.

Here are examples below.

https://www.hl.co.uk/pensions/annuities/annuity-best-buy-rates

You would get 3.5x the amounts in the table.

On the simplest annuity retiring at 65 that is over £18k a year.

 

[ExRayTed]

I have a railway final salary pension. Been paying into it for 20 years so far. I don't know an awful lot about pensions but the projected pension and lump sum seem ok to me

 

[muon]

I have a railway final salary pension. Been paying into it for 20 years so far. I don't know an awful lot about pensions but the projected pension and lump sum seem ok to me

Final salary schemes are always good compared to pensions available now. Your employer is likely to lose a lot of money on the scheme (as it probably requires deficit funding), which should tell you that you are getting a good deal.

 

[inferno]

I think you might be misunderstanding it. That sounds very close to a career average salary scheme.

A £350k pot in todays money isn't easy to make via a private pension. You are underestimating how good that actually is.

Here are examples below.

https://www.hl.co.uk/pensions/annuities/annuity-best-buy-rates

You would get 3.5x the amounts in the table.

On the simplest annuity retiring at 65 that is over £18k a year.

Unfortunately it's true, I should have added that I don't work in the UK but the middle east, so my higher salary does offset no pension scheme I guess. When I resign I get ( I hope!) 1 month basic salary per year worked in cash. It used to be 35 days per year and now it's been reduced to 21 I believe for new joiner, so you can see how you can't bank on it!

The nationals that work at my company get a gov funded final salary pension after 25yrs of work as far as I am aware, not a bad gig for them and they could have joined our company at 18yrs old!

 

[SpeedFreak]

I am just focusing on building my pot as quickly as I can. I have contributions of 25% of my basic (7% from me matched with 14% from my employer and top up with a further 4%). I want to get this to 30% so will continue to sacrafice my payrises for the next 2 years to do so. I am very happy with my current standard of living so am comfortable in doing this. In terms of final pot, I have a figure in mind to build but no firm thoughts on a retirement age. I enjoy working, am experienced and think I bring a lot of value to my company. Even if I retired at 55 I would want to contract/consult for some time afterwards, maybe not full time but certainly 2/3 days per week.

 

[rubberduck]

Yeah, sorry, I should have been clearer.

It's a private investment that I'm using to fund retirement.

Heya amigafan... I'm not being flippant or doubting you but I think I have read in multiple threads that you managed to retire very early from your 'first career' (HP was it?) with a combination of earning a very high wage coupled with some judicious investments. This has since allowed you to go down the academia route as sort of a hobby if you will, while at the same time providing you and your family with a large enough income that they can live a very comfortable life. I am genuienly fascinated with how you managed this and would love to hear your story from the time you left school to the time you were able to retire. To be able to progress so quickly up the corporate ladder you must have been either very innovative and hard-working or were perhaps an excellent salesman and make an incredible amount of commission etc. Either way, I'd love to hear about it in full detail. Moreover, what can you tell me about the investments you made leading up to your retirement? How much did you invest and where did you invest it in order to get such returns? Being an amiga fan also, I suspect you are not that older than me and can only look up to someone who was so plugged in and thus be able to make wise financial decisions at such a young age. How did you do it?

And yes, I am jealous

 

[Deleted member 66701]

I'll put a post together at some point. But yeah, it was essentially accelerating rapidly up the corporate ladder due to ability, lots of overtime and shift work while lower down, paying off a mortgage very quickly and then dumping almost everything into a pension and investments.

It was tough, especially during early my 30s when I saw my friends getting thier big houses and Porches as they accelerated through thier careers while I made do with more modest toys, but I'm reaping the rewards now. I'll never have an expensive car or a huge house, I'm ok with that in exchange for never having to work again. Now when I chose to work, I can pick what I fancy and drop it without a second thought.

At the moment I'm lecturing part time and enjoying it massively, but if the day comes where I stop enjoying it, I'll just stop.