Poll: Pensions - Are you worried about the future?

[dlockers]

I think salary sacrifice needs some HMRC approval, im slightly out of touch here

Yeah I just can't fathom the name of the regular "pay before tax" pension which sometimes has the conflated salary sacrifice term used to describe it.

 

[Mercenary Keyboard Warrior]

Yeah I just can't fathom the name of the regular "pay before tax" pension which sometimes has the conflated salary sacrifice term used to describe it.

IIRC its called a net pay scheme

 

[EvilRob]

I am sure someone (who is actually qualified) will know the proper name, but there is a distinct thing called "salary sacrifice" or "salary exchange" which is where you agree with your employer you'll only get paid £50k instead of £55k, and they'll chuck the £5k plus any NI saving they make into your pension.

Pensions I am familiar with are paid before tax, but not in a salary exchange agreement. That means NI is slightly higher than on a proper salary sacrifice scheme. I am in this system.

I imagine the saving of NI is offset by the employer reducing their contributions (a % of your new lower salary) so net benefit is minimal.

(You may have said this in your post but I wasn't clear).

My workplace scheme is salary sacrifice and they pay their contributions against reference (pre sacrifice) salary rather than salary after sacrifice but get to save the NI. I also get to save the NI, but it is a small amount.

As mentioned, I think the term you are looking for is a net pay scheme. But other employers use relief at source schemes making it more complicated to get the full tax relief.

 

[OldKitMan]

Bah! I've only just truly understood that with PAYE you only receive tax relief on basic tax rate, and you need to claim from HRMC for the higher rate. Can only back date by fourrtax years too.

As others have said you might be ok but you need to check, if you look at your pension providers statements then it should show the contributions and any Tax Relief. I've been in a couple of pensions over the years, one was relief at source and the other deducted from gross salary. Another way to check is on your payslip you'll have your gross earning for the month under payments or similar and then you'll have a 'Taxable Payments' in the This Period box, if that number is lower than the payments then you'll be getting deducted at source. Hope you get it sorted.

 

[dirtychinchilla]

not worth checking what my pensions worth, ill check it when im ready to retire lol . it might be a silly way of looking at it but, i put 7.5% in and so dose my employer. if i loose some money on it then the way i look at is its money lost from what my employer put in and not the money i earned. i was going to up from 7.5% but i decided to scrap that idea with everything rocketing in price

That doesn't quite make sense, though 15% is decent in my mind. If you play around with https://www.thesalarycalculator.co.uk/, you might find that because of they way the tax brackets work, a decent increase in how much you contribute to your pension could not cost you very much.

 

[Mekrel]

Phew, checked today and the pension payment is deducted prior to tax being calculated on the remainder.

 

[KiwiTaff]

Just did a back of a fag packet run using the armed forces pension calculator. To be taken with several pinches of salt.

I've done just shy of 14 years to date having joined at 17 in 2008, I did the numbers based off of staying in untill the age of 55. (Made my eyes water)

If I stay till 55, I'll be entitled to an 85k payout (which I believe to be tax free) and approximately 19k a year which will increase at state pension age. This is on a slight blend of the previous pension scheme and the new pension scheme brought in , in 2015. The people on the old old pension scheme are laughing all the way to the bank.

The hardest thing to believe is that I'll see till 55 in the mob. I'm going to have to have a hard think if this is really what I want to do. Still got another crack at the whip up untill age 40 to start another career.

I love my job, love the service, proud of what I do. Though despise the attitudes of people I work with. To the point they're an embarrassment to the uniform. Though thats a whole other thread entirely

Hopefully when I eventually leave I'll be mortage free / have a cushion from a S&S ISA too.

 

[Penfold101]

Just did a back of a fag packet run using the armed forces pension calculator. To be taken with several pinches of salt.

I've done just shy of 14 years to date having joined at 17 in 2008, I did the numbers based off of staying in untill the age of 55. (Made my eyes water)

If I stay till 55, I'll be entitled to an 85k payout (which I believe to be tax free) and approximately 19k a year which will increase at state pension age. This is on a slight blend of the previous pension scheme and the new pension scheme brought in , in 2015. The people on the old old pension scheme are laughing all the way to the bank.

The hardest thing to believe is that I'll see till 55 in the mob. I'm going to have to have a hard think if this is really what I want to do. Still got another crack at the whip up untill age 40 to start another career.

I love my job, love the service, proud of what I do. Though despise the attitudes of people I work with. To the point they're an embarrassment to the uniform. Though thats a whole other thread entirely

Hopefully when I eventually leave I'll be mortage free / have a cushion from a S&S ISA too.

I consider myself ridiculously lucky to have joined under the 75 scheme - I didn’t understand or appreciate any of this when I first joined up at the same age you did.
You don’t mention which branch you joined, but RAF promotion is ridiculously difficult in the technical trades so even staying till age 55 is not something to take for granted, although given the manpower crisis at the moment you could probably stay as long as you wanted at almost any rank…

 

[Sheff]

I just read this morning that the US Social Security system will run dry in 2034, and not be able to pay out all of its liabilities. This makes me wonder if the UK state pension scheme will be in a similar position before I retire in ~2050.

Steve Baker (so massive pinch of salt) said that we have 20 years - I think it was on politics live this week.

I can see the state pension age rising again to try and put it off, maybe another u-turn on increased NI contributions - eventually the triple lock will have to go.

 

[HACO]

Steve Baker (so massive pinch of salt) said that we have 20 years - I think it was on politics live this week.

I can see the state pension age rising again to try and put it off, maybe another u-turn on increased NI contributions - eventually the triple lock will have to go.

Yeah ours, as it stands today without triple lock increases, will be insolvent in late 2030s or so. With triple lock that can happen even sooner. Something has to give. Either taxes will have to go up substantially, or state pension age will have to go higher, or it will have to be means tested, or a combination of these.

FWIT, state pension was intended as a means-tested benefit for the poor people above 70 when life expectancy was under 60. It was never intended to fund old people's lifestyle for 20-30 years after retirement. With demographic shifts we are going to have fewer and fewer workers per old people, and that's not just the UK but the whole world, state pensions in all countries will have to go through these changes and perhaps turn into what they were intended in the first place.

 

[KiwiTaff]

I consider myself ridiculously lucky to have joined under the 75 scheme - I didn’t understand or appreciate any of this when I first joined up at the same age you did.
You don’t mention which branch you joined, but RAF promotion is ridiculously difficult in the technical trades so even staying till age 55 is not something to take for granted, although given the manpower crisis at the moment you could probably stay as long as you wanted at almost any rank…

I'm a 2nd year Sgt at the moment Air & Space Operations Manager (ABM/ASOP in Old money) I fancy my chances in a few years time to be competitive for Flight Sergeant. Though things ultimately slow down to WO. A couple of years ago FS > WO was almost at dead man's shoes level! Though there's a slight improvement now.

After doing my promotion course recently, most of the techies that were there had time on me in the service, so fully get their promotion is slower. That side of the RAF is completely foreign to me, but the calibre of personnel seemed vastly better to what I contend with .

 

[robj20]

Try not to check on my pension too much my Vanguard one had dipped a lot this year. But it'll bounce back eventually.

 

[Richie]

Either taxes will have to go up substantially, or state pension age will have to go higher, or it will have to be means tested, or a combination of these.

The government will have a fight on their hands if they means test it and essentially remove a pension that someone has paid up to 55 years of contributions into (ages 16 to 66, more as age increases happen)

 

[Penfold101]

I'm a 2nd year Sgt at the moment Air & Space Operations Manager (ABM/ASOP in Old money) I fancy my chances in a few years time to be competitive for Flight Sergeant. Though things ultimately slow down to WO. A couple of years ago FS > WO was almost at dead man's shoes level! Though there's a slight improvement now.

After doing my promotion course recently, most of the techies that were there had time on me in the service, so fully get their promotion is slower. That side of the RAF is completely foreign to me, but the calibre of personnel seemed vastly better to what I contend with .

We have our fair share of idiots come through, believe me. Personally I just enjoy being on-aircraft and using the tools - the higher up you go you end up being a manager and sitting behind a desk, dealing with policy, support and manpower which just doesn’t interest me. I’ve just passed my 22 and I’m happy sitting at Cpl for the last 3 years of my career whilst doing my RoS for getting my license.

 

[ci_newman]

The government will have a fight on their hands if they means test it and essentially remove a pension that someone has paid up to 55 years of contributions into (ages 16 to 66, more as age increases happen)

Thats the issue with pyramid schemes though. We haven't actually "paid" our own pension contributions, we've paid social security / NI deductions. Nothing was ever ring fenced for our own retirement, it was assumed endless growth.

Its easy to see why the Government has forced all employers to introduce private pensions, by the time we get to 2040 I expect the national pension will be means tested like UC and you only get it if your private pension and savings doesn't cover the basic "minimum".

Millenials and later generations are ****ed.

 

[Destination]

The government will have a fight on their hands if they means test it and essentially remove a pension that someone has paid up to 55 years of contributions into (ages 16 to 66, more as age increases happen)

I tend to agree, whatever minister introduces that will end up swinging off a bridge.

 

[Richie]

Thats the issue with pyramid schemes though. We haven't actually "paid" our own pension contributions, we've paid social security / NI deductions. Nothing was ever ring fenced for our own retirement, it was assumed endless growth.

Yup, I mentioned this previously about how pensions are funded so I understand it. However, that does not negate the fact that I have had money taken out of my salary to pay for my state pension.

I've paid it in good faith. Therefore, as far as I am concerned, I am due it.... I'm not convinced that everyone else genuinely thinks they aren't due it themselves.

 

[ci_newman]

Yup, I mentioned this previously about how pensions are funded so I understand it. However, that does not negate the fact that I have had money taken out of my salary to pay for my state pension.

I've paid it in good faith. Therefore, as far as I am concerned, I am due it.... I'm not convinced that everyone else genuinely thinks they aren't due it themselves.

I agree with you for what its worth. But I don't see how the pension black hole will be funded

 

[MichaelAwkward]

However, that does not negate the fact that I have had money taken out of my salary to pay for my state pension.

Who told you those deductions were specifically to pay for your state pension?

 

[ci_newman]

Who told you those deductions were specifically to pay for your state pension?

Until recently you were able to opt out of additional NI pension contributions. Why could you opt out of something if you weren't specifically making contributions to it?

[Edit] in fact my FIL did opt out of additional NI pension and is utterly screwed now because he didn't actually invest in a private pension to replace it.