To think we are heading into a pensions disaster

A lot of NHS workers aren’t aware of the fact that they were contracted out of paying full NI contributions for years and so have to work/contribute longer than 35 years to get the full state pension.

This. I’m NHS and out at 55 (after 36 years) next year. The pension is the only thing that’s kept me there. Many many others like me.

Ok so employees must be offered a pension. Only idiots don’t pay as the government gives tax relief contributions - up to a certain amount. Self employed is a different ball game.

Public sector employees can opt out too.

Employees in the private sector still have the right to "opt out" of workplace pensions. They're not compulsory by law. I don't know whether public sector pensions have the same rules or whether a PS employee can opt out of their PS pension scheme too?

Self employed don't benefit from "employer" contributions - they have to bear the entire contribution themselves.

Fair comments except for the "deferred" tax on pensions. Lots of people are saving up to 62% tax on their pension contributions if they're higher rate taxpayers and in the £100-£125k tax band. If they draw down their pensions at 20% basic rate, they've massively benefitted from tax savings. If they draw pensions in the years before state retirement age, some of their pensions will be tax free under the personal allowance. Your point is only really valid for people who are basic rate taxpayers putting money in and basic rate taxpayers when they draw it out again. (And of course, there's no capital gains tax on the increase in value of the underlying investments/assets which is another tax break).

@countingthedays945 People are saying this awful student debt stops them saving for a pension and another poster says they stumped up £27,000 fees and all living expenses (which can be £12,000 pa easily) so dc can make pension contributions. So firstly only the rich do this and secondly all employees must make pension contributions. Only the self employed have options.

Repayments are taken from my salary. They don’t have to come for me at 60 because they come for me every month.

I was a teacher. We would be pretty stuffed if no one went into teaching or nursing because there are better paid jobs.

@AllThePotatoesAreSinging You do not actually “owe” anything. No one is coming after you at age 60 to pay off the balance! It’s not a bank loan. The repayments are based on earnings. If you don’t work, you don’t pay. Some people work part time under the threshold. They don’t pay. Most people need the loans and a good degree from a good university should get you a better paid job.

Completely agree! And since we are now clued up about pensions (which I wasn’t in my 20s) we can advise them to pay into their pensions from the outset.

Because people don’t want their kids to spend their working life paying off their student loan twice over and still owe what they borrowed. It’s effectively an extra 9% tax rate, with an interest rate twice that of my mortgage.

I’ve been paying my student loan back for 20 years. It’s only the last 3 years that the amount owed has started to go down rather than up or staying the same. I’ll be paying it for the rest of my working life, unless I suddenly become able to pay it off all at once.

I would rather my kids were able to pay that money into their own pension or use it to pay off their mortgage. I’ll do my best to make sure they don’t have any student loans.

It will be a worry for a lot of people who have prioritised house deposits, rent, paying for childcare and a high cost of living

So paying for a place to live, food, gas and electric are necessities to live. Childcare is need since two wages are often required to pay for a place to live, food, gas and electric. Not sure how I can prioritise these basics over a pension? What is my other opinion live in the woods and forage for food?

DH and I not doing that brilliantly on pensions front but we do own our property outright in London so could downsize and release about 500k but that's not necessarily loads if you might have to spread it over 2 decades.

@Echobelly I think that's ok if you're in London - free transport, free & cheap culture, competing food shops, decent hospitals.

YANBU - I think about this a lot. There's going to be increasing numbers of people who have rented all their life, never been able to save much or anything for a pension and when they finally can't work anymore they won't be able to afford anywhere to live, or we'll start seeing couples in their 80s on bedsit rooms bc it's all they can afford.

DH and I not doing that brilliantly on pensions front but we do own our property outright in London so could downsize and release about 500k but that's not necessarily loads if you might have to spread it over 2 decades. I'm assuming working until I'm 70, but of course health issues could arise before then.

Why is this thread about university fees? I’m confused!

@ThymeScent Most people cannot pay £9,500 pa fees and £12,000 living expenses though. It’s very much a minority who can do this. Also employers are auto enrolment into pensions. Not much choice unless you are self employed regarding pension payments. Whether it’s worth paying up front is a moot point if the job secured is minimum wage. If it’s medicine there’s work but not all grads make enough to pay any grad tax.

@Newtess. The maintenance loan gives just about enough if it’s the max loan. Some poorer students get bursaries too so can get at least £12,000. Yes they might need to look for cheaper accommodation but it’s doable and they can work! Also the old grants were means tested. Many students worked back in the day too and parents were expected to make up the difference as now. As now some didn’t! It’s never been the case that parents weren’t means tested.

Tax “relief” on pensions is just deferred tax. There’s actually a huge tax risk now because tax rates in the UK are only heading one way therefore taxes on withdrawal may well exceed the tax deferred at the point of contribution. They just work the opposite way around to ISAs with the tax paid at withdrawal rather than up front, but with additional uncertainty… granted there are some additional benefits like not paying NI on the money, and the tax free lump sum, but who knows if that will persist? And with money in a pension the Government can change the rules after you’ve contributed and planned for decades, move the date when you can access the fund, impose so punitive taxes on the money. In the absence of any cross-party commitment not to do so and with all the evidence that they do continually try to raid these funds, it is certainly not risk free.

As for state pensions, it’s inevitable really that they won’t remain universal and that they will need to be phased down to a safety net only. Public sector pension schemes will also have to be significantly changed because the liabilities are not payable given demographic projections. Sadly, no Government will mention these basic facts. They distract people with nonsense while refusing to acknowledge the large-bottomed grey animal taking up most of the room. Perhaps someone should let some mice go next to Downing Street and see if that prompts any reaction?

I paid my DC university fees and costs upfront. Better for them to be able to put into their own pensions as soon as they started earning rather than being saddled with a loan

Like so many things in the UK, terrible planning with nobody thinking through what the consequences would be in terms of skills shortages in trades, and lack of available jobs for graduates from pointless degrees at non-universities. And if people are meant to work until they are nearly 70 then how can there be no access to retraining? Yet this country won’t even decent primary and secondary schools (or even appropriate provision for disabled children!). The results of totally inadequate investment in current and future working generations are very predictable.

The UK seems unable to produce a single political party which is vaguely competent or has any interest in anything beyond the next election, or even next week.

Excuse all the typos!!

You don’t think anyone realises this? Really? You think you are the only person who understands this 😂

But that only helps the country if they have less reliance on the state, and to get there, we need to means test the state pension. A bit pointless using taxpayers money to line the pockets of someone's private pension, AND then give them a state pension on top. It's double dipping.

i was going to say! Either somebody’s built a working delorian and travelled here from 2022 or they are confused.

But yes, it’s a big problem that Governments continue to try to treat people’s retirement funds as their personal piggy bank. It destroys public trust on the system. They’ve been told time and again that they need to do is simply make no more changes to the tax rules around pensions/ ISAs and provide a stable platform so that people have the confidence in the systems, but every time a Chancellor is short of cash they raid pensions/ savings again. Idiotic if you actually want people to save for their retirements and be self-sufficient, which the country desperately needs them to do!

@TheCastleDoesNotReply

I agree that far too many people are going to university and it’s helping nobody. We need to make university for the top 10-15% and fully funded, and reinstated decent polys, technical colleges, apprenticeships with proper links to business and genuine routes into permanent employment, and stop pretending everybody is academic. Also funded evening classes etc to enable people to retrain midlife.

Agree with every word of that. We desperately need to reverse the damage of the 90s and 00s in terms of obsession with university to the detriment of our previously world leading further/adult education system.

This is worth looking at, to see the reality of the situation. It’s obvious that things won’t go on like this because the country would go bankrupt.

@SinkToTheBottomWithYou The other issue is contributing years and how many retire early. They can because of equity in homes. There’s lots of reasons why some need to work and others don’t. My DH is still doing a bit of work at 72. It’s his brain and experience that count though. By so many retiring early and not paying NI it leaves far too much for younger workers to pay and massive pension debt we cannot service.