I am retired. I am “fortunate” to have a DB pension, but I didn’t start out wealthy, I was sole breadwinner due to my husbands mental illness for 18 years, we nearly “lost” out house due to debt at one point.
my Pension got to the level it did because I prioritised it. I could have left my company and earnt more elsewhere , but those companies would have no longer had DB schemes. i figured that more money now, and a riskier future wasn’t worth it. I stayed with my company for over 30 years but it also meant I had to move location twice over 200 miles uprooting my family. I spent the last 5 years of my career doing an international job, which sounds glamorous , but I was away from home so much, trying to juggle raising my dc and a mentally I’ll husband and it sent me to breaking point - hence why I had to take early retirement . But working for a company with DB meant I always HAD to save right form get go of working at young age. It was mandatory, so by time I retired I’d contributed for decades at a high rate. The company was also excellent at financially educating its workforce, and encouraging us to save more into AVCs , take advantage of tax allowances etc.
it on the question of pension provision I seethe frequently, it is one of the issues that I get most irate about politically and is swept under the carpet by politicians.
The issue is that quietly successive governments have put the burden of pensions onto individuals rather than a collective responsisiblty. They have, decades ago, removed tax advantages for employers to provide DB schemes. They have sold the public a piece of propaganda that raising NI to increase state pensions to a living amount is unaffordable to the public purse. This completely omits that individuals then need to pay 5-15% of their salary into a personal pension anyway as a default now. A proportion of that is paid by every single individual to pension management companies, financial institutions etc for admin and find management costs -at an enormously inflated price above what individuals would pay if spread collectively. These fees and sums being invested have lined the pockets of the already wealthy - creaming off money from every single poor or less wealthy employee being told this is only solution to ensure their financial security. No wonder the uk financial sector has bombed- all these millions of new individual pension pots with little sums and proportionally high running costs fees have made the financial industry rich and highly dependant on retirement investmens.
No party ever wanted to seriously consider other options, let alone ever told voters explicitly that an option would be to raise NI by say 10% - not popular but, jeez, it would be cheaper for individuals, especially if the rates were increased with increasing salary as is now.
The other option would have been to oblige complainies to operate a collective DC scheme , or even at government level, so that individuals were not responsible for the fund management and admin costs applied to every single persons pension individually, and that risks were spread . This model is used in other countries to good success .
Right now the public are generally very badly informed about how pensions work. They’re difficult, making decisions on what product to convert your fund to when crystallising is difficult for anyone, but if you’ve not been good at maths , or don’t have a “savers” mindset, you can faff your what pot you have up the wall- the government doesn’t seem to realise that a free 1 hour sessions is not a replacement for being able to afford a financial advisor for years to ensure a personal pot is saving hard for you.
a lot of people don’t realise you’re pot can decrease. Your pot can vary, and the pension you take, depending on what markets are doing at time you choose to take your pension- someone retiring now will , for the same pot, receive 10% less pension now than 3 years ago for instance. add to that the factors that determine what you get have to be decided on basis of widowed pension or RPI increases, and it’s just way too much to expect of the vast majority of employees . How the hell does the government expect that low wage, basically educated people could ever be expected to make difficult and complex decisions like these.
And then we come onto the even more thorny thread of the gender pension gap. Women receive just 25% of the tax relief on pensions paid out by government year. Men save more, therefore receive more tax advantages…that’s not because they’re better savers (often the reverse), it is an amplified factor that women are subject to gender pay gaps even within an industry, but more importantly across all employment . Here’s a stark fact “Women are paid just £380,000 on average over their lifetimes compared with £643,000 for men, according to official figures that lay bare the scale of Britain's gender pay gap”. It’s not surprising then that women’s pensions are massively lower and saving pots , like the OP, are inadequate.
yes, Op, the figures of pot you need are ridiculously out of reach for you. Especially for you as a women.
the DC personal pension model is a con. We’ve been sold it as the only way to protect our futures. There were other options and models - wealthy people decided they could make more money by not doing that and screw the less well off.
yep, I get very very pissed off about it. 🤬🤬🤬🤬🤬I’m sorry for every women in this situation. 🥺💐