To shrug and say "Er, so?" when I read: "Half of UK not saving enough for retirement, says study"

[fgaaagh]

AIBU to wonder where we're meant to get the money to pay into a pension, alongside all the other pressures on the family finances? (normal household costs, commuting costs, mortgage, council tax, helping out my own parents, topping up my NI contributions from being a SAHM cos we couldn't afford childcare to eat up my wages and more on top, and, finally, possibly saving for kids tuition fees or a small amount for a first house in the unlikely event anything is spare and left over).

Seriously - I've just read this headline online, and I don't get why the government / media try to make out in their articles that people don't care enough to plan for retirement to any meaningful level.

I wonder how many cases, of the current section of society who are middle aged - what reasons will make up proportion of those not saving "enough"?

1. Igorance (didn't know the govt pension wouldn't be enough)
2. Apathy (who cares about retirement, live for today)
3. Arrogance (I'll be fine, I'll find a way)
4. Inability (can't afford to)

Personally, I'm betting that if we could zip forward 50 years and speak to the people currently in their 30s / 40s, the answer would be mostly made up of Number 4s. Amongst my friends and relatives, it's certainly the case.

So AIBU to not give rat's arse about what the government or any advisory body thinks about your Average Jane saving for retirement? Because it's not like we can really do that much about it, is there? There have been warnings for years telling people to save more for retirement, we're certainly more aware than the people who are retiring now were at our age.

Ho hum!

£58 a month isn't going to buy you fuck all in terms of a pension

When they say "50% not saving adequately" could that 50% possibly be made up of lots of women who take take time out for children, fall off the career ladder, go part time, etc etc etc? Hmmm I wonder...

YANBU. I had to stop paying into my pension because we just can't afford it. Right now it is 'head down and pay the mortgage' time. Am more concerned with the short and medium term than the long term.

on the other hand, some people have no money because they have got in the habit of spending whatever they've got. I have known people on very good earnings who never have any money left, and they still wouldn't if you doubled their earnings.

Getting into the habit of tucking something away for the future might not stop you spending whatever you've got, but if the money goes away before you get your hands on it, you might not miss it.

Although I am very conscious of the shameful behaviour of pension companies when they can get away with it (high charges and orphan assets in particular) there are now some very good value schemes about. Compound growth over 40 years can perform very well.

Its up to the government to create a stable platform for pension saving, amongst other things. If it is such a problem in this country, it surely shows that there is something wrong with the organisation of the country somewhere, no?

The trouble is that they keep changing the goalposts, so it is hard to plan wisely long term for your future.

Plus, if you did everything the government of this country advised you to do at various times, goody goody style, you would probably be in massive debt and unable to make ends meet.

purits - my husband is eligible to retire at that age but he doesn't have to and can continue in his career until he's 55 if it suits us. Yes, he's employed by the state and, yes, it's a very generous deal but there are good reasons for that generosity. He's in the Army and the nature of the job justifies the pension deal.

I've been paying into a pension since I was 25 (6 years). In all honesty I'd have been better saving the money towards a house deposit. Owning my own house when I retire would give me far more security in retirement than my pension especially as I'm not convinced it will exist by then.

The mortgage company treats my pension contributions in the same way as a personal loan payment so it reduces the amount I can borrow. No reward for being financially prudent there.

Yes, Beta has a lot of good advice there though I'd slightly amend:

There are very good reasons why people are rationally choosing not to save for a pension

There are good reasons not to put savings into a pension fund as such, but that doesn't mean you shouldn't view a lot of your savings and investments as a 'pension fund' - longterm and not to be blown on a whim!

OK. jcscot. Forces are special circumstances. He can have his retirement at 41 with my blessing and thanks.

Morebeta

Would your advice be different if the higher tax rate rebate on pension contributions still existed?

My view would be that for a 50% top up on your contributions, it's worth putting money into a SIPP vs an ISA.

Grimma - yes I agree.

"...but that doesn't mean you shouldn't view a lot of your savings and investments as a 'pension fund' - longterm and not to be blown on a whim."

Looking in a holistic way at all your assets (eg house, savings, ISA) and your liabilities (eg overdraft, mortgage) is the way to go. Its wat me and DW do. Of course the pension industry do not want you do that. They want you to routinely put the same amount of money in per month and pay their fees regardless of the rest of your financial situation.

wel, on the one hand i have seen all the money my dad put into pension schemes fly away..

i am planning on buying a property to rent out before i retire to serve as a pension. that is the plan. how to achieve it...harder.

and then that can be part of my DCs pension, and so on...

of course, we are still a way to go on the mortgage on the house we live in...

@Morebeta... Of course it makes no sense to save up whilst in debt. People with no money can't finance a pension. But not everyone is in debt - contrary to popular belief - and so the advice to look again at retirement provision is very valid.

Agree with what Beta and Poe are saying, I think the other reason people don't save is (in my case):

1. Mistrust and inability to get good information.

I research carefully, DH and I are intelligent people able to assimilate information, we have previously managed complex money, but we just can't seem to find a pension product that makes sense for us.

His work scheme is not contributed to by the employer, I'm self-employed. If we could save into a government scheme, even if it was low-interest, but the money was GUARRANTEED as secure, and there were mandatory contributions by his employer/HMRC to incentivise us to keep paying in, then we would. In the mean time we're going to put our money where we can see it (mortgage, ISA), rather than pay into a scheme that if one of drops dead a day too early or some 20-year-old fund manager makes a cock up means we might never see a penny again.

i do have a pension of sort but took redundancy last year.

fil saved hard for his pension and then watched over 50% of it go up in smoke a few years ago. it is hard to have faith in any sort of saving or pension scheme atm.

i am planning on buying a property to rent out before i retire to serve as a pension. that is the plan.

Hopefully history won't repeat itself. DHs mother and aunt worked in their family business, and their father gave them each a rental property which he viewed as their 'pension'. Then the Labour government at the time imposed 98% tax on 'unearned income' which was what this was deemed to be. I don't think this lasted for very long as it obviously was a ridiculous policy designed only to punish not to be an effective fiscal measure (the really rich offshored, of course). I really don't think this would happen again, but it is a bit of a lesson in not having all your eggs in one basket.

TheBride - yes at the margin some higher rate tax payers would be better of saving using a SIPP if the higher rate tax incentive were still there. I have a SIPP but no longer contribute. I just manage the pot that is there.

Cogito - yes for people with no debt it might make sense if they have used up all their other tax free allowances elsewhere and are well paid enough to have spare money. I just sense that the 20% of people not contibuting which are the fous of this advice are very likely not to be in that position and almost certanly not if it is only a matter of giving up a cup of coffee each day. These are the people who most definitley should not be contributing. The interest on their other debts, means testing and management fees will wipe out far more than they could ever gain through investment returns.

I worry i won't have enough income when i retire. Can't afford to save more but think if i did then ill just get shafted when they means test the state pension.

More Beta Me too. Thanks. Just wanted to check if my IFA had screwed me over.....but it appears he hasn't......or at least that you two agree

"I'm guessing that he is State employed."

I'm guessing he is not! Unless he is a firefighter or similar job that demands people retire at a young age.

In the public sector the default pension retirement age is 65 for most people. And public sector pensions are contributory. I have only ever heard people in the private sector being part of a non contributory pension scheme.

I have a public sector pension that's about to be frozen as I'm not going back to work after mat leave. My husband is self-employed and has no pension but some savings. We have just put a bit in national savings and ISA but there's none spare. With one income we think ourselves lucky we have no credit card debt or loans bar the mortgage.

I won't be starting a private pension - I have to put all our income into daily living expenses. We will be living for today in the forseeable future.

There are so many calls on finances now, 'the future' is just an unreal place so far away it's out of a lot of peoples minds.

lesley, its already established he's Army.

The days of some private companies allowing unabated pensions at 50 are pretty much dead - they were basically an alternative to redundancies. AFAIK non-contributory pensions are a thing of the past too.

The real difference in fortune is not contributory/non-contributory, but final salary vs money purchase.

Final salary = way, way better in 99% of cases. V few private companies still have those.

My public sector pension is contributory.

I never thought in a million years I would (a) work for the public sector and (b) have a pension.

If you think about it, the whole concept of working lives and pensions is flawed. In the "olden days", most people left school at 16, debt free, worked until they were 65 (approx 50 yrs) and then lived another 10.

Now, people start working at 25, retire at 65 (40 yrs) and may well live another 20 years.

The ratio of Working life: retirement has therefore gone from 5:1 to 2:1

That's never going to work for the vast majority.

By the way, based on the last 120 years of investment returns and current Bank of England Bank Rate the expected return on holding a portfolio of UK shares is just 6.5% per annum. Subtract fees from that to work out what you should expect on average as an investment return from your pension pot this year.

Could be much better or worse than that due to market risk of course but if you have any debts that are costing you any more than 6% per annum then saving for a pension will likely be making you poorer.

Saving money in a pension really can be making you poorer if you are paying high rates of interest elsewhere on debts. The pension industry never tell you that.