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!

@Horsemad.... your contributions earn the tax relief from the government, which is also deposited in your pension. So every £1 you put in instantly turns into £1.20. As a starting point that's hard to match in the average Cash ISA earning 3% but pensions are intended for the long-term. ISAs are good if you think you'll need the money back at some point before retirement age.

@Cogito so I could start a Child Trust Fund for her now, then at the age of 18 she could start a pension instead and I could give her money towards the payments (& she could either access the Child Trust Fund at that point or use it as the base for her savings)?

@nijinsky... yes, it's a shame that some kids don't have generous relatives making provisions for them but that's life. However, kids with no financial support can call on grants and other help unavailable to others. Plus many develop a determination to make it on their own terms. They don't let the loss of EMA stand in their way, for example. Others who have money handed to them on a platee often don't appreciate its value and waste it as fast as they get it. 'Disadvantage' can be in the eye of the beholder....

Aw thanks Cogito, I appreciate your help.

Nijinsky My parents happen to have bought a house and sold it at the bottom and top of the market and benefit themselves from the so-called "gold plated" local government pensions that they have claimed early due to ill health retirement. They want to share their good fortune with their family.

I didn't grow up with lots of money in the house and my DH and I are not high earners at all. It is a shame that not all children can have a pension from their grandparents but I for one am pleased that my DS will - esp as the state assistance by then will be minimal, if at all.

Cognito Others who have money handed to them on a platee often don't appreciate its value and waste it as fast as they get it. This is why my parents aren't putting money into a trust fund for him to waste on cars or drink when he is 18. He won't be able to access his pension until he is 55.

@wotss. That sounds like a great idea. At 18 (and you'd be giving her guidance) her CTF money could be a deposit on a flat, capital to start a business, funds for university... or the downpayment on a pension. I started one for my DS in 2000 (this was pre the CTF government funded scheme) and invest just £20/month. The value went down in the 2008 crash but it's recovered since. Think he'll end up with something between £5500 and £6000 when it matures.

Cogito - you raise a very good point but there is a solution as TheBride rightly points out you can just buy a tracker that invests in a broad spread of shares that dont requure you to make any decision at all.

Very few professional investors beat the stockmarket index so just investing in the index you will be beating 95% of professional investors anyway. DW and I do it for a living but for people with a WOHM job and no specific training or experience investing in an index is probably the best way to go.

A slightly tangential point but borrowing on a 90% mortgage and buying a house is actually a lot riskier than just investing your 10% deposit in the stockmarket. People just dont feel it is because they understand what a house is. They feel comfortable with the risk and I don't blame people for feeling that way given how poorly most fund managers have performed with pensions etc.

Well I s'pose people do like the fact they can actually live in a house (and would have to live in something anyway).

Thanks for the replies Cogito (and for posting, MoreBeta) - this thread has turned into quite an enlightening Q&A session .

Good point about living in a house. Property developers aside, most people are buying a home as a place to live or bring up a family. Provided they can keep up with the payments, it doesn't matter that much if the value goes up or down. A share certificate is only a piece of paper - a glorified betting slip. If the value goes down, you've nothing to show for it.

Would that everyone could see that a house is simply something to live in. Its an asset which should keep pace with wage inflation but as soon as it goes higher than that and people start seeing it as an 'investment' which will appreciate in real terms... then you know we're headed for another boom&bust. I've seen a few, can't believe people don't learn!

Very interesting thread.

*XKarenX' - just because you are a SAHM doesn't mean that you can't hold assets (pension, ISA etc) in your own name. I would be thinking of building your own savings or pension alongside your partners. All very well to live off him for the moment, but what if you split or he dies? Do you know what percentage of assets in his name you would be entitled to?

MoreBeta - your recommendation would be to put more into National Savings than pension then? I pay into a private pension, and I've used my ISA allowance this year. I have the opportunity to increase my long term savings and my plan had been to increase my pension contributions.

I hate the fact that when My grandfather who had paid into a pension and saved all his life was in a home with dementia and had to pay full fees. Virtually all those years of saving got swallowed up while my able bodied Nan became on the breadline. The people in the next room had to pay nothing.
Where is the incentive to save?
I had been living under the illusion of thinking the money in our home would be enough to see us through retirement if we sold aged 65, but thinking about it, is property going to continue to rise at the same rate as inflation? Our house is worth 250k if that doesn't go up it won't take long to spend unless we live with relatives and be a burden. We do have some savings but should DH get made redundant they would only last us 6 months at most.
I second what an earlier poster said about falling asleep permenantly aged 65, although I would say 70.

Its a bit of a lottery, Worm. My MIL is 92 and has been able to live at home till the last 4 months (admitted to hospital where a series of cockups has kept her.) Now, because she has income and savings she have choice about what happens - either more carers at home than the state could provide, or being able to move her to a residential home near us. Different authority, so can only do if self funding, if she had no money she'd be stuck miles away.

Depending where you live, property prices may well fall some more but inevitably will rise again - its a matter of luck where on the cycle you sell.

We have no choice but to pay my husbands annual bonus directly into his pension, as should he take it directly he gets taxed at 50%. It is better of us to over pay into my husbands pension than for me to have a private pension (tax reasons for him)

we pay £75 a month into funds for our children, have done since they were born, not sure when they will get thier mitts on that.

Alibaba - I would certainly consider some kind of Index Linked Savings Certificates for 6 months worth of your earnings as rainy day money. Tax free it pays RPI plus 0.5%. With RPI at at 5.2% at the moment and tax free that is not bad.

You only get the full rate of return if you leave it for 5 years but still get your hands on it with a penalty in an emergncy if you lost your job. You are limited to £15,000 per issue and RPI could fall to zero or even negative but some guaranteed inflation protection should be a part of any pension portfolio - especially if close to retirement. Less so if you are young and earning a wage that is keeping pace with inflation.

NS&I is also the most hassle-free savings provider I know of. Just about every bank or building society we've ever dealt with has messed up something at some point; NS&I seem remarkably competent by comparison.

It is better to invest in a pension than saving towards a mortgage or Children's tuition fees because of the tax benefits.

littlemissboden - I wouldn't exactly describe it as no choice Your husband won't be getting higher rate tax relief on pension contributions any longer, so it is just as tax efficient to have some savings/pension in your own name. Don't let him have it all in his name, his pension won't pay the same to you if he dies.

Beta - that is interesting, thanks. I'm only 34 so retirement is some way off but that looks a very good product - nowhere else is paying 5.7% tax free atm!

All this talk of pensions not being worth it, I can see how that's true for some, especially if you have debts. But what if you don't, and your employer pays into your pension? Mine pays 7%, which I thought was pretty good. Employee has to contribute a min of 3%, I decided to pay 4% as I can afford it. I was led to believe that means I get back nearly £150 for the £50 a month I put in. Which I thought was a good deal. Since I'm 26, no doubt there won't even be a state pension by the time I get to that age. But maybe the money would be better put in a savings account? £50 a month is money I can afford to lose, but I'd obviously rather get it back sometime!

Can they really stop teh state pension for those of us who have been paying NI for the last 20 years? I'm only 36 but always thought that NI was what got you your pension? I know that we pay our NI for current pensioners, etc rather than actually paying for our own pension but couldn't the govt be done for fraud or something if they change everything halfway through your working life?

At some point someone has to realise that one person doesn't have enough money in the pot in one lifetime to pay for university, buy a house, raise a family and pay for old age.
I expect buying a house will go first as people have to rent. But then people will get to old age with no savings of any sort.

Viva - unfortunately the link between the NI you paid in and what you got out was broken at the moment the entire welfare state was set up many many years ago. Todays pensioners simply never paid enough NI to justify the pensions they now get.

The state pension paid by any Govt is entirely at their discretion. The Coalition are saying they have restored the link between the state pension and wages - but in reality it all just comes out of current taxation anyway so I have no idea how they plan to pay pensioners higher pensions than they already get. I fuly expect all state pensions to be means tested in future. Yet another disincentive to bother saving for one.

There is no big pot of NI money sitting there which pensioners have contibuted to over their years of work. The NI money got spent as it was taken in just like a tax. It only worked as I described earlier because there wa far more young workers than pensioners and those paneiners didnt live long. Now people live a long time and there are a lot of pensioners the state and private pension system is utterly utterly broken. Politicians daren't tell us the truth and just keep kicking the problem down the road.

Morebeta - could you explain what you mean about the Higher rate tax incentive not being there for pensions savings, I thought 20pc went into the pension fund with any other tax paid being reclaimed in your tax return?

I'm talking as a 40pc tax payer so perhaps you are talking about higher rate as being 50pc?

I have plenty of savings in my own name, (and our our properties are in my name) sorry MmeBlueberry: I should of written that in the past tense, as this year it will be different, paying it all into dh's pension was what has best these last years.

I have a pension that is pretty pants actually from my former working days, we have talked about sorting it, but while the tax relief was available to him, it made sense to stick it in dh's.