to think most people will work till they're dead and won't see retirement age?

[tugging]

Ok massive generalisation but I see a lot of people talking about how they're 40 or so and have 20 + years before they retire.

As a society, we're more sicker, more stressed and more busier than ever. These things would shorten your life expectancy. I can't imagine working till I'm nearly 70- I'm not even 40 and I'm already knackered! I think I'll be dead before I reach retirement age. I know so many people who have died before 60. They never got to retire and enjoy a work free life.

I know people can retire earlier but not many people have a decent pension that i know of and are forced to work till they're nearly 70 or till ill health.

[WilyKitWilyKat]

I actually think remaining in some form of employment - even a day a week - or at least being active in some form or another is really beneficial during retirement. All the people I know who live to 90+ remained active - whether work, volunteering, local politics (council) or something else. My grandfather worked 50 years at a coal mine, then worked “in the back” of a local shop three mornings a week. He also laid my parents driveway when he was in his 80s.

[sansou]

Well, it's true for the males in DH's family - the majority have died before 65 from unexpected ailments. . FIL didn't make it to retirement age so I'm quite keen for DH to be able to be in a position to work less before that.

Most people severely underestimate their pension pot requirements especially if they're reliant on a defined contributions type pension.

I've paid 25+ yrs of DC pension contributions (nearly 50) from an above average salary. I'm hoping that my total pension pot will be approx £400K by the time I'm 55. The plan is to work less and get my pension pot to £500K (£20Kpa at 4%) and in a position to not have to work at all whilst maintaining a reasonable lifestyle. DC should also be financially independent by then.

Mortgage already paid down a few years ago - this was a deliberate lifestyle choice to have a modest mortgage (relative to household income) and it's definitely been the right decision for us. Past redundancies have made us wary of over leveraging ourselves on income/mortgage ratios and we have probably been more cautious than most and also keener to pay it down/off.

Not much use pumping disposable income into pensions if you can't access it until 55+ and you need it now due to redundancy to pay the bills!

[SilenceIsNotAvailable]

@Symposium123

Many national pension schemes take contributions from their citizens and invest them to provide an income for that same cohort in retirement. Ours, unfortunately, pays current pensions from current tax take. It is therefore extremely vulnerable to being impacted to a much greater extent by demographic changes in the population. All of this was entirely foreseeable (and, indeed, foreseen).

*@MagentaZebras* - absolutely, but the history of it is that in the post war years, the Government of the time wanted to provide an old age pension straight away. So they did, in 1948. Those pensioners had never paid in, so National Insurance was started to pay for those pensioners’ pensions, with the promise that those paying NICs would get an old age pension of their own when the time came.

If we’d said that no one would get a pension unless they’d paid in, there would be an awful lot of old people from the 1940s to the 1970s dying in poverty. So I think it was the right thing to do to give them one… but that puts us in the position we’re in today. My NICs aren’t invested, and they pay for today’s pensioners’ state pension.

Agreed, but there's been nearly 80 years since then and no Government has used that time to gradually make up that initial shortfall which is astonishingly short-sighted.

At first you didn't receive state pension until you were 70 (and there were much lower life expectancies in those days), you had to have a full work history (also rare) and it was a pittance anyway. The cost was negligible compared to today and it could have been paid from current money and at least the majority of the NI contributions at the time invested for the cohorts actually paying in, especially given at the time there was more public acceptance of "big state" investment/ provision.

Instead is has been operated as a ticking time bomb which is obviously unsustainable; it's just pass the parcel because each PM buries their head in the sand and hopes it won't happen on their watch. Utterly irresponsible. But this is what happens if the people running the economy have little grasp of economics.

[Symposium123]

Many national pension schemes take contributions from their citizens and invest them to provide an income for that same cohort in retirement. Ours, unfortunately, pays current pensions from current tax take. It is therefore extremely vulnerable to being impacted to a much greater extent by demographic changes in the population. All of this was entirely foreseeable (and, indeed, foreseen).

@MagentaZebras - absolutely, but the history of it is that in the post war years, the Government of the time wanted to provide an old age pension straight away. So they did, in 1948. Those pensioners had never paid in, so National Insurance was started to pay for those pensioners’ pensions, with the promise that those paying NICs would get an old age pension of their own when the time came.

If we’d said that no one would get a pension unless they’d paid in, there would be an awful lot of old people from the 1940s to the 1970s dying in poverty. So I think it was the right thing to do to give them one… but that puts us in the position we’re in today. My NICs aren’t invested, and they pay for today’s pensioners’ state pension.

[MagentaZebras]

The point I was trying to make is that a Govt could change the tax laws so that the "tax free lump sum" becomes taxable (or at a lower tax rate), or that NIC is deducted from pension payments. Tax law changes doesn't change the rules of the pension scheme, it doesn't affect the amount of savings a person has - it merely reduces some of the tax benefits which can be done via the annual Budget speech very simply.

Successive Governments have already raided private pension schemes several times. If you wish to encourage people to save for their own retirements this is counterproductive because the public will lose trust in the system if the goalposts keep being changed.

[fiveminutebreak]

I definitely think retirement needs rethinking. I am fully expecting to work well into my 60s possibly later but I don't necessarily see that as a bad thing. My dad who's in his 80s now didn't retire really until he was late 70s, and he still does a little bit of work on the side. But he enjoys it and it keeps him healthy mentally.

While I would like to not have the burden of a mortgage in my 60s (which will only be possible if we move region and downsize), I would definitely like to be working part-time and / or volunteering. I'm not sure 'the classic retirement scenario of gardening, shopping in waitrose and going on cruises is really all I want to expect from my later years - there is definitely more to life than this! Though, of course, I am talking from a place of privilege and an expectation of good health - which is not guaranteed.

[Mia85]

@Gymsmile21

I’ve always worked and don’t have a pension. I came from a poor background so have nothing I can inherit either.

I can’t afford to save for a pension. My partner got made redundant once so we had a bit of extra money and I thought about a pension, if I put in 5% over a ridiculous amount of years, I would only get 14k a year!! Pathetic, 14k in 50 years time will be the equivalent to a tenner.

I’m sure I will die before retirement age anyway so I’m not concerned. My kids will inherit our house and that should sort them well out.

£14K a year is pretty good going for a pension. If you get the full state pension that's c£23K a year in total. It'd cost you hundreds of thousands to buy an annuity that paid that out. Is it a defined benefit pension? Many schemes have inflationary increases built in. If you have that available then I would re-think the decision not to put it in.

[Gymsmile21]

I’ve always worked and don’t have a pension. I came from a poor background so have nothing I can inherit either.

I can’t afford to save for a pension. My partner got made redundant once so we had a bit of extra money and I thought about a pension, if I put in 5% over a ridiculous amount of years, I would only get 14k a year!! Pathetic, 14k in 50 years time will be the equivalent to a tenner.

I’m sure I will die before retirement age anyway so I’m not concerned. My kids will inherit our house and that should sort them well out.

[MagentaZebras]

@Iamthewombat

The addition revenues from that shouls have been invested to create a permanent fund, the profits from which would benefit UK citizens in perpetuity, rather than squandered as tax cuts to feather nests in the short term. Basically our Government used one of our major national resources that was a one-off irreplasable source of wealth to spaff monez at a generation that was already the luckiest that ever lived. And now tells us they can't afford us to retire on one of the worst state pensions in Europe until we're almost 70

You are deluded if you think that all the North Sea oil money was used to deliver tax cuts and “feather nests”. The repeated use of the phrase “ponzi scheme” suggests that you aren’t approaching this topic entirely rationally.

Also, has it occurred to you that even if Britain had set aside all of the North Sea revenues for your chosen purpose, providing generous pension benefits for your citizens is rather easier when you have 5 million people, like Norway, rather than 66 million people, like Britain?

what won't be acceptable is paying "national insurance" throughout working life and being told 30+ years will mean a "full state pension" that'll be upgraded with at least inflation and then somebody trying to revoke it and saying it won't be paid after the contributions have been made...

Aha! It all becomes clear. I suspect that you are in the ‘Back to 60’ WASPI camp. In which case, I won’t expect a reasoned argument.

Nope! I'm in my 30s. It's just that I understand economics.

Many national pension schemes take contributions from their citizens and invest them to provide an income for that same cohort in retirement. Ours, unfortunately, pays current pensions from current tax take. It is therefore extremely vulnerable to being impacted to a much greater extent by demographic changes in the population. All of this was entirely foreseeable (and, indeed, foreseen).

[Shedbuilder]

Yes, and I think that it's more possible to live cheaply than some think. My husband and I holiday a lot, and I think people think us very rich - and we are, comparatively.

But when you talk details, you realise that the friends holidaying once every couple of years are spending £3000 a go (it came up because they weren't happy with the holiday, and didn't include spending money!) - that would cover the NINE holidays (all abroad) we took in one year

I'm trying to imagine how you and you partner could take nine foreign holidays a year for less than £3000. Could you give us some ideas of how you went abroad on holiday, the two of you, for £310 a time: I need to learn.

[Kazzyhoward]

@Cassilis

Nope. The UK "state pension" system is the very definition of a ponzo scheme and if anybody was running it other than the Government they'd be in prison.

They are using current payments in to make current payments out to investors (having spent already all of the money those previous investors paid in). That is exactly what makes it unsustainable.

Very worrying. Sounds like the State Pension will become means tested at some point, which is fine for the well off, but it means those who put it into a modest private pension for years may as well not have bothered.

Hence the introduction of workplace pension schemes. In another 40 years or so, everyone will have a workplace pension, so there'll be no need for state pensions for all. Those without a workplace pension will probably have to claim other benefits to give them an income.

[Orangebug]

The vast majority of European countries have an unfunded state pension scheme similar to the UK.

[Iamthewombat]

The unfunded nature of the state pension is not a secret and many other countries operate in a similar manner. Having a sovereign wealth fund is the exception.

I’m rather bored of hearing people parrot ‘Ponzi scheme! Ponzi scheme!’ about state pensions. Although ‘Ponzo scheme’ is, I suppose, a refreshing change.

If it helps, Ponzi schemes are generally pyramid schemes, which the state pension is not, and it would be unusual for a fraudulent arrangement to vary the terms for future beneficiaries with a warning about the risk to future payments. That’s why the state pension age has gone up. I don’t think that Bernie Madoff, the most famous recent Ponzi scheme operator, was contacting his later investors to reset their expectations about future payments.

[Cassilis]

Nope. The UK "state pension" system is the very definition of a ponzo scheme and if anybody was running it other than the Government they'd be in prison.

They are using current payments in to make current payments out to investors (having spent already all of the money those previous investors paid in). That is exactly what makes it unsustainable.

Very worrying. Sounds like the State Pension will become means tested at some point, which is fine for the well off, but it means those who put it into a modest private pension for years may as well not have bothered.

[HalcyonSea]

The point I was trying to make is that a Govt could change the tax laws so that the "tax free lump sum" becomes taxable (or at a lower tax rate), or that NIC is deducted from pension payments. Tax law changes doesn't change the rules of the pension scheme, it doesn't affect the amount of savings a person has - it merely reduces some of the tax benefits which can be done via the annual Budget speech very simply.

Ah ok. For what purpose? We already have the poorest state and private pension provision in Europe. If they tax people even more on it, it will discourage saving even further. There have already been so many tax raids on pensions in recent years, this seems like a very misguided idea economically.

[HalcyonSea]

@Iamthewombat

The addition revenues from that shouls have been invested to create a permanent fund, the profits from which would benefit UK citizens in perpetuity, rather than squandered as tax cuts to feather nests in the short term. Basically our Government used one of our major national resources that was a one-off irreplasable source of wealth to spaff monez at a generation that was already the luckiest that ever lived. And now tells us they can't afford us to retire on one of the worst state pensions in Europe until we're almost 70

You are deluded if you think that all the North Sea oil money was used to deliver tax cuts and “feather nests”. The repeated use of the phrase “ponzi scheme” suggests that you aren’t approaching this topic entirely rationally.

Also, has it occurred to you that even if Britain had set aside all of the North Sea revenues for your chosen purpose, providing generous pension benefits for your citizens is rather easier when you have 5 million people, like Norway, rather than 66 million people, like Britain?

what won't be acceptable is paying "national insurance" throughout working life and being told 30+ years will mean a "full state pension" that'll be upgraded with at least inflation and then somebody trying to revoke it and saying it won't be paid after the contributions have been made...

Aha! It all becomes clear. I suspect that you are in the ‘Back to 60’ WASPI camp. In which case, I won’t expect a reasoned argument.

Nope. The UK "state pension" system is the very definition of a ponzo scheme and if anybody was running it other than the Government they'd be in prison.

They are using current payments in to make current payments out to investors (having spent already all of the money those previous investors paid in). That is exactly what makes it unsustainable.

Had they (like many countries do!) been investing what is being paid in currently to pay then pensions of people currently working when they retire, and still had now invested what people had paid in for their own reitrements up to now, then population fluctuations etc would not be such a problem.

A ponzi scheme of this nature always collapses when it doesn't have enough new investors to enable to payouts to those already ripped off. That takes much longer in a state enforced scheme but will inevitably happen when a baby boom reverses. Oooops.

[MissConductUS]

What a sensible girl (and parents!).

Thanks.

When she was a younger girl, money ran through her fingers like water, so this change was quite welcome. I think she caught the investing bug from my DH, as he has always been a diligent and sophisticated investor. She educated herself on the internet and then discussed her investment choices with DH before making them. Our son, who is 21 opened a Roth this year with money he made from an internship and has contributed the annual maximum.

We have been saving for their uni expenses since they were toddlers, and with some help from family, their uni expenses are fully covered. That's quite a feat in the US.

[anotherday235]

I am planning to set up a business like a B&B when my kids are settled in work (so probably 10-15 years time) so I don't have to work for someone else forever!! Whether I will be able to afford to do it is another matter but I will research the options at least. It's pretty much the only thing keeping me going.

[Sloth66]

I’ve taken a part time, low paid job that I hope to carry on working in for a few more years. I also get a small nhs and a private hospital pension.
Wherever I’ve worked, I’ve always joined the pension scheme, and I have 2 private pensions that I don’t need to start drawing from yet.
I couldn’t do 12.5 hour shifts any more, and that seems to exclude most nhs work these days. 20 hours a week is fine.

[Cassilis]

True, yes. Though 'front loading' doesn't have to be huge, even a small amount makes a big difference later on.

My post, in part, was based on the gender pension gap. Unless there is a huge societal shift in the way that we treat expectant mothers and those with children financially, it is women who will bear the brunt of pension poverty.

I've just upped my pension contribution from to 11%, based on this and advice from lido.

I know ignorance is no excuse, but I really wish I had had someone had explained this this stuff to me years ago, I've been working since I was 15 (part-time).

[lidoshuffle]

@MissConductUS

If parents could be persuaded to save money in their daughter's pension while those daughters are still children that would be of much greater value.

Very good point. When our daughter got her first paying job at 18 she became eligible to contribute her wages into a tax advantaged retirement account called a Roth IRA. You can only pay into a Roth with earned income. So she deposited most her pay and we replaced it dollar for dollar so that she could keep access to the cash. She's already investing for retirement at age 19.

What a sensible girl (and parents!).

There will always be other calls on your money - university, student loans, first career steps, mortgage, wedding, babies, kids through university. That's the reality of life unfortunately.

To get a pension you have to recognise that and sacrifice more immediately interesting things, when a pension seems so boring and retirement an eternity away. It's hard when you don't know what the far future will bring and there are things you want now.

I'm just so grateful I was automatically enrolled in my first job and carried on. I would/could never have done it myself in my 20s or early 30s. Before you know, half your working life is over and options are fewer.

[MissConductUS]

If parents could be persuaded to save money in their daughter's pension while those daughters are still children that would be of much greater value.

Very good point. When our daughter got her first paying job at 18 she became eligible to contribute her wages into a tax advantaged retirement account called a Roth IRA. You can only pay into a Roth with earned income. So she deposited most her pay and we replaced it dollar for dollar so that she could keep access to the cash. She's already investing for retirement at age 19.

[80sEyeShadow]

[quote Kazzyhoward]**@80sEyeShadow* My advice to any and all young people, women in particular, is to 'front load' your pension - pay in as much as you can reasonably afford when you are as young as possible.*

Easier said that done when they have student loan repayments, historically high housing costs, and the prospect of tax rises on the horizon to pay for covid. The "squeezed middle" are rapidly extending to the "squeezed young" too![/quote]
True, yes. Though 'front loading' doesn't have to be huge, even a small amount makes a big difference later on.

My post, in part, was based on the gender pension gap. Unless there is a huge societal shift in the way that we treat expectant mothers and those with children financially, it is women who will bear the brunt of pension poverty.

It was only a generation ago that parents often saved for their daughter's wedding. If parents could be persuaded to save money in their daughter's pension while those daughters are still children that would be of much greater value.

[MissConductUS]

In the US, what we are taught is that the state pension (aka Social Security Retirement Benefits) is one leg of a three-legged stool, the other two being employer pensions and personal savings. And the elderly are the most affluent age group in the US.

The Graying Of Wealth

[Symposium123]

Everyone should work to provide for themselves. If you save while you’re working when you’re younger, you can live off that when you’re older. That’s called a “pension”.

If you don’t save at all, you’ll need to fall back on the state’s safety net, the amount of which and age at which it can be drawn depends on what the state can afford. That’s called the “State Pension”.

If you want to retire earlier than State Pension age and/or receive a higher income than the State Pension provides it’s up to you to save for it. No one else. If your occupational pension won’t be enough, save more.