To think workplace/private pensions will be used like this in future?

[themaskedcat]

Many agree the state pension as it currently works is not sustainable. When it was set up it was linked to life expectancy and there were many workers for every pensioner, but these days it's the biggest cost from the welfare budget and there aren't enough workers for every SP recipient.

The age is going up to 67 soon, and will be 68 for anyone born after 1978. I'm in my 30s and expect the age to be into the 70s for my generation.

But while people are living longer, that doesn't mean people are going to necessarily be healthier and able to work into their 70s. I believe that for many, they will have to use their private pension to 'bridge the gap' from the time they can no longer work until they get the state pension (whatever age that will be). So private pensions will need to be used 'before' rather than 'alongside' the state pension. And that's I think that's why there's such an emphasis on them these days, so people in their 60s will have something to fall back on.

I think this has been the expectation for a while. State pension will cover your frailest, most infirm years, those where you really cannot work at all.

I think we'll also see a rise in older people in part time work in retail, childcare etc.

There will have to be a cultural shift, too many people expect a state funded long period in good health where they will be off work, travelling etc. Its not sustainable, what is more sustainable is a more gradual reduction, dropping to part time work etc and phasing that out as you become less able to manage it.

There will have to be a cultural shift, too many people expect a state funded long period in good health where they will be off work, travelling etc. It's not sustainable, what is more sustainable is a more gradual reduction, dropping to part time work etc and phasing that out as you become less able to manage it.

And when should it shift?

No, no teachers are. They’re all desperate to get out. I only know one who went past 60.

The rest got out in their mid to late 50’s.

I remember going to Florida in the 00s and some of the shop assistants were really elderly and frail

Any government would be mad to means test the state pension because people will simply game the system.

Why would I pay over 10% of my salary every month into an occupational or private pension plus of course have to keep paying NI contributions every month if I'm then going to have less state pension than someone who chose not to make their own provision, or who has perhaps never worked?

It's ready the case isn't it? Most people save into a private pension. As we always hear the state pension is really to cover the bare minimum. If you want comfort you need your own pension as well.

There will have to be a cultural shift, too many people expect a state funded long period in good health where they will be off work, travelling etc.

The expectation is there because that’s what the current pensioners enjoy. I know several pensioners who received state pension from 60 and were / are still in receipt over 90. Now, I’m not saying they should have it stopped. But it has to be understood that it was only originally designed to be in payment for a much shorter period of time due to life expectancy.
This is also a generation who had access to the gold standard final salary pensions.

So people see what retirement looks like for the generations above them, and expect it will look similar for them.

Not really because not everyone will inherit.
Care costs are only going to increase

The UK still has high home ownership, I think it's around 65% and it is a much higher figure for older people. So inheritance will be a factor for in many peoples pension provision. I know someone who hasn't contributed into a pension because they know they will inherit. It's a risky strategy but it is likely to provide income.

There is an average timeframe on how long care costs are typically needed for and I believe it's around 18months so inheritance will be significant for many.

Not correct sadly. Until recently when I finally managed to renegotiate my package my employer was paying around 1% of my salary. I was topping up a lot.

@Pleasealexa look at current inheritance figures, you would be foolish to simply rely on that for a pension.

There is an average timeframe on how long care costs are typically needed for and I believe it's around 18months so inheritance will be significant for many.

Other health costs will increase, it's inevitable eg if you want that operation then it's a 3 yr wait unless you go private, you need care in the home? well they state offer is lacking so again you may have to pay.

We are doing a combination of additional pension contributions over the workplace one and overpaying our mortgage, unfortunately just a small amount but it adds up, so that we don't have to worry about that payment.

I do find it all confusing and stressful! My grandparents are all in their 90s and going strong so if that's anything to go by I'm going to need to fund myself for a decent amount of time 🤣

I agree that life expectancy is stalling and may fall - but that's because of obesity and other preventable health conditions. There is a widening gap in life expectancy for poorer vs better off people and I would expect that to worsen.

A bigger problem for the state is that healthy life expectancy is also likely to fall - so more people on disability benefits and greater healthcare use, which is even more expensive than paying a pension.

Need to account for care costs being needed in the home figures too (different and additional to Carehome figures). And often just as expensive.

north/south decide too. Yes 18 months in a Carehome won’t wipeout a surrey pensioner’s estate but it would do easily on regular a family home in the north east - so no inheritance.

@TheMoment exactly. I know 3 older people who have gone private for operations and some relatives paid about 140k for carers in the home as they wanted to live out their days at home but the state offering was woeful.

Similarly, I'm reluctant to upsize my home because I don't want to pay a mortgage in my 60s and I'd like be able to put more into long term savings. That period of 60 -68 worries me as I've seen people in my family really struggle financially at that point.

However, friends of mine are very blasé about upsizing/remortgaging for extensions etc because courtesy of SE house prices it's basically a given that they will inherit a good sum of money. One of my friends is an only child, her parents (and factory worker and a carer for context) own two properties which combined are worth in excess of £1m and my friend is on the property ladder. Plenty of other friends likely to inherit well into 6 figures. I won't inherit.

A bigger problem for the state is that healthy life expectancy is also likely to fall

Healthy life expectancy hasn't improved in years, life expectancy improved because we got better at keeping ill people alive.

I also think care in the home may include house value, yes I know Teresa May tried it and huge backlash but at the end of the day we need care workers so the market may force it.

If you stop paying into it you lose the employer contribution so you would have to save a lot more to get the same amount. You.would essentially be turning down free money. You would also need to check if the scheme you are in is defined benefit or defined contribution. If defined benefit it would be even more crazy to stop paying into it.

Agree. I think there will come a time soon where a house has a charge on it from the council and when house sold some is then used to pay back any fees including care in the home which is very expensive - I was shocked as it’s not often discussed (unlike Carehome which are!).

All the politicians just kick the can down the road (don’t blame them tbh) as don’t want to be abused or be a meme etc - as the public will hate it - but there is absolutely no money.

without social media and media changes in the world was like the 80s/90s I think politicians would just tell the truth more easily and say was is needed but due to media abuse etc it’s easier to not be honest and just ignore as it’s what everyone else does.

Yes you can. It will have a reduction for each year you take it early but you most certainly can take it before state pension age.

That happens now and has done for years. My father in law retired over 20 years ago, early 50s, amd my dad did this 12 years ago late ish 50s. It's nothing new, it's always been the case. Now there is alot more awareness for private pensions as you have to choose to opt out so really, this trend of early retirement can continue. My private pension is changing to 57 from 55 as they are clearly struggling to keep people paying in longer term too.

@TheMoment agree, the public don't want to hear the truth. I mean some aren't even aware we have an ageing population & think the feckless are churning out babies 🤷🏻‍♀️

Juat because teachers no longer feel able to teach full time in to their 60s doesn't mean they won't be able to work at all.

They could do something different. Tutoring, retail, working part time exam marking or in libraries. We have to stop thinking we can't step down, or that work at a lower salary is beneath us. We may be less productive in our 60s and may earn less but it doesn't mean earning nothing. Many people at that age no longer need to earn peak salary, they have finished childrearing, may have finished paying a mortgage etc, so many just need part time income at a lower wage to bridge the gap to full retirement.

How recently was this? It has been the law in the UK since 2019 that the employer contribution is a minimum of 3% of qualifying earnings. If they were only paying 1% after that point they were acting illegally.

I would caution people to have other savings if wanting to retire at 60. There are laws about when you can take a pension out and nothing stopping the government restricting how young people can.

I havea separate savings pot which i intend to maintain control over, so its not in my main pension. Its there for me to draw on if i want to reduce work and the government make it harder for me to access my private pension when i want.