Page 17 | To think we are heading into a pensions disaster

She11y · 2025-03-25T20:03:18+00:00

I asked ChatGPT what the median pension savings were for someone in their mid 40s and I got the below reply: Ages 35 to 44: The median pension pot is approximately £30,600. • Ages 45 to 54: The median pension pot increases to about £81,200. This website has a similarly sobering statistic - average pension pot for 50-59 is £96k. [[https://www.nutsaboutmoney.com/pensions/average-pension-pot-uk https://www.nutsaboutmoney.com/pensions/average-pension-pot-uk]] These are averages and the number will be brought down by some people who have zero pension savings but it's still a very low amount. How are people going to survive retirement. There aren't many jobs for people the wrong side of 50z

Spodemultiuser · 26/03/2025 17:40

SparrowsEatUpToHalfTheirBodyWeightADay · 26/03/2025 17:35

You will accident end up with local bar instead of retirement 😂

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Well we already live in a Shepherd and Neame building, that’s why there’s hops popping up all over the garden.

Chin chin 😁

Cumberlandsausagedog · 26/03/2025 18:11

TheCastleDoesNotReply · 26/03/2025 16:35

I did state there were still some tax advantages to pensions, such as paying no NI on the contributions and this not being charged to pension-aged people on withdrawal, plus the tax free lump sum. It’s possible, of course, but rather rare I would think, that anybody deferring 62% tax on contribution would be withdrawing all their money at basic rate tax.

People forget that these tax advantages were put in place for very good reason: to encourage people to save for retirement. It’s meant to be an arrangement that provides tax advantages, as an incentive to save. Why else would anybody lock their money into a product where they cannot access it for decades? The problem is uncertainty over the actually being any tax advantage remaining by the time the money is withdrawn because successive governments keep moving the goalposts. It destroys all trust in the system. The government are creating a huge risk for which it is no longer clear that the potentially higher returns provided by their tax incentives will compensate, so they are actively undermining the system. People take the tax rate risk in terms of the fact general taxation rates may change before withdrawal (although it’s clear that at this point this is not just uncertainty, rather a highly probable downside for current pension investors given the likely trajectory of income tax rates) but if the other rules around LTAs, tax free lump sum, allowable retirement age (to access your own money!), NI pensioner exemption, inheritance tax rules keep being changed then how can a reasonable person say “here’s my money, I’ll just take a punt and hope you don’t screw me over”? It’s turning long-term investment planning into something more akin to a casino game if the other party to the contract arbitrarily changes the rules on a regular basis and you have no right to withdraw your funds when they change the terms. This continued manipulation of the system, always of course for the government to try to get its hands on more of people’s life savings, is destroying trust in the system and the perceived incentive that the beneficial tax rules are meant to provide because these may well not apply and you have mo way to cancel the contract and retrieve your money when they change the terms.

People are already taking investment risk, interest rate risk, currency risk, income tax rate risk with these investments. I think the endless raids on top of that are a step too far for many; all trust in the integrity of the system has been eroded. The final nail in the coffin would be if they tried to mess about with the relief at the point of contribution. At that point I think the industry would become obsolete. I also suspect that’s why they’re now insinutating that they should attack ISAs: rather than repair what’s wrong with the pension system the cynical part of me thinks that they’re trying to engineer a way to ensure there’s no realistic alternative by restricting ISAs (via which this tax rate risk at least can be removed).

It seems very counterproductive to discourage responsible and prudent behaviour in this way if the hope is to get more people to save and become self-sufficient in retirement, which is why numerous independent reports on the topic for several years now have told the government of the day consistently that they need to just leave the system alone if they want to encourage pension saving. Sadly - as ever, it seems - we have a government which insists on ignoring very sensible economic advice.

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You think it’s rare that anyone on the marginal £100k-£125k tax rate will be withdrawing all of theirDC pension at basic rate tax?

So you are only taxed at higher rate tax if your income is over £50k. Take out state pension and this would be a DC annual annuity of £38k a year. This is a huge amount! Very few people would have a DC pot big enough to get this much money, esp as £100k-£125k really doesn’t go far these days as other threads show. If your kids have left home and you have no mortgage you can have an excellent retirement on less than £50k esp if your partner also has a pension.

PalmTreeAngel · 26/03/2025 18:12

Wildflowers99 · 25/03/2025 22:14

Who says it isn’t? All I’m saying is not having a pot to piss in as a pensioner to enable a more comfortable uni experience for your DC is crazy.

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But some people obviously want to put their children first. It isn’t the wisest idea, I agree - but I think you are being unnecessarily harsh.

Fascinate · 26/03/2025 18:14

I have a full state pension due, as having spent the past 27 years as a carer for firstly my disabled child, then my disabled mother, I have enough NI years to qualify. What noone tells you is that, on (as of Aug 24) £320 per month carers allowance there is no way you can build up your own pension pot, that's all I have to look forward to.

On a full state pension I dont think I'm entitled to pension credit. So approx £210 per week pension, in rented accommodation, I'm looking at not paying any other bills and living on beans on toast. If I'd worked and left the state to deal with look after my disabled relatives it would have cost upwards of £1k a week for carers being sent in.

I'm stuffed, aren't I?

TinyFlamingo · 26/03/2025 18:14

Start saving 100 now for the next 25 years, and with compound interest on that 30k you could have 130k or there abouts. If that could be €200 (one for each of you if coupled) then that's 260k and so on. If you do this from 20s you can have over a million so at least tell your kids to start investing 100 a month minimum as soon as they humanly can!

Basically for a decent at standards of living it's 30k - 50k per year of pensionable, I personally know nobody who has that even if they do put towards their pensions.
With cost of living and when we get there I doubt we'll even have a state pension (I recon it'll be means tested) I worry a lot about this too.

It's scary times!

MellersSmellers · 26/03/2025 18:15

Agree that public sector pensions will have to be looked at. They are always justified on the basis that public sector salaries are typically lower, but I don't know if that is true any more. Even if it is, I'd rather we corrected any salary imbalance and moved to DC pension schemes for public sector.
As to other comments above, of course any DC pension you have is in addition to that state pension, but how long before the value of the state pension has to be trimmed as well? or the 25% tax free removed?

Heroyamslava · 26/03/2025 18:21

0 council tax doesn't really exist unless you are very , very poor ( less than 20 000 if retired )... The deprived pay a disproportionately large amount of council tax compared to the " comfortably off " ( ........ those 100 k households who somehow believe they are not well off ... but pay £3 - 4 000 CT , which they think is very high while on a miserably low £100 000 income

Tatemoderndrawyourown · 26/03/2025 18:21

Wildflowers99 · 25/03/2025 21:12

Then the course is too difficult for him and he won’t cope with it as a career. Lectures are a maximum of 4/5 hours a day, if he can’t cope with a few restaurant shifts on top of this then he’s going to find his working life very hard indeed.

I did my degree while working and looking after 2 small kids.

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Oh do piss off.

CantWatchRejection · 26/03/2025 18:26

Pandersmum · 26/03/2025 16:47

I bet your husband also worked really hard!

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Hmm, not sure even he would say that ;-) He can have some busy days but has never done an all-nighter or experienced sleepless nights due to work stress. Thankfully! Whereas some private sector jobs are v stressful.

Spamham · 26/03/2025 18:40

Chungai · 25/03/2025 21:23

I think I'm fucked pension wise.

I got a work pension aged 30ish but didn't realise the rates on it were absolutely shit (I assume risk averse) so it's hardly accrued any interest and is worth pennies now. I'm currently on the govt scheme Nest pension which is equally rubbish. My whole pot is about 40k and I'm 45. I know I need to fix it but I have absolutely no idea where to start. Until about 5 years ago I was either working part time, on mat leave or saving to buy a house so wasn't really able to put much in but I'm so annoyed what I have put in has not worked hard for me.

Finances have never been my strong point, I thought if I kept out of debt and kept my spending down I'd be ok but totally missed the memo on the importance of clever investments. I've saved some money but it's only getting 5% interest.

Does anyone have any good resources for clueless people like me on where to start? Do I just need to pay a financial advisor? How do I avoid getting ripped off or losing money?

Book a free appointment with Pension Wise
https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise/book-a-free-pension-wise-appointment

Also, check out Martin Lewis's numerous articles on his MSE website on pensions. He has a tv show on ITV which is really good.

Penko25 · 26/03/2025 18:44

I deliberately stayed in my public sector job instead of working privately, mostly for the pension. My pension is great & will provide over 60k a year with state pension as well. We all have choices.

taxguru · 26/03/2025 18:53

Spodemultiuser · 26/03/2025 16:47

there were changes made between those gold plated and silver plated schemes

There could just as easily be changes made again. I suspect there will have to be at some point in the not too distant future.

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Yes, but mostly affecting new recruits. You can't retrospectively change the pension terms of those approaching retirement and those already retired, which is where the problems lay.

Spodemultiuser · 26/03/2025 18:59

taxguru · 26/03/2025 18:53

Yes, but mostly affecting new recruits. You can't retrospectively change the pension terms of those approaching retirement and those already retired, which is where the problems lay.

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Agree
Much the same as the state pensions really

NinjaPaws · 26/03/2025 19:00

Badgerandfox227
Public sector pensions need to be scrapped. It’s the private sector paying for them, and we can’t hope to achieve anything like the public sector pension. More equitable to only allow defined contribution pensions - then maybe something would be done for us all.

I have worked in the public sector since I was 23. I have paid into a pension for the whole of this time. I am contributing to a defined contribution pension. That is just the way it is, it was not a choice I made - just the pension available from my employer. I am 61, and had cancer at 40 and again at 50. I have never earned masses of money, and will not (if I actually reach pension age - currently 67) take home a massive (gold plated I think it is called?) pension. If you pay people low salaries then they will get low pensions. If you ensure that I am not even able to take home the pension I have contributed to you will be unable to run the public sector at all. Pah, what do I care about the public sector I hear all the Daily Fail readers chant. Well, who do you think is emptying your bins, cleaning up fly tipping, teaching, providing school meals/wraparound care to the children (adults of tomorrow); looking after the adults of today who need help to continue living in their own homes; being social workers for children/adults who need this service; transporting SEN children to SEN schools; providing SEN schools and maintained schools; street lighting; policing; courts; prisons; health care. I cannot be bothered to go on because I know a lot of people think that without the public sector they would be just fine. That worked well for Care in the Community didn't it, mental health services being so easy to access..

Spodemultiuser · 26/03/2025 19:01

Penko25 · 26/03/2025 18:44

I deliberately stayed in my public sector job instead of working privately, mostly for the pension. My pension is great & will provide over 60k a year with state pension as well. We all have choices.

Not everyone is in a profession or area relevant to public sector jobs though.
Most people have to work in the private sector.

Petrie999 · 26/03/2025 19:16

Anonym00se · 26/03/2025 08:55

I don’t think public sector staff appreciate how high ‘high’ actually is. For most of them, they’ll be paying less in tax than they’re receiving in employer contributions which is insane. At the same time they’ll consider themselves net contributors because they’re paying £10k tax and not on benefits without considering that the taxpayer is paying £15k a year into their pension.

I hear the argument about accepting lower paid public service roles, and while that may be true for those in high powered London careers, for the average Joe there isn’t a great disparity in wages between public/private sector roles; in fact for huge areas of the country the public sector jobs are the ONLY available roles.

Public sector workers moaning that their pensions aren’t ‘great’ because they’re not getting the final salary pension of yesteryear is ridiculous. They are still amazing pensions!

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For my role personally I could earn approx 30% more in private sector, but mine is fairly specialist. Id also do less unpaid OT. I think you've misunderstood the tone of most public sector responses, no one I've seen is moaning. I'm very appreciative of my pension, and am aware it is a lot better than most. I also think they are likely unsustainable, but don't feel guilty or as though I'm taking the piss. I acknowledge that in my field if they got rid of it they would need to improve pay considerably to attract people.

Lovehascomeandgone · 26/03/2025 19:20

Overthemoun · 25/03/2025 20:07

Yep! I don’t think anyone realises that you need to save a pot of £800k to give you an income of £25k, pre tax. You have to start young and pay in a lot to get there and realistically, the cost of living is too high for most to be able to do it all.

@Overthemoun are you sure that is right? I have nowhere near that in my pot but I would get £17k if I took it right now.

Userlosername · 26/03/2025 19:20

Recycledblonde · 26/03/2025 17:15

I work in the NHS on a band 7 salary and I pay 9% of my salary and the employer contribution is 19%. I do think that’s good but it’s no where near 25-30% of my salary.

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It’s simply not comparable to a defined contribution pension. I don’t know where you got the 19% figure from but your employer underwrites your scheme and future benefits. There’s no risk to you, they (us taxpayers) are on the hook to make your future pension payments. At least the nhs scheme is funded but still we have to fund the scheme to make the promised benefits

Userlosername · 26/03/2025 19:23

TizerorFizz · 26/03/2025 17:19

If the pension contributions are added into state salaries, they are competitive. No one ever does it though. To get pay rises, pension sacrifice could be offered. Less government %, more pay increase. An actuary would need to crunch the numbers to effect savings.

This has been done. On average public sector workers are 10% better paid than private sector when you take pension into account. And public sector workers have shorter hours and less work

Diorchristian · 26/03/2025 19:29

@Yellowhammer09 currently drilling into my dc young minds but easy to listen now and different when working earning and and their money will go a million ways, socially, fun, mortgage travel etc

Dogsbreath7 · 26/03/2025 19:32

Wildflowers99 · 25/03/2025 20:33

They should get a job then.

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Why do you think you are right and you can comment on other people’s life choices? The uk govt has decided what the levels of contributions should be from parents. Why do YOU think parents should not meet that contribution?

Kids are meant to be studying not working. Some degrees are hard work not 6 hrs of contact time. And some towns/cities are overrun by students looking for work.

Be less judgy. Some people don’t abandon their kids at 18.

FixTheBone · 26/03/2025 19:43

MellersSmellers · 26/03/2025 18:15

Agree that public sector pensions will have to be looked at. They are always justified on the basis that public sector salaries are typically lower, but I don't know if that is true any more. Even if it is, I'd rather we corrected any salary imbalance and moved to DC pension schemes for public sector.
As to other comments above, of course any DC pension you have is in addition to that state pension, but how long before the value of the state pension has to be trimmed as well? or the 25% tax free removed?

Thats mental. The obr predicts public sector pensions will be in a surplus by the end of the decade.

If my pension gets taken away or reduced (for the third time since 1998) I'll be leaving unless my salary matches what i get in the private sector (6x btw, my nhs consultant salary is £120k for a 12PA/48hr/week job plan - 120k ÷ (52x48)= £48/hr, I charge £300/hr for private work).

Lets be conservative and say 3x current consultant salary, thats an £27bn immediate annual cost to the economy, and you wouldn't resolve the outstanding pension liabilities for 30 years (even though the 'liability' is modelled to be a 0.1% surplus by 2029).

ImmediateReaction · 26/03/2025 20:06

TheCastleDoesNotReply · 26/03/2025 14:47

Well, yeah. Obviously not much point people going to university and incurring that debt for low quality, pointless degrees. But those who do worthwhile ones at decent universities are the ones who end up paying it all back and funding others to pointless ones, in effect. If you’re building a decent career them the 9% kicks in pretty quickly at a fair low level of earnings now, below the starting salary for many grad schemes.

I agree that far too many people are going to university and it’s helping nobody. We need to make university for the top 10-15% and fully funded, and reinstated decent polys, technical colleges, apprenticeships with proper links to business and genuine routes into permanent employment, and stop pretending everybody is academic. Also funded evening classes etc to enable people to retrain midlife.

But this is one reason why, as I said in an earlier post, the UK healthcare system and public sector and state pensions systems should be the urgent priority for reform. They are bleeding the country dry. These systems simply do not and cannot work in their current form and the longer it takes people to accept this mathematic fact the less likely it is that the UK will be able to reverse its declining living standards by investing in young people (the whole education budget should be doubled), infrastructure, cheap energy, technology, and look to the future. Nothing will improve in the UK until all of the ever-increasing tax revenue is being siphoned off to pay for elderly people who made no provision for their retirements, despite living through the period of the most favourable economic conditions in the entirety of human history.

£140bn on pension, £160bn of the NHS cost spent on the same cohort, and £100bn on the debts they ran up. That’s before you even get to the off-balance sheet unfunded public sector pay schemes. It’s just not feasible for it to continue. They didn’t pay anywhere near enough tax in their lifetimes to cover the costs of the welfare and services they are extracting as a cohort (averaging £200k per person above their inflation-adjusted lifetime tax payments), nor did they provide such pensions and healthcare and long retirements to their own parents and grandparents. It is financially crippling the country and every government passes the buck as they don’t want to be the one to do what needs to be done but it won’t be long now before they have no choice, which will be far messier than transitioning to a sustainable system in an ordered and phased manner.

It won’t be pretty, but the maths simply can’t be made to work so it is inevitable that before much longer one unlucky government will be left holding the hot potato, which is now roughly the temperature of the Sun.

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This.

Pensioners are these higher pensions plys added state pension need to pay more tax. The country cannot afford them. They have sucked the country dry and continue to do so. They whinge when they loose wfa but most really didn't need it. Pure greed.

Skooled · 26/03/2025 20:11

Tiredofallthis101 · 25/03/2025 21:21

Some courses are 4-5 hours a day, I studied a scientific degree (sorry keeping it vague!) and was in uni 8.30-5.30 5 days a week for most of the year and at some points even longer. We were expected to do an equal amount of hours of work outside of uni as well. Not saying you can't work in the holidays etc but working part time isn't always possible.

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Only ones I can think of for this are medicine/dentistry etc My course was fairly full on at 9-5 every day (except weds afternoon of course) but I still managed to work part time. I stopped the term before my finals but that was it. Most courses are not 9-5 and are less hours/more flexible.

Papyrophile · 26/03/2025 20:17

I and we have been self employed since the early 1990s so tax rules have changed a lot over that period. I worked as a freelance in fin services as a writer, which meant that I read a vast amount. In the early 2000s, I heard about SIPPs, so I quizzed our accountant, who had never done one, and she buzzed people she knew, who hadn't done any either. (They did hundreds after ours) We bodged our way into creating one, which is still running (it owns one small building), funded some of the cost via a commercial mortgage over 10 years, and the company that uses the building pays rent. The mortgage has been paid off for 10 years and the rent has risen with inflation. So our SIPP gets £30k income in rent annually, the value of the asset has increased (not as much as residential property) and there is no mortgage remaining. We have invested the annual income to build the fund, and the money put in 20 years ago has increased, and is now invested differently. But you have to have the money and see the opportunity. 25 years later, we are contemplating building a second. These things are slow if you are small.