To think we are heading into a pensions disaster

[She11y]

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

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

I wish we would stop pushing a degree to all our young people. Some of these degrees are worthless. Lets promote T levels, and trades.

I am 39 with a pension pot a little under 30k. I recognise that this is quite poor, and am about to start a new role with a higher salary and a much better employer contribution. I’ve accepted this role with my pension in mind as I know I’m running behind. I do have 5 years in an old teachers pension which will help but I am focusing on this now. I agree there’s a future problem brewing

This is what happens when you vote successive right wing governments in.

Agree
Lectures are timetabled all over the place
The only way you could do them all in one very long day is if they are all online.
Maybe the Open University or similar do this. No idea

Then of course there’s course work in groups which a lot of degrees require
Plus lab work. One of mine spends a lot of time in the lab. Another of mine does a lot of group coursework.
Theres no way any Uni degree can be achieved on one day a week of lectures. They simply aren’t scheduled like that

Or just reduce other benefits.
Which is happening now.
Im guessing more reductions on UC top ups is next

Maybe it's HER uni fees? To try and better your prospects, many adults return to higher education. My husband retrained as a nurse after redundancy and we're still paying it off but he's earning more now than he was before!

No they said it was for their kids. I just think it’s madness - I’ll help DC with it if I can, but my priority is deposits because they’re far more concrete and reliable.

That is basically what happened to me, I have my state pension (full as I had worked for well over the 35 years needed to get this) and a small NHS pension which is added to my state pension and therefore taxed. For most of my working life I simply could not afford to pay into a work place pension as I needed every penny for me and my child. I retired just before the COL crisis hit and I was ok but now I am struggling with bills again. It is like my younger years but without the hope and optimism that things will improve. I used to be able to afford the odd treat such as a day out or lunch with a friend but things are just so expensive now that I can hardly ever do this. Sometimes I wonder what the point of my life has been

There is not enough money for the government to give higher state pension to all. To have a decent pension to live on needs younger people to work. If childcare for working mothers were free and also have job protection for mothers returning to work, maybe, it could help women who want to have children but can’t afford it, to go ahead. Therefore, there will be more in the workforce in 25 years time.
Also, charge all companies who use an AI machine, the equivalent of social unemployment pay for the people whose jobs has have made redundant, every eight hours the machine is used.

I can dream can’t I?

This is the problem
Most things simply move on. Its why parents give terrible advice!

If you had taught me about isas, employment law etc while at school most of it would be massively changed in 10 years, 3 goverments

I'm also not sure how much I would have retained about pensions at 18.

Its also incredibly hard to give relevant advice. As seen on this thread, some of the advice is completely irrelevant for other people. If you have a class, some of them will end up being 100k earners some will be minimum wage who don't come from families where it's ever thought as possible to follow financial advice

The example of expensive cars on monthly payments is a great example, there was a point in my life where actually that made great financial sense

Agree -same.

Yes! Lots of things that need to be better taught. So many people on here think thematic ‘common law marriage’ protects them and their kids when the ‘DP’ relationship breaks down…

Surplus is easy, the contributions have increased, the benefits reduced, twice in the last 15 years.

Over the same time period public sector pay has been essentially frozen since the banking crash until last year.

The pay increase this year in combination with increased contributions and the fact it is now career average rather than final salary means that the input increaes significantly, but the liabilities wont increase for a couple of decades.

The other thing is no pot. There's a nominal pot of up to about £2.1m, but given the average life expectancy of a surgeon is about 7 years post retirement, a massive wodge of that goes straight back into the government finances when you die.

Its not me saying it btw, it's the OBRs analysis, which tallies with others ive seen from the Kings Fund etc.

Lifeskills:

I suspect that it could be summed up in a fairly short youtube video covering:

• there's no such thing as free money - what you borrow has to be repaid
• compound interest - the good, the bad and the ugly
• relationships & marriage - rights and wrongs

You don't really need to teach the exact detail and things changing isn't really that much of a problem. It's more the generalities. I remember when I was studying, we had to study Capital Transfer Tax but by the time we sat the exam, it had been scrapped and Inheritance Tax had been introduced. That didn't mean the exam was pointless - a lot of the theory remained the same, but under a different name, the exam was more about aptitude to study a death tax, understand one set of rules, apply the rules to example scenarios, etc. Same applies to income tax, capital gains tax, etc. - I've never been examined on any changes since the mid 1980s, but the fact I could study the rules at that time, able to apply the rules, etc., is the learned and examined skill.

That's what needs to be taught. Not the minutae detail of current rules at the time of teaching, but generalities, as most things don't change that much over the short term. Income tax is still income tax - the rate may change by a point or two, but the theory doesn't change. Likewise contract law - you teach the importance of a contract in general terms, i.e. the ways you can find yourself bound by a contract, penalties for early termination, what a deposit means (i.e. check whether refundable or not), consumer contract law, i.e. cooling off periods for online shopping, no automatic right to a refund if you change you mind having bought something in a shop, etc etc. So much basic stuff really doesn't change much, and it's that kind of thing that affects virtually everyone in normal life. Throw in a few random examples about the impact of compound interest on loans and savings/pensions, show the impact of interest and fees if you don't pay your credit card in full every month, etc etc. You don't need to delve into the detail of the algebraic equation as that turns off the less able - just concentrate on the headline impact to drive it home to students. I once saw a brilliant slide years ago about the difference in saving £10 (fixed) per month for 40 years as opposed to increasing the £10 yearly by a couple of percent - the end result was the final capital sum was massively higher after 40 years, with just modest annual increases. It's that kind of image that would stay with pupils far more effectively than trying to teach pupils the compound interest rate when many of them can barely do equations at all!

I agree 'fiscal education should absolutely be taught in schools. For your other question. Overpay your mortgage if you can. This was our priority,every spare few pounds.Hammer down the mortgage. There is little more important than the roof over your head. If you can manage that.
We had ours paid off 11 years early. Do an additional pension if you can but obviously try to stagger the maturity dates. They will catch you on tax but it's still a nice passive income to augment your main pension.( if you have one) Good luck whatever you do.

Plus the basics of how payslips work - a quick illustration of a simple payslip and what it means.

Plus consumer contract law highlights.

Plus basics and illustrations of pensions.

You could do separate "lessons" on each topic, being light on detail, but lots of real life style illustrations etc to try to maintain their interest. Just enough to give some basics. It should really be parents, but when some parents don't know it themselves, they can't teach their kids.

The reality is most of the pensioners of the future are unlikely to have the wealth some pensioners of today enjoy and we need to be realistic about that. I’m aware not all pensioners are rich, but some have benefited from final salary pension schemes (which are as rare as hen’s teeth today). Even the public sector pensions now are not as generous as they used to be. Plus most pensioners now own their homes outright and paid their mortgage off years ago, giving more time to save, while many younger people may be renting their whole lives and into retirement, due to how house prices have spiralled.

People on average salaries will have a low pension if on the basic contributions, and unless they inherit they’ll be working until god knows what age until state pension kicks in. Companies like Saga holidays will have less customers as pensioners will have less money for such things, and be working longer so no time for it.

I’m a millennial and I think private pensions will be used to live during the time when we physically can’t work anymore but we are not old enough for the state pension (the age will probably be 80 by that point). We will need pensions for basic living, rather than to ‘enjoy’ retirement.

Who do we think is doing all of that?

Nobody, most of the time. Most of the services you mention where our money is allegedly going barely seem to exist anymore.

Exactly. What the poster meant I believe is that for a short time, very unusually, there may be a period where current contributions from the employers (aka the rest of the population) and the much smaller employee contributions for those of working age who are in the unfunded public sector ponzi schemes may actually be equivalent to the current payments to retired members of the ponzi scheme.

I.e. the taxpayer won’t be adding the additional £19bn per year that it is now to current payouts to retired ponzi scheme members (per the bar chart I posted upthread breaking down Government expenditure), on top of paying an average 25%-30% of each employee’s salary who belongs to the schemes for this already, every year, from current taxes.

The additional £19bn we’re currently paying on top of this is predicted to not be necessary for a short period on the basis that even more people will be employed in the public sector to provide health and care to elderly people due to their growing numbers, so we will still be paying that £19bn, and significantly more, via additional salaries and the taxpayer’s “employer” pension contributions.

Then demographic changes will really bite and even more ponzi scheme members will retire, seemingly expecting the unpayable promises made to them to be met by a shrinking working-aged population, and the entirely foreseeable nasty shock will occur when somebody finally is forced to tell them that these promised pensions simply won’t be paid at the level they’ve been told they will receive, because it is mathematically impossible for that to happen due to the £1trn and rising, completely unpayable off-balance sheet liability for these pie in the sky promises, which would instantly make the country bankrupt if they were ever recognised in the Government accounts.

Nobody wants to deal with the reality or admit it, so instead of a smooth transition to a viable system there will be a harsh economic shock and lots of very disappointed and poor old people when the piper turns up with his hand out, as he always does eventually no matter how much people wish to pretend he doesn’t exist.

Some people won’t need big pensions. Millennials are set to become the richest generation in history as they inherit trillions of pounds worth of property wealth. Not everyone of course.

Your question is not relevant to this thread, I suggest you start your own for some employment advice advice relating to your children.

People say ‘irrelevant’ stuff all the time. I thought I would ask as there seemed to be relevant expertise on this thread. Someone kindly answered and I didn’t mention it again. Hardly a huge derail. What an odd thing for you to make the effort to post!

Bang on. I think they don't realise we actually earn the money to pay for the pension in the first place. It's not from the magic money tree !!!

I'm 58. So much has changed in the financial landscape since I started working.

I do feel that people are being expected to assess risk and opportunity then make decisions which they are ill equipped to make.

We are being expected to make decisions which our 80 year old selves will have to live with. Managing a drawdown pension may look appealing at 65 but will an 80 year old be able to cope?