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

Well it's currently 35 years to earn the full state pension. I worked full time for 10 years until I had my children, then only worked part time until I was 58. So you will qualify for a full state pension without having to work full time for 40 years! I know everyone's circumstances are different and women do tend to work full time now, even when they have a young family to raise. But we all have choices - we worked hard and managed to clear our mortgage in our 50s but that meant making sacrifices in our 30s and 40s. I didn't run a car for years and we couldn't afford foreign holidays until our children were older. Neither of us have a private pension and we feel quite comfortable financially 🤔

The point is that the lower pay you receive today is far less of a sacrifice than the huge benefit you will receive in the future from your pension.

It is very difficult for most people to really visualise this and understand it. You are giving up something today for a better future.

The public sector pension benefit is worth approx 25% extra salary today plus the value of the guarantee which is hard even for actuaries to quantify.

You may think that even if your salary today was 25% higher, you would be underpaid, but I think this is less of a slam-dunk and you still have to value the pension guarantee that no one on the private sector with a defined contribution pension has.

The Trump drama this week has caused stock markets to fall massively. We, with private pensions, have all lost some pension as a result. No one in the public sector has suffered a loss at all.

Can you begin to see how valuable your pension is?

So come and work for the public sector. There are plenty of vacancies.

If we all worked for the public sector there’d be nobody to pay the wages!

Yes public sector jobs should be advertised eg as £50k (£40k salary + £10k benefits). Perhaps that wld make it more obvious and more people wld be attracted to them.

So come and join us there’s loads of vacancies we can’t fill. Of course you may have to take a massive pay cut and have people telling you how you have it so good and all the ills of the UK are your fault on a daily basis.

That’s pretty darn good. 20 years for 50% of your final salary? If you retire on £50k that’s £25k pa and inflation proofed. Plus your state pension which is over £13k if you have a food enough NI record.l, which by the way, is triple locked. Plus any other savings you have. Never mind your hand, I’d bite off your whole arm for a deal that good.

I've always told all 3 of my DC to pump money into their pensions at the start of their careers whilst they have no DC to consider. Also some employers will match pound for pound what you put in so if you get an employer who does that pay in the maximum you can.

The reality is there will be many in retirement who either still have to pay a mortgage or are renting. Do you mean £25k each or between a couple? Wesleyan have a chart that tells you howuch you need for a basic retirement, a comfortable retirement and a well off retirement. Basic is a couple just living off 2 state pensions and a small private pension of £3k a year each. It says no foreign holidays, no running a car, 1 weekend break each year, only one pub meal out each month etc. The comfortable retirement was having 2 weeks foreign holidays each year, running a car, a couple of weekend breaks in UK, eating out once a week etc. 2 state pensions plus £10-12k private pension each.

Public service is generous to those on lower grades but means to those on high grades because they try to even everything up. DH worked as a civil servant most of his career. He was on £60k but he got a job in private sector for £130k towards end of his career. He said a woman who's job it was to fill up paper in photocopier, take a jug of water into meetings, book meeting rooms for people and accommodation if working away got £30k with no qualifications except a few GCSEs.

A pensions firm has a vested interest/bias in over-inflating the figures to "encourage" people to invest more with them to get a bigger pension. I've looked at the detail of some of these illustrations and they're pretty ridiculous with how they make up the spending requirements.

It's often been said that PS is better for "plodders" as they get better pay and pensions than low level jobs in the private sector, but the private sector is better for "professionals" and ambitious people because they'll have more opportunities outside the public sector if they're willing to put more effort in and would be strangled in the public sector where they can "fly" in the private sector if willing to move around a bit between firms to develop their careers etc.

the government pay on average 30% of the salary contributions to the FS pension. In comparison private sector employers pay up to 3% of banded earnings. There isn’t such a big difference between earning now private or public

That sounds like an amazing retirement but I suppose it depends on what kind of lifestyle you've had whilst working. We're currently living on around £20,000 a year and can afford to run two cars, have weekends away, eat out occasionally and have a foreign holiday or a UK holiday too. We have always lived fairly frugally and don't drink alcohol or smoke, don't have Sky TV or Netflix or expensive mobile phones! It is interesting what people think they're going to need in retirement - an income in excess of £50,000 would feel like we've won the lottery as we have never earned that sort of money whilst working! Also, thinking about it, alot of our pastimes don't cost money - walking, fishing, volunteering, singing in a choir etc. We were never going to take up golf or buy a yacht in retirement so we're quite content 😌

Yep, same here. We're currently living on less that state pension and that's whilst we're working, so living on state pension only won't change our lifestyles at all once we retire.

No, Loughborough University do thorough independent research to update it regularly for living standards and inflation so that it sets out the realistic standards of living and income required whether single or a couple (and notably, assumes no housing costs… if you still have housing costs you need far more).

https://www.retirementlivingstandards.org.uk/

It’s also very clear from this thread that many people in the public sector haven’t the faintest idea how much they’d need to save to achieve the same pensions that they’re being promised if they were paying for them themselves.

It’s also clear that many people are in complete denial about how much they should be saving and that saving the minimums through auto-enrolment in a DC scheme will be nowhere near enough. There is no guarantee that the state pension will continue to keep up with inflation in the future. In fact, it’s extremely unlikely as it’s unaffordable already because it’s a ponzi scheme, so intending to rely on that puts you in a very precarious position indeed.

We're a mix of really frugal and willing to spend freely on stuff we value, so none of the estimates make sense to us either.

Like, my car is fourteen years old, but we went on five holidays and six long weekends one year. Or we batch cook cheap dinners but also dine out.

And it pays to think of what you'll do once you retire. I love cooking from scratch and will have more time to do it. I love growing my own veg, and will have more time to do it. I love "slow travel' by train and ferry - I only need to catch a plane when I'm forced to by short holiday dates!

I've had three medium-term stints out of work in the past few years (7m, 2m and 10m), so I know how I employ my time, and it's generally much cheaper.

That said, we earn plenty too and are stuffing most of it into pensions.

I’ve just had a discussion and an estimate of my pension. Apparently I should get about £20k pa NHS pension plus my state pension. DH has about £500k in his private pension pot pre Trump. By the time I retire in 5 years my salary should be around £55k so a drop in income but one we can sustain. We spend money on travel and meals out etc but not on cars and our mortgage is paid off finally. I think we will be comfortable even if not rich.

It's the workhouse for me when I'm old......

Why would you pay uni fees in your situation?

Why would you comment without reading at least some of the thread?

@Badbadbunny so every doctor, nurse, physio etc is a plodder and every ‘estate agent’ ( just using them as example) is ambitious. That’s literally the crappest bullshit theory I’ve ever heard!

You are in a great position

This is what the government need to realise. How is a lone parent that has had to juggle working and raising children (meaning they can’t always work full time) be expected to pay enough into a private or workplace pension. I am older than you and have less in my pension pot.