To think pensions need huge reform?

[aburrsir]

With all of the recent chat over changing politicians and big ideas that don’t go anywhere, I can’t be the only one who thinks that someone needs to bite the bullet with pensions?

It’s something ridiculous like 50% of the welfare budget annually, and this is never going to go away.

IMO the government need to hike up retirement age and scrap the triple lock. There can be provisions made to go along with this to phase this in for those in genuine need (e.g. for the next 10 years those with no private pensions can get a top up to cover the transition period).

I’d rather know “look you can’t retire until 75” now than this constant “it’s 67…. now wait it’s 68…..” that never ends.

It seems that all governments are scared to do such a big change as it will piss off older people (who are the primary voting demographic) but something needs to change as this is just completely unsustainable long term.

We’re better off making these changes to ensure the state pension can continue sustainably in the long term future rather than having this attitude of “as long as I’m alright I don’t care”

We need a gov with long term planning goals and not just short term firefighting. AIBU?

Yes. Three pension-related threads started just today. Perhaps more that that I haven't seen.

Why do so many people disagree with the facts that today’s “boomer” generation are well off statistically as a group* and it’s largely due to huge housing gains & workplace pensions.

*this doesn’t mean every single boomer is rich or owns a house etc

I don’t disagree with this. But you could use that argument to suggest that those who have contributed most should be the ones who get it, not the ones who have contributed very little or nothing. By the time I reach SP age in 7 years, assuming I continue working, I’ll have paid tax and NI for over 50 years. And getting SP has been factored into my retirement planning, this will be the case for many people in their 50s and 60s and there isn’t time to make it up.

My parents didn’t own their own home so I’ve never inherited anything, however the next generation will, as is the case for most of my friends children. There are many people in their 30s, 40s who will inherit a lot of money from property. Every generation has its financial challenges, they differ.

Yes, the pensions bill is huge. But so is the bill for other benefits. They need to address why so many young people are claiming benefits and not working, it’s not a good long term strategy for the country or for those individuals.

Average life expectancy is 78/82 roughly, I don’t want to work until I’m 75 and I doubt I’d be physically able to, given the sector I work in.
I started working at 13 (Saturday/Sunday job) and have worked throughout my adult life, the only time I have had off is when I had my children, which totalled 24 months for the three of them.
I have a private pension that I’ve put a small amount into from the age of 18 but my pension forecast is still a low standard of living if I retired at 67.
Not sure what the answer is but making 70+ year olds work is not the answer.

Or it could be because we are in economic strife & there are continuous threads about benefits. More & more people seem to be realising that pensioner benefits are a large part of the benefits bill & we are in new territory with the demographic shift.

Or it could be bots

And once you get too frail, you don’t need £200 a week, as you aren’t able to do anything with it

People to frail to do anything with it will need to pay for help around the house etc. Pay for taxis, that sort of thing.

So they will need it.

I know which I would put my money on. But we aren't allowed to say that sort of thing on MN.

@Cucurella I don’t really understand your response. Again the vast majority of today’s pensioners have not paid enough into the system vs what they take out. That matters when the demographics are as they are. The fact that some younger people may inherit a house in the future is a separate point and doesn’t change it.

Demographics are the biggest issue; in the 60s we had 5 workers to 1 pensioner, it’s now 3:1 and not far off 2:1.

There are already more over 60s than under 15s which is staggering.

Said it before but this is what I would do with pensions.

Starting April 2027, every newborn is given a years tax-free allowance ie £12570 and is placed inside a SIPP 100% in equities. The trade-off is that there will be no state pension for that person. The tax-free allowance will rise year on year by inflation.

You would be able to change providers if you so wish but obviously, the money would not be available until state retirement age ie 67. I would keep that set forever. When the time comes, you would only be able to buy an annuity.

If you never put a single penny into that pension, 5% growth (low for the stock market) over 67 years will net you just under £354,000. Buying an annuity with that would give a lump sum of £87,500 and annual payment for life of £19,600.

10% growth over 67 years (about average) will net you just under £9,800,000. Buying an annuity with that would give a lump sum of £2,450,000 and annual payment for life of £549,000.

If you add just £50 a month for those 67 years, the figures are phenomenal. You would have a pot of £14,600,000. An annuity with that would give a lump sum of £3,650,000 and an annual for life payment of £818,000.

You could fund a decent amount of care out of that if you needed to, so costs would reduce there too.

I would add a proviso that you have to pay back whatever the seed money is the year you retire out of your tax-free lump sum.

Eventually, State pension costs would be self-funding and cost the country nothing.

I'm sure there are flaws in my plan but it seems simple enough to me.

OK, just pay us to use all the things we have created for you younguns. Like roads, pavements, electronic stuff, hospitals, schools etc.

The French have only just put it up to 64 and that was after a gigantic row so it's still being phased in!

It would be interesting to see how much I would have if all the NI that I paid had been invested in a FTSE tracker going back to 1980.

Agree, 10m to China, why?

All of these things work in a circle though.

If people work much longer then that has a knock on effect on the younger work force who then cannot get jobs, it has an impact on the parents who rely on grandparents to provide elements of childcare who would then have to pay for expensive formal childcare.

It has an impact on the health and safety considerations of workplaces. Increased sick leave as age naturally wears on the body would also affect employers. If you have too much sick leave then in many jobs you'll be made redundant so there's a balance to be struck between rewarding people for a long career and then punishing them at the end of it when their body just can't sustain the work any longer. Would you want to be out job hunting at 70?

It also has a very significant impact on the individual if your job is not really suitable for doing into later life such as very physical work. For example I work with highly volatile individuals- could I still be doing that at 75? Probably not. So certain career pathways would see an exodus of otherwise skilled and competent workers because they can't stay in that job long term.

The other impact of this op is that we NEED people in minimum wage and low earning jobs. Society literally would not function without them. It's all well and good saying people 'shouldn't' have a mortgage or big bills when they're elderly but the reality is that life is much messier than that. And a huge percentage of the population are not going to be in a position to pay big amounts into a private pension unless their wages increase substantially.

People get divorced, partners die, people end up ill for long periods, houses require significant repairs to be done etc that mean people find themselves needing to extend their mortgage period or simply not having the ability to save for long periods. Pensioners also need to run a car for example. This proposal of yours also is not rural proofed. It would have a significant impact on elderly in rural communities who are already more vulnerable. Never mind elderly who are actually carers for their disabled/ill children.

If you increase the age of pension and older people struggle more financially then you also have the perfect recipe for increased pressure on an already struggling healthcare system. It's important that pensioners can heat their homes, connect with others, move around and eat well because they're at increased vulnerability for ill health due to their age. Take away the safety net and more people will be leaning on healthcare services where before they were resourced to manage that independently.

I see your point, but as someone else said, most people don’t pay in enough for this to really work like that.

I don’t disagree that other benefits also need to be reviewed and adjusted, but the pension is the biggest and most costly one so I started the post there.

I would personally love to see benefits reduced for those with mental health issues out of work in exchange for better support for these individuals to get back into work and receive adequate mental health support.

I also agree that elements of UC stop people from working or wanting to work and this needs to be changed. Too many people don’t work over the 16 hour threshold because it will affect benefits - this needs to stop. Ideally people should need to evidence why they can only work so little (ie caring responsibilities etc) or why their employer won’t give them these extra hours/why they can’t find a job with more hours.

I dont think people imagine that what will happen on the whole. They are assuming people will make a plan for a personal pension/savings to bridge the gap between when they want/need to retire and state pension coming in or will access other benefits if not fit to work or unable to find work.

I agree with this. My DC are tweens and we've only just thought about/ had the spare money after years of childcare to contribute to Junior SIPPs. The compounding figures are mind-blowing.

The problem is that those over 50
will have made provisions based on getting a pension at x age. It was 60 when I started work, move us now 67, likely 68. Whilst I was young enough for the rise to 65 not to be an issue, if it was moved more than a year or 2 I’d be screwed because we have financial plans based on 67

Any and all benefits are not paid for by the taxpayer. That's a lie that politicians and the public alike seem to believe.

Also, the country can't run out of money. It's has a sovereign currency, it can simply print more.

The truth is that the government can fund anything it wants to and as such running a budget deficit is not only expected, its a good thing as it means the government is actually investing into the country.

This all makes perfect sense if you think about it. The government can't tax money that hasn't been spent in the economy yet. Therefore spend comes before taxes. Further, tax money doesn't go into government coffers, it is destroyed, and replaced with new money generated when the government spends.

This means, austerity is a lie. Politicians and the Bank of England are Liars too.

The budget is not like a household budget where you have a fixed amount coming in and therefore that's the limit of what you can spend. The only limit to government spending is the need to control inflation, which should be handled via income tax. Whilst we're at it, the Bank of England manipulating interest rates to control inflation is a blunt sword, hurts everyone except the ultra rich, and they need to stop it and let the tax bands do that work instead.

So fed up with this. I’m in my late 50s and work in education. No way can I keep going until I’m 75.

We all need state decent pensions, it comes sooner than you think and UK state pensions are already at the bottom of state pensions in Europe.

I’d rather means test child benefit harder first. Far too many families fritter money on expensive endless tech kids don’t need , designer clothes, holidays abroad, eating out, coffee etc. Don’t really want my taxes paying to be frittered like that
and definitely don’t want money taken from pensions to continue to fund it.

1. It won’t always be 50% of the welfare budget. The only reasons it is a larger % now is because the biggest generation is collecting a state pension and we have had 15 years of austerity where everything else in welfare has been slashed to the bone.

2. Raising retirement age to 75 is unworkable. It exceeds total life expectancy in many regions of the UK and exceeds healthy (fit to work) life expectancy in all of the UK regions. State pension is cheaper than working age universal credit for people who are biologically too old & sick to work which is all you’d do by going from 67 to 75. Even the current planned rises to 70 are not going to save any money.

Yanbu to say we need a government to plan for the future though. We do, sadly most politicians have the same ideas you do which ironically shows Rishi Sunak was right and we really should require students to take maths and economics to A level as a basic minimum level of education.

Read what you replied to again. They stated that access to pensions should be at a fixed age. Not linked to state pension age. As it will be from 2028. I'm younger than you. My access to my private pensions is linked to state pension age. Which sucks.

The people claiming pension now and the generation below them have paid for older people to get a pension the whole of their working lives. When I started work the state pension age for females was 60. Now it's 67. That's just the way it is. I had uncertainty during my working lifetime. What makes you so special you can't have uncertainty like previous generations did? I have told my DS state pension is likely to be 70 or even 71 before he will be able to claim it. He's paying into both a work place pension and a SIPP. I paid into Teachers Pension scheme and also a SIPP or equivalent throughout my working life. I've also paid through taxation for people of retirement age to have a state pension. I in turn expect to have a state pension. If it was brought in it would have to be be for aged 18 year olds not to pay for retired people so be paying less taxation to enable them to pay more into a work placed pension or SIPP. That would have to be mandatory for it to work. There are people who have never worked a day in their lives and got a free stamp for their pension. There are people who gladly live off benefits choosing not to work as they say it is not worthwhile for them to do so to only be a small amount better off than if they continued to work 20 hours a week and get UC top ups. Before pension stops I'd like to see UC with a cap for all people not just some and these top ups reduced for able bodied people.

What about those still renting and over the threshold for means tested handouts?

And still paying tax…..🙄