What will happen to those of us who can’t afford to pay in to a pension?

[whatnooow]

I’m starting to get a bit worried about how we are supposed to support ourselves as we get older as we basically live hand to mouth each month.

My DH and I are minimum wage workers and had to come out of the company pension contributions about 7 years ago to be able to get by, day to day. we’re both early 40s and are both knackered already. Another 30 years will definitely kill us off!

Will we just have to work until we drop dead? What if we can’t work due to ill health, but not actually disabled? Luckily we will have paid the mortgage off in about 20 years, but how will we survive, pay bills, buy food etc?

Neither of us will receive any inheritance. Time feels like it’s speeding up and I’m very worried.

I find it odd that people seem surprised that someone in their 40’s is in a Minimum wage job.
not everyone has the education, intelligence, opportunities to do better. Childhood Poverty and upbringing etc contribute to that.
there are plenty of cleaners in their 40’s aren’t there? Or cashiers, supermarket workers etc.
telling someone to retrain/study when they are living hand to mouth is a bit much.

Get a rental property ? Oh, Liebour have ruined that now.

Op writes clearly and articulately though. They clearly have the ability to progress

Retraining isn't the only option. Surely most jobs have some form of profession if you're an employee? Or if not find a minimum wage role that offers some kind of career attached and you can work your way up

Do some maths - state pension for both of you (and it will exist - don’t listen to those that think it won’t) will bring you in £2k a month between you. How much (excluding mortgage) do you spend now?

So we are relatively low earners (or were until 2 years ago)
and I understand your hesitation about paying into your work pension, but I really would encourage you to - it comes out before tax and tbh you get to the point that you don’t even notice- or could work three hours overtime to compensate.
sometimes they also come with extra benefits (my husbands had some sort of payout if he died early, and you got more if you paid in 8%, I can’t remember the exact numbers, but it worked out more cost effective than life insurance for the time he was there)

so top tip is opt in now - ten years contributions will give you a bit of a nest egg.

second thing we have done is opens a lisa.
the government pay in 25% of what you have saved , but you can only access it after 60 (unless buying a house) we put in £5 a week in there and pretend that it doesn’t exist. Already the government have added over £100 of “free” money, and our plan is to use it to go part time / retire a year or so early if needed (both our jobs we need to be physically able) if we are both healthy- it’s going on a massive bucket list holiday.

good luck. I started trying to save more last year , and I feel so much better in myself for it. (Even though it is meager pennies compared to some)

I have found money box a handy little app

But lots of jobs are minimum wage without the possibility to progress. Carers, not everyone wants to then train to be a nurse, therefore are at that level. And we need people to stay at that level else where will all the carers be? Multiple NHS roles both clinical and admin wise, even if people wanted to progress there are maybe 1 or 2 roles across the trust for eg an admin team leader as opposed to 40 admin roles. Aldi/supermarket assistant- 40 roles, i imagine only a couple of team leader roles. Schools, LA etc unless a qualified teacher/social worker/ professional the majority or roles are minimum wage or just above yet are crucial roles. Not every minimum wage job should be done by school leavers/ graduates there needs to be people with life skills/ experience.

Often with progression there is then a lack of flexibility in hours etc which may be crucial to another aspect of someones life.

I too find it odd that everyone seems to have to progress or is deemed to of failed at life. Sorry off on a tangent and not the point of the thread.

OP there will be state benefit of some description and if your working you should of contributed enough. If on sickness style benefits by that point i imagine there will be some sort of benefit style pension. However where possible i would try and opt back into a work place pension even if its one of you this year and the other next year so you can gradually adapt your finances rather than a big hit in one go.

The first thing to do is check your state pension. Call the future pension centre at the DWP and ask for a pension statement.

They will tell you how many qualifying years you have for a State pension and how many you need to qualify for the full rate, they will also give you advice on what you can/should do to top it up if there's any shortfall.

If there are any gaps, you can make a voluntary payment up to the previous 6 tax years to top up your credits.

There's also home responsibility protection that LOADS of people haven't claimed (see Martin Lewis website for more info) this can increase your SP too.

Secondly, you need to look out all your old paperwork for historical private/workplace pensions. Check with your bank for offers on private pension pots and combine them all together. (monzo do a good rate and all the leg work for you)

There's no point in having small pots all over the place, they will loose value. The best move is to combine them now and invest them with your bank or similar, I.e monzo, money box or similar.

You should also try and opt back into your workplace pension scheme. Set it to the lowest rate and you should hopefully be able to afford the monthly loss without it having too much of an impact. Your employer will match your contributions up to around 5-6%

Did you say you are over 40? A LISA is a must if you don't already have one. You can open them before you reach 40 and as long as you pay in before your 40th birthday, you can continue to pay in until retirement. Even £10 per month will build up interest and you can set the "round up" feature on your current account could put a little extra in with every spend you make. That way you wouldn't really notice the difference.

You would be looking for a long-term investment plan rather than the short term used for a mortgage with the government 25% scheme. This should give you a better pot when you do come to claim.

Good luck OP. It's never too late to make plans for the future, even if it's only baby steps, it all adds up.

My understanding too, and it will only go to those who are lifelong benefit recipients.
everyone else will be told “tough luck, it’s your fault you should have saved from your earnings”

I think the law about employers contributing to a pension was clearly signposting a move to less dependency on state pension alone, and it is true that saving into a private pension through a workplace scheme is excellent value for money - the employer contribution and government 20% additional contribution.

But I think it would be an extreme measure to stop the state pension completely and can't see it happening.

And especially not when people have no other income.

OP - the state pension in a household of two is very do-able. It's single pensioners covering 100% of the overheads on a single state pension that find it harder. So....take care of your marriage! An important factor in preparing for retirement!

I’m nearly 50 and I’m not expecting there to be any state pension by the time I retire (currently 67). My pension isn’t what it should be so I’m planning on maximising contributions over the next 10 years and hoping for decent growth.

They'll be a state pension and it'll rise, at least, in line with inflation.

Any party that even thinks about scrapping it, is electorally, dead in the water.

Look at Labour with Winter fuel or trying to reduce Disability benefits?

Your state pension will be fine.

If you are not eligible for state pension or only have partial state pension then you get pension credit.

this is basically similar to pension but you don’t have to have contributed.

https://www.gov.uk/pension-credit

very unlikely that the govt will get rid of it, there are a lot of people with only partial state pension.

I couldn't pay into a pension fund and now survive on the state pension plus PIP as I have cancer . I was divorced several years ago and while married was reasonably well off , after divorce I had to learn how to budget . I myst blow my own trumpet and say that I'm really good with money now and even have some savings .. my home is paid for so that helps . You will manage and will not be destitute! Your income will be supplemented with Pension credit . The only thing I would add is that the UK state pension is the lowest in Europe and I can't understand why older people are expected to manage .

I’m so sorry for your worry OP, and second all of the comments about workplace pension.

My partner - now in his 60s- went to work for BT at 16 as an apprentice. He did fairly well, working with electrics in sub stations of some sort, & stayed there about 12 years, paying into what was then a defined benefit pension scheme. His benefits were frozen when he left. When he reached 60, a pleasant surprise was a £1200 pcm BT pension , frozen for over 30 years.

To me this just underlines what we have lost over the past 30 years. All security - defined benefit company pensions, a decent state pension, a functioning NHS, a decent enough salary to save - has been lost to us. Our ‘leaders’ have just pillaged us- and meanwhile the media tries to distract us by endlessly selling us stories about Holly Bloody Ramsay’s wedding.

I can’t see how there won’t be a state pension for people like you OP ie who have worked and paid NI. If there isn’t then we are going to have big problems because benefit claimants will be sitting pretty in social housing get pension credits whilst this echo have worked full time and paid in will be worse off. Goodness knows what private renters will do.

This is a ticking time bomb as is the public sector pension commitment. Facts are OP you might be better living your life now rather than having savings when you retire as you’ll be more likely to get pension benefits.

Won't your work pension be taxed at 20% so roughly worth 19k?

Thanks everyone, for trying to put my mind at ease. Ill definitely make the pension at work a priority.

Our neighbours have a low income as pensioners and they get pension credit to top them up (I know the details as they asked me for help filling out the forms). They are a couple and the man only has a partial state pension as he stopped work due to ill health/being a carer (but didn't claim everything he could have so didn't get NI credits). The woman has a full state pension plus a tiny private pension (based on pt min wage work, only paid into it since auto enrolment so didn't build up much) but their joint amount is below the threshold for pension credit. They get their council tax paid, fuel allowance and their house is paid off. The woman gets PIP and they get a carer premium on their pension credit so it's a bit more than the standard amount. They seem to manage pretty comfortably, able to go on modest holidays and cover their bills. Theyve always been on a low income so they can budget and cook extremely well, and their quality of life is probably no worse than they had in their working life (slightly better as they have more free time for shopping around and leisure - they have free public transport, social activities at the community centre and free swimming at the leisure centre).

The rules for pension credit and state pension might change by the time you get to that age, but it's unrealistic to think there won't be some kind of safety net.

The OP is a good example of the many many people who make up a good reason not to carp on about paying state pensions and keeping the triple lock.

Be careful what you wish for! If it is reduced / slashed now you will never get it back as you approach retirement!

Labour will only keep the state pension for those who they feel are entitled to it, so not nhs, police, teachers etc..
Labour actually has intense dislike for the midsection of society so if you’re not a champagne socialist or full on benefit dependent, labour just wants to bleed you dry.

If just in your early 40’s you’ve got time to turn this around…but you need to get on top of your numbers. Recommend you have a look at Rebel Finance School (free on FB and YT) and take it from here.

Why should it be our responsibility to turn it around, rather than receiving the state pension we’ve always been told we’ll get?

State pension is still a pretty miserable experience. Why not aim to top it up?

State pension isn’t a huge amount, and also we can’t rely on it always being available. We can complain all we want but if it gets taken away, or the pension age raised further, there’s not much we can do, so might as well prepare and build up private pensions as much as possible. I’m assuming we won’t get much state pension, if any at all, and it won’t be until 70+. Therefore building up our private pensions with the aim of being able to retire earlier and not need the state pension to be comfortable, and if we get it it’ll be a bonus.