Pensions in the private sector - an impossible goal

[Newmeagain]

I am feeling quite depressed about my pension and it seems to me that for most people in the private sector it is impossible to accumulate a decent pension.

it feels like we have three categories of people: people in the public sector who get really good pensions; people in the private sector with very high paying jobs; and then people in the private sector with less well paying jobs and it is this last group that have no hope.

I currently have a well paying job but for many years my pay was lower and I could not increase my contributions because I was a lone parent and had to prioritise living costs. I am in my early 50s and my pot is £135k. My googling indicates that even a £400k pot (which seems like an impossible goal) would only give me a very modest annual pension. I am single, so no one to share costs with.

it’s that people don’t start them early enough

Bit difficult when paying for education, rent & saving for a deposit though.

The problem with private sector/DC schemes is that the auto enrolment amounts are not enough for a decent private pension if you don’t pay in more than the default. So may people think they’ll be taken care of because they’re paying into a pension, but have no idea how much capital they’ll need for the retirement they want.

rule of thumb is C £300k capital to generate £10k a year income.

Most public sector workers cannot now access their pension until age 67 without taking a hit

And only if you’d worked for 40 years full time prior to 2015. It’s been salary average since then

I think @Katypp’s point is that 20-30% employer contributions are in no way average. And it is galling to hear public sector workers complaining about how much worse their pensions are now when so many people in the private sector are getting a paltry 3% contributions from their own employers.

I don’t begrudge paying for them, but it’s infuriating to hear listen to people complaining about them with no clue about how fortunate they are.

Sure, but the relevant comparator is what these people would be earning in the private sector- millions. And you see it when people move between public and private sectors.

Same is true for anyone remotely senior. I’ve worked as a lawyer in both the private and public sectors. I can make more than double in the private sector for effectively the same role.

This isn't the majority of roles obviously. Pay is a lot closer for junior roles because there’s a floor on how little someone can earn- minimum wage.

But this would be the same for any pension scheme, public or private. Public sector pensions tend to cost quite a high percentage of salary and you cannot choose to add more or less than the stated amount, unlike with private pensions where you can just pay what you can afford.

But actually, they really aren’t. This was the point I made badly earlier.
Even a very low level, the attractive pension escalates people with very little ability. To almost equal levels of graduate salaries due to the overly generous pension.
Once you had compounded interest to the equation, they could quite quickly overtake them

@DreamyJade I agree that public sector pensions are good but DB schemes were more common in the private sector in the past. I also agree that 3% employer contributions are crap and again they were higher in the past.

But my point was someone is not paying for current public sector workers pensions in the future but they are paying for people taking their pensions now.

I never said otherwise just highlighting the cost of living now for younger people is prohibitive to them starting to save for a pension from a young age.

unlike with private pensions where you can just pay what you can afford.

What does this mean? Most have a % that you have to pay, there isn’t flexibility…

All these people who think the public sector is full of untalented people with wonderful pensions, why on earth aren't you working there? We'd get (according to you) better people doing public sector jobs, and you'd be better off. The public sector is huge, there must be something you could do or retrain for, after all, apparently you don't have to be good at anything...

This is it - it’s forever been the case that public sector is dependable - means your less likely to loss your job and have decent benefits, but privately will pay more but be that bit more riskier. It’s a bit DM to start pitting teachers against plumbers and nurses against delivery drivers , divide and distract against the real issues.

But that 20-30% isn’t going into the employees own ‘pot’ is it? Not like a private sector employer contribution would?

doing a degree which isn’t accredited is incredibly unfortunate. Did you know this doing it? Was it falsely advertised and would you have any recourse against whatever institution you attended. Obviously the NHS can’t hire people unless they can stand over their degrees, but some people do go back at train again?

Could you downsize or move area @Newmeagain when it comes to retirement age to free up some capital?

No I didn't know anything about accreditation when choosing my course. When' I did realise, I assumed because it was a decent uni I would be fine.

There is an additional category - the self-employed that get zero employer contribution and are having to save their entire pension from their earnings.

They do get the government contribution though, so it’s not entirely disastrous.

Is it a degree which is seeking accreditation so may be backdated? That has happened with some reputable universities but it is a risk to take (often easier to get on/lower cost given the risk) but universities should be clear about it. I’m sorry it’s happened to you - there must be others in your cohort in a similar position so might be worth a collective query to the uni?

And they can be incredibly tax efficient which helps.

1 year conversion courses are available to gain accreditation. Or if it’s something like Biomed you can become accredited via work.

Who is the body that would issue the accreditation, please?

Depends on the subject. British Psychological Society, Institute of Biomedical Science, British Computer Society, Bar standards Board, Social Work England, Nursing and Midwifery Council, Institute of Health Care Professionals, Health and Care Professions Council are some examples.

I didn’t expect so many posts on this!

Can I just say, I was not attacking public sector pensions.

My point was perhaps about the frustration and difficulty of building a decent pension as a woman in particular, in a private sector job.

My degree took ages and so I did not start earning a proper income until I was 25. I then became a lone parent in my early 30s. Always worked but four days a week when dc was at school. You can see where this is going. Then started back full time but my private sector job is not something I can do in my 60s. The informal cut off point is around 55.

I guess I will probably sell my house and move somewhere cheaper. ( not downsize as my house is already small!)

You expect us to believe that you got that pension and only worked one day in six months?

Pull the other one.