Half of UK have no pension

Harry_Powell

EdInvestor wrote: »

Or perhaps it will be more like 10k from the two state pensions, dunstonh
has forgotten about S2P.

Find out how much YOU will get by applying for a state pension forecast.

www.thepensionservice.gov.uk

Thanks for that link, I'll send off for my forecast asap. As I have said in my post earlier, it's unlikely that I'll be paying into a personal pension any time soon, so was really pleased to read your remarks about the second state pension paying more than 10k. I obviously want to make sure I maximise my state pension but couldn't find any information on how to do this. I saw that the basic state pension is fixed at £5k but the details were really thin on the second pension and how much it pays.

I'd really appreciate it if you could provide any links, you've given me a real lifeline with your post.

MrChips

baby_boomer wrote: »

Typical of the BBC's "we don't live in the real world" approach is the following:

"Taking [a cash lump sum on retirement] does not affect the pension payable to your qualifying spouse, qualifying civil partner or dependants. It will still be calculated on your full pension, as though you had not chosen to exchange part of it for cash."

This is pretty standard in all defined benefit schemes. The commutation factor will be calculated to take this into account so the cash taken isn't worth as much as if the spouse's pension was also commuted.

Old_Slaphead

ray123 wrote: »

What I would like to know is - how many of the 50% saving for a pension are working for the Public sector, who seem to have very good schemes? I sure it is a fair proportion.

Approx 40-45% of the 50% (ie 20% of total) is represented by the public sector.

There is a 90%+ uptake in the Public Sector pension schemes (hardly surprising as, in current economic circumstances, it's exceptionally generous). Most, but not all, are unfunded and will require to be paid for by future taxpayers ie those who can't afford to save for their own pensions. The ones that are funded, ie LGPS, are currently underfunded and will require further tax/council taxpayer support.

dunstonh

The news report really worried me... to have an income of around £10k a year, it said someone in their 20s would need to put away about £200 per month. I'm 22, I put in £75 a month, which is 5% of my income (I'm hoping my employers will one day decide to match this, but I'm not holding my breath on that one!).

You dont need to put £200pm at 22 to get 10k. Far less than that is needed providing you index the contribution to match inflation. The £200 probably works on the basis that you dont increase annually.

A quick and dirty calculation for a 22 year old retiring at state pension age wanting £10k income a year would need a gross contribution of around £96.22pm if you expect 5% growth p.a. or £52.37 if you expect 7% growth per annum. If you then started on those figures and increased them each year with inflation then you should get around £10k in retirement.

If you leave it until age 28 then the figures jump up. at 5% you would need to pay £134 and at 7% you would need to pay £80.47.

If you didnt want to increase with inflation but remain level then you would need to pay around £273 pm and hope inflation remained an average of 2.5%. So, you can see that when the media report figures, the lack of context they put it in can be more damaging than good.

jh2009

The media also seem to want to only focus on the negative rather than present a balanced view.

No mention when they talk of past scandals of the PPF Fund that has been in operation about 4 years now that (putting aside funding issues) is largely sorting out badly run schemes/scandals.

No mention of the fact pensions/the stock market are long term investments, and are currently very cheap to invest in if you have a long time frame. Instead they drag on a bewilldered looking plumber with the implied subliminal message pensions have gone down the drain!

No mention of tax relief that cuts the costs of provision or long term investment gains, all of which can massively affect their "£200 a month for 20 year olds, £300 30 years olds", etc).

No positive solutions, ie speak to your employer and see if they offer a scheme to help out with this £200 cost, look online at websites about pensions, etc.

No showing the odd young or older person whose invested over the last 20 years and who is feeling confident/not worried about the future.

Dr Altmann brought on as usual (still wearing her invisible grim reaper costume) warning we will be living in poverty.

jh2009

They did however at least this time resist their usual urge to put an actor in a bowler hat in a rolls royce..... while the reporter cycles slowly behind!

Pssst

Here are some scary comparison sites/tables...

http://www.fsa.gov.uk/tables/

http://www.moneyfacts.co.uk/annuities/bestbuys/2/cpa_male_60.aspx

LucyTheDwarf

dunstonh wrote: »

So, you can see that when the media report figures, the lack of context they put it in can be more damaging than good.

Indeed!

And thank you, I feel slightly reassured that it's not a foregone conclusion that I'll starve to death in my old age.

Gorgeous_George

dunstonh wrote: »

...A quick and dirty calculation for a 22 year old retiring at state pension age wanting £10k income a year would need a gross contribution of around £96.22pm if you expect 5% growth p.a. or £52.37 if you expect 7% growth per annum. If you then started on those figures and increased them each year with inflation then you should get around £10k in retirement...

Is that £10K in today's money or in 50 years' time when it will be about a month's pay?

Do you think pensions will increase at 5% or 7% per year over the next 50 years?

How much will the pension scheme earn over the course of the pension?

GG

dunstonh

Is that £10K in today's money or in 50 years' time when it will be about a month's pay?

Thats in todays money/real terms. Only if the contribution increases each year with inflation though.

Do you think pensions will increase at 5% or 7% per year over the next 50 years?

Depends on how you invest it. a rough guide would be to use 5% for cautious and 7% for medium risk and 9% for adventurous.