Worried 25 year old

jh2009

marklv wrote: »

They have already been looked at on a number of occasions, and changes have been made. No doubt they will be looked at again, but I think it very unlikely that existing members will have their schemes closed; for new joiners though the situation may well be different. Even the public sector hating Tories are well aware that to tinker with public sector pensions would open a big can of worms - not even Thatcher did that.

Agree. Most likely changes will be made to new staff.

They may change future benefits though, with historical benefit levels protected.

I sense big arguments though/maybe strikes before any change is made.

marklv

jh2009 wrote: »

Agree. Most likely changes will be made to new staff.

They may change future benefits though, with historical benefit levels protected.

I sense big arguments though/maybe strikes before any change is made.

The political cost of messing with public sector pensions in high. Changing the benefits of people on existing schemes, in the way that IBM, Fujitsu and a number of other companies have done, would be guaranteed to cause big trouble, and strikes would be certain. Hitting new entrants is easier and carries a much lower political cost. Anyway, my gut feeling is that the public sector wage bill will be cut in other ways, probably through mass redundancies in areas that can be replaced by internet based transactions, e.g. jobcentres and tax offices. Specialists, like lawyers, accountants, surveyors, medics and IT geeks will always be needed in the public sector - it's the admin people who will be in the firing line.

GSXRCarlos

has anyone suggested investing their money in cash ISAs for now?

This will act as a stop-gap solution, and still retain some control over their money

Pensions need to be properly considered and made to work for you, i'm fortunate, my employer has a company who does it for us

But whatever you do, any money you can put away now will be a big help in the future (£10 a month might be all you can afford, but it's a start)

mintedmatty

jh2009,


My employer doesnt contribute to my pension? I have 2 seperate pensions i just pay into myself? under this NEST scheme will they have to start contributing if I started one up? if so how much?

jh2009

NEST isnt introduced until 2012 and the compulsary employer contributions will be phased in over 4 years up to 2016.

If you are not in a qualifying occupational scheme they will have to put you into NEST, or contribute contributions to their scheme as an alternative, unless you opt out (and they wont be able to bribe you to opt out of it).

The contributions by 2016 will be employee 4%, employer 3% tax relief 1%. As i said there would be some phasing in and also we will have to see after the election if this changes, depending on who is elected.

jh2009

GSXRCarlos wrote: »

has anyone suggested investing their money in cash ISAs for now?

This will act as a stop-gap solution, and still retain some control over their money

Pensions need to be properly considered and made to work for you, i'm fortunate, my employer has a company who does it for us

But whatever you do, any money you can put away now will be a big help in the future (£10 a month might be all you can afford, but it's a start)

I dont think cash isas are a suitable investment for retirement provision.

They are good for saving if you need instant access, but long term inflation erodes the cash.

Also with an ISA theres no tax relief, whereas with pensions you get 20% tax relief. (so each £100 in a pension costs £80 vs £100 costing £100 in an ISA, which is equivalent to a 25% immediate return).

If you really wanted you can hold 100% cash in a pension, though for younger people this isnt a good long term strategy.

A Pension is just a wrapper really and not an investment on its own. The word pension is a bit like a mars bar wrapper. If they put a mars bar in a plain wrapper and sold it for the same price theres no difference. A Pension and ISA Work exactly the same really.

Manual_Reversion

Mess wrote: »

Hi everyone I know I am probably a bit too young to be thinking about this. However lately I have been thinking about when Im old and what the future will hold.

You are thinking about this at a much younger age than most but this is absolutely to your advantage. I would urge you to continue thinking/researching the matter and then positively do something about it.

Mess wrote: »

So my question is, if I stick with nannying for the next few years, what will my options be when it comes to getting a pension?

Assuming you pay National Insurance contributions (and continue doing so) then you'll receive the basic state pension. £6500 per year at today's rates roughly I believe. You may also receive the Second State Pension which may be the same again - I'm afraid I have no understanding of this however so please seek further advice on this. Get a state pension forecast (google it or search the forum for links to do this).

If you don't fancy the idea of having to live on the income having done the above research then you need to make your own provision. You could do this in different ways (ISA, pension being the main methods).

Taking the pension method, as an example, £100 per month gross (costs a basic rate tax payer £80 from your pocket), over 40 years, assuming 6% growth per year, will generate a pension pot just shy of £200,000. If you use the whole lot to buy a yearly income then it will produce roughly £12,000 per year. Divide by two to get adjusted-for-inflation figures and you're looking at £6000 annually, on top of your state pension of course.

What's an iPhone contract these days? £35 per month minimum? You're almost halfway there.

It's doable.

vaporate

bendix wrote: »

A pot of £100,000 at retirement is, I would think, the bare minimum that people should be aiming for. Even £200k seems light to me.

The key problem is that people expect to get a retirement sum and think it doesn't take discipline or commitment. It's bloody hard work. I have made a huge personal sacrifice to secure my future - I lived the dream life of an expat in Thailand for five years and saved hard, but then realised I wasn't on course to maintain that lifestyle so moved back here and am committing to being here for a few years until I've saved enough to retire at 48-50 back in paradise.

My lifestyle in London is much worse than in Thailand, but it's a price I am prepared to pay for the greater good.

off topic but many TEFLers do this.

lvader

I think the very minimum people should aim for is to use up the full tax allowance at 65, if you do it as a couple that's nearly 20k a year tax free and very achievable for most.

no_fat_chicks

marklv wrote: »

This talk about the likelihood of the state pension becoming nothing is pure BS. No democratic government will ever remove the state pension because it would be political suicide. What will happen instead is what has been happening since Thatcher removed the average earnings link in 1980: the gradual degradation of the state pension to the point when it will be worth almost nothing (in relative terms).

So it won't become nothing, instead, it will become nothing? Did I read that right?