State pension age rise needed to balance books

Sapphire

Procrastinator333 wrote: »

Not all can save for a pension. But a lot more than currently do, could if they wanted to. I also don't think you understand how defined contribution schemes are often structured. So, to educate you a bit (probably not possible) on defined contribution schemes.

There is an old rule of thumb. If from the day you start work you put half your age (as a %) in to your pension you will get about 2/3 final salary.

So a 22 year old needs 11%. The vast majority of employers offer matching, or better than matching offers. Which often increase with length of service too. Even if it is just a matching scheme, the company will often put in 3,4,5% if the employee does too. There is also the fact that you get tax relief. So if an employee has a scheme where they put in 5%, the company puts in 5% they only lose 4% of net pay and get 10% in their pension. If it is a salary sacrifice that adds another 0.5% in to the pot.

Yes this is not available to all and the terms will be different. But almost all employers offer company contributions of some level or another. Even though this is such an obvious bargain. The numbers that don't do it are ridiculous. My employer gives 6% if you put in 4% and it is salary sacrifice. So that would cost an employee 3.2% of net pay and they would get 10.4% of their salary in to their pension.

I see the payroll / pension for 300 of our employees. Only about 130 pay in to the pension! For every £3.20 of net pay, they can have £10.40 in their pension. But so few do it!!!!! Or. A person on £20k only needs to give up £640 of their salary to get £2,080 in to their pension each year.

Sure there may be a few who really can't spare a penny, but that is not the majority. The majority chose to blow money on many other things. Then when they get to about 40 they suddenly think oh carp, I might need a pension one day. Too late sunshine.

For the future, people who are starting out on their working careers now can be made to save into pension schemes through legislation. But that is not going to help people who are going to be retiring within the next couple of decades or more, many of whom have seen savings and pensions they have saved for decimated – pension promises were made to them, and not unreasonably they expected such promises to be kept. For such people, who have no prospect of extending their working lives, sudden increases in the pension age will mean destitution.

Contrary to what many of you 'older generation' bashers conveniently propagate, not everyone has made a fortune from property (though that is probably the experience of your parents if you really think that way). Many people work in professions that do not pay the kinds of salaries that seem to be common in, say, the law, financial services, medicine and dentistry, but had modest incomes all their working lives (though their professions could well have been very interesting).

marklv

Generali wrote: »

Life expectancy at birth has increased from 65-75 in Europe over the last 60 years:

http://en.wikipedia.org/wiki/File:Life_expectancy_1950-2005.svg

Why would you assume that life expectancy won't continue to increase at a similar rate? For my money there is less reason to think life expectancy won't continue to rise than that it will. Why should a 100 year trend suddenly turn around despite all the advances that are being made in genetics?

This bloke reckons that my generation (I'm 39) will routinely live to be 100 and my kids will most likely live for centuries.

Assuming there is some sort of miraculous discovery in genetics and the actual ageing process can be slowed down, then it could be possible for people to live pretty much indefinitely. But it's a massively huge 'if'. I remember watching a BBC TV documentary in 1995 which claimed that we were a few years away from having the secret of eternal life and agelessness. Well, 15 years later there has been no such breakthrough, so I'm very sceptical that it will ever happen. And cancer, likewise, still kills lots and lots of people worldwide. Dream on.

marklv

Sapphire wrote: »

Where will they live? The world is over-populated now. What will happen if people live for centuries?

Do we migrate to the stars? Or practise genocide?

You forget that we live in a capitalist world. Only the wealthy will be able to access such life increasing technology.

Procrastinator333

Sapphire wrote: »

For the future, people who are starting out on their working careers now can be made to save into pension schemes through legislation. But that is not going to help people who are going to be retiring within the next couple of decades or more, many of whom have seen savings and pensions they have saved for decimated – pension promises were made to them, and not unreasonably they expected such promises to be kept. For such people, who have no prospect of extending their working lives, sudden increases in the pension age will mean destitution.

Contrary to what many of you 'older generation' bashers conveniently propagate, not everyone has made a fortune from property (though that is probably the experience of your parents if you really think that way). Many people work in professions that do not pay the kinds of salaries that seem to be common in, say, the law, financial services, medicine and dentistry, but had modest incomes all their working lives (though their professions could well have been very interesting).

Please quote where I said the older generation have all made a fortune from property? Though no doubt many have.

So basically what you are saying is that we should wait 10-20 years to let all those who failed to save properly draw a decent pension - which will be paid for by my generation. Then when we get there it should be bumped up? So we pay for your retirement and ours?

My comments are not a pop at the older generation. The young of today are repeating the mistakes. So many don't bother to start a pension for so long.

Why can't people extend their working life? My proposal of 6 months for every year that goes by? So if you are 64, you now have to work to 65.5. So what, that 6 months makes no difference.

If you are 40. Then you still have 25 years left to work anyway and you can prepare accordingly so you can work another 35 years instead.

Procrastinator333

marklv wrote: »

A lot of what you say is fanciful rubbish, and trust me I don't need 'educating'. I know all about personal pensions. A lot of what pension providers and financial consultants promise is pure lies and utter rubbish as it's based on totally groundless projections of the stock market indices growing over several years. The fact is that the stock market index can stay static for decades, or even drop, as has been happening since 2000. Then you end up with less money than you contributed!! And, as I said before and repeat for your deaf ears, many people already have high levels of financial commitment and simply cannot afford to contribute anything to the pension schemes.

And you forget that even £2k a year into a pension scheme is only £80k after 40 years. What does that give? £4k a year. Big deal. Can you live on that?

:rotfl:ROTHFAPML

OK. Lets break down that trip to make it a little more managable:

marklv wrote: »

I know all about personal pensions.

Right, so I will just quote this next bit. And the fact you don't get why it is such tripe illustrates that you are talking out of your ar*e about the point above.

marklv wrote: »

And you forget that even £2k a year into a pension scheme is only £80k after 40 years. What does that give? £4k a year. Big deal. Can you live on that?

I can't remember the person who said it, I think I actually read it from a game called civilization but: "Compound interest - The most powerful force in the universe"

The basic pension rule of thumb, in todays terms, a person on £20k salary who start at 22 with an 11% total contribution would get a pension around £13k. If you can live on £20k while working you can live on £13k in retirement.

So, now on to the next steaming turd within your verbal pile of ca*k

marklv wrote: »

A lot of what pension providers and financial consultants promise is pure lies and utter rubbish as it's based on totally groundless projections of the stock market indices growing over several years. The fact is that the stock market index can stay static for decades, or even drop, as has been happening since 2000.

Pensions are long term, not 10 years. Yes they can stay flat, but that is why pension providers will discuss something called "diversification"

On we go....

marklv wrote: »

And, as I said before and repeat for your deaf ears, many people already have high levels of financial commitment and simply cannot afford to contribute anything to the pension schemes.

Yes there are a few, but it is not the majority, not the vast majority. They spend money on sh*t and then moan when they hit 40 because they have nothing. They should reduce their financial commitments. Easy.

Just because you are ignorant doesn't mean we all are.

LydiaJ

marklv wrote: »

You are absolutely right. How many people over 50 who are not in very senior management roles work for the likes of Accenture or one of the investment banks like JP Morgan or Goldman's? Not many. These organisations want young people who are happy to be pushed around and forced to work 12-15 hours a day, even weekends.

The only jobs suitable for the older workers are part-time ones in places like B&Q or Tesco. Is this what the government has in mind?

Do you really think there are only "12-15 hours a day in an investment bank" type jobs and "part time in B&Q or Tesco" type jobs and nothing in between?

There are millions of people in their 50s and 60s working as doctors, teachers, care assistants, plumbers, car mechanics, sales reps, secretaries, midwives, solicitors, vicars, civil engineers, estate agents, cleaners, receptionists, office managers, research scientists, speech therapists, bus drivers, etc etc etc.

Age discrimination in recruitment can be a problem, but the list of jobs that older people genuinely can't do is tiny compared with the list of jobs where someone in their 60s can perform just as well as someone in their 20s.

Graham_Devon

I'm going to take the average workers wage. Apparently that was £25,800.

If this average worker put 10% of their wages into a pension pot, they would have £17,622 after tax and NI left per year.

So let's take the average rent payment (as we are talking about putting into pensions at a young age, I am going to use rents instead of mortgage payments, think this is fair.) of £670 a month.

The worker now has £9582 left.

Now lets:
- Take off their council tax at a mere £80 a month
- Take off their transport costs at a minimal £100 a month (car payment, tax, insurance, MOT, fuel)
- Take off bills for a 1-2 bed flat at approx £130 a month (phone, electric, water, TV licence, insurances etc)
- Take off their food bills at £180 a month

The have £3862 left

For those with student loans, lets take off the £81 a month they would be required to repay on a 20k total loan.

They have £2902 left.

This £2902 then has to pay for anything required in life. Maybe a new fridge is required? A TV? Maybe a computer? Maybe they need broadband for their work / life? Maybe they need new clothes.

So, lets say they buy a very frugal £250 worth of clothes. Need a new exhaust on their car at £100, need a new fridge at £160, need to buy a laptop at £300. Go out for just 4 meals in a year at £15 each. And buy presents for their family birthdays etc at £100, and have christmas to contend with at £150.

They have £1782 left for EVERYTHING else in life for an entire year.

Out of this money, they should also be saving for a deposit for a home apparently. We haven't even suggested they have any type of credit card or personal loan debt (which is quite likely looking at their budget). Or shock horror, have a child.

As I said earlier, all this "people should just do like I do and save this, pay that, do this" is pointless.

We are facing a HUGE pension problem in this country. Absolutely collosal. As all those average workers out there, cannot simply pay higher tax to sort out the defecit, sort out their own pensions, save deposits for houses to get the best interest rate etc etc etc.

Pensions have been put on the back burner as people my age try to set up their lives, get their home / family. Pensions HAVE to wait until later, unless you are bringing in a very decent wage, well over your peers.

It's ver simply saying "well you should look after yourself, cut back". But tell me, how on EARTH could the person above cut back? Maybe they could share and cut back on the rent a little, not a lot, but a little. Maybe give them an extra £1000 a year. Wow, life for them is still cut back to the essentials, and one single repair bill could wipe out half of that 1k saving...and 1k a year saving on rent isn't going to help their house deposit quickly.

We need a lower cost of living. It's just too expensive. Housing being the biggest and most skewed cost.

Those investing in housing, pushing prices up over the last decade, cheering on rent increasesm are sucking the life not only out of their younger generations, but also the general economy as a whole, as it's simply impossible to do everything on the money available....and it will hit the fan later down the line.

olly300

Generali wrote: »

Ask him not me, he's on Radio 5 once a week and invites questions.

Life expectancy has risen consistently and we can expect it to continue rising. We can ignore that or embrace it. The former is foolhardy IMO.

Actually you haven't counted in the obesity epidermic.

Lots of children are now expected to die younger than their parents due to this. As those who are obese are more likely to get and suffer from life limiting conditions such as diabetes, heart disease and cancers.

Procrastinator333

Graham_Devon wrote: »

I'm going to take the average workers wage. Apparently that was £25,800.

If this average worker put 10% of their wages into a pension pot, they would have £17,622 after tax and NI left per year.

So let's take the average rent payment (as we are talking about putting into pensions at a young age, I am going to use rents instead of mortgage payments, think this is fair.) of £670 a month.

The worker now has £9582 left.

Now lets:
- Take off their council tax at a mere £80 a month
- Take off their transport costs at a minimal £100 a month (car payment, tax, insurance, MOT, fuel)
- Take off bills for a 1-2 bed flat at approx £130 a month (phone, electric, water, TV licence, insurances etc)
- Take off their food bills at £180 a month

The have £3862 left

For those with student loans, lets take off the £81 a month they would be required to repay on a 20k total loan.

They have £2902 left.

This £2902 then has to pay for anything required in life. Maybe a new fridge is required? A TV? Maybe a computer? Maybe they need broadband for their work / life? Maybe they need new clothes.

So, lets say they buy a very frugal £250 worth of clothes. Need a new exhaust on their car at £100, need a new fridge at £160, need to buy a laptop at £300. Go out for just 4 meals in a year at £15 each. And buy presents for their family birthdays etc at £100, and have christmas to contend with at £150.

They have £1782 left for EVERYTHING else in life for an entire year.

Out of this money, they should also be saving for a deposit for a home apparently. We haven't even suggested they have any type of credit card or personal loan debt (which is quite likely looking at their budget). Or shock horror, have a child.

As I said earlier, all this "people should just do like I do and save this, pay that, do this" is pointless.

We are facing a HUGE pension problem in this country. Absolutely collosal. As all those average workers out there, cannot simply pay higher tax to sort out the defecit, sort out their own pensions, save deposits for houses to get the best interest rate etc etc etc.

Pensions have been put on the back burner as people my age try to set up their lives, get their home / family. Pensions HAVE to wait until later, unless you are bringing in a very decent wage, well over your peers.

It's ver simply saying "well you should look after yourself, cut back". But tell me, how on EARTH could the person above cut back? Maybe they could share and cut back on the rent a little, not a lot, but a little. Maybe give them an extra £1000 a year. Wow, life for them is still cut back to the essentials, and one single repair bill could wipe out half of that 1k saving...and 1k a year saving on rent isn't going to help their house deposit quickly.

We need a lower cost of living. It's just too expensive. Housing being the biggest and most skewed cost.

Those investing in housing, pushing prices up over the last decade, cheering on rent increasesm are sucking the life not only out of their younger generations, but also the general economy as a whole, as it's simply impossible to do everything on the money available....and it will hit the fan later down the line.

I'm off out, so only time to pick holes in the biggest holes.

1) I clearly explained just about every worker has access to a scheme where the company pays in to it as well. I used the example of the company I work for. Not the most generous, but certainly ok scheme.

The 11% for a 22year old is in total, not their own.

It only costs somone on £20k £640 out of their net pay in a year to be putting in the 10%.

Re-read my post. Then go read about pension contributions - pay attention to the parts on tax relief, employer contributions and salary sacrifice. They all serve to make the net pay cost to the employee significantly lower than it sounds.

2) Where can they save money? In your numbers. What person on £25k pays £670 on rent????!!!!! You share with someone or get a 1 bed. Seriously? £670?! The first place I rented with my other half cost £700 a few years ago. Now a few salary rises along we spend £1,100 a month. Even now renting a place bigger than we actually need, we are still well under your £670 a month!

£130 a month for all thos other bills? They need to learn about things like go-compare and quidco.

£180 for 1 persons food?!

I;m also very skeptical they end up with so little net pay, but don't have time to check your numbers, will do that later.

Graham_Devon

There are plenty of holes to be picked, I'm sure, as I've just used very vague figures.

However, I'd have to disagree with the old adage argument of they can share.

The person is on the average wage. Not minimum wage, or even low wage. If we are at a point where all the person earning 26k a year can expect is a flat share, or at best a one bed flat, and STILL be pretty much maxing out their imcome every year should soemthing crop up or they wish to have a half decent life, then we really are in trouble.

What can the person earning 20k, 18k, or the person in the factory earning close to minimum wage at say 13k, expect? A broom cupboard? Or living 2 to a room?

The £130 for all bills aint much is it? £80 a month gas / elec, £20 water, £10 insurance, £11 phone, £12 or whatever TV licence....actually, I undershot it!! We haven't even got to a mobile phone yet.

The £180 on food for one person isn't much. It's £45 a week, and thats to include washing, cleaning, hygiene products etc.

I wasn't using the most frgual cost of living that can be had, as I was always using the average wage, average rent. Therefore I used an average bill amount....not the absolute bare minimum required to survive.

As stated, if the person on 26k can expect the bare minimum living conditions and bare minimum food costs in order to merely get by, then the country really is in dire trouble.