State pension age rise needed to balance books

PasturesNew

If there is one job and two people, one is 20-25, the other is 50-60, isn't it better that the 50-60 (having already worked for 30-45 years without a break) gets to retire if they want, freeing up that job for the 20-25?

I don't see how raising the pension age makes any difference. There's still only X people paying into any pot. It's probably cheaper to keep somebody 50-60 on basic state pension than a younger person who would be claiming JSA and probably LHA, then all the cost of providing the jobcentre for them to sign on, and the cost of any schemes etc they make them do because they're not working.

PasturesNew

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.

In my experience, hardly any company has ever provided a pension scheme. Some used to after 2 years. But I've never been in a company pension.

Having your own pension isn't something that started being talked about until I was close to 30... already a bit late to "start".

I did start one once, £15/month, paid in about 6 months and lost my job. It took about another month to get another job, so then it took me a year to catch up on being behind from being out of work a month. One thing I had to cancel was that £15/month. When I tried to start it again they said I had to completely pay back every missed payment - something that was impossible to do. So they closed it (there's some term they used). Since then I've never dared start another one because I am in/out of jobs so often.

Now, mathematically, if I save £100/month every month, without fail, forever until I retire... then when I retire I'd get back £100/month. So, that relies on me having a job every month from now until I retire and being able to afford £100/month every month without fail.

And - even if I did that - then I'd lose that £100/month from the pension MIG amount. Ergo, I'd effectively be throwing away that £100/month every month - when I desperately need it now to live.

For some, the figures don't stack up.

Also, from your figures ... if I earnt £20k and had a company pension scheme available, I'd join it. But where I live jobs pay about minimum wage - £20k would be exceedingly exceptional/rare, or in the public sector (which you can't get into, especially if you've never worked for them before).

IveSeenTheLight

marklv wrote: »

There is no reason to assume life expectancy will rise more and more - there will come a point at which it will plateau.

I'm sure it will, however the average age has been rising and those that provide pensions therefore have to cover for a longer period.
It boils down to either receiving less each year or reducing the time in which the pensions cover i.e. increasing the retirement age

When life expectancy plateau's, pensions won;t need to cover a longer period.

IveSeenTheLight

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.

Which is why people choose to invest in alternative investments.
When a DC scheme cannot provide you with a pension you know you are going to get, many will seek alternative options

PasturesNew

Figures from where I live and what my life would be like in my area if I could get a job:

£480 for a 1-bed flat, that's the LHA rate, so we'll stick with that. At my age, I'd deserve a 1-bed flat and nobody wants to share with an old aspie... we're just weird.
Local median wage for a full-time female £13,500

So, let's divvi those up:

£936 takehome

£480 rent
£60 council tax (including single discount)
£40 electricity/gas
£15 water
£12 TV license
£10 contents insurance
£100 commuting/travel to work
£100 food and household items (loo rolls, washing up liquid, washing powder, etc)
£40 phone line and broadband and mobile phone
====
£857

£936 - £857 = £79/month

Now pay for:
Xmas
Presents
Clothes
Shoes
Holidays
Household goods
Repairs/replacements

It'd be nice to have a hobby - too expensive. Or go on courses - too expensive.

Pension ...? pfft

Graham_Devon

PasturesNew wrote: »

Figures from where I live and what my life would be like in my area if I could get a job:

£480 for a 1-bed flat, that's the LHA rate, so we'll stick with that. At my age, I'd deserve a 1-bed flat and nobody wants to share with an old aspie... we're just weird.
Local median wage for a full-time female £13,500

So, let's divvi those up:

£936 takehome

£480 rent
£60 council tax (including single discount)
£40 electricity/gas
£15 water
£12 TV license
£10 contents insurance
£100 commuting/travel to work
£100 food and household items (loo rolls, washing up liquid, washing powder, etc)
£40 phone line and broadband and mobile phone
====
£857

£936 - £857 = £79/month

Now pay for:
Xmas
Presents
Clothes
Shoes
Holidays
Household goods
Repairs/replacements

It'd be nice to have a hobby - too expensive. Or go on courses - too expensive.

Pension ...? pfft

The answer here is probably to get rid of broadband, and live like an illegal immigrant, 15 to a 3 bed house. Cutting out lunch would probably also be beneficial.

Just remember to add to your pension pot.

ceridwen

Thanks for posting that O.P. - I'd read a bit about that earlier and been worrying.

I was (VERY) relieved to see that this body is saying that people "need at least 10 years notice of a policy change" - I've been worrying myself sick that my State Pension Age will be revised upwards - but as I'm comfortably within 10 years of it - whew! Huge sighs of relief chez ceridwen....

PasturesNew

ceridwen wrote: »

Thanks for posting that O.P. - I'd read a bit about that earlier and been worrying.

I was (VERY) relieved to see that this body is saying that people "need at least 10 years notice of a policy change" - I've been worrying myself sick that my State Pension Age will be revised upwards - but as I'm comfortably within 10 years of it - whew! Huge sighs of relief chez ceridwen....

I've already retired

I doubt I'll ever get another job again, so I'll continue bumbling along making a few quid here and there where I can.

Ageism ... you only realise it's there when it's you

vivatifosi

IveSeenTheLight wrote: »

I'm sure it will, however the average age has been rising and those that provide pensions therefore have to cover for a longer period.
It boils down to either receiving less each year or reducing the time in which the pensions cover i.e. increasing the retirement age

When life expectancy plateau's, pensions won;t need to cover a longer period.

I'm looking at this from the pension fund's POV. We've had to up our life expectancy factors as have most schemes. It's particularly important for DB schemes, even though it can put them in deficit/increase deficit as we need to cover our liabilities. Until we know the plateau is coming we can't look at anything else as it could be negligent to do so.

It's a really difficult issue from both sides of the fence.

ceridwen

PasturesNew wrote: »

I've already retired

I doubt I'll ever get another job again, so I'll continue bumbling along making a few quid here and there where I can.

Ageism ... you only realise it's there when it's you

Well - I hope you do manage to get another job okay Pastures...

Me - i'm older than you are and with a lot less to offer an employer than you have - so I'm very aware that I would definitely never get another job again if I needed one (not that I'd want to anyway.....)