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MSE News: How to defuse the pension time bomb

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This is the discussion thread for the following MSE News Story:
"Britons must increase the amount they save by thousands of pounds a year to secure a decent retirement income, research suggests ..."
"Britons must increase the amount they save by thousands of pounds a year to secure a decent retirement income, research suggests ..."
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Rather simplistic - a few years of a final salary pension won't give much retirement income. If someone has neglected to make pension provision earlier in their career they may well wish to set aside more into a pension to make up for their low pension savings, despite being in a final-salary scheme.
It can be claimed before the end of the tax year, by asking HMRC to adjust the tax code. This can be done even before a pension contribution is made, in anticipation of making a contribution later in the tax year.
We've already seen in the last couple of years the damage a relatively minor (on the grand scale of things) economic upheaval has caused - Billions wiped off investments worldwide; several of what in 2006 everyone would have regarded as the leading financial institutions in the world completely wiped out; and the pensions black hole getting ever wider. Even if the worst of this current crisis is over - and that's far from certain - Is it really reasonable to expect that we're going to get through the next 40 years without something similar or worse happening again, swallowing up all the money we've been squirrelling away for retirement?
Consider that within the next 40 years, the world will have to find some way of funding a huge number of retiring 'baby boomers' who don't have enough savings, while simultaneously dealing with a smaller workforce caused by population changes, who will therefore be contributing less to the economy. The numbers simply don't add up. The only way the numbers can possibly be made to add up is if the savings made by the younger generation are used to plug the gap - so what happens when we reach retirement age? The money has already been spent, and there's less than ever coming in to replace it...
I guess it comes down to how much faith one has in financial institutions, and in some ways in the current economic system as a whole. My personal view is that the current global economic model is inherently unsustainable and that it is going to reach the limits of its finite potential well before I come to retire. Without wanting to sound like some kind of crackpot Marxist, I think by 2053, the year at which I'll hit 70 and realistically the earliest I'll be able to retire, the global economic system will, by necessity, look very different to what it does now.
So while increasing one's pension savings may be a good idea for those for whom retirement is on the horizon, for the younger generation of workers perhaps instead of investing money in a pension plan that may or may not be able to deliver in 30 or 40 years' time, it might be worth considering alternative methods to provide for old age...
well maybe or maybe not gold plated but
the employer (or taxpayer) does indeed take all the investment risk
the employee pays relatively little typical 6-8% for a pension that would cost 20-25% of salary
the final pension is indexed linked
typically include spouse/partner pension
good children pension if you die in service
and many public sector pensions in fact allow people to retire early with no actuarial reduction in benefits
some would say gold plated is a fair description
This is not the first financial crisis. It wont be the last. There have been 8 since 1956. They occur on average every 7 years. The scale differs but they are not new. Its just that we have 24 hour media nowadays that likes to scaremonger and a generation that had to wait longer than average for their first recession.
Defusing the retirement time bomb requires a discussion on retirement age, this has been dodged by Governments of all persuasions since I don't know when. We can't afford people to retire with 20+ years of life expectancy left and we should admit it. The timid proposals to lift retirement age to 67 are too little too late.
As to young people needing to save more, how can they when they are busy paying off student fees, trying to afford one of our overpriced properties and heaven help them, trying to afford to raise children. Actually I do have the answer for that; don't get educated, don't get a job; don't get your own house and the state will provide everything you need because if you do save for a pension and then have the temerity to have savings then expect to get less.
There is no incentive to save, even less so with the punitively low interest rates and until that is addressed people like me will just ignore any need to save for a pension. No, I don't plan to retire until ill health or death get to me. I'll continue working and paying my taxes like any self respecting person who contrary to the majority don't believe we have an inbuilt right to everything.
Yours cynically.
Their methodology is somewhat suspect.
-o I am humble -o You are attention seeking -o She is Nadine Dorries
Some people would say gold plated, some people would use the word decent. The issue is not the benefits but whether people get the benefits too cheaply.
What I deeply resent is Cameron saying gold plated, the real issue in this country is inherited wealth. I think people who work hard should get a decent pension.
The Conservatives think that if you are not born rich, or do not make your millions in the private sector, you deserve to be poor.
Cameron was born gold plated, he needed to do nothing to do that, people who work hard should get a decent pension.
If we as a country cannot enable people to work and earn a decent pension, we are not much of a country. The fact that many people who work hard in this country will never have a decent pension, is a shame on us all.
Rant over, sorry.
5th decile of 50-state pension age people have 30% state pensions, 30% private pension, 30% housing and 10% other wealth to live off. And the percentage of those having income replacement rates below target in retirement is:
38-43% counting only pension income
29% adding all other non-pension, non-housing and non-inheritance money
18% adding half of housing wealth (trading down)
16% adding inheritances
So the pension companies are making the situation look worse than it is by missing out much of the retirement planning picture.
It was a nice rant but since inheritance only had a little effect on those not meeting retirement income targets, perhaps you may consider decreasing the relative importance of inheritance in your understanding of the situation.
Source: Second Report of the Pensions Commission, page 79.
Where ever your money is for your pension, one place it shouldn't (100%) be for the majority of the time is in cash.
-o I am humble -o You are attention seeking -o She is Nadine Dorries