Workers facing a bleak old age?

edinburgher

Reading the comments on the following article, it seems to me that the main problem that future generations of British pensioners face is that they're disinterested, not willing to do a little research and believe everything that they read in the tabloid press:

http://www.bbc.co.uk/news/business-14346734

Apparently we're all going to live in old age poverty and it's the fault of (in no particular order):

1. Foreigners
2. Foreigners
3. Foreigners
4. The pension industry
5. Foreigners

The moment I see someone saying that they paid into a pension for 25+ years and still lost money I start to wonder:

1. Whether they actually made any payments past the first month
2. Whether they ever increased said payment/payments, or whether they thought they would pay 5% a month of their £15k wage and retire on £50k
3. Whether they read the paperwork for the pension and chose their investments for reasons other than to get the form completed

Granted the financial services industry in the UK hasn't got the best reputation for transparency and the government seems to make it harder to save than it has to sometimes, but are we really that badly off compared to the rest of the world?

I get the feeling the average Brit would rather act like a victim and absolve themself of having to actually work to secure their future prosperity (and maybe go without some of life's little luxuries) - am I being overly harsh?

Procrastinator333

I was going to post a bit of a rant about many of those comments. But the fact is, most people don't like pensions because they don't understand them. Just another example of why financial education should become a required subject at school.

As for the "foreigners" aspect. I would employ a hard working "foreigner" that costs less over a moaning Brit every day of the week.

wotsthat

I don't think you are being overly harsh.

We live in a society where people complain about the nanny state and others complain that the government isn't doing enough. Unfortunately, I suspect that there's quite an overlap in these 'two'groups i.e. why shouldn't I eat/ drink whatever I want - it's my life and, in the following breath, why isn't the government making sure I've got a comfortable retirement to look forward to.

It's so so important that the government should be making it compulsory to save into a private pension scheme with very limited opt-outs i.e. terminal illness, demonstrable alternative income etc. A couple of years ago government threatened to legislate about carrier bag use and agonised about fox hunting when thousands of people get to retirement relying only on the state pension. The financial sector should be doing more as well - transparent charges would be a start - annual statements should show how much a pension company has taken in charges during the course of the previous year.

dtsazza

Looks like it's not so much people "falling through the cracks of private sector pension provision", as it is people stumbling around blindfolded yet veering away from the solid surfaces because they might wear out their shoes.

I was going to post a bit of a rant about many of those comments. But the fact is, most people don't like pensions because they don't understand them. Just another example of why financial education should become a required subject at school.

Absolutely - the top rated comments on that article are utter rubbish. The Saga guy put it very well:

• Pensions are not magic
• You need to save some of your income while working if you want to have money while not working

The first bullet point seems to be the one that the average person falls down on. But if they approached things from the second bullet point, and then start thinking "but what financial vehicle shall I store these savings in", it wouldn't be unusual for them to conclude that a pension was in fact the most suitable wrapper.

dtsazza

wotsthat wrote: »

It's so so important that the government should be making it compulsory to save into a private pension scheme with very limited opt-outs i.e. terminal illness, demonstrable alternative income etc.

Or, they take the Ants and the Grasshopper route, and simply pay out the flat rate state pension to everyone (with no means-tested benefits above and beyond that).

I would much rather the government lets people face the consequences of their actions, rather than force them to take "good" actions.

wotsthat

dtsazza wrote: »

I would much rather the government lets people face the consequences of their actions, rather than force them to take "good" actions.

Well I'd go along with that except it's theoretical and would never happen.

Don't forget that people who spend life free-loading and taking no responsibility for themselves turn into fluffy haired pensioners - they're the last group that a government will ever make a lesson of.

dtsazza

wotsthat wrote: »

Well I'd go along with that except it's theoretical and would never happen.

Don't forget that people who spend life free-loading and taking no responsibility for themselves turn into fluffy haired pensioners - they're the last group that a government will ever make a lesson of.

Bah - politics. Don't worry though - it's not only the pensioners that I want them to make a lesson of, so they can be the last group.

Seriously though, I was brought up on the principles that that fable is based on - which I'd have thought to be undeniably sound. Yet the system seems to be sending out the opposite message:

"Work hard and be successful and we'll tax you at a much higher marginal rate, so that we can give your money to people who didn't work hard, and spent all their money on having fun rather than prudently making sacrifices to put some aside as you did."

olly300

edinburgher wrote: »

The moment I see someone saying that they paid into a pension for 25+ years and still lost money I start to wonder:

1. Whether they actually made any payments past the first month
2. Whether they ever increased said payment/payments, or whether they thought they would pay 5% a month of their £15k wage and retire on £50k
3. Whether they read the paperwork for the pension and chose their investments for reasons other than to get the form completed

Lots of people simply tune out when you tell them something to do with money or finance.

I remember telling one of my mates, who is intelligent due to the job she holds, that the bank will charge interest on her overdraft once she wasn't a student. She didn't believe me until she was charged it.

edinburgher wrote: »

Granted the financial services industry in the UK hasn't got the best reputation for transparency and the government seems to make it harder to save than it has to sometimes, but are we really that badly off compared to the rest of the world?

Other European countries make pensions contributions compulsory. Either for both employee and employer, or just the employee. There is absolutely no getting out of making the contributions.

edinburgher wrote: »

I get the feeling the average Brit would rather act like a victim and absolve themself of having to actually work to secure their future prosperity (and maybe go without some of life's little luxuries) - am I being overly harsh?

In some cases yes and in other cases no.

There have been a lot of pension programs on in the last few months showing that people are being ripped off by charges. Some simply by not knowing the services out there that can help them get decent quotes others due to not understanding the paperwork they had been given and knowing where to go to get more information.

ChiefGrasscutter

I think you are being harsh........

Here is an example from work
We had AVC's attached to our pension scheme
Many were paying in quite a lot into the AVC part - indeed at higher % rates than they were paying into the main scheme.
You had a number of options are to which firm would manage your AVC pot.
One of those options was Equitable Life...........and we know what happened to them!

I was lucky by chance only - I chose one of the others, but you try telling those that did choose EL what a good idea pensions are and how essential it is to save in one and how it will "guarantee your future"

Indeed it seems to me from casual reading in the press generally that for employees below a certain wage level it will probably be better overall for them long term NOT to save for a pension as charges will overtake the gains and instead say sod you to HMG - you can pay when I'm 66.

Procrastinator333

ChiefGrasscutter wrote: »

Indeed it seems to me from casual reading in the press generally that for employees below a certain wage level it will probably be better overall for them long term NOT to save for a pension as charges will overtake the gains and instead say sod you to HMG - you can pay when I'm 66.

So your plan is to blow the lot and get to retirement with nothing so the state can look after you? Great plan.

Oh, and don't count on it being 66. My money is on it rising to 70 in the not too distant future.

MacMickster

wotsthat wrote: »

It's so so important that the government should be making it compulsory to save into a private pension scheme with very limited opt-outs .

The problem is that many pension funds are very poorly run with the investor paying high charges and taking all the risk.

If you are going to make contribution to a pension compulsory, then why not just increase National Insurance by a few percent for both employees and employers and pay a worthwhile state pension?