Private sector pensions in seismic collapse

PaulF81

Linton wrote: »

I wonder whether you would still take the same view in 50 (or however many years it is until you are close to 75) years time?

Having watched 3 very proud close family members descend into dementia and dribbling pea soup down their chins, sorry, that would be my choice.

Extended life expentancy doesnt go hand in hand with maintained quality of life. Its not about sticking around the longest, its about doing the most with the time you are given.

tartanterra

I was brought up by my grandparents.
They in turn, had been brought up in an age where there was very little in the way of "welfare" and saving for a rainy day was the order of the day. In those days there was very little provision for private pensions, so they saved in any way they could.
They didn't have any financial advice as such, and didn't really have a plan; they just put a bit aside because that was simply what you did.

Sadly, that culture of saving for the future seems to be missing these days. Many people are spending what they earn (and more) and living for the moment and the next 3D HDTV.

It seems wrong that those who saved for retirement, can end up no better off than those who blew all their money when they had it. I am completely baffled at the insanity of the benefits system.

Unfortunately, there now appears to be an undercurrent of "the state will provide", amongst sizeable sections of society.

I don't normally welcome any state interference in peoples lives, but I do think that the Government needs to get it's act together on future pension provision, and it needs to do it now.

Generali

FWIW, the Super system in Aus works very well and has stopped, for the most part, unpaid pension rights accruing.

chewmylegoff

My view is that we need to copy the Australian system and make it compulsory for everyone to pay into a money purchase pot. Trouble is that it would be hugely unpopular with everyone who currently doesn't pay into a pension, or anyone in the public sector. It would also be more expensive for govt in the short and medium term as they would have to actually pay the contributions at the same time as paying existing pensioners.

Therefore the can will continue to be kicked down the street again and again, with the older generations choosing to screw the younger generations over at each juncture (just like this time where the pension reforms in the public sector do not touch anyone retiring in the next 10 years).

At some point in the future the younger generations will decide they don't want to pay more tax to protect the pensions of older people whilst diluting their own retirement rights. Hopefully I'll be dead or rich by then.

BobQ

chewmylegoff wrote: »

My view is that we need to copy the Australian system and make it compulsory for everyone to pay into a money purchase pot. Trouble is that it would be hugely unpopular with everyone who currently doesn't pay into a pension, or anyone in the public sector. It would also be more expensive for govt in the short and medium term as they would have to actually pay the contributions at the same time as paying existing pensioners..

Unfortunately its the very people who will benefit from such a scheme who object to it.

chewmylegoff wrote: »

Therefore the can will continue to be kicked down the street again and again, with the older generations choosing to screw the younger generations over at each juncture (just like this time where the pension reforms in the public sector do not touch anyone retiring in the next 10 years)..

This is absurd, ordinary people generally have little contol of these matters and certainly do not set out to screw anyone younger than them. Reforms happen around ordinary people and they have little control of them.

The fact is (and will always be the case) that pensions must be planned over the long term and the rules of the game need to be laid down so that people can plan their pensions. If the pensions industry and the government cannot come up with a vehicle that gives ordinary people a fair chance they are incompetent. Either way it will always be unfair to make changes that adversely affect people in the last few years of their career.

chewmylegoff wrote: »

At some point in the future the younger generations will decide they don't want to pay more tax to protect the pensions of older people whilst diluting their own retirement rights. Hopefully I'll be dead or rich by then.

I doubt this will happen because young people are never the majority. As they get older most view things differently and the younger generation will be moaning about something else. When I was young nobody cared about pensions, it was about nuclear disarmanment, civil rights and social liberation. This younger generation will find other priorities too.

BobQ

Generali wrote: »

FWIW, the Super system in Aus works very well and has stopped, for the most part, unpaid pension rights accruing.

I agree and only wish UK Governments had had the foresight to introduce such a system in the same timescales. That they did not is an indictment of generations of politicians who were content to take their own very generous and protected benefits package while presiding over employers who were positively encouraged to take pension holidays and ordinary people who were laregely allowed to do as they pleased. Now the chickens have come home.

chewmylegoff

BobQ wrote: »

This is absurd, ordinary people generally have little contol of these matters and certainly do not set out to screw anyone younger than them. Reforms happen around ordinary people and they have little control of them.

well, as we saw this year, the govt attempts pension reforms (which in fact went nowhere near enough), and the people on the receiving end went on strike. they don't want to pay more tax, more pension contributions, or face lower entitlements. only natural, of course, but this is the sort of reaction which will guide government policy - because government thinks in terms of getting reelected in a maximum of 5 years time, not what they are cooking up for 20-50 years time. thus they bribe the electorate by continuing to offer them unsustainable deals, which are contingent upon the younger generations (many of whom are either not yet old enough to vote or not even born yet) paying higher tax in the future.

CLAPTON

Generali wrote: »

FWIW, the Super system in Aus works very well and has stopped, for the most part, unpaid pension rights accruing.

briefly

what is the Aus sytem?
how much do people pay in
is it compulsory
how much do they get in retirement
at what age
etc

kabayiri

tartanterra wrote: »

...
I don't normally welcome any state interference in peoples lives, but I do think that the Government needs to get it's act together on future pension provision, and it needs to do it now.

Are you saying that the government should take money out of peoples' pockets right now, when many are facing a real drop in living standards due to flatish wage inflation prospects or loss of employment ?

It doesn't sound like a vote winner to me, more like an election loser.

chewmylegoff

Aus system requires the employer to pay 9% into a superannuation scheme which is basically the same as a money purchase pension scheme - so each employee has their own pot, and can top it up with extra voluntary contributions.

I think the way it works is more that the employer takes 9% from your salary and pays it into a super fund rather than them paying another 9% on top, so if an aussie says they're on $100,000 that includes the 9% super. May be wrong on that and I guess it's just semantics anyway.