Penalised for putting a 'bit by for your old age' no longer

RenovationMan

mcc100 wrote: »

As a regular visitor to a residential home I have to agree.

I have no desire to live into my 80's and will be taking early retirement as soon as possible.

Fortunately I am lucky enough to have a final salary pension so will hopefully be in the privileged position to do so.

I'm also in a final salary pension set at 1/60th. As I am on over £60k, it equates to £1k guaranteed pension per year of working there. If I work there until I retire in 23 years (and don't get a payrise over that time), I'll have a £23k pension, which will be nice.

This is in addition to the money purchase pension I already have, plus ISAs and downsizing from our large home which will release a chunk of tax free cash. I've always been determined that I won't be in poverty when I'm older and that I won't have to work until I drop dead. While I don't put everything I ear away for my retirement, my savings and investments are all geared towards my retirement. Those who completely live for the now will be the ones moaning about their crappy state pension. Tough, they should have forgone the Ipads, phones and other junk.

RenovationWoman

RenovationMan wrote: »

I'm also in a final salary pension set at 1/60th. As I am on over £60k, it equates to £1k guaranteed pension per year of working there. If I work there until I retire in 23 years (and don't get a payrise over that time), I'll have a £23k pension, which will be nice.

This is in addition to the money purchase pension I already have, plus ISAs and downsizing from our large home which will release a chunk of tax free cash. I've always been determined that I won't be in poverty when I'm older and that I won't have to work until I drop dead. While I don't put everything I ear away for my retirement, my savings and investments are all geared towards my retirement. Those who completely live for the now will be the ones moaning about their crappy state pension. Tough, they should have forgone the Ipads, phones and other junk.

:j :beer:

StevieJ

jamesd wrote: »

Your deductions need rework when you look at the data.

1981 life expectancy for 65 year old man: 14 years woman: 18 years
2012 life expectancy for 65 year old man: 21.6 years woman: 24.1 ye.

How do those projections compare to the reality, presumably we 'more or less' have the factual data to compare by now?

StevieJ

jamesmorgan wrote: »

In 1948 when the state pension was introduced, average life expectancy was 66. .

Wow we must have being going backwards for three millenia+ :eek: The bible mentions 'three score and ten' or 'four score' if you ate your five a day

Thrugelmir

RenovationMan wrote: »

I can see people living longer because of advances in medical care but having much diminished quality of life as more people are registered as disabled, tubs of lard pottering about on those motobility scooters, barely alive.

My mother is now 84. Has been taking Keep Fit classes since she joined the National Keep Fit Association in 1954 when it was founded as an instructor.

Still takes 2 classes a week for the over 60's. Fills in her time with table tennis and Scottish dancing.

Life is very much what you make it.

Starting with attitude.

jamesd

StevieJ wrote: »

How do those projections compare to the reality, presumably we 'more or less' have the factual data to compare by now?

Earlier projections were wrong on the low side. There's been a consistent pattern of under-estimating just how much progress would be made.

pqrdef

Gettingeven wrote: »

The correct evaluation involves life expectancy at age 65, not at birth!

Well no. If there's a difference, the implication is that more people are reaching 65. But from the pensions point of view, that's just as bad, because funding calculations incorporate the people who pay into the fund and don't live to draw their pension. Their money is still in the fund, and goes to subsidise the pensions of those who reach retirement.

pqrdef

Gettingeven wrote: »

Unchecked, it's going to cause a massive problem for health services

The issue with costs is whether you reckon on a per-year or per-lifetime basis. Over a lifetime, it's those who live too long who end up costing most - those who die young are cheap.

But most GPs think the overweight shouldn't get NHS treatment, because they see the cost per year. They don't perceive the benefit to public finances of people who die younger.

gravitytolls

jamesd wrote: »

The current system doesn't penalise people for saving. It rewards those with inadequate savings by topping up their savings with means tested benefits.

For those who are committed to inadequately providing for their old age this creates a disincentive for them to do any saving at all, because they will still get the same final income level.

The new plan increases the reward for inadequate savings by adding the savings to the benefits. That removes the disincentive.

There are quite a lot of folk who are never in a position to save adequately for their old age, it's nothing to do with being frivolous.

jamesd

Depends somewhat on what's adequate but I'd agree that it's hard for someone on JSA for life to save a lot for retirement. Much more viable by the time income rises to benefits for inability to work or the minimum wage.

The current system accepts people getting pension and non-pension savings worth around £45,000* to add to their income in retirement if they are getting Pension Credit and Savings Credit, without reducing the means tested benefits. About £5 a week over a full 52 years from 18 to state pension age is enough to get to that amount, assuming investment returns of 4% over inflation. Or £15 a week for 30 years. Whether someone on JSA could manage £5 a week depends on the person, their situation and particularly on whether they live in a high or low cost part of the country.

The new proposal would add 50% or so to the basic state pension and remove the limit on other savings.

The current system is a catch for those who are trying to save for retirement and hit the income window between what means tested benefits allow and what eliminates all entitlement to benefits. Within that range they don't get the benefit of their extra savings. And it takes much more than £5 a week to get to the point of not qualifying for any means tested benefits.

So those on means tested benefit income level in retirement get all they can save but those who try harder or with a bit more ability to do more get penalised until they are more fully successful.

Anyone who is getting means tested benefits when retired is someone who I'd say has inadequately provided for retirement, because they have ended up using a safety net to help those in that situation. But this isn't necessarily a judgment of the person for it because I know there can be reasons that I'd consider more than good enough to be in that situation with little or no fault.

*This is a combination of the pension capital it takes to reach the income limit with an RPI increasing annuity and the non-pension savings limit.