my dads private pension

dunstonh

really wish pension advisors would wake up to this fact. There is NO point in people on low incomes investing money they really need NOW into pensions for when they come to retire they will be no better off.

And what happens if a future Govt changes the benefits (which is likely)?

Also, by the time you take state pension, Serps and S2P into account, the value of pension credit could be very low. So, even small contributions could be beneficial.

The thousands of pounds he put into his pension over 35 years was a total and utter waste of money. Our family had to suffer some hardship during those years while he was making those contributions for absolutely NO BENEFIT AT ALL.

It was a benefit to all the taxpayers out there who have to pay for all the freeloaders as well as those that genuinely need help.

Shaunyboy

dunstonh wrote: »

And what happens if a future Govt changes the benefits (which is likely)?

Yep, governments are always tinkering with the benefits system but the general argument still stands. If you are on a low income it is not worth putting money you need on day to day living into a pension.

dunstonh wrote: »

Also, by the time you take state pension, Serps and S2P into account, the value of pension credit could be very low. So, even small contributions could be beneficial.

Nope, I disagree. All tiny gains with small pensions are wiped out by the need to pay rent and council tax. Like I said, workers on low incomes are wasting their hard earned money by putting it in a pension. They should enjoy it with their families.

dunstonh wrote: »

It was a benefit to all the taxpayers out there who have to pay for all the freeloaders as well as those that genuinely need help.

Hmmmm very interesting. I wonder if you advise everyone on the best course of action that will benefit "all the taxpayers out there" rather than the person you are advising. I suspect not.

dunstonh

Nope, I disagree. All tiny gains with small pensions are wiped out by the need to pay rent and council tax. Like I said, workers on low incomes are wasting their hard earned money by putting it in a pension. They should enjoy it with their families.

You could get upto £8000 a year from state pensions as a single person. That is only just short of the pension credit amount.

An 18 year old paying £35pm net keeping it up with inflation each year (so it remains £35 in real terms) would end up with around £10k a year income in retirement in real terms. There are not too many people in this country that couldnt afford that. Of course, it may mean that they cant have the full sky package or perhaps 1 less McDonalds a week.

Shaunyboy

dunstonh wrote: »

You could get upto £8000 a year from state pensions as a single person. That is only just short of the pension credit amount.

An 18 year old paying £35pm net keeping it up with inflation each year (so it remains £35 in real terms) would end up with around £10k a year income in retirement in real terms. There are not too many people in this country that couldnt afford that. Of course, it may mean that they cant have the full sky package or perhaps 1 less McDonalds a week.

Cloud Cuckoo Land

jamesd

Shaunyboy, the population of working age divided by the population of pensionable age is projected to fall from 3.35 in 2002 to 3.10 in 2011, 3.09 in 2021 and 2.53 in 2031, before falling below 2.2 in the 2050s and levelling off. With that background it doesn't appear prudent to assume that benefit levels will remain as they are, since just maintaining them will increase the costs to those who are working by 50%.

Shaunyboy

jamesd wrote: »

Shaunyboy, the population of working age divided by the population of pensionable age is projected to fall from 3.35 in 2002 to 3.10 in 2011, 3.09 in 2021 and 2.53 in 2031, before falling below 2.2 in the 2050s and levelling off. With that background it doesn't appear prudent to assume that benefit levels will remain as they are, since just maintaining them will increase the costs to those who are working by 50%.

Jamesd, Have you got a link for those stats? They are very interesting.

jamesd

Shaunyboy, I've linked in the source I used that time. The original source was probably one of the three reports of the Pensions Commission, otherwise known as the Turner Report, and I recommend reading, or at least scanning, all of the reports, starting with the final report. There's a great deal of interesting material in them. Page 5 of the executive summary has a graph showing the changing dependency ratio (the formal name for the ratio I gave before).

dunstonh

It's well known that the Govt cannot sustain the current level of benefits in the years to come without either taxing everyone to kingdom come or stopping benefits. As either extreme is unlikely to happen, you are most likely to see a middle ground of less benefits and more tax.

From 2012 when the NPSS is introduced all employees will be auto enrolled into the scheme with a 4% contribution of the salary (final figures subject to change). Someone earning £15,000 a year will have £50pm taken from their wage to pay for it. Initially you can opt out but most will not and there is pressure to make it compulsary. That alone will take most people out of the pension credit qualification which helps the Govt no end.

Shaunyboy

Thanks Jamesd, really useful that.

Reading the executive summary of the report I think the answer is there.

In order to, "maintain the standard of living of the poorest pensioners the state system will need to be MORE GENEROUS on average."

This will be paid for through, "an increase in taxes devoted to pensions expenditure and an increase in State Pension Ages."

It would be politically impossible, I reckon, to start making the poorest pensioners now even more poorer in the future. And because of this, I believe that benefit levels will INCREASE in the future rather than decrease. Paid for by an increase in the SPAs and devoting more tax to it.

Quite right too. All taxpayers should indeed make sure that our poorest pensioners have some kind of dignity when they grow old.

Andy_L

Shaunyboy wrote: »

Cloud Cuckoo Land

In what way? That they can't afford £35/mth or that it won't produce an income of £10k