Pensions uncertain in the future?

fizio

I'd say that the 'youngsters' of today need to spend less money on buying phones/laptops/gadgets/etc and more on saving for the future - a simple case of living within your means and not being as obsessed with 'instant gratification' as the current generation seems to be..
Though I do feel for many of the current generation in terms of having massive university debts and limited job opportunities..

DreamerV

haf63 wrote: »

I'd say that the 'youngsters' of today need to spend less money on buying phones/laptops/gadgets/etc and more on saving for the future - a simple case of living within your means and not being as obsessed with 'instant gratification' as the current generation seems to be..
Though I do feel for many of the current generation in terms of having massive university debts and limited job opportunities..

Although it's true they need to save more, even saving at the same rates as their parents' generation, they will still fall so much shorter, because of growth rates, annuity rates, housing, etc. I do agree that on the whole, youngsters do need to spend less on gadgets. That said, without gadgets and the ability to be constantly in contact, I don't think I could do my work. It's inefficient for me not to work while commuting 2.25 hours per day.

Although I do see people in their 20s buying a new laptop every year or 2 at a few hundred pounds, a new mobile (on contract) for roughly the same amount, but more worringly, spending upwards of £100/wk on going out. I'd suggest this to be a massive problem (around £50 x twice a week on alcohol/clubbing). I wonder what difference half this money would do if put in a pension instead.

IronWolf

CLAPTON wrote: »

what's unfair about living to 100 or more ?

what's unfair about increasing the pension age?

what's unfair about annuinity rates decreasing

what's unfair about a (semi) flat rate state pension?

Nothing unfair, but just because you live longer does not mean that you're quality of life will be any good beyond the age of say 80.

My father works with old people a lot and often says he would rather just call it a day at 70-80 than live onto 100, seeing some of the health conditions that people have to live with and the need for round the clock health care at these kind of ages.

atush

Jack_Griffin wrote: »

That's a story in the news, my feeling is that longevity rises will flatten out dramatically at some point. It doesn't quite square with the obesity crises stories.

According to this morning, we are all drinking ourselves to death? But yet the LE isn't falling?

Today's adults may do well on LE, it is today's children that may suffer from reduced LE due to Obesity. There is a whole generation of kids out there being raised on ready meals and fast food.

The only way my kids ever got hold of horse meat in their diet would be school meals. I have been using UK only beef for many years, and only buy burgers from Marks&S. Not that I have a problem with horse meat per say, but I do have a problem with mechanically recovered meat-as it caused New variant JCD. So have not used anything but high quality meats for decades.

marathonic

IronWolf wrote: »

Nothing unfair, but just because you live longer does not mean that you're quality of life will be any good beyond the age of say 80.

My father works with old people a lot and often says he would rather just call it a day at 70-80 than live onto 100, seeing some of the health conditions that people have to live with and the need for round the clock health care at these kind of ages.

The oldest member of my local cycling club is 87. I don't see any sign of him slowing down - actually finishes cycles ahead of people half his age.

Neverland

Its going to be the work longer option isn't it

Up until the 80s from WWII the usual course was to work from 16-18 to 60 or 65 and after c.45 years of working ...retire for 10 years in good health and maybe last another 5-10 years in declining health

It was only in the last twenty years that a 30 year retirement was even contemplated by many people

You look at the direction of travel of government policy and you can quite clearly see that the state retirement age will 70 by 2035-2040

Your future is as follows:

Start work at 21 - work for 50 years - retire at 70 - die at 95-100

The extra five years working life pays for the extra 5-10 years in retirement

marathonic

Personally, I think the pension system is very fair.

The tax-free lump sum is a good enticement regarding a pension for tying your money up until retirement. However, people have the wrong mindset.

Why should you need enticements? At the end of the day, you MUST save for retirement if you don't want a significant drop in living standards after retirement. It's akin to saying "I'm not going to eat dinner this week because the supermarket have no BOGOF deals".

From a general point of view, due to tax relief:

A standard rate taxpayer pays between £59.75 and £68 per £100 pension contribution depending on whether their employer offers a salary sacrifice scheme and how the employer NI savings are treated.

A higher rate taxpayer pays between £42.18 and £48 per £100 pension contribution depending on their salary, whether their employer offers a salary sacrifice scheme and how the employer NI savings are treated.

Add to the above the potential employer contribution.

Some will argue that this is a tax deferal as opposed to a tax saving scheme. This is only a disadvantage for those who are getting lower-rate tax relief and expect to be higher rate tax payers in retirement.

Sure rules will change but it's equally possible that a wealth tax could be introduced to tax any savings outside a pension wrapper. We can only look at current rules in retirement planning. Anything else is speculation.

The way to look at it is that you have a choices similar to the following:

Spend 100% of earnings until retirement and take a cut of, for example, 60% in earnings by moving to state pension.

Spend 80% of earnings until retirement and take a cut of, for example, 20% in earnings by moving to state pension subsidised by a private pension.

Neverland

marathonic wrote: »

Personally, I think the pension system is very fair.

The tax-free lump sum is a good enticement regarding a pension for tying your money up until retirement. However, people have the wrong mindset.

The current system is VERY unfair

About 2/3 of the tax relief goes to higher and additional rate tax payers

Only 15% of workers pay higher rate income tax according to HMRC

Its no coincidence that the number of people paying into private pensions is at a 30 year low

hugheskevi

The current system is VERY unfair

About 2/3 of the tax relief goes to higher and additional rate tax payers

Higher and additional rate pay 54% of all income tax, which doesn't look too far out of line.

Although 10-15% of individuals paying 54% of the total income tax does look rather unfair.

marathonic

Neverland wrote: »

The current system is VERY unfair

About 2/3 of the tax relief goes to higher and additional rate tax payers

Only 15% of workers pay higher rate income tax according to HMRC

Its no coincidence that the number of people paying into private pensions is at a 30 year low

So basically, you are saying that you are being given an incentive to save for retirement but, because someone else is being given a better incentive, it's VERY unfair?

Again, as I've said before, you shouldn't need an incentive as it's something that must be done.

Saving for retirement through a pension offers many incentives outside the area of tax:

• It's not assessed for means tested benefits;
• It's not taken from you through bankruptcy;
• You can't touch it until retirement (some class this as a disadvantage which I disagree with);

Thank in itself is incentive enough.