State Pension vs Private Pension

hezmack

I have been wondering if when I retire in 40 years if I would even get a state pension as my parents always said that I wouldn't and that I should get a private one as soon as I started work and I immediately started paying in to a pension when I started to work.

I have since been on the state pension websites and all looks good that I should be entitled to one. It also says that you can pay in extra now to have a higher payout.

My question is:

Would it be worth looking at stopping my private pension and using those payments I am making and pay additional to the state pension?

dunstonh

State Pension vs Private Pension

That is a strange question. its a bit like saying drink or food.

I have been wondering if when I retire in 40 years if I would even get a state pension as my parents always said that I wouldn't

No-one can predict the future that far ahead. However, it is unlikely you would not get a state pension.

said that I wouldn't and that I should get a private one as soon as I started work and I immediately started paying in to a pension when I started to work.

It is good advice albeit for the wrong reason.

Would it be worth looking at stopping my private pension and using those payments I am making and pay additional to the state pension?

You cannot pay extra into the state pension (caveat applies but not applicable here). The state pension is designed to give you a basic level of income. More or less taking you to the breadline. Personal pensions are designed to be incremental to that to allow you to keep a standard of living above the breadline.

atush

It really is not an either or. I suspect, and am confident, that short of world wide breakdown, there will still be a state pension. Any govt that gor rid of it, would not be in govt long.

But I suspect, as now, it won't be enough to live on. So, I think your parents are right, you need a private pension (or better yet a work pension) too. And to save in ISAs.

grey_gym_sock

dunstonh wrote: »

its a bit like saying drink or food.

so, it's something like ....

drink = state pension

food = private pension

air = ISA

?

MikeAppleton

I speak to a number of financial advisors in my day-to-day work and the prevailing view (although I should state it's not an overwhelming view) is that the state pension is unsustainable and will either need to undergo drastic change, or it will have to be removed completely.

An ever-ageing population means that in 40 years time you, if it is still there you might need to be 100 before you can claim it.

CLAPTON

MikeAppleton wrote: »

I speak to a number of financial advisors in my day-to-day work and the prevailing view (although I should state it's not an overwhelming view) is that the state pension is unsustainable and will either need to undergo drastic change, or it will have to be removed completely.

An ever-ageing population means that in 40 years time you, if it is still there you might need to be 100 before you can claim it.

people with a vested interest in selling financial products think that the state pension is 'unsustainable'

yes of course

Linton

MikeAppleton wrote: »

I speak to a number of financial advisors in my day-to-day work and the prevailing view (although I should state it's not an overwhelming view) is that the state pension is unsustainable and will either need to undergo drastic change, or it will have to be removed completely.

An ever-ageing population means that in 40 years time you, if it is still there you might need to be 100 before you can claim it.

It well might - if average life expectancy goes up to say 120. Under those circumstances it could well be that people normally take early retirement at say 90. But there is no reason for a state pension not to be universal or unsustainable and good reasons for keeping one.

MikeAppleton

CLAPTON wrote: »

people with a vested interest in selling financial products think that the state pension is 'unsustainable'

yes of course

As you would expect. But I'm not one of their clients, they are mine.

Dig a little deeper and all the following have also questioned the sustainability of it:

1. The Economist (Feb 2013)
2. The Guardian (Jan 2013)
3. Moneywise Magazine (Jul 2012)
4. The European Group of Actuaries (Jul 2012)
5. Citywire (Jan 2012)
6. Financial Times (Jun 2012)

The ones from June/july coincided with the reforms. Here's a particularly interesting piece:

Baroness Greengross, chief executive of the International Longevity Centre-UK (ILC-UK), welcomes the automatic link: "The government is right to consider how the state pension age needs to increase in line with longevity. It is simply not sustainable for the state to adequately support us for the increasing number of years we are spending in retirement."

Smoke and fires? I think not personally, but I have a nose for bad smells.

CLAPTON

MikeAppleton wrote: »

As you would expect. But I'm not one of their clients, they are mine.

Dig a little deeper and all the following have also questioned the sustainability of it:

1. The Economist (Feb 2013)
2. The Guardian (Jan 2013)
3. Moneywise Magazine (Jul 2012)
4. The European Group of Actuaries (Jul 2012)
5. Citywire (Jan 2012)
6. Financial Times (Jun 2012)

The ones from June/july coincided with the reforms. Here's a particularly interesting piece:

Baroness Greengross, chief executive of the International Longevity Centre-UK (ILC-UK), welcomes the automatic link: "The government is right to consider how the state pension age needs to increase in line with longevity. It is simply not sustainable for the state to adequately support us for the increasing number of years we are spending in retirement."

Smoke and fires? I think not personally, but I have a nose for bad smells.

it is extremely unlikely that the state pension will disappear unless that is the will of the electorate.


if you consider that increasing the age of retirement in line with longevity is 'drastic ' change then so be it but most think this is just common sense

mania112

grey_gym_sock wrote: »

so, it's something like ....

drink = state pension

food = private pension

air = ISA

?

No, you don't need an ISA to survive.

mania112

It's largely likely that state benefits when you retire will not be sufficient to maintain a comfortable standard of living.

So long as you're working there's no problem getting a full state pension (based on current legislation), so please make personal pension contributions ASAP.

It's highly unlikely there won't be a state pension in 40 years from now.