Don't know what to think about this attitude

dunstonh

and without exception the conversations have bordered on how they intend on cashing in their pensions as soon as they can and living off the state when they retire

Problem with that is a) you cannot cash in a pension and b) the Govt is changing the state pension and pension credits to remove a lot of the benefits.

These people are the stupid ones that live for today and are going to find life very hard in retirement when they realise how foolish they have been.

elantan

from what i understand Dunstonh the intention is as soon as they reach 55 they will take their 25% tax free and start drawing their pension, they have stated to hubby that they have stopped paying into the company pension and will now wait till they are 55 and start drawing it, although some of them have looked into those companies that offer the cashing in, hubby asked me a few questions regarding this a few months ago and i told him that it was illegal unless extreme circumstances etc so he relayed that message back to the people and they contacted him today ( funnily enough) and said something was on the news about that last night, so they intend on drawing on their pension and getting the 25% tax free as soon as possible instead ...

sorry i didnt male that clear at first, i shouldve

hugheskevi

Of all the uncertainties, there are a few things we can be fairly sure of:

• Public finances and national debt are not going to undergo a massive recovery anytime soon
• The nation is ageing (many more old people in the future)
• No government will cut benefits to existing pensioners except as a last resort (raising pension age for future pensioners does not count as reducing pensioner benefits as it does not affect existing pensioners)

Take that with the historic perspective that all through the 1980s and most of the 1990s State Pension lost value relative to earnings and that even today pensioner poverty statistics look poor compared to most of Europe, and it would take either a brave or stupid person to gamble that in the future there will be nice generous benefits paid out to all pensioners.

FLAPJACK

This thread reminds me of a conversation I once had with a younger (much) colleague, we both worked for a large organisation with a good DB pension scheme....changed to a career average scheme now...still not to be knocked though.

Anyhow this person had just "bought" their first property.... with a interest only mortgage, when I asked them have they got a vehicle to provide the capital when the time comes?. Don't need one the house will double in value in a couple of years!.....this was of course pre credit crunch.
We are not talking Knightsbridge either....but a dodgy part of a northern city.

I asked (thinking the same as the posters here....about the future) have you joined the pension here at work? .....being young it would have been cheap and with time worth a fair bit...plus "free" money from the employer.

The answer I got was "Do I look old enough to worry about a pension".

I take my hat off to them for seeing the foresight to buy a property and being savvy at a young age but I would have thought they would also see the sense in what I was suggesting.

So with the news last week of the "ticking" timebomb of interest only mortgages and the fact of having to live off the SP plus having a lump sum to find at some point .....I think if I was that person now I WOULD look old enough to pay into a penson.

elantan

what i dont understand is this young persons idea of paying the house back, ok yes say his house did double in value in 25 years time, how will that pay back the mortgage? would he have to sell the house get double the money back pay half to the bank then use the other half to buy a house? the house he would have to buy would then not be as good as the one he sold ?

i must be dumb or something as i just dont understand that

ajbell

I work for a FTSE 100 company which has a final salary pension scheme (closed to new starters now) and 2 of my workmates opted out of it. When I asked them what they would do when they retire, at whatever age the state pension is then, they both replied that they would die before then. Neither of them has any health problems so I asked what they would do if they did not die and they shrugged their shoulders. They HAVE to die, that is their retirement plan.

FLAPJACK

Thanks elantan.......

For the confirmation of this fact......it's a conundrum I have gone over and over when I can't sleep.

I suppose it's just about plausible if they were (as you say)to payoff the mortgage and buy cheaper with a larger cash vs loan sum and improve the place to add value.

Having said that though the person wasn't the "developer" type nor would have the cash to pay someone to do it.

Who knows whats happened to them..

FLAPJACK

Neither of them has any health problems so I asked what they would do if they did not die and they shrugged their shoulders. They HAVE to die, that is their retirement plan.


Maybe they are keeping just enough to buy one way tickets to Dignitas in Switzerland .

Often think how much simpler life (financially) would be if we were born with a BBD.....it's such a bind trying to think into the unknown....for some anyway.;)

redbuzzard

kwmlondon wrote: »

Maybe it's because I live in London that I feel the way I do, but you can't live on benefits. You may just about be able to survive, but it's not a life.

If there are a very few people milking the system then that's an inevitable thing if you want to help a large group of people who need social security. All the figures I've seen suggest that the people defrauding the system are a tiny minority and it would cost way more to weed them out than we'd ever save.

Making it harder to claim benefits may stop a few cheats, but the real outcome is huge numbers of honest people losing out and that's something I can't live with.

I pay a very high tax rate and I consider it a very low price for living in a civilised society, but then that's just my opinion.

I don't disagree at all. It still shocks me to look at the USA, the world's richest nation, still having huge numbers of dirt poor people.

Essentially market driven economies are good at generating wealth, but terrible at sharing it out. The opposite in fact, they concentrate it to the owners of capital. The nature of economics is that the seller of his labour, in the absence of collective bargaining or a benevolent legislature, will always be kept near the breadline.

The challenge of preventing this is not so much the cheats, as those who choose the safety net over providing for themselves.

I would guess that most of us on this board especially have a stand-on-my-own-feet attitude, but also a sheltered existence. There really are material numbers of people who will make themselves homeless, or pregnant, to get free housing or have another child to avoid going out to work (or so I am told by my SiL who works for a charity dealing with teenage single mothers).

We can't let that prevent us looking after those who can't look after themselves, or fall on hard times. But it's certainly a challenge to do that affordably, especially now, and it's important to consider how to make it less attractive as a lifestyle choice for the sake of the people who really need help.

atush

still totally undecided about the whole pension bit or whether to go down the ISA route tbh,

First of all there is a sticky on page one.

Second, I said it there, and i'll say it here. It isn't either or. In fact they are both just tax wrappers. So you need Both!

So, add to the pension and while you are doing that, fill isas too.