What Pension Plan

Southend1

dunstonh wrote: »

What means tested benefits? Whilst some will still exist, pension credit is being abolished. Have you also seen the size of the tax benefits? It isn't something to aspire to. Do you really want to plan to live on the breadline for 20-30 years?

Someone earning less doesnt need to pay in as much. In Norfolk, a generally low earning area, people used to joke that they got a pay rise when they retired as state pension and personal provision would actually earn them more than they were when they were working.

You see people that pay more on the sky tv or mobile phones than they do into their pensions. If you priorities are right and you are putting the right budget into it based on your earnings then that is fine. If you are just putting in £50pm to tick a box and to persuade yourself that you are doing enough then that is not.

I was thinking of things like housing benefit, council tax benefit, free prescriptions, care fees etc.

Funny you should mention people being better off in retirement, I was thinking about it this morning when reading this thread. I think I am likely to be quite a bit better off in retirement assuming state pension is still equivalent to approx. £7.5k in today's money. Having said that, it's likely the government will find some way to keep me in poverty until I shuffle off!

lvader

Southend1 wrote: »

Surely a low earner who contributes only £50 or so a month to a pension will lose as much/more means tested benefit in retirement than the pension gained?

Why would a 25 year old assume he will be a low wage earner and destitute for the rest of his life?

Southend1

lvader wrote: »

Why would a 25 year old assume he will be a low wage earner and destitute for the rest of his life?

Not saying he would. But if his career takes off at a later date it may be easier to make up the contributions when they are affordable rather than struggling now and making small contributions which, if his income doesn't rise significantly, may be wasted anyway

monicaG84

Private pensions are the only way, with government pensions the world over soon to be depleted by an ageing population. I would keep your pension very far from any public interference, otherwise expect your money to become part of a government pool, and taken from you

Southend1

monicaG84 wrote: »

Private pensions are the only way, with government pensions the world over soon to be depleted by an ageing population. I would keep your pension very far from any public interference, otherwise expect your money to become part of a government pool, and taken from you

Not sure this is correct. Here's some figures- a little out of date (from 2009) but spending on state pensions is only forecast to increase from around 5% of national income to around 7% in 2058. http://www.ifs.org.uk/bns/bn43.pdf

This may even be less now that the flat rate pension is coming in.

Would be interesting to know the up to date figures.

hugheskevi

Would be interesting to know the up to date figures

Table 5.1 of the single-tier White Paper shows that spending on state pensions and pensioner benefits will rise from 6.9% of GDP in 2012/13 to 8.5% in 2060/61.

Due to the single-tier pension, spending in 2060/61 is projected to fall from 8.5% to 8.1% (page 12).

hugheskevi

Whilst talking of long-term spend, Office for Budgetary Responsibility recently published a long term spending report.

Table 3.6 on page 80 shows the change in GDP spent on age related expenditure between 2012/13 and 2062/63:

Health 8.1% to 8.8% of GDP
Long-term care 1.2% to 2.4%
Education 5.6% to 4.4%
State Pensions 6.0% to 8.4%
Pensioner benefits 1.2% to 1.1%
Public service pensions 2.2% to 1.3%

Interesting to compare these to Figure 6.2 in the IFS report linked above showing HM Treasury spending projections between 2007/8 and 2057/58, as at March 2008:

Health 7.4% to 9.9%
Long term care 1.2% to 2.0%
Education 5.0% to 5.6%
State Pensions 4.9% to 7.2%
Public service pensions 1.5% to 1.8%

atush

Southend1 wrote: »

Not saying he would. But if his career takes off at a later date it may be easier to make up the contributions when they are affordable rather than struggling now and making small contributions which, if his income doesn't rise significantly, may be wasted anyway

In theory, possibly.

But we all know what happens when your career and salary takes off- you buy a house, get married, have kids. Which all means the same or even larger struggle to save.

As salary rises, it just means the same % of salary into a pension grows by t he same exponent

FatherAbraham

Southend1 wrote: »

Here's some figures- a little out of date (from 2009) but spending on state pensions is only forecast to increase from around 5% of national income to around 7% in 2058. http://www.ifs.org.uk/bns/bn43.pdf

7% doesn't sound like much -- but then again, it depends how one frames it.

From 5% to 7% is a 40% increase -- that's huge!

(Of course, we really need to know how all the other things change too, because 5% of national income to 7% of national income might, in fact, be the same amount, if national income falls by 29%)

Warmest regards,
FA

monicaG84

Very true father abraham.

Many economists cite the coming ageing as an issue. financial newspapers cite it too. I do think it will throw up a problem when taken in the context of other issues - like structural problems with an economy which has put all its manufacturing offshore. I wonder how much the working population will fall by, and also the skilled working population (might be negligable)