Raising the pension age in order to pay for pensions

Loughton_Monkey

IveSeenTheLight wrote: »

The government has introduced that companies must contribute 3% towards an employees pension.
That should be used toward providing a "basic" pension.

For any private / personal pension contributions that I may be contributing for 50 - 60 years, I'd like to be able to do whatever I want with the investment upon retirement.
I don't believe I should be constrained as to how much I can take out and how much as a percentage minimum I must re-invest into an annuity.

What I mean is, I might retire at 67 / 68 by current calculations, so if I decide to spend my private contributions travelling the world, living the high life for 5 or 10 years before settling down to elderly retirement then that should be my choice.

The restriction in choice means that I need to consider if I invest elsewhere to have that control.
The only real benefit I see from pension contributions is that they are from my gross salary as opposed to my nett.

To be honest, I think the government has it about right on this.

1. State Pension is generally paid only as a lifetime income [now with option to defer...]
2. All other private pensions no longer have to be used to buy an annuity. You have the option to drawdown, thus carrying the bulk of longevity and investment risk yourself.
3. Above capped at £20K, above which you can draw down whatever the hell you like and have your world cruise. Without the £20K cap there would be a strong chance you would blow your pension only then to go cap in hand for extra benefits and HB for example.

OK, Final Salary pensions are virtually all 75% annuity payments.

Overall, though, it is simply down to 'Retirement Planning'. This is not difficult. Using pensions alone for retirement savings is rather silly. Other assets are also advisable. Investment in your house is [irrespective of any house price inflation] an excellent investment to guarantee rent-free life forever after retirement. ISA's, too, are an investment every bit as good as pension pots, with only a quite small 'price' to give you 100% flexibility. And we all need some 'safe' cash, and again we should build up a bit of this in tax free ISA's.

I find only half my spending comes from annuities. So I have exactly the flexibility you promulgate to 'blow it all' on a new Jag, world cruise, or even both. Except that I am protected in the safe knowledge that I will always have a 'respectable' underlying drip feed of G&T money.

To me, it's a perfect balance to have half my spending, index linked, guaranteed for life. Then the other half is a sort of complex 'drawdown scheme' in which I manage a full range of assets - roughly half in equities, half in cash. In a 'good' year, my investment income more than covers the rest of my spending. In a 'bad' year I just dip into the savings.

setmefree2

Graham_Devon wrote: »

George Osbourne is today likely to announce the raising of the pension age to 69/70.

It's only being raised for state pensions. As long as they are not relying on that then future generations can retire when they want....

setmefree2

CLAPTON wrote: »

delaying the age of retirement should increase those economically active: the fact that some older people won't be able to work due to 'age ' related illness is no different from the situation of the disabled today.

And presumably they will receive disability benefit.

CLAPTON

setmefree2 wrote: »

And presumably they will receive disability benefit.

what ever

the situation already exists today, that some people at pre retirement age can't work: the state then has to look after them.

It doesn't mean the logic of increasing the retirement age isn't both necessary and effective.

kabayiri

I confess I'm a little confused.

The mass immigration we have witnessed and continue to witness was supposed to solve our pension woes.

I know this because Hamish said so (on several occasions to boot)

So, why the need for this response? Perhaps immigration was never going to solve anything.

Graham_Devon

Anyone think this item, presented today is a good idea? I don't see how it makes the affordability any better, afterall, any money funneled in now by people buying extra pension will surely go out (and heaps more) in pension payments?

Seems an odd announcement to state all those under 40 will have to work longer as it's all unaffordable, but if you are around 65 or over today, hey you can pay a bit more in and probably take lots more out?

Over-60s: Millions of over-60s will receive a one-off chance to “buy” extra state pension income. This applies even if they qualify for the full £110.15 basic payout a week today. It will take the form of additional state pension. Details of how this scheme will work are yet to be published. It will be open to anyone who reaches state pension age before April 6 2016, including existing pensioners. The basic state pension will also increase by £2.95 a week next April, taking the basic payout to £113.10 a week.

Younger workers: Those under 50 have lost out to the tune of thousands of pounds. Plans to raise the state retirement age have been mapped out before, but those increases are being accelerated – again. Most people in their 40s will now be unable to claim their state pension until 68 rather than 67. Those in their 20s can expect to work until they are 70, up from 68.

Jennifer_Jane

Graham_Devon: thanks for posting this. Re the first paragraph, I personally think it's madness. As people here may remember, I sent over money from overseas to buy my Basic State Pension NI contributions. If this goes ahead, I will definitely take advantage of it (I don't get the full pension anyway). So I'm pleased about it, but think it's the wrong thing to do as it will place a greater burden on the State Pension.


Re the second paragraph, it's about time that people understand that you cannot live just on the BSP, and that it has nothing to do with when you retire. You need to make other provision, other investments or savings, to enable you to stop working when you want to.

Graham_Devon

Jennifer_Jane wrote: »

Graham_Devon: thanks for posting this. Re the first paragraph, I personally think it's madness. As people here may remember, I sent over money from overseas to buy my Basic State Pension NI contributions. If this goes ahead, I will definitely take advantage of it (I don't get the full pension anyway). So I'm pleased about it, but think it's the wrong thing to do as it will place a greater burden on the State Pension.


Re the second paragraph, it's about time that people understand that you cannot live just on the BSP, and that it has nothing to do with when you retire. You need to make other provision, other investments or savings, to enable you to stop working when you want to.

Well, the thing that struck me within a couple of second regarding buying extra pension (so long as you were born on or before a certain date) is that only those with the money in the first place are going to be able to buy more.

Therefore, what's this going to do? Make those who are comfortable and able to throw money into a pension, even more comfortable.

Will do nothing for those pensioners struggling by as they won't have the means to buy in.

And in order to make the comfortbale, more comfortable, everyone else has to chip in, pay more and work longer as apparently it's all unaffordable.

I know that politicians like the silver vote, but this is a bit of an insult, not only to all those who can't make use of it, but to those in the age band who are the people who really need it but don't have the means to buy into the giveaway.

I was dumfounded when I read it. Though it doesn't appear to have been picked up in too many places yet.

CLAPTON

kabayiri wrote: »

I confess I'm a little confused.

The mass immigration we have witnessed and continue to witness was supposed to solve our pension woes.

I know this because Hamish said so (on several occasions to boot)

So, why the need for this response? Perhaps immigration was never going to solve anything.

The demographic forecasts include the assumption that present levels of immigration continue.

Even with these assumptions, the forecast show that the percentage of people of working age will fall in relation to total population.

The conclusion is that the country, per capita, will get poorer.

IveSeenTheLight

Loughton_Monkey wrote: »

To be honest, I think the government has it about right on this.

1. State Pension is generally paid only as a lifetime income [now with option to defer...]
2. All other private pensions no longer have to be used to buy an annuity. You have the option to drawdown, thus carrying the bulk of longevity and investment risk yourself.
3. Above capped at £20K, above which you can draw down whatever the hell you like and have your world cruise. Without the £20K cap there would be a strong chance you would blow your pension only then to go cap in hand for extra benefits and HB for example.

I read the drawdown, not as drawing down £20k each year, but you can only drawdown to a level where you are obtaining a secured pension of £20k

Essentially you will need a "current value" fund of approx £260k, before your allowed to draw down.

So your fund need to exceed this with any "splash the cash" retirement enjoyment fund.