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How stupid is my plan?
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Get orrrrfffff my thread or I'll set the dogs on you!:D0
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Not so, for one of the key points about the flat rate state pension is it takes money from average and above working people and gives it instead to people who don't work much or at all. A similar greater benefit for the poor happens with the increased personal allowance. There has been a small increase in the difference between rich and poor in the last few years but that's likely to be temporary given the changes being made.
Pensions aren't unaffordable. All it takes to get to the median average pensioner income today is putting away £59* net a month. That doesn't take action by politicians or wealth redistribution, it just takes people not ignoring their futures and doing something active about it themselves. The government is even helping with that, via the auto-enrolment system, so people have to actively sabotage their futures by opting out to avoid doing a lot better than the state pension.
Forget USS changes. Do something about your future and encourage others to do something about their as well. That'll make a much bigger difference to your future and that of anyone else you explain the real facts to than any amount of griping here.
You might also consider that there is nowhere near as much wealth inequality as seems to be the case. That's because a large part of it is the difference between young people who have a working life of potential earnings ahead and those nearing retirement or retired who have spent their youth to accumulate the assets that they will live off in retirement. Those future earnings are usually completely ignored in wealth inequality numbers. So is the difference in living costs for the same lifestyle in the north and south. One effect of that and the difference in property between north and south is that about 30% of the UK population have assets of at least £1 million. An 18 year old just starting out after years of free education and health care plus a living costs subsidy from child benefit might think that a million is a fortune and unequal, while a person looking at retirement with it will not feel anything close to rich, with good reason.
*median is about £18,000. Flat rate state pension about £8,000 leaving £10,000 to find. Pension pot size at 4% drawing to achieve that is £250,000. Gross cost of that with the 5% long term historic UK stock market return over a 50 year working life is £94 a month. With auto-enrolment and final rules 5/8 of that is net cost to the employee leaving a net cost to the employee of £58.75. All numbers are in today's money.
Good points all taken. I still think that income inequality is a big factor though. We are constantly being told that pensions and cost of living rises are unaffordable yet those at the top consistently award themselves above inflation pay increases and huge bonuses. Until that kind of greed stops I will find it hard to believe that a living wage and a reasonable pension for all working people is unaffordable.0 -
Now there's talk of further reductions in benefits in USS, however. For the employers it's all about cost reduction so they can have bigger surpluses.
I didn't get this bit.
Surpluses? I thought practically all funded defined-benefit pension schemes were in (generally massive) deficit.
Are you saying that USS has a surplus?
Warmest regards,
FAThus the old Gentleman ended his Harangue. The People heard it, and approved the Doctrine, and immediately practised the Contrary, just as if it had been a common Sermon; for the Vendue opened ...THE WAY TO WEALTH, Benjamin Franklin, 1758 AD0 -
Are you saying that USS has a surplus?
If he is, he's demonstrably wrong: http://www.ussranda.co.uk/Gross cost of that with the 5% long term historic UK stock market return over a 50 year working life is £94 a month.
Fine with what you're saying - I think people can afford to save into their pensions more than they do, but don't generally prioritise this form of saving enough, either because retirement is such an abstract concept to people in the first half of their working lives or because they mistakenly think they're not likely to live past 75. But a 50 year working life? I'd say closer to 40-45 if you consider a) the number of people going to university and b) the number of people who have some long-term absence during their career, due to redundancy (or general unemployment), child-rearing, etc.I am a Technical Analyst at a third-party pension administration company. My job is to interpret rules and legislation and provide technical guidance, but I am not a lawyer or a qualified advisor of any kind and anything I say on these boards is my opinion only.0 -
FatherAbraham wrote: »I didn't get this bit.
Surpluses? I thought practically all funded defined-benefit pension schemes were in (generally massive) deficit.
Are you saying that USS has a surplus?
Warmest regards,
FA
No I am saying the universities run huge surpluses. According to the current accounting standards applied to the USS it is in deficit. Though from my limited understanding of accountancy it seems that the standards are more appropriate for closed DB schemes than large, open schemes with positive cashflow.0 -
limited understanding of accountancy
Not advisable for a complex actuarial analysis!I am a Technical Analyst at a third-party pension administration company. My job is to interpret rules and legislation and provide technical guidance, but I am not a lawyer or a qualified advisor of any kind and anything I say on these boards is my opinion only.0 -
PensionTech wrote: »Not advisable for a complex actuarial analysis!
NI perhaps not, but it seems an odd strategy in an open and growing scheme with positive cash flow to be moving towards derisking investments to seek safety rather than growth. The rules seem to be hung up on achieving a 100% funding level but this isn't necessary in such a scheme as far as I can understand0
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