Is the work place pension just ruining pensions for everyone else

atush

JillyC8 wrote: »

Well said. Ive had some excellent advice on here, but you do have to fight through the gloaters.

Stop so much with the gloater thing.

Loads of us with decent pensions struggled when we started. I dont gloat i just try to get others to save. but it is hard when people say they cant afford to save anything when they have the latest phone, go out all the time and waste money on buying lunches and fancy coffee.

JillyC8

atush wrote: »

Stop so much with the gloater thing.

Loads of us with decent pensions struggled when we started. I dont gloat i just try to get others to save. but it is hard when people say they cant afford to save anything when they have the latest phone, go out all the time and waste money on buying lunches and fancy coffee.

How would you know that level of detail about their lives?

I wasn't specifying anyone in particular, but there are definitely posters on here who jump to conclusions and just repeat the same patronising comments when someone new is asking for advice - particularly if it's anything to do with transferring FS pensions and/or taking advantage of pension freedoms.

Everyone has different approaches, life pressures and reasons for doing what they do with money, and it's unfair to assume a poster is being wasteful just because they may enjoy some of the smaller pleasures in life.

Thrugelmir

JillyC8 wrote: »

How would you know that level of detail about their lives?

People watch. It's free to do. Alternatively chat to work colleagues. Ask them how much they are spending on their Apple iPhone contract or Sky Sports package.

JillyC8

Thrugelmir wrote: »

People watch. It's free to do. Alternatively chat to work colleagues. Ask them how much they are spending on their Apple iPhone contract or Sky Sports package.

Sorry I thought we were talking specifically about posters on here.

Of course I work with many people who spend on smaller pleasures, but I'm not aware of how healthy or unhealthy their pension arrangements are.

My point was following on from an earlier comment in the thread; people shouldn't automatically assume a poster is wasteful just because they don't have hundreds of thousands stored away in pension savings.

mumf

atush wrote: »

Maybe some of these workers should move in together and lower their outgoings? Maybe they could afford to save?

And that last statement is exactly the "snotty reply" that I commented on!

AnotherJoe

hugheskevi wrote: »

It will likely be that abolishing qualifying earnings and basing contribution rates on whole earnings will effectively become part of the phased increase of contribution rates that has taken place over the last few years.

I think too much emphasis is put on being in a statutory minimum pension when on minimum wage. The employer contribution for a person working 40 hours a week on minimum wage is £330 per year. Whilst something is better than nothing, opting-out for a few years isn't going to be the biggest financial decision/mistake individuals will make.

If individuals remain minimum wage their entire life, then State Pension, Pension Credit, Housing Benefit and Council Tax Benefit will meet most of their financial needs, as in practice very few people will work constantly at minimum wage - their employment will be broken with regular spells of unemployment, or they will progress to higher salary positions.

If individuals progress, then losing £330 of employer contributions for a year or two will be of little consequence, and the lost individual contributions are likely to be put to better use in improving earnings potential and meeting living costs. Use of a payday loan a few times a year could easily cost more than the value of the employer contribution, for example.

Re-enrolment will mean individuals are put back into the pension every few years, and hopefully if circumstances have changed they stay in the pension.

So whilst staying in the pension would almost certainly be best, opting out for a year or two is not going to be massively detrimental.

However, equally likely, if they get into the habit of opting out each time (easier to do as time goes by and so they can rationalise "not worth starting now" I reckon that £330 a year plus employees contribution plus modest growth over 30 years woudl give a lump sum of about £40k in today's terms at retirement, something that no doubt none of them would think was trivial.

crv1963

little_alien wrote: »

Please correct me if i'm wrong but just seems like the workplace pension is a bad deal?

To return to the original post, you are wrong.

The deal has its' faults and the political driver is in my honest opinion to reduce the future state support/ benefits for pensioners who reach SPA. The levels of personal, employer and state contribution is set too low, however they are at levels that are a start and I am sure as time goes by and like all new "deductions from earnings" they will be gradually increased.

If they had been introduced at the level needed to provide a decent pension then the drop out rate would be higher.

Given the poor pension knowledge nationally, (I include myself as not being as informed as I should have been and we are now playing catch up) then there has to be a start somewhere.

Education is part of the answer but when people see x amount deducted and have a utility bill needing paying they could and sometimes do think "I have to live now and so will worry about my pension later".

We on this forum are in a clear minority nationally, some here are newbies, some old hands but all are here because they have an interest in pensions, be it how to increase them, how to take them or how to best plan them.

I have never felt looked down on for asking sometimes daft questions, only the daft don't question.

Some people have great pension pots and ISAs and SIPPS and all sorts of other savings, good for them for planning and earning them, some like me have what I would consider modest or just enough savings and are trying to make the most of time left in work to boost them, others have very little but by looking and asking they often get told a way to move forward.

None can know why someone else has done what they have as they have not walked in that persons shoes, or seen their life choices.

We live in an unequal society, all society is unequal, all this forum does is try to help others understand options, be that fear of not having enough or fear of not being certain that one option is better than another to manage retirement income from big pots. All are equally valid to ask.

If someone knows that their provision is not what they need then at least they can plan, identify possible solutions and if they can savings. But at least they know. Many more are going through life thinking because of AE they have ticked the pension box and don't think anymore about it.

Sorry for my rant but I don't think turning on each other helps anyone.

Anonymous101

Almost all of the above, especially the OP, highlights the real problem that is the undereducation on anything personal finance related.

The basics of personal finance including pensions are very simple to understand if you cut out all jargon. As others have said its way overdue that it was taught in schools.
However teachers themselves would need educating before this could be implemented properly as the average level of understanding throughout the population is so poor. People that generate some headroom within their finances and are able to save a little as a buffer by living within their means, even if that means going without the latest iphone or god forbid using public transport or not drinking or smoking are few and far between.

Most people get paid and immediately think what can they spend it on rather than how they can best use that money to better their position. It’s all about priorities and unfortunately people have been conditioned into thinking that owning stuff is more important than saving a buffer or investing a little for their future.

That probably will be judged as another preachy snotty reply but its really not. I just dispare that people are so unaware how making small changes, such as contributing to a workplace pension, can yield huge benefits. I really don’t know what we can do to change things.

thickasabrick

The challenge is particularly difficult for those on low incomes. Although it's not just about pensions.
The thing is, it much much more important for someone in that situation to think strategically, which can be an overwhelming task given the urgency and immediacy of surviving day to day.

The magic of compounding can make a big difference over the timescales saving for a pension entails, even with very modest amounts.

To quote from an article by The Escape Artist titled "Understanding your money blueprint (Part 1)"
"The great news is that its never too late to change the money blueprint you inherited. We have free choice and can change the way we see the world. But most people don’t bother because it requires them to do some work."

woolythoughts wrote: »

Doesnt this just reduce the benefits bill rather than benefitting the retired person.

Unless your pension is of sufficient amount, all having one will do is reduce the amount of housing benefit/state support you get in old age.

Those in low paid jobs will struggle to put enough away to get a decent amount.

Therefore they are worse off when working for very little benefit in old age.

GunJack

Anonymous101 wrote: »

, even if that means .........god forbid using public transport

This is one that annoys me - for me (and a hellova lot of others, I suspect) it's cheaper to own and run a car or motorbike to get to work (and a lot quicker) than it would be to use PT. In my case at least half the time or less and many hundreds of ££s cheaper to use a car.