Pensions envy. Are we heading for financially comfortable but socially uncomfortable retirements?

Albermarle

In some cases it is just not about marketable skills . Often you become embedded in a company. You fit in with colleagues, the culture , your boss even . Every year you get a pay rise and maybe a bonus . 
It is perfectly possible that your pay and/or benefits level has risen above the going rate for the job but nobody cares as you are a valued employee.
If you give that up at 45 ( probably peak career for a lot of people) and then re enter the industry ten years later . Then even with still marketable skills you will probably struggle to restart at the same level you left .
No doubt there are some exceptions, but I think it would be a big risk that you would find yourself a couple of rungs down the ladder and not very happy.

MaxiRobriguez

I'm late to this thread but in regards to the original question, then probably.

There will be decent retirements for those with DB schemes still, high earners and medium earners who are laser focused on savings. There will not be decent retirements for lower earners nor those who are profligate with their cashflow. 

I'm not going to feel guilty either way, despite a left-leaning bias which should naturally make me more socially conscious. The reality is I'm paid what I think is a reasonable amount for my skill set and the benefits I bring to my company. It's higher rate, but not excessively so, but I'm still having to whack away almost 50% of my pre-tax salary into my pension to get the retirement I want - which is out by 50, for a modest £25k a year or so.

I'm not going to be made to feel guilty by other people who have to work until 67 and are on less. We all have to make sacrifices - mine is my time/effort, nice consumer goods and too often mental sanity. In return I should have a more comfortable retirement. I plan to enjoy it, I'll have earned it. 

Anonymous101

MaxiRobriguez said:

I'm late to this thread but in regards to the original question, then probably.

There will be decent retirements for those with DB schemes still, high earners and medium earners who are laser focused on savings. There will not be decent retirements for lower earners nor those who are profligate with their cashflow. 

I'm not going to feel guilty either way, despite a left-leaning bias which should naturally make me more socially conscious. The reality is I'm paid what I think is a reasonable amount for my skill set and the benefits I bring to my company. It's higher rate, but not excessively so, but I'm still having to whack away almost 50% of my pre-tax salary into my pension to get the retirement I want - which is out by 50, for a modest £25k a year or so.

I'm not going to be made to feel guilty by other people who have to work until 67 and are on less. We all have to make sacrifices - mine is my time/effort, nice consumer goods and too often mental sanity. In return I should have a more comfortable retirement. I plan to enjoy it, I'll have earned it. 

I'm in a fairly similar situation. The reality is that we all make our choices. The majority choose, although somewhat blindly in most cases, to follow a consumerist lifestyle and aren't prepared to invest in themselves either through career development or financial investments into pensions etc.

I'm a great believer in radical personal responsibility. I think the only thing stopping the vast majority of people from having a comfortable retirement is themselves. So I won't be made to feel guilty because I made the effort and put away half my salary for a decade or two by people that didn't educate themselves or chose spend the money on a new car every other year etc etc.

MaxiRobriguez

I should add that I do feel for people who cannot save adequately for their retirement. Many people cannot do so because they do not have the cash flow. Many people cannot do so because they've not had access to the right education. Such people deserve a reasonably comfortable retirement through state funding. Not excessive, just enough so that they can have a few years at the end of their life, where they don't have to work, and they can afford the basics. I don't think the state pension is going to be enough for many current working people.

I just don't feel guilty as I don't think I'm to blame for that.

jamesd

A person who makes just minimum wage can afford enough to get a pension income level that's not hugely below minimum wage. Part from the state pension and part from a workplace pension with auto-enrollment.

Those who are unable to work can get the state pension as a substantial increase on what means tested benefits have been paying them, depending in part on whether they live in rented or owned by them accommodation.

The new state pension system is considerably more unfriendly to those with a full working life on low pay, reducing their state pension by around a quarter compared to the old one. The new one is more friendly to those with limited work history, stereotypically stay at home women though quite a lot of men with limited UK work history can also benefit.

sammyjammy

jamesd said:

The new state pension system is considerably more unfriendly to those with a full working life on low pay, reducing their state pension by around a quarter compared to the old one. The new one is more friendly to those with limited work history, stereotypically stay at home women though quite a lot of men with limited UK work history can also benefit.

Not many stay at home mums these days unless they have never worked or had limited low paid work before first child, comparatively speaking of course.

bostonerimus

Albermarle said:

 massive graduate debt which is effectively another tax with rumour of thresholds for payments being decreased and length of payback are being extended, hopefully not as seems unfair and on top of that in my area at least there seems very few employment opportunities unless you work for something similar to the minimum wage 

Apart from not doing a ' Mickey Mouse' course , it is often necessary for graduates to be willing to relocate, to get onto the rung of the ladder leading to  the higher paid professional jobs. Usually means going to live in a big City , which not all will want to do.  .

It's grim up North though. I always say that in the hope that the southerners will stay in the South.

In fact a better representation is that the North has pockets of prosperity , surrounded by larger areas of deprivation ( the grim bits) . Whilst the South has pockets of deprivation ( which can also be grim ) surrounded by larger areas of prosperity .

I got out of uni in the mid 1980s with a PhD in physics. I had one job offer that was related to my thesis work in optics from a defense company at a starting salary of  £12k pa. There wasn't much work going that was directly related to physics back then and many graduates went into The City because they had good maths skills. I was offered a job in a big bank I think because I knew what a "standard deviation" was and could have started with Arthur Andersen or KPMG etc., but frankly I could not deal with the level of BS that I experienced in the interviews. Anyway a generation of physical scientists was lost to British industry. I got so frustrated that I started applying for jobs overseas and after a couple of months had offers from research institutions in Germany, Australia and USA. I chose a job working for the Smithsonian Institution in the USA with a starting salary of $40k pa which was twice what I was being offered in the UK. The benefits turned out to be excellent too with health insurance all paid for by the Smithsonian and they also put 16% of my salary into the pension.

That time in the mid 1980s when UK employment opportunities were quite limited for graduates gave many the impetus to look beyond the UK. Today I'm in contact with some college friends and they are all over the world, some in the US like me and many in Germany and France. I'm very grateful that I got a good education in the UK before there were out of pocket fees to pay, but sad that the UK could not make the best use of my skills and it's the squandering of intellectual capital, or at least not having the resources or vision to use it well, that I think made me first realize that the UK was in a long term decline.

bostonerimus

jamesd said:

A person who makes just minimum wage can afford enough to get a pension income level that's not hugely below minimum wage. Part from the state pension and part from a workplace pension with auto-enrollment.

Those who are unable to work can get the state pension as a substantial increase on what means tested benefits have been paying them, depending in part on whether they live in rented or owned by them accommodation.

The new state pension system is considerably more unfriendly to those with a full working life on low pay, reducing their state pension by around a quarter compared to the old one. The new one is more friendly to those with limited work history, stereotypically stay at home women though quite a lot of men with limited UK work history can also benefit.

The removal of an income related component to the state pension is going to reduce the pension for many workers and even though the full flat rate pension is higher than the old basic state pension it ends up being less because of the removal of many benefits those on basic pension usually had. The new pension is good for people who work in the home and the self employed, but the UK state pension is still a poor benefit when compared with the state pensions of many other countries.

The UK does have many tax advantaged opportunities to save into pensions and ISAs and has generous dividend and capital gains allowances, but you have to earn enough to take advantage of them. Also pension contributions have been shifted from employers to employees with the rise of the DC pension. So the UK is a good country to save for retirement if you are well paid and the stock market treats you well, but for the middle to low income people it is increasingly tough.

jamesd

sammyjammy said:

jamesd said:

The new state pension system is considerably more unfriendly to those with a full working life on low pay, reducing their state pension by around a quarter compared to the old one. The new one is more friendly to those with limited work history, stereotypically stay at home women though quite a lot of men with limited UK work history can also benefit.

Not many stay at home mums these days unless they have never worked or had limited low paid work before first child, comparatively speaking of course.

Yes. While it's still a big factor for women reaching state pension age now, in October-December 2020 the female 16+ employment rate was 71.8% vs 80.6% male. Part time work was a big difference, 38% of women in part time work vs 18% of men. Back in 1971 the female employment rate was about 52% and male 92%, per the graph on page 8.

That change in women's employment rate is undoubtedly part of the reason why the ability to get a state pension based on a spouse's record was removes in the 2016 changes, so now everyone qualifies or not on their own, though with lots of credits for such things as childcare or just having children in the family.

pensionpawn

bostonerimus said:

Albermarle said:

 massive graduate debt which is effectively another tax with rumour of thresholds for payments being decreased and length of payback are being extended, hopefully not as seems unfair and on top of that in my area at least there seems very few employment opportunities unless you work for something similar to the minimum wage 

Apart from not doing a ' Mickey Mouse' course , it is often necessary for graduates to be willing to relocate, to get onto the rung of the ladder leading to  the higher paid professional jobs. Usually means going to live in a big City , which not all will want to do.  .

It's grim up North though. I always say that in the hope that the southerners will stay in the South.

In fact a better representation is that the North has pockets of prosperity , surrounded by larger areas of deprivation ( the grim bits) . Whilst the South has pockets of deprivation ( which can also be grim ) surrounded by larger areas of prosperity .

I got out of uni in the mid 1980s with a PhD in physics. I had one job offer that was related to my thesis work in optics from a defense company at a starting salary of  £12k pa. There wasn't much work going that was directly related to physics back then and many graduates went into The City because they had good maths skills. I was offered a job in a big bank I think because I knew what a "standard deviation" was and could have started with Arthur Andersen or KPMG etc., but frankly I could not deal with the level of BS that I experienced in the interviews. Anyway a generation of physical scientists was lost to British industry. I got so frustrated that I started applying for jobs overseas and after a couple of months had offers from research institutions in Germany, Australia and USA. I chose a job working for the Smithsonian Institution in the USA with a starting salary of $40k pa which was twice what I was being offered in the UK. The benefits turned out to be excellent too with health insurance all paid for by the Smithsonian and they also put 16% of my salary into the pension.

That time in the mid 1980s when UK employment opportunities were quite limited for graduates gave many the impetus to look beyond the UK. Today I'm in contact with some college friends and they are all over the world, some in the US like me and many in Germany and France. I'm very grateful that I got a good education in the UK before there were out of pocket fees to pay, but sad that the UK could not make the best use of my skills and it's the squandering of intellectual capital, or at least not having the resources or vision to use it well, that I think made me first realize that the UK was in a long term decline.

I grew up on a South Wales council estate in the valleys and for someone studying A level Physics, Maths and Computing at the local (no shopping around then) comp' there was never going to be many opportunities locally, at least until the silicon boom (?) started to move into brown sites in the mid to late 90's. As someone bitten by the early '80s home computer bug I followed a four year Electrical & Electronic Engineering 'thin sandwich' degree course (Oct - March studying, exams, April - Oct paid work experience for three years, final year all uni) moving to the midlands to work and the south coast to study. On graduating I actually ended up permanently living in the midlands (up t'north from where I grew up) where the grass was greener for me. However I eventually moved back down south to start a career in mobile telecoms. The morale of the story being that 'up north' can be just as good as 'down south' and the opportunity for a good post grad career is linked to simultaneous industrial experience. You may also have to relocate, as I did, to the city (though I lived in a leafy town) to pursue your ambition. Thin sandwich courses disappeared in the 1990's however Dyson has opened his own university, where students also simultaneously work for him, which I believe is a step in the right direction. Unless intent on a 'career' in research universities are supposed to be meeting the needs of the workplace. By encouraging 50% of school leavers into university a certain PM sold at least half of those a pup!