The future of pensions - thoughts!

katejo

Silvertabby said:

Universidad said:

ukpoker said:

Its therefore an idea for the government to grasp the nettle and start to come up with ideas on how to solve this issue.

Are you proposing they do this in time to affect your own pension, or just the pensions for the generation(s) after you?

Shades of WASPI saying that they fully agree with the re-equalisation of State pension ages - just as long as it only applied to their younger sisters, and not them.

I am slightly too young to be included in WASPI but have sympathy with them because of the speed at which it was imposed. It could have been more gradual.

Silvertabby

katejo said:

Silvertabby said:

Universidad said:

ukpoker said:

Its therefore an idea for the government to grasp the nettle and start to come up with ideas on how to solve this issue.

Are you proposing they do this in time to affect your own pension, or just the pensions for the generation(s) after you?

Shades of WASPI saying that they fully agree with the re-equalisation of State pension ages - just as long as it only applied to their younger sisters, and not them.

I am slightly too young to be included in WASPI but have sympathy with them because of the speed at which it was imposed. It could have been more gradual.

It was all over the media in the mid 1990s, and the changes (from 60 to 65) took place over the period 2010 to 2018. 

P.S.  I was born in 1956.

dunstonh

What if people can’t afford 10% to 15% deducted from their wages, how would that be managed?
Lower income people in particular would find that a serious struggle.

They would need to go back to living within their means.

Cue Panorama filming people saying they are really hard up and unable to afford to pay into a pension whilst sitting in their lounge with a 65-inch ultra HD TV, every subscription under the sun and a bookcase with 200 PlayStation games at £50 a go.  Whilst going on two overseas holidays a year, eating takeaways and texting on the latest top of the range phone....

Priorities have changed spending habits.

itsthelittlethings

No new pensions? So what is going to happen to people who are too old and infirm to work?

BlackKnightMonty

I would like to see the equivalent of a 401K created.

A beefed up Stocks & Shares ISA with no limit contribution from gross salary.

I think the NEST scheme is close to this. But the fund choices are limited and you can currently only choose one. We could have a UK fund for the option of investing in the UK.

BlackKnightMonty

ukpoker said:

According to most financial analysts the country can't afford to keep paying out an ever increasing amount of pensions to people that are living longer and require more money every year just to keep up with the basics.

Its therefore an idea for the government to grasp the nettle and start to come up with ideas on how to solve this issue. 

My thoughts are as follows :

- Tell the public that as from 2065 no new pensioners will be created. In other words anyone becoming of retirement age (currently 67) will no longer get a STATE pension.

- Enforce a strict contribution scheme whereby people of a certain age will be deducted a percentage of their salary in order to fund their retirement. 

Aged - 18 thru 25 -> 3% of earnings
            25 thru 30 -> 5% of earnings
            30 thru 35 -> 8% of earnings
            35 thru 40 -> 10% of earnings
            40 thru 50 -> 12.5% of earnings
            50+ -> 15% of earnings

All contributions will be government MATCHED!

By 2100 all monies usually being paid out on state pension will be none existent and can then be used to fund the ever going saga of the NHS...but that's another story

Very admirable.

How would that work for the 5m unemployed who sit on benefits throughout their working life and then pick up a free state pension?

ukpoker

BlackKnightMonty said:

Very admirable.

How would that work for the 5m unemployed who sit on benefits throughout their working life and then pick up a free state pension?

How many people would get up off their collective botties and work if they knew there was no pot of gold at the end of the rainbow?

Given that the government gives 40 years notice then there can be no excuse for those that CAN work DO work!

I've read a few good ideas on the thread so far...401K similar...no limits on contributions etc but the pension has been around a long time now and cannot continue to be funded in the way it is currently. 

Nomatter how you cut the cake money does not grow on trees and funding pension payments into the 22nd century seems like a big no no to me

njm123

BlackKnightMonty said:

ukpoker said:

According to most financial analysts the country can't afford to keep paying out an ever increasing amount of pensions to people that are living longer and require more money every year just to keep up with the basics.

Its therefore an idea for the government to grasp the nettle and start to come up with ideas on how to solve this issue. 

My thoughts are as follows :

- Tell the public that as from 2065 no new pensioners will be created. In other words anyone becoming of retirement age (currently 67) will no longer get a STATE pension.

- Enforce a strict contribution scheme whereby people of a certain age will be deducted a percentage of their salary in order to fund their retirement. 

Aged - 18 thru 25 -> 3% of earnings
            25 thru 30 -> 5% of earnings
            30 thru 35 -> 8% of earnings
            35 thru 40 -> 10% of earnings
            40 thru 50 -> 12.5% of earnings
            50+ -> 15% of earnings

All contributions will be government MATCHED!

By 2100 all monies usually being paid out on state pension will be none existent and can then be used to fund the ever going saga of the NHS...but that's another story

Very admirable.

How would that work for the 5m unemployed who sit on benefits throughout their working life and then pick up a free state pension?

Guess it would be the same as now - they'd get some sort of pension credit, and with that access to a whole range of benefits so they're probably better off in retirement than those who work in low paid jobs.

njm123

dunstonh said:

What if people can’t afford 10% to 15% deducted from their wages, how would that be managed?
Lower income people in particular would find that a serious struggle.

They would need to go back to living within their means.

Cue Panorama filming people saying they are really hard up and unable to afford to pay into a pension whilst sitting in their lounge with a 65-inch ultra HD TV, every subscription under the sun and a bookcase with 200 PlayStation games at £50 a go.  Whilst going on two overseas holidays a year, eating takeaways and texting on the last top of the range phone....

Priorities have changed spending habits.

The education system needs to start teaching people how to budget properly again and differentiate between NEED and WANT, also to stop thinking they are entitled to have A B C regardless of their income, and expecting Government to cover any shortfall.  

hugheskevi

ukpoker said:

BlackKnightMonty said:

Very admirable.

How would that work for the 5m unemployed who sit on benefits throughout their working life and then pick up a free state pension?

How many people would get up off their collective botties and work if they knew there was no pot of gold at the end of the rainbow?

Given that the government gives 40 years notice then there can be no excuse for those that CAN work DO work!

I've read a few good ideas on the thread so far...401K similar...no limits on contributions etc but the pension has been around a long time now and cannot continue to be funded in the way it is currently. 

Nomatter how you cut the cake money does not grow on trees and funding pension payments into the 22nd century seems like a big no no to me

One way or another future pensioners will need to have an income.

That income is provided by transferring resources from those who produce goods and services (ie workers) to pensioners.

The use of the tax and benefit system to effect that transfer is very efficient and low cost. Having a near universal, non means tested system also overcomes many of the incentive problems created by protection systems for those with low income.

Using investments to effect the transfer instead just utilises a different method of transfer, through the use of equity and dividends, but ultimately has the same effect of transferring resources from the productive to the non productive, but in a much less efficient way.

It could be argued that overseas investments overcome this, but then that points towards a large centrally managed sovereign wealth fund. That isn't going to happen whilst we have 2.6 trillion national debt.

As long as the State pension is fairly low, it is a very sensible base to build private pension wealth upon.