How much pension income to break even

Phossy

dont_use_vistaprint said:

sgx2000 said:

Perhaps the foreign holidays are 6 single days in Rhyl..........

Interesting so many people focused on the least interesting & relevant aspect of this story, the foreign holidays.

You can read much between the lines 

The focus is there because it is such a stand out statement and it comes across as ludicrous, whether you see that or not. It reads like a Daily Mail story on immigrants.

Cobbler_tone

pterri said:

Cobbler_tone said:

Here is a prime example of why pensions are so effective.
My employer (since 2021) has given the option to exclude the payment of annual bonus towards pension contributions. Ironically I have been campaigning to do the exact opposite, i.e. enable bonus payments into the pension! 

The impact for even a 20% tax payer is clear. On each £1,000 of bonus, £41 (extra net) will go in your pocket at the sacrifice of £180 'lost' into your pension. It is their way of 'helping' people during the 'cost of living crisis'.
The default is to carry on as normal (i.e. it is pensionable) but people will opt out to take the cash, even though they don't really need it. 

Some younger people know the cost but have no other way of scraping a deposit together to save for a deposit - even when the rent is more than the repayments. Glad I didn’t have to make that choice and have to try and catch I’ll later. 

As they are crying into their Costa, whilst scrolling through Tik Tok on their £1,000 phones.
I'm not talking about genuine hardship cases, just those who make very poor decisions.
These young 'uns have never had it so good! 


I know they don't understand this pension cost as I have explained it to half a dozen of them today, all not realising the true impact....despite there being an example in the company blurb.

pterri

Cobbler_tone said:

pterri said:

Cobbler_tone said:

Here is a prime example of why pensions are so effective.
My employer (since 2021) has given the option to exclude the payment of annual bonus towards pension contributions. Ironically I have been campaigning to do the exact opposite, i.e. enable bonus payments into the pension! 

The impact for even a 20% tax payer is clear. On each £1,000 of bonus, £41 (extra net) will go in your pocket at the sacrifice of £180 'lost' into your pension. It is their way of 'helping' people during the 'cost of living crisis'.
The default is to carry on as normal (i.e. it is pensionable) but people will opt out to take the cash, even though they don't really need it. 

Some younger people know the cost but have no other way of scraping a deposit together to save for a deposit - even when the rent is more than the repayments. Glad I didn’t have to make that choice and have to try and catch I’ll later. 

As they are crying into their Costa, whilst scrolling through Tik Tok on their £1,000 phones.
I'm not talking about genuine hardship cases, just those who make very poor decisions.
These young 'uns have never had it so good! 


I know they don't understand this pension cost as I have explained it to half a dozen of them today, all not realising the true impact....despite there being an example in the company blurb.

I don’t disagree, i bought my first flat at 28 I think, I was tired of sharing. I can quiet see why a person at the same age or older now would be going slowly insane at having to share a fridge or heaven forbid start a family while flat sharing or throwing money at a landlord with no security. May not be the best financial decision but can sympathise with why they make a choice to delay a pension for a few years to buy. 

DairyQueen

Cus said:

Does she spend all of it or save some? (Based on her quote that she has never had so much money)

I believe that she has short-term savings to pay for one-offs (e.g. replacement white goods) and b/day Xmas gifts for young family members. Her feeling of relative wealth is likely to be different to those of us who have always enjoyed reasonable pension incomes. She now has the means to buy herself a new top or two without considering herself extravagant.  

Cus

DairyQueen said:

Cus said:

Does she spend all of it or save some? (Based on her quote that she has never had so much money)

I believe that she has short-term savings to pay for one-offs (e.g. replacement white goods) and b/day Xmas gifts for young family members. Her feeling of relative wealth is likely to be different to those of us who have always enjoyed reasonable pension incomes. She now has the means to buy herself a new top or two without considering herself extravagant.  

Thanks. Carers do a selfless job and the support of the state is there as it should be in any compassionate society. Don't let her save anything and get tripped up by some benefits algorithm!

DairyQueen

Cobbler_tone said:

dont_use_vistaprint said:

Better put that money into ISA savings ?

If someone is saving rather than paying into a pension, won't many of these 'benefits' drop off? At least those means tested.

I can appreciate the debate about what to do if you get to your latter years and have no pension.

I just think of the stress (of having no savings), the admin, dealing with some really inefficient systems etc. How many elderly people are not very tech savvy and may not have the support to facilitate what may be available?

There is an argument (depending on employment situation, employer contributions etc) of when you may as well save but you will still struggle to get the tax breaks of a pension elsewhere.

I'd still never advice a strategy of avoiding a pension to live off benefits that are ever changing and may/may not be around.

Attendance allowance is the one that so many people should be claiming but don't, although TBF it is an absolute dog of a form.

That form is the worst I have ever encountered. I completed in the autumn on behalf of my frail and aged dad. It took me the best part of 6 weeks to gather all of the info. and reports required from GP and hospitals (with the help and support of an experienced CAB advisor). It is one of those forms designed to defeat you but for those who make the effort there is more chance of success. To my intense surprise dad has been granted AA at the higher rate. Result!

There is no way in hell that dad would have the capacity to deal with this himself.

zagfles

Phossy said:

dont_use_vistaprint said:

sgx2000 said:

Perhaps the foreign holidays are 6 single days in Rhyl..........

Interesting so many people focused on the least interesting & relevant aspect of this story, the foreign holidays.

You can read much between the lines 

The focus is there because it is such a stand out statement and it comes across as ludicrous, whether you see that or not. It reads like a Daily Mail story on immigrants.

It might come across as "ludicrous" to those who only see holidays in terms of a fortnight's package in Benidorm, the sort of posh cruise advertised in the Guardian, or even a caravan in Rhyl. It's possible to holiday in places where the cost of living is far cheaper than the UK so you could even spend less on the holiday than you would have at home. 

p00hsticks

dont_use_vistaprint said:

Keep_pedalling said:

Sounds like BS to me. PC is means tested and no one on it will have enough savings or income to have 5 to 6 overseas holidays a year.

It’s not BS.

And if you read the post properly you’ll see not just pension credit it’s a whole range of things that you become eligible for if in receipt of PC , which when added up would be a significant amount of pre-tax income.
 

Yes you become eligible for a whole lot of other benefits, which can massively reduce your expenditure, but it doesn't alter the fact that in order to qualify in the first place you need to have a pretty low income ( < £218 a week I think ?) and not a great deal of savings ? 

So free glasses are great if you need free glasses, free dental care is great if and when you need dental care, a free TV licence is great if you watch TV. But it's not like you get given the money instead if you don't need those benefits - so while it may reduce your expenditure, it's not going to increase your income .

So while she might get to go on 4-6 foreign holidays a year, I find it difficult to see how she could comfortably pay for them ...... 

indiasign

dont_use_vistaprint said:

SouthCoastBoy said:

dont_use_vistaprint said:

SouthCoastBoy said:

Pension credit does open up a number of other benefits. My mum received pension credit, which in turn led onto additional benefits such as not having to contribute council tax, she also got a free boiler and I think some additional winter fuel payment (but not sure on that one). 

I think there may well be a position where if you receive just enough to not get pension credit you may be worse of? I think that is the point the OP is making. I don't know if this is true, but I do know by my mum receiving pension credit it opened up a number of other benefits.

Thank you, finally someone  who actually read and understands the original post!

I think the sum of all those additional benefits is quite significant, especially when you consider it is all tax-free free. 

Yes, especially the council tax, which for a band d property around here is close to 2500 a year so 3k a year before tax

Person in question receives utilities support through 5 different schemes &  is always in positive credit without paying anything. 

None of these look at actual usage or ability to pay, simply are you on PC , yes, have this extra money then.

Also the new boiler, radiators , insulation etc is a big CAPEX project many of us will face at some point in retirement 

Just out of interest, could you detail these schemes? I have an elderly Aunt who is on Pension Credit, but is receiving no help with utilities, so I’d like to be able to point her in the right direction.

Thanks

DairyQueen

pterri said:

Other issue, none of the state benefits are guaranteed for life. They can and will be tinkered with, to rely on that going forward would be insane. 

My thoughts exactly. To be at the mercy of government policy wouldn't make for a secure and happy retirement.