Almost nobody in my workplace invests in the stock market for their retirement, it's insane.

eskbanker

Albermarle said:

eskbanker said:

ircE said:

eskbanker said:

Albermarle said:

In a basic auto enrolment scheme, you pay 4% and your are given 4% for free.

It's 5% and 3% respectively:

https://www.gov.uk/workplace-pensions/what-you-your-employer-and-the-government-pay

Not to speak for @Albermarle but it could be argued that since the 5% is essentially post-tax 4% + 1% tax relief, then "give 4% to get 4%" is the framing that would make sense for someone who has opted out.

Sounds a bit contrived to me, and, given the dangers of myths and misinformation, it would always be best IMHO to state facts that are clearly verifiable in such circumstances, even if amplified with additional explanation about the ultimate net effect of such contributions!

Well I think 4% from you and 4% free money, is a valid way to present an argument for opting in a pension, to someone who has opted out.

To be honest I don't recall ever seeing it presented that way and just thought that it was a mistake when 'correcting' to the published figures, but the 4/4 presentation, while more attractive numerically, isn't always going to be accurate and fully representative, when tax rates vary, and if factoring tax relief into figures on the way into a pension then it would be logical and consistent to incorporate the taxation effect on the way out too!

masonic

It will also be a challenge where those contributing via salary sacrifice see a deduction of 5% rather than 4%, or ask to contribute 4% and get told it's below the minimum.

Albermarle

eskbanker said:

Albermarle said:

eskbanker said:

ircE said:

eskbanker said:

Albermarle said:

In a basic auto enrolment scheme, you pay 4% and your are given 4% for free.

It's 5% and 3% respectively:

https://www.gov.uk/workplace-pensions/what-you-your-employer-and-the-government-pay

Not to speak for @Albermarle but it could be argued that since the 5% is essentially post-tax 4% + 1% tax relief, then "give 4% to get 4%" is the framing that would make sense for someone who has opted out.

Sounds a bit contrived to me, and, given the dangers of myths and misinformation, it would always be best IMHO to state facts that are clearly verifiable in such circumstances, even if amplified with additional explanation about the ultimate net effect of such contributions!

Well I think 4% from you and 4% free money, is a valid way to present an argument for opting in a pension, to someone who has opted out.

To be honest I don't recall ever seeing it presented that way and just thought that it was a mistake when 'correcting' to the published figures, but the 4/4 presentation, while more attractive numerically, isn't always going to be accurate and fully representative, when tax rates vary, and if factoring tax relief into figures on the way into a pension then it would be logical and consistent to incorporate the taxation effect on the way out too!

When you are trying to sell an idea, some positive spin is usually more important than the fine details. Ask any politician ! 

eskbanker

Albermarle said:

When you are trying to sell an idea, some positive spin is usually more important than the fine details. Ask any politician! 

Not sure that politicians are particularly admirable role models in this context, and I'd argue that their tendencies to exaggerate positives and ignore negatives are an entirely inappropriate template for financial advice!

[Deleted User]

fuzzzzy said:

[Deleted User] said:

It just seems like not enough people are being financially responsible and taking steps to ensure they have a comfortable retirement. I absolutely promise you when you're 65 and freezing cold in your home because you can't afford to put the heating on, eating from food banks and having no money to do anything, you'll totally regret not being frugal and investing for your future. 

I absolutely promise you that if in mid-life you ever find yourself in a hospital bed being told your condition could be life threatening you'll totally regret having been frugal.

No-one knows what the future holds for them and so it is also about having a balanced approach. Save a bit, invest a bit, live a bit.

But statistically speaking, the chances of that happening are lower than the chances of it not happening. So you'd rather chose to live your life based on the assumption that the less likely outcome will happen? How does that make sense? 

The average age of death is 82, yes some people die at 40 and some people die at 100 but the average is 82. Therefore one should plan to live to that age. That means having enough money to sustain you to that age, and ideally beyond.

The thought of being too old to work and having no money so I'm cold in my damp home everyday due to lack of heating, hungry, living in poverty, terrified of every little price rise, anxious about whether I'll freeze to death in my home while managing 1 meal a day because that's all I have terrifies me far more than the thought that I'll regret not blowing my pay check every month, going on 4 holidays a year, buying the latest iphone every 2 years etc ever would.

I'm still convinced that the people who are capable of saving by don't have the mindset that "It'll be alright, I'll figure it out." I think they're going to be in for a major reality check once they hit their 60's and realise they messed up financially.

Ksw3

Average life expectancy is not 82 in all parts of the UK... and healthy life expectancy considerably lower..

QrizB

As a contrary anecdote, one evening this week (while wmy family were discussing what we'd been up to during the day) my 18yo said they, plus one of their college friends, had spent some time trying to persuade a third friend (who has a part-time job) to start saving in a pension.

So at least some teens studying A levels and BTECs do have these conversations.

kempiejon

I did my planning based on making the century before my money runs out. 
Trick must be to move to where healthy life expectancy is highest if you've a few bob stashed away for later life and to that with the youngest if you're not making much pension provision.

strawb_shortcake

QrizB said:

As a contrary anecdote, one evening this week (while wmy family were discussing what we'd been up to during the day) my 18yo said they, plus one of their college friends, had spent some time trying to persuade a third friend (who has a part-time job) to start saving in a pension.

So at least some teens studying A levels and BTECs do have these conversations.

My Daughter started paying into a pension, despite not earning enough to be auto enrolled, I'm not sure if she was even 18 at then. 

But she saves into a LISA, and both her  and her brother have chose to "forget" about their now matured JISA's for a rainy day. Their younger brother however, he's a spender so not sure he'll be as restrained...

Bostonerimus1

DC pensions and ISAs are great opportunities for tax advantaged investing and legislation around NEST and requiring companies to offer a DC pensions and for people to have to positively opt out are efforts to get people to use those opportunities. However, for reasons of ignorance or simply not being able to afford to invest many people don't take advantage of them. The move away from company DB pensions to DC pensions shifted responsibility and costs from employers to employees and I believe that the financial and sociological implications of these changes are only just being seen and I'm not sanguine about the future.