Poor value pensions....

[eighthobstruction]

I am lucky enough that my future money is fairly safe though small....yet another stress to the younger members of society....probably not something that would have been any different whether govt who pushed it through was red or blue....seems yet again let down by the rules and regs, and the drawing of legislation (+ avarice of Pension agents)....let down by the legal and financial advice given to ministers no doubt....

[ahinton]

I am lucky enough that my future money is fairly safe though small....yet another stress to the younger members of society....probably not something that would have been any different whether govt who pushed it through was red or blue....seems yet again let down by the rules and regs, and the drawing of legislation (+ avarice of Pension agents)....let down by the legal and financial advice given to ministers no doubt....

I happen to believe that pensions have for some time been in their painfully slow death throes but few seem willing to face up to this and try to address its consequences. Pension schemes cannot be devised and run for free and, if markets don't perform adequately, pension performance will be compromised accordingly. The old Final Salary Schemes have gradually folded one by one to the point at which they're now like gold dust. Increasing numbers of employers, employees and self-employed people are finding it ever more difficult to contribute to pensions adequately or even at all. Variations in expectations of working life and retired life continue to increase. All the talk of fiddling about with pensions and pension schemes is hardly likely to prove helpful in devising solutions; it certainly hasn't been so to date. Pensions are in any case just one of a number of savings vehicles, their principal purported attraction being the tax relief on contributions (though this is gradually being reduced on larger contributions made by those on the highest incomes). More and more pensioners of and above the current state retirement age are finding it impossible to manage on their pensions alone and have to find work to make up the difference.

[An_Inspector_Calls]

This is quite a good summary of what went wrong:

http://www.saveoursavers.co.uk/government-failure/pulverising-final-salary-pension-funds/

[Anna]

In these days of benefit cuts, the state pension is now referred to as a 'benefit' In fact it's nothing of the sort, people have paid in to get a amount paid monthly once they retire. More and more the talk seems to be of the axing of this 'benefit' to pensioners.
What the men in suits in Whitehall don't seem, or unable to, grasp is that for ordinary people, in ordinary jobs (supermarket/shop workes etcr) on just above minimum wage there is no money left for them to pay into a pension scheme - even if their employer had one, and a final salary scheme never was an option for them.
A neighbour had a 'pension pot' of £150,000 - rather than having to purchase an annuity he purchased a buy to let property, so monthly income from that £650 (I think a lot of people are doing this if they can) Doiing my family history - working class families - they all were still working practically until they dropped - going back to 1840 some were in the workhouse. OK - but where is the work now for the 65-75 year olds? Perhaps a return to the workhouses is on the csrds?

[teamsaint]

Anna, unless I am mistaken, pension funds (those that have attracted tax relief on the initial investment) cannot be withdrawn in cash unless they are beneath the "Trivial" threshold, which is around the £20k level (for the total fund).

With regards to AHs points, it would be fair to point out that in the larger corporate sector, profits are at an all time high, while the companies cut back on pension provision.

Pension provision, State and corporate, is a matter of will. There is no will to keep provision high, and there have been many unwarranted attacks on provision.

Working till we drop , for the bottom 80/90% is the goal of the policy makers IMO. Its certainly the direction of travel of policy.

One might usefully ask why people are being asked/made/encouraged to work later and later in life, while youth unemployment is stubbornly high.

[Serial_Apologist]

OK - but where is the work now for the 65-75 year olds?

Bee and Queue was the last I heard in this particular connection.

[ahinton]

In these days of benefit cuts, the state pension is now referred to as a 'benefit' In fact it's nothing of the sort, people have paid in to get a amount paid monthly once they retire. More and more the talk seems to be of the axing of this 'benefit' to pensioners.

No government will want to take what will undoubtedly be the very considerable flac for axing this benefit, but they'll all gradually cut it back, for sure. It is a benefit, I'm afraid; I know people pay in but they don't actually pay into a government pension fund so they have no pension accounts in their names in which the monies paid in are invested on their behalf by government, as would happen with any real pension, so there's not a hope of investment growth on these. It's therefore been a myth promoted by governmemnts of all colours ever since that benefit began that the monies paid in are contributions towards a "pension"; it's not quite a state-sponsored Ponzi scheme but it's not so far off that.

[teamsaint]

A Ponzi scheme in your opinion AH, but several generations have benefited from it, regardless of its modest value.
It is WELL within the financial capabilities of rich nations like ours to provide a decent living for its older citizens. It is a matter of will.

[Anna]

One might usefully ask why people are being asked/made/encouraged to work later and later in life, while youth unemployment is stubbornly high.

Yes. And the answer is ......... ????
You, and I, am baffled it seems.

[teamsaint]

Yes. And the answer is ......... ????
You, and I, am baffled it seems.

bafflement at the state of the world is normal for me , Anna.

Strange days indeed, as John lennon said......

answers on a postcard , with a 60p stamp, to the bloke who used to run football.......

[ahinton]

A Ponzi scheme in your opinion AH, but several generations have benefited from it, regardless of its modest value.
It is WELL within the financial capabilities of rich nations like ours to provide a decent living for its older citizens. It is a matter of will.

That's a matter open to debate (and let's not forget just what proportion of state benefits are in any case paid out of government borrowings these days) but, if governments are indeed to do this (and I'm not sure that is the rôle of governments to meddle in the financial services industry as a participating investor), they're going to have to set up an actual pension scheme, which they haven't ever done. The monies paid in by people go straight out again in benefits (including state retirement benefit) to those already entitled to receive them, so they never stay in an account to be invested on behalf of the contributors; if that's the intent, then so be it, but let's not pretend - and let governments not try to hoodwink us - that the state manages our contributions for us by investing them prudently with a hope of long-term growth in order to produce a viable pension pot at state retirement age.

I did not, by the way, claim that it IS a Ponzi scheme; I sought merely to suggest that it might seem to me to have something in common with such schemes, for the reasons given above.

[teamsaint]

I agree that pretending that the money is invested is pointless.

If we want well funded retirements we have to pay for them. But everybody I know WANTS a well funded state scheme, paid for out of taxes.
It can be done.
Private pensions are, for most people, an illusion. They would be FAR better investing or saving elsewhere.
And the corporate sector needs telling, not asking, to start joining in again. The new provisions from next year on(?) do seem a small step in the right direction, but they are 30 years too late. Probably deliberately.

[amateur51]

Bee and Queue was the last I heard in this particular connection.

Someone's got to prepare, cook, serve & wash-up Mr Clegg's proposed free school meals for the nippers up to age 7, surely.

[amateur51]

No government will want to take what will undoubtedly be the very considerable flac for axing this benefit, but they'll all gradually cut it back, for sure. It is a benefit, I'm afraid; I know people pay in but they don't actually pay into a government pension fund so they have no pension accounts in their names in which the monies paid in are invested on their behalf by government, as would happen with any real pension, so there's not a hope of investment growth on these. It's therefore been a myth promoted by governmemnts of all colours ever since that benefit began that the monies paid in are contributions towards a "pension"; it's not quite a state-sponsored Ponzi scheme but it's not so far off that.

As I understand it, when determining your State pension 'entitlement' the Pensions Service will refer to your level of contributions, all of which suggests 'paying into a scheme with athreshold of entitlement.

[amateur51]

Yes. And the answer is ......... ????
You, and I, am baffled it seems.

Any room for an extra small one?