Pensions: ‘Why I’m one of millions of UK adults not paying in’
https://www.bbc.co.uk/news/articles/c05631v11ndo
Posted by DamascusNuked
Pensions: ‘Why I’m one of millions of UK adults not paying in’
https://www.bbc.co.uk/news/articles/c05631v11ndo
Posted by DamascusNuked
37 Comments
I lot of people are going to be fucked when their older given how much it costs to live (survive) these days
The flowchart on /r/UKPersonalFinance is a really good resource for anyone wondering how to approach finances
If you’re PAYE, why the fuck wouldn’t you use the employers pension, sure you’re gonna “lose” a couple hundred a month, but you also get “free” money from the employer contributions. without those contributions mine would look like shit as about 60% of it is from those.
Lovely, no doubt my taxes will be used to bail out these idiots when they can’t afford to survive in 20 years time, no doubt they’ll be handed free housing and a comfortable allowance from the state along with a host of additional payments throughout the year.
I pay 50% pension, just because I need as much money as I can get now. I work for my local council and the pay is horrendous, so unfortunately I’m having to take a little from my older self just to get by.
They are too busy finding the money to survive NOW…never mind in 20-40 years…
I was self employed and put a little into a private pension every month.I couldn’t afford much and that’s made worse by obviously having no employer contributions.
But it’s made a big difference now I’ve retired. Relying on the state pension would be just about doable but a pretty miserable existence.
I can’t even imagine how it’s going to be for kids growing up now if there’s not even going to be that safety net. But, if you don’t have any spare money at all, what are you going to do? You have to pay bills and feed yourself. A dilemma I’m glad I don’t have.
The lack of financial education in the United Kingdom is outrageous. Completely aware that it’s that way to keep people trapped in the system and widen the wealth distribution gap. But I genuinely believe finance and politics should be two core subjects on the schooling curriculum, just like maths, science.
I pay for a private pension. You need to pay in around £3,000 a year to get something marginally acceptable. Around 36 yrs of contribution privately and you get around £11,000 annually, plus the state pension. The return isn’t great especially if you’re still having to rent.
Save these idiots from themselves. Remove the option to opt out of workplace pensions.
Well I’ve been paying a pension since 18. I’ll be ok, I know where this is all going to end up and nothing worse that being old and broke.
Where does the BBC find all these self employed single women with 2-3 kids ?
Is it just AI generated clickbait?
Reminded me of this girl 38, single, 2 kids, beauty tech, main income is a student loan…
https://www.reddit.com/r/unitedkingdom/comments/1gei055/budget_i_earn_1800_a_month_and_have_nothing_left/
Why the fuck would I pay into a pension I’ll never see? The bloody age will be 75 soon enough. It’s just paying for boomers to piss it up the wall.
They will.never let me retire.
Just save enough for a ticket to Geneva that’s the only guarantee you have
Everything will be gone when I’m old enough
Completely shafted since birth by a system of pulling up ladders
Thanks for the reminder to top up my workplace pension when I next get the chance! My employer already puts in a good amount but any extra top-ups even if it’s like £10 a month pay dividends if you can afford to do it.
I totally didn’t read that article.
I’m not in the pension scheme.
I accept I am going to get downvoted to oblivion .. but hear me out at least ..
Why? On close to min wage for years it wasn’t affordable at that time (3 years nearly). I was on tax credits just to eat working full time. No chance I could afford another 200 a month on pension.
Now ..
Over the years, my income increased but I continued to opt out of pension enrollment.
About 5 years ago, I put my savings as-was (20k) in to a managed S&P500 (acc) fund and pay in £500 pcm via DD on payday. At an average 8% my investment over the next 20 years of about 120k compounded annually is predicted to be worth ~380k. In 20 years I will be 55.
Pros over a pension: I can take it when I want/need. I recently needed surgery and I went private and paid cash. I can will it to someone. It is mostly not taxed. I am not required to keep working when I want to stop (that time will come and I have known people who had to do another 5 years and then dropped dead so yeah that’s a biggie for me). If I die early, its all going to my son and not the government.
This is just my opinion, but I fell in to this situation accidentally so would not advocate this pov, but, pensions are poverty traps for generations. I say this as pensions didn’t used to be such a significant chunk of your pay (9.8% where I work) and people had more disposable income, so putting a little aside each month made total sense. Most people were financially illiterate (and many still are so they are still the best option) and the whole paradigm of “work 50 years and retire, then die shortly thereafter” was still very much the norm. That’s changed.
Also the people I do know who have private and state and NHS pensions all say thanks to inflation it is not enough to live on and they continue to have to work at least part time. I don’t know anyone who is comfortable in retirement who wasn’t on six figures or enjoyed the now defunct final salary scheme or who didn’t make a fortune in capital asset appreciation.
You’re literally throwing away free money if your employer does any sort of matched contribution. It’s built into how much you ‘cost’ as an employee, if you opt out, the company get to keep that money. You should always max your contribution to the max that they will match it too. Otherwise you’re giving away your money.
As long as we don’t bail them out then they can be idiots. They’ll be on the streets when they’re not working but that’s on them.
Well, who can actually completely trust whether their pension pot won’t be raided by the time it’s due anyway?
***Pensions: ‘Why I’m one of the millions of UK adults that are financially illiterate!’***
Interesting that two of three people interviewed are South Asian origin.
I’m British Asian and we don’t tend to invest in pensions as much as there is a cultural trend towards intergenerational families living in the same house. My grandparents put nothing in their pensions so that the next generation could focus solely on studying. In turn that generation looked after them as they got old
This only really works if you are able to eventually have your own funds and family.
Some people haven’t read the article.
These are low laid workers who have no room in their income for a pension, compared to the cost of raising a family or wanting your own place.
Low paid workers have never had the chance to be flash, but they had an easily affordable roof over their heads. It’s underestimated how much more life has become expensive, especially factoring housing costs in.
I.e. symptomatic or pay not going far enough to plan for old age
I am gonna be honest as much as I understand that the state pension may disappear for those of us with private pensions due to it being unsustainable. It will really piss me off if people like this get to keep it while I lose it. To the point where I might as well spend all my private pension earlier to have a richer younger retirement and then only claim the state pension later on when I am older and more feeble
Link opting out from work pension scheme payments to opting out from any income-bssed benefit other than state pension after retirement age.
Then make sure you follow through and let them starve and freeze to death. Problem solved.
This is a really good way to ensure you’re still working in your 80s.
51 here – these days I think a lot more about pensions. My peers who were smarter (and better off) than me in their twenties have fat pension pots and can comfortably retire within the next five years, because they started making contributions early.
They’ll retire when they’re still young and healthy enough to enjoy around 20 years of leisure before they start getting too old to have fun. They might not get their state pensions until 67, but they have big enough private pensions that they don’t care.
At the other end of the scale I know people who will only have the state pension, so they’ll need to work until 67+ and will spend their final years scraping by on very little.
I’m somewhere in the middle. I’ll probably need to work until 67, but my private pension should be enough that, combined with the state pension, I should have a relatively comfortable retirement.
For what it’s worth, I wish I understood this when I was younger: a pension is the best long -term investment you can make.
For a start, you don’t pay tax on your contributions. If you pay £100 into a savings account, you first have to pay income tax on that £100, but if you pay it into your pension pot you don’t pay income tax on it. If you’re a basic rate tax payer, that means a £100 pension contribution only costs you £80.
The next point depends on your employer, but many of them will match your contributions up to a certain level – so again that’s free money you can’t get any other way.
Finally, the magic of compounding. When you’re young you might not have a lot of money, but you have the next best thing – time. With an average return of 7% per year, over the years and decades tens of £s turn into hundreds, hundreds turn into thousands, and suddenly you’re in your fifties and it’s the difference between retiring early and rich or late and poor.
I have a private pension. It’s not a lot with my current salary and an input of 3 + 5%, but at least I will be able to afford a Zimmer frame with a rear-view camera when reversing.
I’m sorry, but if you came from one of the poorest countries in the world and work a low income job in the most expensive city in the UK, don’t expect any sympathy or bailouts when you come to retire.
I can see that some people don’t have money to put away. But for the good of future taxpayers it’s time to make it a requirement for anyone earning a living wage to contribute to a personal pension.
Well won’t they get a shock, when they find out the state pension is terrible.
I have no empathy for those that actively choose to put themselves in poverty.
When I started my current job in 2011 I was auto enrolled into the scheme for just a month. I received a letter today letting me know how my £250 pension pot had been growing since. Unbelievably, my pension provider has actually managed to lose money so far, and it’s now worth £242, despite massive stock market gains, high interest rates etc. Why would I contribute to a scheme that is clearly so badly managed?
The serious damage of this is that we have pensioners with one of the highest median take home pay in Europe due to our hybrid system yet we can never have a serious discussion about things like the triple lock because there are a load of unfortunate/ irresponsible people who haven’t played the game. “But you can’t thrust them into poverty!”
I would advocate for a government backed optional provider anyone can sign up to, say if you don’t have an employer for any reason. Then it really would be “you had the chance, we don’t care you’re poor in old age.”
If you pay in through salary sacrifice you save NI as well, which is a huge saving from both your employer and yourself.
Not doing the auto-enrollment gets you money now at huge cost for your retirement. You are much better off putting that into your pension and getting a loan against it I imagine.
Well this is a by product of a non existent financial education in schools . What an absolute L to give your future self , learn about compound interest how to combat inflation with an optimal pension fund etc . saving and investing overtime having returns compound will transform your mentality and your future prospects 👍
Next time the minimum wage is due to go up put half of the increase in as an employer contribution to a workplace pension and make that workplace pension mandatory and independent of the employment so people port it with them when they change jobs but initially with zero employee contributions. Each year do the same split with the minimum wage increase until the employer contributions hit say 10% in 5-10 years time. Then re-assess and perhaps start adding mandatory employee contributions. When this new mandatory element to the workplace pension catches up to the current 3% employer obligation that should tag along.
Simultaneously do something like an increase to self employed NI contributions and divert that increase to an equivalent to a workplace pension.
Employers will award lower annual salary increases
while this process pushes up to the 10% level and people will complain up suppression of wages (but I suspect the scheme itself will also suppress demand-led inflation (ceteris paribus)) but in 30 years time we can start winding down the state pension (hopefully before it’s bankrupted the country). Government has to play the long game on pensions and ignore the electoral cycle.
I kinda think there are some who this will work for if they are able to manage their cash effectively and stay diligent. But for some (including me) I just can’t do financing well so I prefer to pay into my pension. Good luck to those who choose to take a proactive approach to their retirement funds.
Maybe I’m in the minority, but surely the state pension should be liveable?
So, rather than worry about people’s private pensions, fix the state pension. Do whatever is required (tax etc) to make sure it is funded well enough that people have a liveable pension. Private pensions should always be something you add on to make your retirement more comfortable. Poor people deserve to be able to afford to retire as well.