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Retire When You Want, You'll Get Nothing Anyway


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As a historical note, when I started my first job at what was then a state owned company in 1983 I remember sitting through a pension presentation at the age of 18 and having to choose a retiremement age. The choice was 60 or 65, if you chose 60 it would cost you 50p a week from your wages, equivalent to the price of a pint, this was too much for many but the thought of doing an extra five years was too much for me so I sacraficed the pint.

How times have changed, that was a 40ths scheme to 50% of final salary, how I treasure my frozen 15/40ths now when I see how much I have to shovel in now.

Just remember who is stealing your retirement.

I worked for a company in the 70s that ran a compulsory pension scheme with 50% paid by the company and 50% by the employee. Fortunately, I was only there for three years as the company has been taken over many times since then and no one will take responsibility for the pension scheme. The government/DSS keep telling me they'll track it down but they never do.

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As a historical note, when I started my first job at what was then a state owned company in 1983 I remember sitting through a pension presentation at the age of 18 and having to choose a retiremement age. The choice was 60 or 65, if you chose 60 it would cost you 50p a week from your wages, equivalent to the price of a pint, this was too much for many but the thought of doing an extra five years was too much for me so I sacraficed the pint.

How times have changed, that was a 40ths scheme to 50% of final salary, how I treasure my frozen 15/40ths now when I see how much I have to shovel in now.

Just remember who is stealing your retirement.

I worked for a private company (UK branch of US multinational) from 1988. We had a defined benefit (DB) scheme. In the mid 90s the management introduced a define contribution (DC) scheme. New hires could only take the DC scheme, existing employees could choose to switch or not. I was ignorant then (and now) but I assumed that the new one had to be worse as new hires couldnt choose the old one :) 99% of my peers stuck with DB, a couple switched and regretted it. I dont blame the management really, the old scheme (and even before Gordon Brown, remember) was very expensive and an open-ended commitment. employee DB contributions kept rising but I didnt complain, it was a great benefit.

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Indeed. Indicates just how valuable state pension is. Most people (couples) will never save anywere near £400k.

If government said "Instead of paying retired couples £10,000 p.a. in basic state pension we will give them £400,000 at retirement" I suspect the reaction would be very different & nobody would say "keep it, its not worth having"

+1

When calculating the Lifetime Allowance for a company final salary pension, the Inland Revenue multiplies the annual pension by twenty. Which hugely understates the true value of a final salary pension, it would be more accurate to multiply the annual pension by forty, fifty or even sixty depending on the exact terms of the benefit.

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I worked for a private company (UK branch of US multinational) from 1988. We had a defined benefit (DB) scheme. In the mid 90s the management introduced a define contribution (DC) scheme. New hires could only take the DC scheme, existing employees could choose to switch or not. I was ignorant then (and now) but I assumed that the new one had to be worse as new hires couldnt choose the old one :) 99% of my peers stuck with DB, a couple switched and regretted it. I dont blame the management really, the old scheme (and even before Gordon Brown, remember) was very expensive and an open-ended commitment. employee DB contributions kept rising but I didnt complain, it was a great benefit.

A lot DB pensions were very good - for the employee.

I tend to avoid companies with large pension deficits. All my work will be sucked in to pay the pension, which I won't get.

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Yeah. OAP spend drops like a brick post-75.

Telly - which is free. Biscuits. Cat food. Tins of fish. Wethers toffees.

....spend on different things......cleaners, gardeners, taxis, eyes, teeth, and you never know more and more on health? ;)

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pension credit is paid if you have no other income - at £155 a week (or £240 for a couple) even if you have paid NOTHING into the system (not to mention the freebies that come with it) so it is not fair to say anyone will get zero income when they retire.

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pension credit is paid if you have no other income - at £155 a week (or £240 for a couple) even if you have paid NOTHING into the system (not to mention the freebies that come with it) so it is not fair to say anyone will get zero income when they retire.

Zero pension...

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I remember on a pension course I did some time ago being instructed that the state retirement pension was introduced for men at age 65 as the average age for a man dying was 66 so it would give him 1 year to get his affairs in order before popping his clogs.

:)

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I remember on a pension course I did some time ago being instructed that the state retirement pension was introduced for men at age 65 as the average age for a man dying was 66 so it would give him 1 year to get his affairs in order before popping his clogs.

:)

Life expectancy has increased... ;)

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02

Indeed. Indicates just how valuable state pension is. Most people (couples) will never save anywere near 05400k.

02

If government said "Instead of paying retired couples 0510,000 p.a. in basic state pension we will give them 05400,000 at retirement" I suspect the reaction would be very different & nobody would say "keep it, its not worth having"

02

In fact, thats possibly the logical extension of Osbornes "pension freedoms" at some point. To give state pensioners the option to take a lump sum instead of an annual state pension and manage it themselves as he has done with private pensions. Effectively removing the liability (biggest chunk of "welfare") from the state & passing the risk to the punter and in the process generating oodles in fees for his mates in the city & bringing forward consumption & tax revenues.

why would govt give you a lump sum when it relies on inflation to dissolve its debts ? ie govt is expecting the present value of your pension stream to be far smaller than 400,000.

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I remember on a pension course I did some time ago being instructed that the state retirement pension was introduced for men at age 65 as the average age for a man dying was 66 so it would give him 1 year to get his affairs in order before popping his clogs.

:)

The average age of death may have been 66. But for men who reached the age of one, it was significantly higher. The bigger difference would be the number who were worn out from hard physical work by 65 or less.

The state pension as it originally was could probably have been sustainable. It just became socially required that pensioners get ever more. At the same time, ever more folks retiring from physically non-demanding jobs they could perfectly well do for another decade or more without hardship.

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