Generation Without Pension

[MerchantNavy]

I've put into my pension pot since 16. 

Speaking to the younger generation (30 and under), they have always opted out of pensions despite being auto enrolled. Upon querying, they are saving for a deposit towards first house!

Wondering if this is this widespread issue?

Edited April 23 by MerchantNavy

[Orb]

I opted out. My reasons were many, but include:

• I have a feeling future state pensions will be phased out, and will be means tested against those with private pensions. Only people with no private pensions will get state pensions. It's my cynical opinion this is why auto-enrolled pensions were implemented. 
• Robert Maxwell, and those of his ilk (basically I don't trust pension companies).
• I probably won't live to that age anyway, due to my lifestyle.
• If I do live to that age, the state pension will be enough, as I'm very frugal. Both my parents do well from state pension. My mum even builds some savings from it. 

And there's a few other reasons which I don't want to go into here. 

[scottbeard]

Working in the pensions industry I can't help but respond to this:

57 minutes ago, MerchantNavy said:

Speaking to the younger generation (30 and under), they have always opted out of pensions despite being auto enrolled. Upon querying, they are saving for a deposit towards first house!

Wondering if this is this widespread issue?

I fear that there are a lot of opters-out for that reason.  I do wonder whether opting out will continue to be allowed - after all, you can't "opt out" of the state pension and as we discuss below that may be the future of auto enrolment.

42 minutes ago, Orb said:

• I have a feeling future state pensions will be phased out, and will be means tested against those with private pensions. Only people with no private pensions will get state pensions. It's my cynical opinion this is why auto-enrolled pensions were implemented. 

This is possible, but if so would in my view have to happen very much gradually.  When you see the rumpus over the WASPI women I simply cannot see a government saying "right that's it, from day X onwards the state pension becomes 100% means tested overnight".   More likely it would be a gradual shift, with the state pension being part-means-tested and part paid to all (like the old Jobseekers allowance had a contributions based and income based element) with the contributions based element slowly being allowed to dwindle in real value, perhaps by being frozen in nominal terms.

42 minutes ago, Orb said:

• Robert Maxwell, and those of his ilk (basically I don't trust pension companies).

Robert Maxwell raided his own company DB pension fund - he didn't run a pension company.  It's a very isolated example of fraud.  This to me is like not flying because some planes crash.  I can't tell you your plane won't crash; I can tell you that plane crashes are very rare, and that whatever alternative you use is not risk free either.

42 minutes ago, Orb said:

• I probably won't live to that age anyway, due to my lifestyle.

This could well be true, and only you know.  

42 minutes ago, Orb said:

• If I do live to that age, the state pension will be enough, as I'm very frugal. Both my parents do well from state pension. My mum even builds some savings from it. 

I would feel very nervous if I held the two views you stated that "the state pension will be phased out" and "the state pension will be enough".

[Bruce Banner]

I would have opted out of the state pension and the NHS nearly sixty years ago, but it wasn't allowed, even though I was paying for private medical insurance and pension for most of my working life.

I would have been better off now had I been allowed to opt out and no one would have been calling me a parasite for drawing the state pension that I paid into for over forty years.

[Orb]

2 minutes ago, scottbeard said:

I would feel very nervous if I held the two views you stated that "the state pension will be phased out" and "the state pension will be enough".

I meant phased out for those who have other private means. Those without a pot to pee in will still receive it - much like the two tier society we currently have regarding workers and welfare recipients.

Regarding Maxwell.... I've been reading the back pages of Private Eye for 20+ years. The dodgy shenanigans that go on in finance have always left me feeling distrustful. No specific examples spring immediately to mind, but I've read of plenty of cases over the years which have formed, and soured my view. Maybe it's irrational of me, but ultimately we're all trying to balance our cognitive dissonance about the world. I feel much more comfortable not paying into a private pension. 

Plus, I've got more money for a deposit, innit. 

[Social Justice League]

UBI will be the 'fix' imo.

[winkie]

Very many have a private pension, but £250 pm won't pay any bills.

[scottbeard]

1 hour ago, Orb said:

I meant phased out for those who have other private means. Those without a pot to pee in will still receive it - much like the two tier society we currently have regarding workers and welfare recipients.

Indeed - but what amount and from what age?  You are totally at the mercy of the government of the day if you have no no private retirement savings.

1 hour ago, Orb said:

Regarding Maxwell.... I've been reading the back pages of Private Eye for 20+ years. The dodgy shenanigans that go on in finance have always left me feeling distrustful.

I'll say it again - Maxwell didn't work in finance: he was a newspaper owner who stole money.  Thieves steal money from anywhere they can get it, and that doesn't mean that the places they steal it from are dodgy.  

In your mind you are mixing everything relating to money together as "finance" in your mind and treating it all the same, and then it seems using Private Eye to inform financial decisions.  

(Incidentally, the members of Maxwell's pension scheme ended up with about half what they were promised - but bearing in mind the amount of pension funded by the employer and the favourable tax treatment of pensions I wouldn't be surprised if they still had more more left having had half their pension stolen than if they had never joined the pension scheme and just put the money post-tax in the bank instead, just following the logic that 25% of pension money is tax free  lump sum and generally 50-75% of pension paid for by the employer).

[Chunketh]

2 hours ago, Orb said:

I opted out. My reasons were many, but include:

• I have a feeling future state pensions will be phased out, and will be means tested against those with private pensions. Only people with no private pensions will get state pensions. It's my cynical opinion this is why auto-enrolled pensions were implemented. 
• Robert Maxwell, and those of his ilk (basically I don't trust pension companies).
• I probably won't live to that age anyway, due to my lifestyle.
• If I do live to that age, the state pension will be enough, as I'm very frugal. Both my parents do well from state pension. My mum even builds some savings from it. 

And there's a few other reasons which I don't want to go into here. 

Nowt wrong with that. If you can manage on the state pension then thats good enough!

Personally, I dont factor it into my retirement calculations. If its there then brilliant, I have a fair chunk more cash. If not...so be it, I got ripped off to pay for the triple lock.

The only thing that would concern me if I were as frugal as you would be the movement of the age you can draw it and any desire to retire a bit earlier should the need arise.

[Chunketh]

1 hour ago, scottbeard said:

I fear that there are a lot of opters-out for that reason.  I do wonder whether opting out will continue to be allowed - after all, you can't "opt out" of the state pension and as we discuss below that may be the future of auto enrolment.

2 hours ago, Orb said:

It is short sighted though. You lose the tax break and the employers contribution 😕 Id advocate paying the minimum possible to achieve the maximum employer match.

[scottbeard]

5 minutes ago, Chunketh said:

It is short sighted though. You lose the tax break and the employers contribution 😕 Id advocate paying the minimum possible to achieve the maximum employer match.

Probably you're correct.  However, especially if you are a very low earner, there is also a risk that it just eats into means-tested benefits (one of the reasons I don't like them is it dissuades people from doing the best thing).

[Chunketh]

7 minutes ago, scottbeard said:

Probably you're correct.  However, especially if you are a very low earner, there is also a risk that it just eats into means-tested benefits (one of the reasons I don't like them is it dissuades people from doing the best thing).

Quite. Not to mention that at that end of the pay scale, employer matching tends to be to the letter of the law and not generous at all.

I've had colleagues that opt out when the employer pays in 10% for you paying in 5%. You have to be either very desperate for cash or very stupid not to bite their hands off with that kind of generosity. 

 

EDIT:

I'd also add that I moved from an employer matching 10%/10% to one matching 5%/6% a few years back. They gave me a very large raise to take the position, so I upped my contribution to compensate.

Still pisses me off that I dont get that sweet 10% matching loving, even with the extra salary 😕

 

Edited April 23 by Chunketh

[Trampa501]

Quote

If I do live to that age, the state pension will be enough, as I'm very frugal. 

If you're living in a paid-for house, or even low-rent social housing, I'd tend to agree. Some won't, as they will insist on expensive travel-the-world holidays, or expensive dining out etc. But I've found that appetites decrease as you age. One drink is often enough and the days of drinking 5 beers or glasses of wine are over. Not to mention the desire to get to sleep earlier. 

[Big Orange]

The UK's pension aggreement already effectively blew itself up quietly for the under 50s or 60s, we're inevitably going to live with the consequences and solution in the next 25 to 50 years....

Edited April 23 by Big Orange

[Orb]

19 minutes ago, Trampa501 said:

If you're living in a paid-for house

That's my plan, and very do-able. 

There is a plan to retire earlier than state pension age too. 

[Pmax2020]

If you’re in the 40% income tax bracket then it’s madness not channelling a little extra into your workplace pension, if you are allowed to do so.

Particularly as you get older and access to that pot of money it’s on the horizon. 

[TheChangeIsCast]

I prioritised becoming debt (including mortgage) fee before the age of 30, at the expense of pension contributions. I'd make the same choice again. My reasoning was that becoming debt and mortgage free at a young age brings immediate benefits to enjoy whilst young and in full health, and that's certainly been the case. I'm playing catch up on the pension front a bit now of course (I'm now 40), but I still moderate how much I put in, because again, I'd rather enjoy my money whilst I'm young and healthy. I've worked with too many people over the years who die a year or two after retiring, and that thought is grim, wasting your whole life just to live a good life during your last few years. So it's all about a delicate balance for me, and I'm lucky I can afford to make pension contributions and still live a good life. If I earned less money and could only afford to either live a good life, or pension, I'd live a good life whilst young, and be prepared to be poor when I was old.

Health is wealth and all that.

[regprentice]

2 hours ago, Social Justice League said:

UBI will be the 'fix' imo.

IIRC the state pension gad been seriously proposed and discussed for around 35 years prior to being passed into law in 1909. I think UBI will be the same and the generation being discussed in this thread might be unlucky and miss out.

[winkie]

Not a generation without a pension a generation without a pension that will pay living and expenses bills..... huge inequality, gap extending.....we love it......the haves and the have nots...

having not, makes the haves have more......

[The Angry Capitalist]

I agree with much what Orb said.

Never interested me to invest in a pension since I was 16 when I started working.

Do not trust the financial system and the government keeps moving the goalposts.

Furthermore, would rather take responsibility for my own financial decisions rather than put trust in someone I don't know.

That way if things don't work out I can't blame anyone but myself.

Also, nothing is guaranteed in life.

Everything is risk.

I lso have a big problem with government encouraging pensions and the language they use.

The tell things in a way that indicates investing in a pension will more than likely give good returns.

There is only 2 ways they can keep their promises.

Inflate the currency or keep raising the retirement age or most likely both.

Unsustainable, irresponsible and in essence a gonzo scheme.

It constantly needs more and more young workers to pay for the increased numbers of retirees.

They will be doing what they can behind the scenes to reduce the average lifespan to ensure people die younger.

You will have to use your own imagination to think about that.

Midozolam and vaccines come to my mind.

GMO food too.

Food for thought for those of you who think governments and the ruling class have our well being in mind.

 

[TenYearToGetMyMoneyBack]

Too many good post to comment on individually but IMHO but by 2060 the state pension age will probably about 70. That is actually a form of means testing "you want to retire before then. Fund it yourself".

Unfortunately our DB scheme closed at the end of the tax year. They have improved the DC scheme (which is open to all employees and has lots of tiers) to 15% from the company if you pay in 8%. Just 1% will get you in the scheme with the company paying in 2% and giving you the same life insurance as everyone else. Perhaps their claim that it is class leading has some truth. 

In the 1990s there was a good advert from someone like Legal and General titled "The difference between starting a pension late and not at all with pictures of a run down house and a well maintained one with a BL Metro on the drive.

I am 100% with @scottbeard about the tax and NI aspects. In Feb and March I paid more into my AVC than I took home. A former colleague said he was surprised I have never paid higher rate tax. That is all down to careful planning. 

[fellow]

I bet there are lots of people opting out of pension contributions to help pay their increased mortgage costs. Ironically this means less pension money to invest in government bonds, putting upward pressure on yields.

[winkie]

 

[clarkey]

1 hour ago, TheChangeIsCast said:

I prioritised becoming debt (including mortgage) fee before the age of 30, at the expense of pension contributions. I'd make the same choice again. My reasoning was that becoming debt and mortgage free at a young age brings immediate benefits to enjoy whilst young and in full health, and that's certainly been the case. I'm playing catch up on the pension front a bit now of course (I'm now 40), but I still moderate how much I put in, because again, I'd rather enjoy my money whilst I'm young and healthy. I've worked with too many people over the years who die a year or two after retiring, and that thought is grim, wasting your whole life just to live a good life during your last few years. So it's all about a delicate balance for me, and I'm lucky I can afford to make pension contributions and still live a good life. If I earned less money and could only afford to either live a good life, or pension, I'd live a good life whilst young, and be prepared to be poor when I was old.

Health is wealth and all that.

Getting that mortgage done early is great but would mean you have to pay it out of already taxed salary . You can max the pension to avoid the 40% tax then take a lump sum at  55 or  whatever clearing the mortgage

[Chunketh]

8 minutes ago, winkie said:

 

I do love that video. I sometimes wonder if I could do that in the Trafford centre, the place where spacial awareness leaves the average punter, and they wander about like mongs, getting under everyone's feet.