Sunday, January 27, 2008

24% of adults hoping to retire by 62 have no pension provision

24% of Brits who hope to retire by 62 have no pension provision

Research from Baring Asset Management (Barings) reveals that on average, Brits expect to be retired by the time they are 62. However, the research found that of those adults yet to retire 24% (9.03 million adults) have made no pension provision at all. The findings highlight the fact that millions of Brits are failing to seriously plan for their retirement...

Posted by converted lurker @ 03:44 PM (1138 views)
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20 thoughts on “24% of adults hoping to retire by 62 have no pension provision

  • Who Stole My Pension? says:

    I wonder what the result would be if we sliced the cake differently. For example public sector versus private sector? I expect the result would be nearly 100% of the public sector intend to retire before 60, while only 30% of the private sector plan to. This is a big gap. I am not getting at the public sector (other than MP’s pensions!) but the problem is that the public sector have expectations that the government cannot meet e.g. the NHS pension scheme has a black hole of 61billion quid.

    For more info on the NHS pension black hole see http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/02/28/nhosi28.xml and for public sector in general see http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/01/22/ccliam22.xml

    The public sector black hole is estimated at 700billion quid and if is all of the governments books as “public sector pensions are generally “unfunded”, that is to say, they are financed by current Government receipts” and thus are not seen as a liability – how nice!

    The crunch will come when all these public sector workers try to retire and the goverment cannot meet the pension contributions and thus the government goes bankrupt!! This situation is getting worse by the day as public sector pension are indexed linked, and inflation is going up, so the government needs to contribute more. But guess what they are broke! Pensions are in just a big a mess as the banking industry e.g. for SIV read “unfunded”!

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  • We truly live in fantasy island, a large proportion of the working people in this country are well and truly financially shafted when it comes to a nice retirement.

    The amount of cash that needs to be stashed away in a money purchase pension scheme to provide a decent pension when you consider both the annuity rates of today and the future is absolutely eye watering.

    Nice car, nice holidays, nice house, nice pension; well you can’t have it all, well at least most of us can’t!

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  • japanese uncle says:

    Except for those financial wizkids and property charlatans who snatched enough money from their clients and public, 95% of the population will have to work until they drop. Having said that, many of those greedy charlatans may well have invested their own money (including borrowed money) in their respective area of speculation, ie shares or properties, etc. In such case they might end up bankrupt as well.

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  • who stole my pension? says:

    Here are two articles that explain the state of the public sector pensions:-

    * http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/01/22/ccliam22.xml 700billion black hole if public pensions!
    * http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/02/28/nhosi28.xml 61billion black hole in NHS pension!

    I wrote a longer article, on comparing the public sector and the private sector pensions but it vanished when I saved it. Anyway the two articles above will give you some food for thought.

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  • I happen to be a pretty good pension sheme but cannot help wondering if it will be able to pay out (final salary) if/when I get to retirement age. The fact is that we are living longer but our pension schemes were designed in a time when we lived shorter lives.

    @japanese uncle

    If I do the sensible things and pay substantial amounts into the company scheme then am I not keeping the “financial wizkids” in the money. Short of managing my own pension investments, how can I avoid being ripped off?

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  • who stole my pension? says:

    If you put more money in to a company pension scheme then you need to make sure that you do not leave the company before you retire. From April next year Gordon has changed the rules for people moving jobs. In the past the old company could index your frozen pension up to inflation – now Crash Gordon has put a 2% limit to the index. With inflation rising ………….. no pension in 20 years! I don’t know why Crash Gordon did this stupid change.

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  • japanese uncle says:

    quiet guy

    No they were prefectly aware that longevity was getting longer. Pension is wholly fraud. But unfortunately you can do nothing, except you reduce your contribution to the scheme. It’s an irrational world. Financial wizkids are protected vicous parasites.

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  • it_is_going_with_a_bang says:

    That would be Gordon telling everyone that inflation is 2%. He thinks if he says it to enough people then it will be forever.
    I am totally unimpressed with MP’s keeping their pay below 2%, because I know full well they will next year or the one after have a bumper 7% increase because of some yet unknown really good reason.
    One of my friends just retired and got a 20k lump sum. It should have been 45k. But the portfolio in his fund was a load of rubbish. For 28 years he paid from £150 to £200 a month into it.
    Ontop of 20k he gets about £350 a month. Had he just put the money in the Bank he probably would have got more.

    Even my pension fund when I last looked at it was rubbish in value. I could have got more from a high interest account at the Bank.

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  • @wsmp. “From April next year Gordon has changed the rules for people moving jobs…”

    I assume GB hasn’t considered the possibility he may not keep his seat at the next election. 🙂

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  • Funny you should say that, I came to the same conclusion myself the last time I looked at mine, the conclusion I came to was that if you can get 4% on a normal savings account it would be even stevens. As I have said before the only thing that works in favour of private pensions is the tax relief!

    As for who stole my pensions comment about the 2% cap, is it worth pulling the money out of a company scheme when you leave and moving it into a private one you can better manage yourself?

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  • enuii.
    I thought if you pulled money out of a company scheme you forfeit your employer’s part of the contribution. Or have I got that wrong?

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  • Sue. Only if you leave within the first 2 years.

    Multiple pensions is an occupational hazard in engineering in this country due to the ups and downs of it, over the last 20 years or so there have been more downs as the entire sector has contracted alongside manufacturing.

    The biggest thing I dread is the thought of managing 10+ pension schemes when I’m old ‘n’ doddery, not somewhere I intend to go!

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  • enuii.
    I’ve probably got this wrong as well, but I also thought you could transfer your pension to your next employer’s scheme, or is that only applicable if you work for local councils.

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  • who stole my pension? says:

    Su,
    You can transfer your company pension scheme to your new employer. I am not sure of the exact terminology to use. You will need to ask for a pension valuation from your old employer and then give this to your new employer. You need to be carefull here, you may still only be able to ask for one valuation per year and it is only valid for a short period of time. Before you do anything I would speak to your new employer. I suspect changing public sector employers (local councils) may be easier as they may all be in one big pension sheme.

    Once you get a valuation please don’t commit suicide!

    You can also get more advice here http://www.pensionsadvisoryservice.org.uk/

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  • who stole my pension? says:

    it_is_going_with_a_bang

    1) I am totally unimpressed with MP’s keeping their pay below 2%, because I know full well they will next year or the one after have a bumper 7% increase because of some yet unknown really good reason. The MP’s will only charge more in expenses to make up for the “low” pay rise.

    2) I have a Standard Life pension and they claim 40% tax relief, but when I get my statement I also realise I could get more in a deposit account. I wrote to SL about this and they just say charges eat it away, Gordon stealth tax etc and that I shouldn’t look at what I put in from my bank account against what the SL statement says. I think they spent my pension on their big fancy new office! How else can they get a 40% head start a only achieve 4% overall!

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  • @wsmp – is you money in Std Life With profit pension fund?

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  • who stole my pension? says:

    Jack,

    Part in with profits (50%) the other is in various funds such as European, Far East etc. Not sure that with profits is a good idea – I can never work out what is really going on – you get statements from SL such as “holding some back for the lean years”. With profits seem to depend on trust and I don’t trust SL anymore.

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  • I rate Standard Life that badly that I removed one on my pensions from their care, took 12 months to complete the process though.

    Strangely enough an old chap I briefly worked with 10 years ago was of the same opinion back then!

    I dread to think what would happen if one of these beastly companies went the way of Northern Rock et al.

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  • @wsmp – The basic idea of with profits is “smoothed returns” ie the Insurance Company holds back part of the returns on the fund in the good years so that they can pay bonuses in the lean years – thats the theory but in practice recently this has not been the case – the big criticism of WP funds is the total lack of transparency – most finance professionals now believe With Profits do not have a viable future.

    I dont want to be seen as providing advice with this post but you might want to consider a better mix for your overall pension contributions (if you get my meaning)

    Hope this info helps.

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  • The solution is to have a portable Pension where you can choose the funds and change them as the conditions require e.g. any sane person would have most of there money in energy and commodity funds now, given that most mixed share funds will lose money, to inflation, in a recession/depression environment. You need to regularly check the performance and choice of funds, don’t expect the same funds to be viable for decades, some could go pear shaped pretty quickly!

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