Monday, March 24, 2008

Nearly 10 per cent of workers expect to pause, reduce or even stop paying into pensions this year.

http://www.express.co.uk/posts/view/39023/Pensions-crisis-as-families-struggle

BRITONS face a £20billion pension black hole – because they are ditching savings plans in a desperate attempt to meet the soaring cost of living, it emerges today.

Posted by sold 2 rent 1 @ 09:40 AM (1140 views)
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9 thoughts on “Nearly 10 per cent of workers expect to pause, reduce or even stop paying into pensions this year.

  • Saw this on the Front Page of the D.E. this morning in the Newsagents for all to see. Quite a reality check for this Newspaper in comparison to its normal Property Bull reporting. It’s interesting to note thate it doesn’t mention mortgage payments in the headline and prefers to use the term ‘cost of living’.

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  • Just read this bit “For a 30-year-old worker on an average £25,000 salary, stopping pension contributions of £100 a month – five per cent of their salary – for just this coming year would lose £16,000 by the time they come to retirement age, according to investment management firm Brewin Dolphin, which carried out the research.”

    The figure is for a 1/3 employee contribution, 2/3 employer i.e. £3600 total over 30 years at 5% growth p.a. totaling 15480 after this period.

    This figure although it doesnt say it is for someone in a company scheme if it was a private money purchase scheme where you are able to stop paying for £1200 contribution over 30 years that would equate to 1200×1.22 (tax relief) = 1464 x 4.32 (30 years at 5%) = £6327.

    Take todays annuity rate of 32.8 would give a loss of pension for our private contributor of £193 per year and £487 per year for our Daily Express £25K Employee.

    Other than the tax relief private pensions as they currently exist in the U.K. are no better than a decent high street bank savings account with the rub of being forced to buy an annuity fixed at time of purchase entirely at the mercy of the prevailing stock market values.

    The Pensions debarcle is a scandal of even bigger proportions than UK House Prices and one that most sheeple will quite happily forget about until it is to late, much to the current governments advantage due to their expense. If everyone saved the requisite amount for their retirement the miracle economy would be shown for what it is, a sham.

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  • new user 2007 says:

    How long did the government believe its objective of pushing up house prices could continue before the system collapsed? I say it was policy as Darling admitted his idea of a stable market was rising prices, even now.

    More importantly, they could have taxed BTL to prevent so much money coming into the housing market to begin with and so preventing this spiral. Or even just removing the 1996 law that started all of this.

    Now people are beginning to realise that Net Assets and not Assets is what counts. All content having high priced houses that can fall, not realising the debt is fixed, particularly in this low inflation era.

    So now it is pay back time and this is the result. I am sure many who can barely afford the interest rate payments are relying on the difference between the debt and equity in 25 years to fund retirement…

    that only works if they plan on living on the streets.

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  • We’re all going to have to work longer, the sooner people get used to the idea the better. Headlines like this could be part of a cynical government ploy: you announce a £500bn black hole, then a few weeks later you say it’s ok, the black hole is only £100bn. That way you cleverly disguise the still huge £100bn black hole.

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  • sold 2 rent 1 says:

    If stocks are heading for an 80pc fall in REAL terms by 2012 then the situation is even more dire.

    We could be the new third world……unless a moment of singularity is reached… and everyhting s changes from the past. Lets hope so.

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  • The Express, with its relentless policy of running extremely bullish front page stories about the health of the property market (“Property Prices to Triple in Next Two Years Says Expert”) has played a key role in ramping up prices. Now its ill-informed readership, which has followed its advice to the letter and mortgaged themselves to the hilt, is buckling under the weight of all that unsustainable debt. Well boo hoo.

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  • The Express also likes screaming about high inflation, without seeing any contradiction in also screaming for rate cuts. Sadly, I suspect, neither do a lot of its readership.

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  • Pelethar, the report was in the Express. It wasn’t necessarily about Express readers.
    Understand?

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  • Why bother saving for a pension anyway? You save some money, the government nicks it or devalues it.

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