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|>>|| No. 3840
The OFT have come out and said that many old (i.e. set up before 2001) pension schemes have high charges and offer savers poor value for money. They've also suggested a cap for auto-enrolment schemes, but it's going to be an almost meaningless gesture as you'd be very hard pressed to find a provider offering auto-enrolment terms with annual management charges greater than 1% anyway.
The pension scheme I'm in at work (contribution: 5% employer, 5% employee gross) has management charges of 0.6%, which I'm alright with as it's less than I'd get if I was investing in collectives through an ISA.
However, I've put the charges and contribution details into Invidion's pension calculator for an idea of what I'd get when I'm 65, 40 years from now, and if my salary increases in line with National Average Earnings and I took the 25% tax-free lump sum I'd be looking at a pension in today's terms of 27.5% of my current salary. If I wanted a pension that would be about two-thirds of what I'm earning now then I'll need to contribute, assuming the employer contribution stays at 5%, 15% gross (12% net) of my salary every year for the next four decades. This does depend on what annuity rates will be like then and I'd also be getting the State Pension, as long as they haven't upped the age you receive it to 80 by then.
If it wasn't for the tax relief and my employer matching my contributions then I doubt I'd bother and I'd look into other ways to support myself while I'm in retirement. What about you lads? What are your thoughts on pensions? In my opinion to have any form of decent retirement income you're at the mercy of your employer offering a good pension scheme.
|>>|| No. 6675
I wish I knew what that meant, as someone who made their first ever pension contribution last month.
|>>|| No. 6676
Basically, pension tax relief isn't really a relief. It's a deferral of income tax already paid as you're now not taking this income until you retire.
Just about everyone receives tax relief of 20% on their contributions, e.g. if you contribute £80 to a pension then tax relief grosses this up to £100 - the £20 is 20% of £100. If you're a higher or additional rate taxpayer then you can apply for further relief of 20/25% from HMRC, which is used to increase your basic rate band or change your tax code rather than increasing the amount going in the pension - a higher rate taxpayer still has £100 gross going in their pension, but they can eventually have the net cost to them reduced from £80 to £60.
It's relatively straightforward, although basic rate taxpayers benefit the least from this system. What the Tories are looking to do is either a) carry on with what Gideon wants to do and scrap tax relief altogether but make the income tax free (which is a bad idea and would solely be to save the government money) or b) introduce a new rate of tax relief, which isn't linked to income tax rates, of possibly 25-35%.
Hope that makes sense.
|>>|| No. 6696
• In a completely unsurprising turn of events, the amount of money lost to pension fraud has gone up since the pension freedoms were announced; from £5.4million in 2014 to £13.3million in 2015.
• Britain has for the first time slipped out of the top 10 in the Melbourne Mercer Global Pension Index, the world's most comprehensive comparison of global pension systems, largely down to the new State Pension which is going to be far less generous for most retirees.
• The WAPSI women have reached their crowdfunding target of £75k in six days. They are now to launch a legal challenge against the 1995 and 2011 State Pension age changes. Their ultimate aim is for all women born in the fifties to have their State Pension backdated to age 60.
|>>|| No. 6697
>They are now to launch a legal challenge against the 1995 and 2011 State Pension age changes.
Yes, I can imagine how distressing that must have been. I, for one, can't see how two decades could possibly be anywhere enough notice.
|>>|| No. 6698
They really need to close the loophole whereby people on unemployment benefits receive NI credits. It makes absolutely no sense that doleys are rewarded in old age the same way working people are.
|>>|| No. 6699
It really is ridiculous.
Between the 1940s and 2010 the State Pension age was 65 for men and 60 for women. Under the 1995 Pensions Act the State Pension for women was to rise from to 65 between 2010 and 2020.
The 2011 Pensions Act escalated this so it'd reach 65 by 2018 instead. It also brought forward the State Pension age reaching 66 to 2020. Men as well as women will have to wait longer to get their State Pension due to the 2011 Act - c. 2.3 million men and c. 2.6 million men are affected by the escalation to age 66. The maximum increase in time is 18 months, affecting c. 300,000 women and these women will have had nearly 8 year's notice (February 2011 to January 2019, when women born August 1954 would have reached State Pension age under the 1995 Act).
Their campaign is a load of bollocks.
Under the old State Pension system it was fine because of all the additional pension you could accrue on top of the basic amount, the new system got rid of this.
|>>|| No. 6738
The government may be preparing to increase the official state pension age to 70 for millions of people currently in their 20s, a former minister has claimed.
Steve Webb said documents produced by the Department for Work and Pensions suggested a “more aggressive” timetable on state pension age (SPA) increases than previously planned was being prepared.
This could affect tens of millions of workers aged under 55, and bring a pension age of 70 into the official timetable for the first time for people currently aged between 22 and 30, he added. The current official SPA for people in their 20s is 68, though under the existing schedule it could be expected to rise to 69.
|>>|| No. 6739
As someone in my early 30s I feel I need to jump on that BTL bandwagon as quick as possible if I am ever going to have a hope of retiring before Alzheimer's consumes my precious memories.
My work pension is linked to the retirement age and the stock market seems overinflated as my parent's generation (50-60s) panic and dump and spare cash into the FTSE in the vain hope of securing even a small regular dividend.
What other options do I have?
|>>|| No. 6740
Pose as a Syrian refugee and they'll give you a council house.
|>>|| No. 6741
>My work pension is linked to the retirement age
You can take your pension at any age from 55, although that's set to rise to being 10 years lower than the State Pension age so will be 56 from 2020, etc.
>the stock market seems overinflated as my parent's generation (50-60s) panic and dump and spare cash into the FTSE in the vain hope of securing even a small regular dividend.
Your pension will probably be invested in many things, not just the FTSE, such as overseas equities, commercial property, gilts and corporate bonds.
Besides, lots of people are putting off investing due to uncertainties over the likes of Brexit. That or doing stupid things like selling when the markets crashed immediately after the EU Referendum vote and reinvesting once the FTSE reached record highs, crystallising investment losses. Best thing that could happen to us from a retirement planning perspective would be for the markets to tank, so our regular contributions buy more units.
I know it shouldn't be encouraged, but the best thing to do is BTL. No other option gives you the option to borrow in order to acquire a relatively large capital asset where the loan repayments will be met by the rental income. It's effectively acquiring an asset for next to nothing. If I went to the bank and asked for £200k to invest in high yielding shares and corporate bonds, with the aim of the dividends and interest distributions meeting the loan repayment, they'd tell me to fuck off.
|>>|| No. 6742
> If I went to the bank and asked for £200k to invest in high yielding shares and corporate bonds, with the aim of the dividends and interest distributions meeting the loan repayment, they'd tell me to fuck off.
Its pretty risky. Every budget/statement there are new taxes/regulations aimed at landlords. The latest thing is agents fees to tenants being banned, making it easier for tenants to move around and so increasing competition amongst landlords, reducing rents and profits.
|>>|| No. 6743
>The latest thing is agents fees to tenants being banned, making it easier for tenants to move around and so increasing competition amongst landlords, reducing rents and profits.
Disgusting letting agent detected.
Fees for tenants created a perverse incentive, since (despite the bollocks spouted by lettings agents) their services are provided to the landlord, but the tenant ends up paying for it. If the landlord doesn't like the fee structure, they can let the property through another agent. If the tenant doesn't like the fee structure, they don't have a choice. They have to suck it up or do without. It's a sorry shame, as when I was looking for somewhere to live, I found a couple of decent flats in ideal locations, but the agents for all of them were known rogues.
This has already happened in Scotland, and the results were rent increases that were roughly in line with what you'd normally expect (rather than the massive hikes that were foretold), landlords switching to better agents now that they can see the whole picture, and a reduction in profits for some of the scummier agents.
|>>|| No. 6794
You do realise you're pretty much agreeing with him don't you?
|>>|| No. 6795
Welcome to .gs, where over half the arguments are over minor details between two people actually agreeing with each other on the whole.
|>>|| No. 6796
This place becomes a lot more enjoyable when you realise that there are some lads that are dying to argue over just about anything and the real winner is the one who doesn't give in to their pedantism.
|>>|| No. 6798
Well the important thing is that you've managed to find a way to feel ah fuck it I can't be arsed.
|>>|| No. 6836
It costs just £34 to get £100 added to pension savings
If like most people you earn over £11,000 (and under £43,000) you pay basic 20% rate tax on all income above that, meaning for every £50 you earn you only take home £34 due to tax AND national insurance.
Yet pension savings, come from PRE-TAX salary, so putting £50 a month in your pension only reduces your pay packet by £34 (£29 for higher 40% rate taxpayers). Plus as often employers will match the £50 you put in, to get a total of £100 a month added to your pension, it only costs you £34. Over a year at this level of saving you’d pay £410 but your pension will have £1,200 added to it. That’s unbeatable.
Hang on, lads. If pension contributions come from your pre-tax salary then what's the point in salary sacrifice? I thought it was to save NI? My understanding is that you pay tax and NI on it and then you get tax relief to reimburse you for the tax paid, otherwise you'd be getting tax relief on something you hadn't paid tax on in the first place so the whole point of salary sacrifice is to save on NI whilst your employer also benefits from paying less NI.
|>>|| No. 6837
> If pension contributions come from your pre-tax salary then what's the point in salary sacrifice?
Some employers schemes do it before tax, some after. Salary sacrifice just means you're in the former category.
|>>|| No. 6838
Does that mean, for most people who aren't using salary sacrifice, The Mirror are talking out their arse?
|>>|| No. 6839
The mechanism is different but the result is the same(ish). Think Gift Aid. When you contribute post-tax, your pension provider claims tax relief at 20% from HMRC. A gross contribution of £100 or a net contribution of £80 will result in £100 in your pension pot, before matching.
|>>|| No. 6855
>Former Chancellor George Osborne is to augment his lucrative private sector income by taking a role with the world's biggest asset manager.
>Sky News has learnt that Mr Osborne is joining the Blackrock Investment Institute as a senior adviser, his first such role since being sacked by Theresa May last summer. The new role will effectively reunite Mr Osborne with his former top economic adviser, Rupert Harrison, who took on a senior position with Blackrock last year.
>It was unclear on Friday how much Mr Osborne is to be paid for the role, but one source said it would be "at least" hundreds of thousands of pounds annually.
The chief architects of pensions freedoms are both in the employ of BlackRock, a fund manager who will certainly have benefited from an increase in the number of people staying invested in their pensions rather than using them to purchase an annuity instead
|>>|| No. 6990
Lads. I'm pretty sure the age of retirement will be raised in the 4 decades before I reach 70. I was thinking of opting out of my civil service pensions. I kind of need the little bit they deduct from me every month and I'm pretty sure I won't reach retirement age after the raise it again anyway. Is there any point anymore?
|>>|| No. 6992
>I was thinking of opting out of my civil service pensions.
I asked an expert about this very thing recently. Her actual words were "don't even think about it". Unless you're a fat, diseased neckbeard with no likelihood of procreating (and therefore at no risk of ever drawing upon the benefits) in which case go get some professional advice. Not least because the cash value of your pension pot is augmented by the employer contribution and if you cash it out right now you'll have to pay tax on the whole lot as if it was this year's income (why hello there, higher rate!). You're in the civil service, so your pay is already shite. If you somehow make it to pension age after a life working in the civil service, the pension you already have will be pretty much the only thing that's worth keeping it up for.
|>>|| No. 6994
>my civil service pensions
A) Anyone who has the chance to join a public sector defined benefit pension scheme and doesn't is almost certainly an idiot.
B) Are you aware you can retire before State Pension age?
|>>|| No. 6995
>B) Are you aware you can retire before State Pension age?
You can retire, but you can't take your civil service pension too early, and if you do you get a significant cut in benefit. For anyone who doesn't have historical rights, the "early" window is now pegged to your individual state pension age. It used to be you could get it at 55, but now it's a fixed number of years fixed to your personal state pension age - if it moves, then the earliest age at which you can take the pension moves with it.
|>>|| No. 6996
How do civil service pensions work? What makes them so great?
I get how private sector pensions work I just don't know the details on civil service ones.
|>>|| No. 6997
The short version: The benefits are based on what you earn rather than what you contribute, and once you take it they're uprated every year. Instead of putting money into a pot and getting an annuity, you earn a fractional entitlement (for final salary schemes) or some fraction of your annual pensionable pay (for career average schemes), and your pension is whatever it all adds up to at the end.
|>>|| No. 7067
>Six million men and women will have to wait a year longer than they expected to get their state pension, the government has announced.
>The rise in the pension age to 68 will now be phased in between 2037 and 2039, rather than from 2044 as was originally proposed. Those affected are currently between the ages of 39 and 47. The announcement was made in the Commons by the Secretary of State for Work and Pensions, David Gauke. He said the government had decided to accept the recommendations of the Cridland report, which proposed the change.
If you're under 40 you probably won't receive a State Pension until you're 70.
Remember, lads. Don't rely on the State, get funding your retirement now.
|>>|| No. 7069
Interest rates have very little to do with retirement planning, unless you're planning on getting a BTL mortgage.
Chances are you'll either be investing, primarily through a stocks & shares ISA or a money purchase pension, or you'll be in a defined benefits pension scheme if you're in the public sector.
|>>|| No. 7070
Shouldn't need one with the tax benefits. You don't just stick it in a bank account.
We are going to have to come to terms with the fact that the state pension can no longer be universal. I think compuslory pension savings will be in order soon.
|>>|| No. 7071
>I think compuslory pension savings will be in order soon.
I doubt it. So far they've been too scared to increase the contribution rates on workplace pensions for fear that employers will kick off at having to pay more and that loads of people will opt out because it's too unaffordable for them.
I think we're more likely to see a new type of social security benefit for those in their late 50s/60s for people below State Pension age but physically unable to keep working that's equivalent to pension credit. It's daft how someone can be on the dole all their life getting NI credits and then receive a full State Pension twice what they'd been getting in JSA.
|>>|| No. 7072
OBS_Disability benefits recipients_Fig_web.jpg
>I think we're more likely to see a new type of social security benefit for those in their late 50s/60s for people below State Pension age but physically unable to keep working that's equivalent to pension credit.
In a sense, we've already tried it. There was a staggering increase in Incapacity Benefit claims in the 80s and 90s, mainly from middle-aged men who had been made redundant from heavy industry. A lot of them did have genuine medical problems, but there was a tacit understanding that they were effectively being given an early retirement. They were too knackered for manual labour and too old to retrain for the few jobs available, so we just fudged the paperwork and signed them off sick. Most of them were signed off with depression or chronic back pain, diagnoses that are impossible to conclusively disprove.
By the peak in 1995, more than one in four men aged 60-64 were claiming Incapacity Benefit. Through a bit of administrative sleight-of-hand, two million long-term unemployed people disappeared from the statistics.
|>>|| No. 7073
>and that loads of people will opt out because it's too unaffordable for them.
|>>|| No. 7074
The pension system is a literal ponzi scheme that might blow up at any moment
|>>|| No. 7076
They'd still be unaffordable for many, especially bearing in mind they say the percentage you should be contributing to your pension is half your age plus a quarter of all salary increases.
What's getting a lot of coverage recently is a flexible State Pension age. The current State Pension age is 65 and the average male has a life expectancy of 21 years. If they have, say, a State Pension of £8,000 per annum that's £168,000 they'll be paid. If someone chooses to take it at age 60 instead then that £168,000 over 26 years is a reduced State Pension of £6,461 per annum.
It's not going to be enough to retire on, depending on their private provision, but could enable someone to cut down their hours or get a less stressful job.
Go on, lad. Explain how it is a literal Ponzi scheme.
|>>|| No. 7078
>unaffordable for many
Maybe the state pension shoudl subsidise it to an extent, but something's got to give. The universal state pensions days are limited.
|>>|| No. 7079
The wheels have been in motion with this for a number of years already.
Automatic enrolment into a company pension scheme has simply replaced the Additional State Pension/SERPS/State Second Pension which used to be on top of the basic State Pension. The only substantial difference is the onus has been shifted from the government to the individual.
People had the facility to opt out of the additional State Pensions, or it might have been compulsory as part of occupational pension scheme membership; those in final salary schemes would have an element of their pension known as guaranteed minimum pension and those in money purchase schemes would have DSS contracted out rebates paid in the following April. What the new State Pension has done, as a bit of an oversimplification, is move from having a basic amount with additional on top to having the additional amount already factored in with a deduction for periods of contracting out.
It's largely young people who will be hardest hit by this, as the additional pension they would have been able to accrue would almost certainly be considerably greater than the maximum available under the new system. However most people don't understand pensions and have little interest in doing so and the government have used levels of obfuscation about the new State Pension that even the most unscrupulous pension providers and financial advisers would think twice about so have been able to get away with greatly weakening the State Pension for future generations. Those close to State Pension age at the time were barely affected by this, in part due to being more likely to be contracted out at some point, so were unlikely to kick up a fuss whereas young people were unable to contract out so had the scope for accruing much higher additional pensions that has now effectively been capped.
|>>|| No. 7080
>Go on, lad. Explain how it is a literal Ponzi scheme.
A Ponzi scheme is one where the returns are paid from deposits. The State Pension is paid out from the same pot that taxpayers pay into. Of course, that it's technically true doesn't mean "pensions are a Ponzi scheme" isn't an utterly dumb thing to say.
|>>|| No. 7184
Savers may face a fresh raid on pensions as the cost of tax relief passed £50 billion for the first time.
Figures published by HM Revenue & Customs show that the total cost to the Treasury of tax relief on pension contributions jumped by more than 10 per cent last year as a record number of people saved for their old age. The tax break is now so expensive that abolishing it would allow the government to wipe out the budget deficit at a stroke, or halve the basic rate of income tax to 10p in the pound.
The £5.3 billion increase in the cost last year adds to the pressure on public finances resulting from expensive spending commitments made at the Conservative Party conference and the deteriorating economic outlook.
A source close to the Treasury said: “The cost of tax relief is only headed in one direction at the moment. There is widespread recognition that the cost trend needs to be reversed.”
Tax relief lets higher-rate taxpayers put £1 into their pension for every 60p they contribute, but basic-rate payers have to contribute 80p. More than two thirds of the value of the break goes to people who earn more than £45,000 a year, leading to accusations that it subsidises the wealthy. Almost five million higher and top-rate taxpayers benefit, by an average of about £5,000 a year.
The figures, buried in an HMRC document published last week, show that the relief costs the Treasury almost 50 per cent more than it did ten years ago, and has more than doubled since 2000. The increase reflects the success of the government’s automatic enrolment programme, in which workers without pensions are signed up to company schemes. Last year an extra one million people started saving for their retirement through auto-enrolment.
However, many in the Treasury question whether such a generous tax break is sustainable, particularly as the bill is likely to jump higher again in six and then 18 months’ time, when the minimum contributions for auto-enrolment pensions increase.
George Osborne ditched the idea of radical reform last year when he was chancellor but senior figures in Mr Hammond’s Treasury are understood to view the system as costly, and unfair on people with lower incomes. There is also disquiet that at least 70 per cent of the cost goes to members of final-salary pension schemes, who are usually older workers who already have very comfortable pensions.
Another Budget where there's speculation they're changing pension tax relief. They should set it as a flat 33.33% and have done with it.
|>>|| No. 7221
Can someone please explain this to me? I don't understand it.
>Toys R Us UK is facing potential collapse this week with the loss of 3,500 jobs as it struggles to win the backing of the state-backed Pension Protection Fund (PPF) for a planned restructure.
>The PPF, the industry-funded, state-backed safety net, demanded that the troubled retailer pump about £9m into the ailing Toys R Us UK pension fund.
>This is in order to gain the PPF’s support for the retailer’s planned company voluntary arrangement (CVA) procedure, which involves the closure of at least 26 loss-making stores. That deal would lead to the loss of up to 800 jobs. The insolvency procedure automatically pushes Toys R Us’s pension fund into assessment by the PPF, giving it a key vote at the meeting and the potential to block the process.
>If the CVA does not go ahead, sources close to the company said it was likely to fall into administration with the potential closure of all 84 permanent stores and about 20 more pop-ups, putting all 3,500 UK staff at risk of redundancy.
>Toys R Us Holdings’ latest set of accounts filed at Companies House show a pension deficit of £18.4m in January, up from £10.25m a year before. But the deficit is higher under the PPF’s assessment and it is understood that the pensions lifeboat fears that pensioners and the fund will be left at risk without £9m in extra cash.
>However, it is understood Toys R Us’s UK business does not have the resources to meet that demand. The group’s US parent is also unable to lend its UK subsidiary the cash under the terms of its court-led bankruptcy protection. The parent company filed for Chapter 11, the US version of administration, in September after running up $5bn (£3.7bn) of debts.
As far as I can see, the PPF have two options:-
1. They let the company enter the CVA and close 26 stores with the loss of 800 jobs and the pension scheme enters the PPF.
2. They demand the £9million from Toys R Us, which they don't get on account of the business being seriously in the shit, refuse it enter the CVA and they force the entire company to collapse. The pension scheme enters the PPF anyway.
Why would they let the entire thing collapse and make thousands unemployed? Is it trying to play Billy Big Bollocks after the likes of BHS gave them the runaround?
|>>|| No. 7222
>Why would they let the entire thing collapse and make thousands unemployed? Is it trying to play Billy Big Bollocks after the likes of BHS gave them the runaround?
Well, it clearly isn't just the pension pot in the UK arm that is the problem, when the US parent has also filed for bankruptcy protection. The fundamentals are very poor for this business, I don't see how they survive.
|>>|| No. 7223
Going into administration is effectively a compulsory takeover of the management. The appointed administrators will have the task of representing the creditors of Toys R Us to achieve a maximum return on their liabilities. That might mean restructuring the company, it might mean selling it as a going concern or it might mean closing up shop and stripping the assets.
If the PPF think that the current management of Toys R Us are unable to turn the business around, then it's probably in everyone's best interests to force them into administration. The CVA might protect some jobs in the short term, but it might also just drag out the inevitable. If Toys R Us keep trading and incur further losses, then it's harder for the PPF to recover funds to close the pension deficit.
Defaults on corporate debt can cause secondary job losses. A large proportion of the debts of Toys R Us are credit lines from suppliers - everything from toy manufacturers and distributors to the people who tarmac their car parks. Poorly managed insolvency can have a domino effect on other companies. If I sell to Toys R Us and they aren't paying my invoices, I might be unable to pay my suppliers and so on. Trading while insolvent is a criminal offence for good reason.
|>>|| No. 7224
>The fundamentals are very poor for this business, I don't see how they survive.
They're one of those companies you're surprised have lasted as long as they have.
The stores are depressing and look no different inside than they did twenty years ago, which were already quite dated at the time. I was in one a few years back and was amazed they were still trying to sell VHS tapes, which were priced at around a tenner each.
|>>|| No. 7225
Yeah agreed - I visited one about ten years ago when I first became a dad, they had a surprisingly good range of baby gear (which is quite obvious when you think about it) but the shops were depressing and dated, even back then.
|>>|| No. 7226
>The British arm of Toys R Us faces being plunged into administration within the next 48 hours, risking the loss of up to 3,200 jobs, after the UK’s pension lifeboat fund indicated that it would block a restructuring proposal for the ailing business.
>The retailer has offered to pay about £1.6m, related to contributions due to the PPF by March, but has said it does not have the resources to pay the remaining £7.3m that has been demanded, according to people briefed on the talks.
>The PPF has suggested a solution whereby the US parent waives an annual royalty fee to use the Toys R Us name, worth about £9m a year. But the US parent has argued that it is unable to do so under the terms of its court-led bankruptcy process. Toys R Us filed for bankruptcy protection in the US and Canada in September after struggling to compete with online competitors. It has been forced to put in place a plan to restructure almost $5bn in long-term debts.
That's that, then. Toys R Us will collapse on Thursday. £584.5m in loans to the parent company written off, most likely extracted by private equity firms.
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