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>> No. 3840 Anonymous
19th September 2013
Thursday 10:03 pm
3840 Pensions
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.
Expand all images.
>> No. 3841 Anonymous
19th September 2013
Thursday 10:41 pm
3841 spacer

Did someone say pension....?
>> No. 3842 Anonymous
19th September 2013
Thursday 11:43 pm
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UK pensions are a waste of time. It's amazing how it varies abroad though. Value for money is far better elsewhere, sadly (for most the UK population being screwed daily).
>> No. 3843 Anonymous
20th September 2013
Friday 6:53 am
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What are they like abroad? More defined benefit schemes? I know BTL on the Graun a regular post in pension articles is that it's wonderful in the Netherlands and we are being ripped off by the greedy bankers over here.
>> No. 3858 Anonymous
24th September 2013
Tuesday 8:38 am
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To me, Auto Enrolment seems like an excuse to scale back the State Pension because more people will have their own personal pensions.

The flaw in this is that I expect many of these pension pots to be piddly amounts. If you didn't have access to a decent pension scheme already then it's likely they'll do the bare minimum of phased contributions of banded earnings. This means contributions only have to be based on earnings between £5,668 and £41,450, so a salary of £15k is now effectively £9,332. Total gross annual contributions (eventually 8%) would be under £750 and that's never going to be enough to provide a worthwhile retirement income.
>> No. 3859 Anonymous
24th September 2013
Tuesday 2:31 pm
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Breaking news, pensions are unsustainable
>> No. 3860 Anonymous
24th September 2013
Tuesday 6:15 pm
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That's probably not the right word to use, but I know what you're getting at. It's only an issue if you're not contributing enough, which is the problem for most people (unless they have other plans for retirement that aren't living in poverty or getting a part-time job in B&Q, like buy-to-let property) because they either can't afford to, they haven't even considered planning for when they retire or the pension scheme their employer offers is poor.

There's a huge gap between what people expect to be living on in retirement and what they're actually going to get - https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/239641/framework-analysis-future-pension-incomes.pdf
>> No. 3861 Anonymous
24th September 2013
Tuesday 9:42 pm
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No, the whole system is one giant ponzi scheme that is on the verge of toppling. QE has worsened the already dire situation.

If you are under 45 you will never see your pension.
>> No. 3862 Anonymous
24th September 2013
Tuesday 9:46 pm
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You do know how pension funds work, right? All QE has done is help push down annuity rates even lower.

You're going to need to explain yourself.
>> No. 3863 Anonymous
25th September 2013
Wednesday 12:51 am
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Correct. It's heading for the proverbial cliff.
>> No. 3864 Anonymous
25th September 2013
Wednesday 7:30 am
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How is it? Are you that lad from /emo/ that didn't understand pensions whatsoever but didn't let that stop him from spouting bollocks about zero sum trading and how you end up losing money because the charges are greater than the returns.
>> No. 3865 Anonymous
30th September 2013
Monday 10:18 pm
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>The government's plans for state pension reform mean many people, particularly lower earners, will receive reduced state pensions in future and private pension saving is meant to make up for a lower state pension – but these contribution levels are far from enough to replace this loss



I guess we're not going to get an explanation from >>3861 or >>3863 about why the pension system is a giant ponzi scheme that is about to collapse. There's several reasons not to save in a pension, especially for low earners, without having to make shite up.
>> No. 3866 Anonymous
30th September 2013
Monday 10:26 pm
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This. If you need a good reason not to put anything into a pension, hefty personal debt is a good place to start. No point building up that pot if it's not adding value. State pensions are arguably a Ponzi scheme (this year's pensioners are paid from last year's tax and NI take, not from their own contributions), but a private money-purchase scheme almost certainly isn't.
>> No. 3867 Anonymous
1st October 2013
Tuesday 6:10 pm
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>but a private money-purchase scheme almost certainly isn't.

Why not? The assets bought by these schemes cannot cover future liabilities and can fall in value.
>> No. 3868 Anonymous
1st October 2013
Tuesday 8:06 pm
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>Why not?
They're paying off retirees (or, more accurately, their annuity provider) with the proportionate share of their investment, not the money invested by new entrants.
>> No. 3869 Anonymous
1st October 2013
Tuesday 8:09 pm
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Lad. Please try harder next time.
>> No. 3870 Anonymous
1st October 2013
Tuesday 8:12 pm
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Not always. A look into the market should give most people vertigo once they start pulling the curtain back.
>> No. 3871 Anonymous
1st October 2013
Tuesday 8:15 pm
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Yes, we heard you the first time, lad.
>> No. 3872 Anonymous
1st October 2013
Tuesday 8:38 pm
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u wot m7
>> No. 3873 Anonymous
1st October 2013
Tuesday 8:44 pm
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Jump off, clifflad.
>> No. 3874 Anonymous
1st October 2013
Tuesday 8:47 pm
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u wot m7
>> No. 3875 Anonymous
1st October 2013
Tuesday 8:51 pm
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>> No. 3876 Anonymous
1st October 2013
Tuesday 9:07 pm
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I could be wrong, but aren't group money purchase schemes quite dated now? As far as I'm aware, they're occupational schemes that employers used in the 80's and 90's when they were switching from defined benefit (final/average salary) schemes to defined contribution schemes which still kept the trustee structure in place. These days new pension schemes are almost certain to be group personal pension plans. I don't know if this meant the trustees could choose what the scheme assets should be invested in or if that only applies to defined benefit schemes.

With group personal pension plans you're not going to end in a situation where assets cannot cover liabilities. This is in no small part down to the fact that there is no guarantee on what will be paid out at retirement and instead it is entirely dependent on how much is paid in, the performance of the funds invested in and annuity rates at the time.

My dad worked in a factory with a defined benefit scheme. He took early retirement at 58 with an annual pension of ~£20,000 that increases by 5% each year. The company have since closed the scheme to new members and replaced it with a defined contribution scheme. I know I'm never going to get anything like that when I retire.
>> No. 3877 Anonymous
1st October 2013
Tuesday 9:41 pm
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I hate to say it,lad, but theodds of you retiring are fucking slim.

I earn a decent five figure salary, but a lot ends up re-invested into new projects. I fully expect to not see a pension. Because I will likely be dead before any payout is likely. A window that moves back year by fucking year anyway.
>> No. 3878 Anonymous
1st October 2013
Tuesday 9:42 pm
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Shit. Apologies for typos, I have sausages cooking...
>> No. 3879 Anonymous
1st October 2013
Tuesday 9:53 pm
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Ever thought of re-investing it through a pension scheme? It's not uncommon for the directors of small/medium companies to create a SSAS (Small Self Administered Scheme) for the purpose of buying the company's land/property and then the company pays market-rate rent back to the scheme.

There's a number of things you can invest into with a SSAS or SIPP (Self Invested Personal Pension), so it may be worth looking into. If you're a higher-rate tax payer then pension contributions provide 40% tax relief (IIRC 20% is added to the net contribution and the other 20% is used to extend the basic-rate band).
>> No. 3880 Anonymous
1st October 2013
Tuesday 10:28 pm
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Oh christ we really never do change do we.
>> No. 3881 Anonymous
2nd October 2013
Wednesday 7:54 am
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This is correct, so I don't know why people have criticised it. With a defined contribution pot the annuity you receive (if/when you buy an annuity you should always search the market instead of accepting what is on offer from your existing pension provider(s), especially if you have health issues) will be underwritten based on your life expectancy and other factors like gilt yields. It's a payment for life in return for the lump sum you pay to them and there are strict regulations on what annuity providers can do with their pool of pension pots received to prevent solvency issues. For example, most of Just Retirement's assets under management are in bonds, gilts and cash and they also reinsure their liabilities.
>> No. 3883 Anonymous
4th October 2013
Friday 10:43 pm
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Apparently they're mad on Mumsnet that Auto-Enrolment means they'll have to pay pension contributions for nannies, gardeners and cleaners.

>> No. 3885 Anonymous
4th October 2013
Friday 11:05 pm
3885 Faily Wail


Now Mail weighs in with 'Now' headline
>> No. 3886 Anonymous
4th October 2013
Friday 11:08 pm
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Come the revolution...
>> No. 3887 Anonymous
4th October 2013
Friday 11:16 pm
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I predict that most of the comments will be about Gordon Brown raiding their pensions or how they were fucked over by Equitable Life.
>> No. 3892 Anonymous
10th October 2013
Thursday 8:39 am
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Cofunds have announced they're scrapping their £40 annual platform charge (although the reality is that they forgot to actually charge anyone for it since they implemented it in January).


This means that if you invest in collectives with them then your only charges are their 0.29% platform charge and fund charges (you could put together a decent portfolio with a TER of ~0.9% - I mentioned this on /pol/ previously >>/pol/50165). It's higher charges than in my pension and I wouldn't get the benefit of gross tax relief on contributions, but I'm going to look into squirreling away £100 or so per month into an ISA with them. This way I don't have to wait until I'm at least 55 until I can touch the money and there won't be limitations like having to buy an annuity/using drawdown. The only drawback is that I loathe Cofunds.
>> No. 3893 Anonymous
23rd October 2013
Wednesday 8:12 am
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They've just had a pensions expert on BBC Breakfast, because Scottish Widows have released a report saying that a 25-year-old needs to save £66 per month if they want an annual income of £5,800 (with no inflation proofing) on top of the State Pension when they retire.

Her advice was that if you don't join a pension scheme you're effectively taking a pay cut because you're missing out on the tax relief and the employer contribution and if you don't save and want to live on more than the State Pension then you'll probably have to keep working in your late 60's/70's.
>> No. 3894 Anonymous
29th October 2013
Tuesday 6:42 pm
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>you'll probably have to keep working in your late 60's/70's
Being realistic all 25 year olds probably will.
>> No. 3895 Anonymous
29th October 2013
Tuesday 6:53 pm
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Late 60s for sure, the retirement age should be rising faster than it is and I suspect that the increase will be bought forward at some point.
>> No. 3896 Anonymous
29th October 2013
Tuesday 7:20 pm
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At the minute the SPA will reach 66 by 2020 (i.e. men and women born on or after 1954) and it's legislated that it will reach 67 by 2036 (i.e. born on or after 6 April 1969) and 68 by 2046 (i.e. born on or after 6 April 1978). The government has proposed to bring it forward so that it reaches 67 between 2026 and 2028 instead; it's not on the table to bring receiving it at age 68 forward or indeed extending it beyond age 68.

The government also knows that private pension provisions are an easy target for them (e.g. GORDON BROWN RAIDED MY PENSION) because the funds will be tied up for decades before savers can have access to them. There's talk of limiting tax-free cash available if you decide to take the benfits when you're 55 from 25% to 20% and also capping the maximum you can hold in ISAs to £100k.
>> No. 3897 Anonymous
29th October 2013
Tuesday 7:22 pm
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>it's not on the table to bring receiving it at age 68 forward or indeed extending it beyond age 68.

When I say "it's not on the table" I don't mean that I don't expect this to happen.
>> No. 3898 Anonymous
29th October 2013
Tuesday 10:36 pm
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Can someone explain because I'm not quite sure. What's the difference between giving my money to a pension provider and keeping money stuffed underneath my mattress?
>> No. 3899 Anonymous
29th October 2013
Tuesday 10:53 pm
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In a pension fund, the value of your investment may go up or down. Under the mattress there's no such uncertainty - it's definitely going down.
>> No. 3900 Anonymous
29th October 2013
Tuesday 11:00 pm
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This. What you want to do is invest in a mattress commodities pension fund.
>> No. 3901 Anonymous
30th October 2013
Wednesday 7:56 am
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>Management fees charged by pension providers could be capped between 0.75% and 1%, according to proposals being set out by the government. The Treasury is consulting on its plans to cap fees, which it says could save people tens of thousands of pounds. Some older schemes set up more than a decade ago have been found to charge up to 2.3% a year in management fees.

>The consultation will seek industry input on three possible options: a 1% cap, a 0.75% cap, or a two-tier "comply or explain" cap, where pension providers will be capped at 0.75%, rising to 1% if they can explain to regulators why their scheme must charge more. A Treasury spokesperson said any final cap could lie somewhere between the two levels suggested, depending on the evidence received. The proposed cap would also only apply to auto-enrolment funds.

>The average charge on a pension set up in 2012 was 0.51%, but the Office of Fair Trading (OFT) estimates that there are more than 186,000 pension pots with £2.65bn worth of assets subject to annual charges of more than 1%. Older pension schemes, set up more than a decade ago, were found to be charging as much as 2.3% in annual fees.


So the pension schemes with the charges over 2% are remaining untouched for now, but Auto-Enrolment schemes, which generally have charges below 1%, are going to have their charges capped. What an utterly meaningless gesture.

I know Steve Webb has said they're looking at scrapping active member discounts (AMD) as part of a broader review of pensions charges, on the basis of "That means when you leave a firm they jack your charges up - we don't think this is right so we will probably ban those", but I don't think they've thought this through; if a scheme has an AMD then, unsurprisingly, the charges are lower for active members of the scheme and if you leave you can usually keep the lower charges if you continue to contribute £20pm. Scrapping the AMD may benefit some people, but it's going to make more people worse off.
>> No. 3902 Anonymous
30th October 2013
Wednesday 11:50 pm
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Thinking about it, if the average annual charges on a new pension scheme was 0.51% last year and they introduce a cap between 0.75% and 1% then there's the risk that this will lead to the average charges increasing as providers decide to charge the maximum. It's what happened with stakeholder pensions.
>> No. 3935 Anonymous
7th November 2013
Thursday 6:13 pm
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I was at a presentation by Standard Life and Aviva earlier.

They said someone retiring now would need a pension pot of ~£250k in order to get an income in line with minimum wage and ~£600k to get one in line with national average earnings.

They're also anticipating an auto enrolment (which the Aviva bod said is a substitute for the State Second Pension, except the government aren't the ones paying it) clusterfuck next year. So far it's mainly large companies who have had to have a workplace pension in place and of the ones that have opted for Nest, 98% have sought financial advice and consultancy. Bear in mind the Nest is seen as the simple route and these are huge organisations who have large finance and payroll teams who would have the resources to deal with this in-house. Next summer alone there will be over 30,000 SMEs having their auto enrolment staging date and at the minute many pension providers are scaling back what they are offering because they don't have the capacity to cope and there isn't enough advisers around either (that is assuming they could afford the advice even if they wanted it; prices will be hiked up because many companies are expected to leave it to the last minute). The guidelines from The Pensions Regulator are very stringent and complex and it's not expected that all of these companies will cope if they go it alone and the regulator is rumoured to be very hungry to issue heavy fines and make examples of companies not complying. Apologies if rambling, I'm on my phone.
>> No. 3936 Anonymous
7th November 2013
Thursday 9:56 pm
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I can follow what you're saying but I don't understand the implications. What's going to actually happen, and is it good or bad?
>> No. 3937 Anonymous
7th November 2013
Thursday 11:16 pm
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We're all fucked. In the earhole.
>> No. 3945 Anonymous
8th November 2013
Friday 10:45 pm
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Depending on the size of the employer, the fine for not having a scheme in place and complying with the duties The Pensions Regulator has set out can be up to £10,000 for each of day of non-compliance. It's expected that not all companies who need to have all this in place next year will be able to cope, so don't be surprised if you hear of relatively large fines being dished out to grab headlines.

On a side note, It's early days but the opt-out rates for being automatically enrolled in a workplace pension scheme is ~8% when it was predicted to be ~30%.

One of the Aviva men had a meeting with Steve Webb on Wednesday. He said that the charges cap will be at 0.75% and trail commission on pensions will cease in a couple of years or so. Both Standard Life (whose charges on Auto-Enrolment schemes range between 0.6%-1%) and Aviva representatives are against the cap, as they see it as a PR stunt but they can't back down because the issue has become politicised (even Cameron has Tweeted about capping charges to help 'hardworking people' save for their retirement) - the Standard Life reps said it would better to focus and raise awareness on fund choice as the majority of people stay in the default fund and it won't be suitable for everyone. They fear that the caps will push people towards cheaper funds which don't tend to perform as well; they said, in general, that their actively managed funds cost 0.07% more than their passive equivalents but perform 0.5% better.

They'd also prefer reform to offer more certainty on what income people will receive when they retire, as one of the main reasons people don't take out a pension plan is because they have no idea of what they'll end up with. When annuities were introduced the expectation was that someone would only live for a decade after retiring, nowadays someone has to live for 18 years to 'break even'.
>> No. 3946 Anonymous
11th November 2013
Monday 11:09 pm
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>Both Standard Life (whose charges on Auto-Enrolment schemes range between 0.6%-1%) and Aviva representatives are against the cap

The Pensions Strategy Director of Legal & General has come out today and argued the case for the cap, actually he believes it should be lower (they have an Auto-Enrolment scheme with an AMC of 0.35%, but all of the funds have additional charges of at least 0.1%). This isn't entirely surprising as they tend to offer less of a service than other pension providers.

His argument is that charges of 1% were achieved in 2001 with stakeholder pensions and there has been significant technological advancement over the previous 12 years to accommodate a low cost default cap of 0.5% that people don't have to pay more than if they don't want to and then people can pay extra if they want more fund choice, guarantees, advice and any other optional extras.

Polite sage because I doubt anyone else cares about this.
>> No. 3947 Anonymous
12th November 2013
Tuesday 11:51 am
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They've been talking about salary sacrifice at work. They gave me a statement that shows that if they reduce my gross pay by nearly 6% my net pay will remain the same because there's less income tax and national insurance to pay along with no personal pension deduction. They then pay an employer contribution that is just under 13% greater than what's paid overall now. Any reason I shouldn't do it?
>> No. 3948 Anonymous
12th November 2013
Tuesday 8:09 pm
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Only if you'll be applying for a mortgage in the near future or you feel you have a misguided duty to pay more tax than you have to.
>> No. 4036 Anonymous
18th November 2013
Monday 10:20 pm
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This. Even HMRC are alright with salary sacrifice as long as it's offered to all employees and doesn't take someone below minimum wage.
>> No. 4037 Anonymous
18th November 2013
Monday 10:29 pm
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Last thing I'll say on the pension charges cap, the FT say it is a bad idea but can see why Webb has gone for it as it "offers the chance for jolly soundbites. It is not, however, based on good economics." The OFT also recommend against a cap.

>> No. 4049 Anonymous
19th November 2013
Tuesday 7:38 pm
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The problem with salary sacrifice and lowering your gross pay is the impact on the "ladder". Typically once you get a rung up you should have a floor under you that increases each step of the way. By accepting this drop you're knocking yourself down if you move to another employer or role.
>> No. 4050 Anonymous
19th November 2013
Tuesday 8:09 pm
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Disclosing your previous salary is just naive. People who know how to negotiate don't answer the question, instead saying something like "my previous role was fundamentally different and I don't think my compensation in that role is relevant". Employers like to bully people into answering the question because it makes it easier for them to underpay you, but nobody you want to work for will refuse to hire you simply because you won't disclose your previous salary. A quick Google will reveal dozens of articles like the following, with recruitment experts unequivocally advising against disclosing your previous salary:
>> No. 4052 Anonymous
19th November 2013
Tuesday 9:55 pm
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I don't agree with that, you'd still know what your notional/reference salary is and any % pay increase or overtime pay should be based on that rather than your post-sacrifice level.

I'm not a good negotiator, so when I've been asked it I tend to lie and inflate what I'm earning. By doing this I ended up earning £4,000 p.a. more in my previous job than one of my colleagues who just accepted what she was offered.
>> No. 4095 Anonymous
27th November 2013
Wednesday 10:44 pm
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Apparently Mexico is the only developed nation with a State Pension less generous than ours.


That isn't entirely surprising when you consider that the system in place here has far more emphasis on private pension provision than other countries. However, too many people aren't saving enough (or at all) and the OECD are warning that high levels of youth unemployment (and a likely SPA of 70 for babies born today) are going to lead to many living in poverty in old age.

>> No. 4096 Anonymous
27th November 2013
Wednesday 10:48 pm
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Doesn't apply to the UK - when you join a new firm you generally have to present your P45 from the previous job showing exactly how much you have earned and how much tax you pay. I have seen people get fired from a new job because they excessively lied about their previous salary.

Employers know that the main reason for changing job is to get a pay rise, so its perfectly ethical and normal to ask for a higher salary than the one you are being paid (you don't have to join them if they don't make you an offer you want, after all), but lying about it or refusing it at best won't get you the job and at worst can easily get you fired in the first week - I have genuinely seen this happen in one place I have worked.
>> No. 4097 Anonymous
27th November 2013
Wednesday 10:49 pm
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Our state pension bill is already far too large. I'm glad it's as low as it is.
>> No. 4098 Anonymous
27th November 2013
Wednesday 10:50 pm
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Was this in a small company? I assume with larger companies it's something that the HR drone will put on file and not really pay attention to.
>> No. 4099 Anonymous
27th November 2013
Wednesday 11:03 pm
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Indeed, I have never needed to show a P45 - the old: I left at short notice and HR have completely failed to provide me one has been fine. They just file details with HMRC and all is good.
>> No. 4100 Anonymous
27th November 2013
Wednesday 11:12 pm
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Nonsense. The quickest P45 I've ever had took 4 weeks to arrive, and only because I bitched about it coming in before the end of the tax year. Clearly you shouldn't lie about it, but refusing the information shouldn't do you any harm. If the person on the other side of the desk doesn't like that you won't tell them the number, that's their problem, and clearly they're not someone you want to be working for. Decline politely, and if at all possible drop hints that this job is not your old job. If they still don't get the hint, ask them to look at it this way: Your salary is confidential information, and I'm sure they wouldn't want you giving that away to their competitors, would they? This goes equally well for people who don't have control of their previous work and therefore won't have a portfolio of evidence to show off. (I've had someone sat in an interview with me show me documents stamped PROPERTY OF xxxxxxx PRIVATE AND CONFIDENTIAL. Needless to say, that was the moment they landed squarely in the "no hire" pile.)
>> No. 4101 Anonymous
27th November 2013
Wednesday 11:27 pm
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It was in a large firm - a bank.
>> No. 4105 Anonymous
27th November 2013
Wednesday 11:59 pm
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Handing over your P45 means that you'll get the right tax code off the bat, but it is by no means mandatory, the only information you *need* to provide is your NI number.
>> No. 4108 Anonymous
28th November 2013
Thursday 12:15 am
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Normally, you can just wait and it'll work itself out the following month, but if you're starting a job in a March with more than a month's salary left of your personal allowance, there is no "following month" and you'll be waiting a year for the refund to come through. Either way, the point is that it's rare to be able to hand in a P45 on day 1.
>> No. 4228 Anonymous
28th November 2013
Thursday 11:43 pm
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The National Insurance fund has been revalued down recently, but there is still a surplus of around £38billion and it has been increasing around £2billion each year.

I know there's an anticipated crisis from the baby boomer population spike, but any future funding problems would be greatly reduced if successive governments used the NI fund for its actual purpose instead of borrowing from the surplus to reduce borrowing from other sources. However, they'd rather reduce the future State Pension (at least not keeping up with inflation) or increase NI rates for workers and scaremonger than actually do this.
>> No. 4262 Anonymous
3rd December 2013
Tuesday 10:09 pm
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On the subject of National Insurance:

According to City A.M., the reason that wages have stagnated is because employers are having to spend more on the likes of pension contributions and a hike in employers NI.

>The proportion of compensation that went to these non-wage benefits increased from 13 per cent in 2000 to 17.2 per cent in 2012, driven by higher pension contributions and a stealthy hike in employer NICs.


There's also calls to scrap NI and replace it with a personal welfare account to wean people off their reliance on state benefits.

>Today, people are treated as if they have paid contributions when they haven't, and claimants with no contributions record get treated much the same as those who have being paying contributions all their lives. Britain is almost alone in Europe in paying unemployed people with weak or non-existent employment records the same as those with a long history of employment.

>Mr Saunders said National Insurance has been subject to so much "tinkering" over the last 70 years that it has become "almost unrecognisable" and people no longer understand how their contributions are being used.

>> No. 4263 Anonymous
3rd December 2013
Tuesday 10:20 pm
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It's the catch-22 of the Pension Guarantee Credit. The maximum state pension is £110.15 a week, but the Guarantee Credit is £145.40 a week, rendering the state pension as largely meaningless for a vast swathe of pensioners.

Not unreasonably, we want to ensure that all pensioners have a decent standard of living in retirement, but it's difficult to implement that without undermining the incentives to save and pay NI. Some middle-income pensioners will benefit from their state pension as a top-up to a private pension, but for those on very low or very high incomes it is essentially irrelevant.
>> No. 4264 Anonymous
3rd December 2013
Tuesday 10:31 pm
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>If “employers’” NICs were abolished tomorrow, wages would increase to compensate
Rather wishful thinking, I fancy.
>> No. 4265 Anonymous
3rd December 2013
Tuesday 11:04 pm
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Employers don't have to pay any NI on the first £148 (IIRC) of weekly earnings. Somone on minimum wage working 35 hours a week would be earning £220.85, so if the NI saving was passed on it would be just over a tenner a week and effectively increase their wage to £6.60 an hour. For someone earning £20k p.a., employer NI works out at around £32.65 per week (just under £1,700 p.a.).

In reality, I think in most salary sacrifice pension arrangements pass on 50% of the employer NI saving and keep the rest for themselves (if there wasn't anything in it for them then they wouldn't do it) so it wouldn't surprise me if that is what the increase in gross pay would be.
>> No. 4266 Anonymous
3rd December 2013
Tuesday 11:26 pm
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>if the NI saving was passed on
Again, wishful thinking. Sure, they could pass on an extra £10 a week to each of their minimum-wage employees, or they could simply pocket the extra £500 per person for themselves. For small business owners still in a tight spot, they might find an extra £5k that they can keep in the business, or pay themselves, a better prospect. For larger companies, you just know that a million-pound saving from abolishing ER NIC is going straight to the CEO or the shareholders.
>> No. 4268 Anonymous
4th December 2013
Wednesday 12:30 am
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You choose to quote City AM? What the fuck, lad. I have met three of their "journalists". Their rigorous training in practical economics was, in all three cases, a degree in English Lit.


>> No. 4271 Anonymous
4th December 2013
Wednesday 12:46 am
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Yes, because as we all know, 'trained economists' are always the best analysts and no one else's input is of any value at all. Moreover, your anecdotal evidence is a compelling reason to accept your ad hominem and appealing to authority argument out of hand.

>> No. 4273 Anonymous
4th December 2013
Wednesday 1:15 am
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I'm not him and nor am I a journo, but he's right - CityAM is a pile of steaming shite.
>> No. 4275 Anonymous
5th December 2013
Thursday 6:19 am
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>The date when people must be 68 to draw a state pension - formerly scheduled for 2046 - will be brought forward to the mid-2030s, Chancellor George Osborne will announce later. Plans to be announced in Mr Osborne's Autumn Statement mean the age could rise again to 69 by the late 2040s.


Looks like everyone under the age of 30 will be at least 70 before they receive a State Pension. Start planning now (be it private pension saving or something else) if you want to be able to retire before then.
>> No. 4276 Anonymous
5th December 2013
Thursday 7:06 am
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What plans do you suggest then?
>> No. 4277 Anonymous
5th December 2013
Thursday 7:19 am
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I fuckin' knew that would 'appen.

This is why I don't bother with a private pension.
>> No. 4278 Anonymous
5th December 2013
Thursday 7:19 am
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>> No. 4279 Anonymous
5th December 2013
Thursday 7:32 am
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Of course it would, the proportion of peoples lives that they spend retired has been increasing enormously, even this won't offset it. You'd have to be a dumb cunt not to have seen it coming.
>> No. 4280 Anonymous
5th December 2013
Thursday 9:27 am
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I've got a better idea. Monopoly money.
>> No. 4281 Anonymous
5th December 2013
Thursday 9:44 am
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>> No. 4282 Anonymous
5th December 2013
Thursday 9:46 am
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>> No. 4283 Anonymous
5th December 2013
Thursday 11:44 am
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The traditional alternatives are investing in property or in equities using a different wrapper, like ISAs. The problem with the latter is many people have poor self control and end up frittering it away.

I have a decent pension scheme at work, so my retirement planning is a mix of that and ISAs. When I'm 55 I plan to semi-retire and do income dtawdown with my pension. That is assuming that the government don't move the goalposts and change the minimum age you can take private pension benefits from. Not many people realise this, but the Stage Pension Age when it was originally introduced was 70; the intention was that you'd get it and then die around 5 years later.

Isn't this more of a reason to have a private pension?
>> No. 4288 Anonymous
5th December 2013
Thursday 2:26 pm
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ISAs? What interest rate do you get with yours?
>> No. 4290 Anonymous
5th December 2013
Thursday 4:25 pm
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>in equities
>> No. 4331 Anonymous
10th December 2013
Tuesday 8:19 am
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Pensioners are being 'burgled' by insurers on annuities

A report has called for an unprecedented investigation into the “excessive” profits the insurance industry is making from annuities, adding that it was nearly impossible for a pensioner to know if they are getting a good deal.

The report said that some insurers in the UK were making up to 20 times more profit on an annuity than other products in their business. Research carried out this summer suggested that insurers make up to £35,500 profit on each £100,000 taken from savers over a 25-year retirement by investing the customer’s money.


It's quite surprising that there isn't a Compare the Market for buying annuities.

It has been well publicised that you shouldn't buy an annuity from your existing pension provider, but many people need their arses wiping for them and simply don't read the information they are given (they should get a very clear and easy to understand booklet from the Money Advice Service and key features documents from their pension provider/prospective annuity provider) and don't search the market for better rates. There is nothing complicated in contacting a few annuity providers and asking for them to give you a quote based on the value of your pension fund; the only variables are whether you want a guarantee period for if you die early (usually 5 or 10 years), whether you want a proportion to continue to be paid to a spouse when you die or whether you want the payment to be level or to escalate annually. It's a bloody myth that it's complex.

It doesn't help when annuity providers are able to make a nice profit from investing the pension pots without passing this on to future annuitants, mind.
>> No. 4358 Anonymous
14th December 2013
Saturday 6:35 pm
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The Graun are saying people in their 20s should be putting 12% of their salary away for retirement and even more if they leave pension saving until later.

>> No. 4359 Anonymous
14th December 2013
Saturday 7:47 pm
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I expect to die young, so fuck it.
>> No. 4360 Anonymous
15th December 2013
Sunday 12:03 pm
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I know someone who was made redundant in his late 50s, decided to take his pension early after his payoff had run out and then died a couple of months later. If he hadn't taken his pension then it would have been paid out as a tax free lump sum to his family and they'd have been about £100k better off.
>> No. 4733 Anonymous
20th January 2014
Monday 6:52 pm
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I've heard that if you get enrolled in a pension scheme the government have made it a bit of a hassle to opt out in the hope that people won't be bothered - something about going to the far end of a fart to request the necessary forms because your employer isn't allowed to give you one so they can't pressure you into opting out. Even if you do opt out your employer will already have made a deduction from your pay and you'll have to wait until the next payroll to get it refunded. At least, these are the gripes I've heard from colleagues.
>> No. 4734 Anonymous
21st January 2014
Tuesday 2:06 am
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And he'd have still been dead. Big whoop.

If you could make those kinds of predictions you'd have a very unusual and special life indeed.
>> No. 4736 Anonymous
21st January 2014
Tuesday 7:41 am
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It's quite a well known risk of taking your benefits early, especially if you're not doing something like drawdown. You don't need to be clairvoyant to know it's generally not recommended.
>> No. 4738 Anonymous
21st January 2014
Tuesday 5:11 pm
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Being dead is a known risk? I doubt it bothers him now.
>> No. 4746 Anonymous
21st January 2014
Tuesday 11:19 pm
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If you take your pension early then you're more likely to die prematurely. Now that's scientific fact.

Some people use their pension funds to buy an annuity before the age of 65 because they're retiring/semi-retiring early, but most people do it because they want to get their hands on the tax-free cash. It's a generally bad idea to do it if you're carrying on working full-time because you'll get a lower annuity rate for being younger and this will be fixed for the rest of your life, you're missing out on years of your pension fund growing and you'll be paying tax on the extra income which you may not even need.

Also, before you crystallise your benefits your pension fund is effectively another form of life assurance. If you take your benefits early in the form of an annuity, like the chap mentioned in >>4360, then you've lost this completely. A much more sensible option would have been to use income drawdown - you can take the tax-free lump sum and then opt not to take the income until you actually need it. The remainder of the pension fund that you have drawn down (e.g. if you wish to take £10k tax-free cash then you'd need to vest £40k and the remaining £30k would be in a post drawdown pot) would continue to be invested and should keep growing - if you were to die then it could be paid out as a lump sum, although after 55% tax*. However, I think most providers require you to get financial advice first and that can cost a fair whack.

*It's not actually as bad as it sounds. A £10k gross pension contribution would cost a basic rate taxpayer £8k. If they died after taking the 25% tax-free lump sum then the remaining £7,500 would be taxed at 55% (i.e. £4,125), so the total paid out would be the initial £2,500 plus the £3,375 = £5,875. As the net cost was £8k, this makes the effective amount lost in tax £2,125 (26.6%). For a higher rate tax payer the net contribution would be £6k, so the effective amount lost in tax is £125 (2.1%).
>> No. 4756 Anonymous
22nd January 2014
Wednesday 4:02 pm
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So when are interest rates going to finally go up high enough (or at all) to make saving and pensions worth while? Right now and for some time it has felt punishing to those who spent their lives doing the right thing while the BoE and government push everyone to breaking point and bend over backwards for those who were reckless and lived beyond their means.
>> No. 4758 Anonymous
22nd January 2014
Wednesday 4:22 pm
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Oh, Dr. Rev. Lord Ian.
>> No. 4760 Anonymous
22nd January 2014
Wednesday 5:37 pm
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Wouldn't it make sense to invest in a pension while things are low? Makes more sense to me than buying high.
>> No. 4761 Anonymous
22nd January 2014
Wednesday 5:39 pm
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Don't expect the BoE to raise rates yet, even if the unemployment rate goes below 7%, it hit 7.1% as of most recent data (released today). The expectation was that it wouldn't go below 7% until the second half of this year, or possibly next year, so I wouldn't expect any real rate rise until next year.

Also 'savers' are no different to anyone else doing stuff with their money as far as I'm concerned, the fact that it's in a bank account rather than in bitcoins or bags of flour doesn't make it special.
>> No. 4762 Anonymous
22nd January 2014
Wednesday 6:26 pm
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It does. Without savers you'd have no economy. See: Run on the bank.
>> No. 4764 Anonymous
22nd January 2014
Wednesday 6:51 pm
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Saving is synonymous with investment. Without depositors, a bank can't lend; Without lending, businesses can't grow. There's a happy medium, between the absurd velocity of money of hyperinflation-era Zimbabwe and the deflationary depression of present-day Japan.
>> No. 4765 Anonymous
22nd January 2014
Wednesday 7:19 pm
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Horses for courses. The key determining factor in whether to put money into savings or a pension pot is whether you want to see it again any time soon. Pulling money out of a pension fund is generally not a good idea.
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