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#836320 - 11th Nov 2013 12:48pm Pensions
derekdwc Online   content


Forum Veteran

Registered: 13th Oct 2008
Posts: 4982
Loc: Birkenhead
Many people rely on state benefits when they are older (housing benefit, council tax benefit, state benefit, etc). Is it worthwhile for these people who had low salaries (£12K - £17K per year ) to have private pensions?

Are private pensions worthwhile for low earners, I think they are only worthwhile for high earners like doctors, solicitors, etc?


Most people’s retirements are funded from two main sources - the state pension and their own private pension.

Both systems are undergoing big changes but the fundamentals remain the same.

The state pension guarantees a retirement income for those who reach a certain age.

Private or company pensions vary in value according to how much money workers and their employers have saved into them, and how their investments perform.

State pension

Pension payments from the government are changing in two significant ways at the moment.

Firstly, the age at which people become entitled to weekly state pension payments is rising, because of increasing life expectancy in the UK.

Until 2010, men recieved the state pension at 65 and women at 60.

Plans drawn up a few years ago meant that women’s state pension age was scheduled to increase from 60 to 65 – in line with men’s – between 2010 and 2020.

But a slight change means that both men’s and women’s state pension age will hit 66 by the end of this decade.

The government has now announced that the state pension age for everyone will probably rise to 67 by 2028.

Means-testing

And ministers have also indicated that they may link further pension age rises to longevity data.

The second change concerns the money people are entitled to.

Under the current system, most people get a fixed weekly pension - worth just over £107 in 2012-13.

Those who do not have other sources of income, such as a private pension, can claim top-up pension credit payments.

But these means-tested top-ups are being abolished, and a single, more generous flat-rate pension – worth about £140 a week at today’s prices – is being introduced, perhaps within two or three years.

Individuals will need to have worked - and paid national insurance contributions - for 30 years or more to be eligible for the full amount.

What the new universal pension means is that those with low-value pension savings will have an incentive to put more cash aside.

The current means-testing system means that many people with small pension pots find that they would have been better off saving nothing and claiming pension credit.

Private pensions

Changes to private pensions over the past decade or so have largely been for the worse.

This is due primarily to increasing life expectancy – which means that pension savings have to last longer, and therefore generate a lower monthly income – and a tough economic climate.

Stock markets – where the lion’s share of pension assets are invested – are not performing as well as previously expected.

And low interest rates mean that the annuities used to turn pension savings into a regular income are paying out less than they used to.

Unfortunately, individuals do not have a great deal of control over these factors.

So the only real solution to these problems is for savers to put more money into their pensions during their working lives.

Start saving earlier

The earlier you can start paying into a pension, the better, as your money will have longer to grow.

If you employer offers to pay pension contributions as long as you do, that is a further incentive to start saving.

From October 2012, the government is rolling out a programme of automatic pension-scheme enrolment for employees in private-sector firms.

Workers can opt out of this if they wish, but for thousands of people, it will be a great opportunity to start a pension with the minimum of hassle.

Auto-enrolment pensions will cost 4 per cent of the worker’s salary - the employer will add 3 per cent, and tax relief a further 1 per cent.

My view is
The government needs people to invest more money in private pensions so the pension companies can invest your money in government bonds (this then becomes part of the National Debt) which we have to pay for again by austerity measures.
I was under the impression that State Pensions of those retired now were originally paid for by the national insurance contributions of the previous generation of workers and those still working and future working generations ( the more people that worked in decent paying jobs the bigger the pension pot)
Unfortunately now there is a dearth of such jobs - 40 hours etc and now they have to find the money for pensions elsewhere.


Edited by derekdwc (11th Nov 2013 12:49pm)

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#836343 - 11th Nov 2013 2:12pm Re: Pensions [Re: derekdwc]
Candlyfloss Offline
Smartchild

Registered: 3rd Feb 2013
Posts: 475
Loc: Wirral
Good thread,What about the ones who have hardly worked in there entire lives,Are they still entitled to the goverment paying them a pension when they havent contributed any national insurance or any taxes?


Edited by Candlyfloss (11th Nov 2013 2:16pm)

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#836361 - 11th Nov 2013 3:04pm Re: Pensions [Re: derekdwc]
derekdwc Online   content


Forum Veteran

Registered: 13th Oct 2008
Posts: 4982
Loc: Birkenhead
Originally Posted By: derekdwc
Many people rely on state benefits when they are older (housing benefit, council tax benefit, state benefit, etc). Is it worthwhile for these people who had low salaries (£12K - £17K per year ) to have private pensions?

Are private pensions worthwhile for low earners, I think they are only worthwhile for high earners like doctors, solicitors, etc?



40 hours(if you're lucky) at National Minimum Wage £6.31 over age 21
= 40 hours x 52 weeks x £6.31 = £13,124.8

I would like to see governments publishing wage bands starting with how many people earn between £0 to £5,000 and going up by £5.000s up to £50,000 instead of just saying the average UK wage is £26,500 (in the year to April 2012.)


Edited by derekdwc (11th Nov 2013 3:13pm)

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#836373 - 11th Nov 2013 4:00pm Re: Pensions [Re: derekdwc]
Moonstar Offline

Forum Addict

Registered: 2nd Jul 2011
Posts: 1240
Loc: Wirral
I don't understand why, if people are having to work more years, why did they cut the State pension entitlement down to a working life of 30 years from 40 years?

The latest State pensions do not include older pensioners who remain on a lower pension who had to have 40 years contributions - why?

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#836379 - 11th Nov 2013 4:19pm Re: Pensions [Re: derekdwc]
missmahjong Offline
Wiki Guide

Registered: 3rd Jun 2012
Posts: 6502
Loc: wirral
Derek, i have worked all my life, will be getting my pension in 2 years time, i find it very 'annoying ' that i will pay a lot of tax because i intent to carry on working , eg 1 weeks wages will be spend on TAX ,also have had a small pension for the last 8 years, which will be taken into consideration as well....
Candyfloss, change the record.......it.s getting BORING same old.....

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#836457 - 11th Nov 2013 9:19pm Re: Pensions [Re: missmahjong]
Candlyfloss Offline
Smartchild

Registered: 3rd Feb 2013
Posts: 475
Loc: Wirral
Originally Posted By: missmahjong
Derek, i have worked all my life, will be getting my pension in 2 years time, i find it very 'annoying ' that i will pay a lot of tax because i intent to carry on working , eg 1 weeks wages will be spend on TAX ,also have had a small pension for the last 8 years, which will be taken into consideration as well....
Candyfloss, change the record.......it.s getting BORING same old.....
Am simply asking a question and on topic.you give it a rest haha.

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#836491 - 11th Nov 2013 10:07pm Re: Pensions [Re: derekdwc]
missmahjong Offline
Wiki Guide

Registered: 3rd Jun 2012
Posts: 6502
Loc: wirral
Same question, on various threads....... On topic but soooo BORING.... your doing your best to 'needle' someone ... i rest my case .....Pxxx Oxx

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#836494 - 11th Nov 2013 10:12pm Re: Pensions [Re: missmahjong]
Candlyfloss Offline
Smartchild

Registered: 3rd Feb 2013
Posts: 475
Loc: Wirral
Originally Posted By: missmahjong
Same question, on various threads....... On topic but soooo BORING.... your doing your best to 'needle' someone ... i rest my case .....Pxxx Oxx
Bottom line miss,If you dont like what you read dont reply ,Simple as that.I rest mine, So back on topic if you dont mind.

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#836519 - 11th Nov 2013 11:52pm Re: Pensions [Re: Candlyfloss]
chriskay Offline
Forum Veteran

Registered: 25th Oct 2007
Posts: 4868
Loc: shropshire
Originally Posted By: Candlyfloss
Good thread,What about the ones who have hardly worked in there entire lives,Are they still entitled to the goverment paying them a pension when they havent contributed any national insurance or any taxes?

In order to qualify for the state pension you need to have worked and paid contributions (or have credits) for 30 years. If you don't qualify under this, you will probably get some sort of benefit (totally unjustified in my opinion).
_________________________
Carpe diem.

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#836521 - 12th Nov 2013 7:02am Re: Pensions [Re: chriskay]
bert1 Offline

Wiki Veteran

Registered: 27th Nov 2008
Posts: 7864
Loc: tranmere
What would be justified?
Poor law, Workhouses or perhaps the development of Brazilian and Indian style shanty towns and throw them all in there to get on with it.
Perhaps we should spend Billions on space travel in a hope some other country sends us aid.
_________________________
God help us,
Come yourself,
Don't send Jesus,
This is no place for children.


Bertieone.

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#836556 - 12th Nov 2013 11:25am Re: Pensions [Re: derekdwc]
BandyCoot Offline

Forum Veteran

Registered: 7th Dec 2008
Posts: 5349
Loc: Birkenhead
Why should bone idleness be rewarded? I worked Bert as you well know but can't claim anything, nor do I want to need to, but those who haven't done a tap are brought up to my level by all the freebies they get handed on a plate and which they never mention when telling the world what a pittance they are picking up, otherwise how can they go shopping, come back with bags full of goodies and do it by TAXI? Just an observation I've made. I pay tax on my second occupational pension, just as a sweetener.
_________________________
Birkenhead........ God's own Room 101.

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#836560 - 12th Nov 2013 12:02pm Re: Pensions [Re: derekdwc]
derekdwc Online   content


Forum Veteran

Registered: 13th Oct 2008
Posts: 4982
Loc: Birkenhead
I could agree with you BandyCoot if there were the jobs about (particularly in Birkenhead and Wallasey) that were full time (40 hours) and a decent wage for those that are fit enough to work.
Just think of all the big employers from the 50s/60s that have gone from this area and been replaced by zero hour,part time staff, tax avoidance/evasion companies that have replaced them.
(I'm not sure how those workers with few hours are affected over receiving state pensions )

By the way I also pay income tax and am on a state pension and count myself lucky enough to do this without claiming any benefits

It's all about creating as much personal wealth as you can by any means you can. Those who have the money invest, buy shares, lend it at high rates, avoid paying taxes and sit back and count how much they've made that year.

Yes we're all in this together. I'm struggling to live on my millions the same as those on their zero hour contracts and those damn shirkers


Edited by derekdwc (12th Nov 2013 12:14pm)

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#836563 - 12th Nov 2013 12:54pm Re: Pensions [Re: derekdwc]
bert1 Offline

Wiki Veteran

Registered: 27th Nov 2008
Posts: 7864
Loc: tranmere
A point that's overlooked is this,

If there was 2.5million job vacancies and only a small percentage of able bodied unemployed, there might be justification in labelling some shirkers, but that's not the case. I hope its accepted that the vast majority of unemployed are not shirkers, if you accept that, why are they not gainfully employed, obviously no jobs. How do we deflect from unemployment and the failure to provide jobs, call them all shirkers.
_________________________
God help us,
Come yourself,
Don't send Jesus,
This is no place for children.


Bertieone.

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#836567 - 12th Nov 2013 1:29pm Re: Pensions [Re: derekdwc]
granny Offline

Wiki Master

Registered: 29th Jun 2011
Posts: 13972
Loc: Wirral
If we are talking about pensions, unless things change in the foreseable future, I wouldn't bother taking out a private pension again, unless one did so from an early age.
My situation of never claiming benefits, juggling 3 part time jobs at times and not at that point being able to afford payments into a private pension fund, due to bringing up 3 children o my own. Now leads me to the situation of having less than £100 per month additional private pension ontop of my state pension. My utility bills are likely to be over third of my income in the next 12months. I am unable to get a new boiler as I do not qualify for pension credits or any benefit, unable to have cavity wall insulation, as my property is too old. Unable to have the free solar panels, now on offer, as my south facing roof has only 7 tiles deep instead of the 9 deep needed and again will not qualify for the outside lagging of properties.
So as all those on pension credits and benefits of other types are in a safe haven, what is likely to happen to those who thought they were doing their best ? Most of whom are at home during the days, not in a cosy warm working environment, do they starve or freeze ?
No, don't pay into a private pension fund unless you start young enough to reap the rewards.
Not complaining, just allowing the men to see that women with children who worked for the 'good of', seem to have been failed, miserably.
_________________________
...and those who were seen dancing were thought to be insane by those who could not hear the music.FN

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#836570 - 12th Nov 2013 2:26pm Re: Pensions [Re: derekdwc]
dustymclean Offline

Old Hand

Registered: 18th Sep 2013
Posts: 320
Loc: birkenhead
The Introduction of a minimum qualifying rule for a state pension is seven years.
It is estimated half of pensioners could have an offset applied to the single tier pension by around 2050. they will receive less than the flat rate pension.
As an example consider someone who reaches state pension age retiring with a state pension worth £177.60 a week. If this person was contracted out of SERPS between 1978 and 1997 and accrued a guaranteed minimum pension of £40 a week which their scheme will pay- they will receive £137.60 a week directly from the state pension.
(I have a COD of £77 per week).
A state pension for the 21st century. DWP 2007

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