Update: it’s time to future-proof pensions

My sentiment exactly Mr John Blunden-Codd, born August 1954 worst apparently year to be born just lost out by 4 months also lost £50000.
I had two small pensions which I wanted to go travelling with when I turned 60, had to withdraw them to pay bills,and yes paid alot of tax for the privilege,had it not been for my husband,yes I am fortunate that my husband before /after put alot of money into his pension pot which he wanted for his retirement, now shares with me,
Guy Opperman said let them get apprenticeships to see the 1950s through to there new state pension age really ????????
I was ‘okay’at 60,4ys 5mths later now I have disability.
We paid in you pay out .

If the retirement pension for each pensioner was based entirely on what they had paid in throughout their contribution period, for many, if not all, it would mean they would be worse off than they are. Today’s pensions are paid for by today’s workers through their NI contributions and taxes. It is the number of contributions that determine the amount of the pension, not the amount paid in.

When I started work in 1965 I had no idea that my generation might still be alive and in receipt of a pension much past about the age of eighty. Those whose pensions will not start being paid for some years after they expected will hopefully live for longer than they expected and reap a bonus in extra years at no added charge.

Frank ,is your wife connected with the medical profession ? I have a reason for asking . GP leaders are very angry with Capita as a primary care support provider because locums are in the same boat, not being provided with any info on their pensions. Locum GP,s must send in their contributions monthly to Capita -BMA website -blog- Capita and the NHS Pension fiasco . Its online at gponline.com its reached the GPC stage . I dont want to give the full URL as there is a warning at the top that the website is for UK health Professionals .

That’s a worry, CAPITA administer many pension funds

totally agree its a financial product designed to remove you from your money

so money has been paid in! that means there is a capital sum sitting somewhere and it belongs to the heirs of those who died as it was not claimed by the payee at an appropriate time i.e on retirement.

There is no such capital sum, N Mitchell. State retirement pensions are paid out of current revenues, not out of accumulated funds. National Insurance is no different to a commercial life insurance policy [term insurance]; it pays out if you keep living but there is no return to the estate in the event of premature death. This balances the cost of the cover and means that contributions are affordable. Compared with life assurance, which pays out a guaranteed sum on death or in specified circumstances, life insurance premiums and national insurance contributions are relatively low.

Your about to be robbed, because as those who know will say “it very complicated!” it’s not complicated they have your money, they have played with your money, made a profit for themselves with your money and now they don’t want to give it up so you have to pay the penalty charge. bill of rights penalties can only be administered by a jury! no other establishment under the law can apply a penalty. Unless you agreed to it through a private contract which you did when you signed up for your pension, or the authorised person did on your behalf.

Penny – It is worth exploring whether or not it is advisable to combine your separate pensions in one scheme under one manager. In doing so, (a) look out for the future management charges, (b) see what the exit penalties are if any, (c) make sure your combined pension pot compares well with the total value of your separate funds, and (d) check how your annual income will compare with the present levels. This is what the PensionWise counsellor should do for you. There is no reason why you could not leave your four occupational pensions exactly as they are and receive an income from each if that suits your requirements, or you could amalgamate one, two, three or all four of them if the terms and conditions are right for you. Something you cannot predict is whether one or more of your existing schemes might fail in the future; although there is some protection there would probably be some detriment. That could be a good reason to consolidate under a new manager and your adviser should cover that point.

By the way, rich people would not need to be so concerned to get the best deal; for the rest of us it is sensible to make sure we do not lose more than we gain from changing our pension arrangements. In my opinion, your existing employers’ pension scheme administrators have responded to you appropriately. They cannot allow you to transfer out until you have received competent advice from independent experts in accordance with your personal circumstances. This is for your protection.

combining pension pots has one big down side that is not often talked about. If you have say 3 separate pensions you are unlikely to have all 3 disappear. But lose 1 = lose all if they are combined.

Who will pay for your living expenses?

On a matter of factual accuracy, did Sir Philip Green actually steal from the BHS company pension fund? Or did he sell the company for a derisory amount because the pension fund was badly depleted as a result of a failure to make adequate employers’ contributions over the years – a practice known as ‘taking a pension holiday’ in corporate business?

This has been a widespread practice; it obviously boosts the company’s profits and thus the dividends payable to the shareholders and the remuneration paid to the directors and top executives. Strangely there have been very few controls on this and members of company pension schemes have suffered greatly. It is the closest thing to theft not regarded as dishonest. It has gone on for many years despite the knowledge of the pension fund trustees, data given in company annual reports & accounts, statements by the pension fund actuary, and reports by the company’s auditors. Companies can get away with it because they believe the Pension Protection Fund will pick up the pension shortfalls and because the major investors are flattered by the company’s artificially inflated profit performance and assume that there will be enough asset value in the company to massage away the pension fund deficit in the event of a takeover.

I believe Sir Philip Green has offered to make a financial settlement to patch up the hole in the BHS pension fund although it might not cover all the liabilities and could leave it short in the long term. It could be forty years or more before some BHS employees are eligible to draw their pension [albeit it will only represent a short service period] by which time the responsibility for this débâcle will have faded from the memory.

Now we come to Carillion . . . yet another pension fund deficit fiasco and possibly on an even bigger scale.

If you were miss-sold your investment in Equitable Life then you should be able to get compensation provided those responsible are traceable and solvent. However, that might turn on whether there was any actual miss-selling as no one could have foreseen the melt-down that occurred when the mutual assurer was found to be grossly underfunded relative to its commitments. I believe compensation is outside the scope of the government’s Pension Protection Fund in this case and the problem might have occurred before the Financial Services Compensation Scheme came into existence [or might also be outside its scope – it would be worth checking]. However, I have seen references to a government compensation scheme that was created to deal with this particular situation.

Equitable Life closed to new policy-holders after its near collapse but has remained in business to carry on investing on behalf of continuing policy-holders and paying out on policies. The mutual assurer was recently taken over by a consolidation fund to administer its remaining assets and liabilities and it looks as though policy-holders are due to receive a bonus from the proceeds of this sale. If your policy remains in place it would be worth enquiring how you stand.

It is a shame that your local government pension provider has distanced itself from offering any assistance to its members who were advised to invest in these AVC’s. If you are in touch with any other beneficiaries of your employer’s superannuation scheme you might find a joint application to the fund, or a joint request for specialist independent financial or legal advice, would be helpful and spread the cost of investigating.

You might find the following June 2018 BBC News article a good starting point for your further enquiries –
https://www.bbc.co.uk/news/business-44497168

This is a very unfortunate situation and quite a number of women in your age bracket are caught up in the change of state retirement pension benefits and the moving of the eligibility ages. You must feel like you are trying to walk up a down escalator and will never reach the top. I cannot offer you any particular advice but I believe there are support groups which are trying to help, or at least explain, what is happening and how people can optimise their entitlements.

The basic reason is that the contributions paid towards pensions and other benefits are nowhere near enough to match the Living Wage. It has always been assumed that people will have an occupational pension or other savings and investments to provide an income in later life, or will have family who can provide support. There was also an assumption that pensioners’ costs of living were lower than working people’s because they did not have travel-to-work expenses or the costs of bringing up children. These assumptions are no longer based on reality – even if they ever were. Additional benefits are available to those with only a basic state retirement pension but that does not add much to the quality of life and will barely cover the most basic essentials.

With people living longer now, pensioners are having to fork out more than was historically the case for new clothes, new appliances and home goods, property repairs and maintenance, and other expenditure that did not even figure in the original assumptions [the internet being but one].

There are some modest reliefs like free or concessionary travel on public transport, the winter heating allowance, and the free TV licence for the over-80’s, and VAT is not payable on most essential foodstuffs, but energy costs carry VAT and other government imposts that hit those on low incomes the hardest. The costs of heating the home increase with age because more heat is required and the time spent indoors is greater.

One of the things that distorts policy is that a significant number of pensioners are very well-off and enjoy a very comfortable lifestyle. Yes, they pay higher taxes and make a good contribution to society through charitable giving and community and voluntary service but they [unintentionally] disguise the plight of the ordinary state pensioner without the lifetime benefits that they have been able to accrue.

I have never understood why child credit to working families counts for more than the support given to the retired generation.

It will be interesting to see what other commenters think on this.

The UN has not lambasted the UK government but one of its special poverty commissioners has drawn attention to the situation. The Joseph Rowntree Foundation produced the basic statistics. I would commend the following information from Full Fact – ‘the UK’s independent fact checking charity’ –
https://fullfact.org/economy/poverty-uk-guide-facts-and-figures/?gclid=EAIaIQobChMItu3Sk6_g3gIVxbHtCh0npgNFEAAYAyAAEgIUCfD_BwE

The diagrams chart the falling percentages of poverty in the UK using both the relative poverty and absolute poverty measures.

If anyone has a remedy for poverty by any definition I urge them to come forward with it.

I agree with Duncan’s comment about “lowering taxes for the rich” but raising them does not always work either.

I am surprised that a government that wants to phase out internal combustion engines keeps freezing fuel duty. That sends out the wrong message and does nothing to help the poor who cannot even afford a car but suffer disproportionately from the emissions. It has also taken a perverse decision, because of its complete mismanagement of railway electrification, to abandon many schemes and require many bi-mode electric trains to cart heavy diesel engines around and big fuels tanks so that they can complete their journeys. How will that help the economics of the railways and reduce ticket prices to enable the poor to get to work?

It was the media that said the UN “lambasted ” the UK government .
In case you think it was a left-wing newspaper here is Right-Wing -Huff Post- all American .
https://www.msn.com/en-gb/money/news/unnecessary-misery-un-poverty-expert-lambasts-austerity-and-government-cuts/ar-BBPMli3?li=AA54rU&item=personalization_enabled%3Afalse

I realised it was the media who bigged the story up – I don’t take everything I read in the papers as gospel, even in the more accurate titles, because they all have a slant.

So which is the next recession, and when will it start? I think we should be told [even if it’s a media quote so long as the source is referenced]. Not more doomsaying, I hope. I have never understood the fascination with negative speculation.

Just one (important) point, Duncan. In your original post you stated:

“The UN has lambasted the UK government for its figure of 14 million”

as though it was a verified fact. By not inserting a link, you also made it appear as though it was your own work. It was only when John challenged you that you revealed the link to the Huffington post.

And the Huff is regarded as a left-leaning paper, BTW.

John Ward says: Today 11:51

I am surprised that a government that wants to phase out internal combustion engines keeps freezing fuel duty. That sends out the wrong message…

Indeed it does, and it does seem as though various government departments are – as seems so often the case – pursuing their own agendas rather than working within a cohesive policy framework.

Ian -“left ” in comparison to Donald maybe and some Republicans but not left as regards the general US population.

“My own work” do you think I script-write for the UN ?

That’s not what I said, Duncan. I said

“By not inserting a link, you also made it appear as though it was your own work.”

In other words, by not using any of the accepted written indicators of a quote, you implied it was your own work. It’s easy to rectify: simply include any relevant link when writing something, and use quotation marks to indicate a quote. That would eliminate any ambiguity.

We don’t need a link for others’ comments – just an attribution in the text will do. I trust people to do it correctly.

These comments are in the context of the discussion about poverty in the UK and the government’s responsibility.

Ian – There is no question that continuing to freeze fuel duty instead of raising it in line with inflation is predominantly beneficial to those who drive big internal combustion engined cars and drive them fast. People in that position are by definition well-off but they are inflicting their pollution on the population at large including those who cannot protect themselves from it and for whom the government should show some consideration. This policy was pushed on the tag of “helping hard-working families”. Many of those hard-working [and low paid] families might prefer the revenue from a higher fuel duty to be spent on measures that would (a) improve their health , (b) stop it from getting any worse, and (c) enable them to do their hard work in cleaner towns and cities.

I declare an interest: our old Jag guzzles gas but we neither go fast nor far. Now that you have been switched on to electric motoring you can occupy the moral high ground – your mountain top lair elevates your position as well and gives you better breathing most of the time I hope.

🙂

I agree with you John. But I always found it fascinating that those pushing hardest for Brexit, for instance, are those rich enough that it won’t affect them. We still allow the very rich to dominate society. In so many ways.

The disgusting fact is that some of those pushing hardest for Brexit did so in a corrupt and illicit manner.

The very rich will always dominate society because becoming rich is one of the aspirations of seeking higher positions, status, office and influence, and those aspirations are usually gratified so the system becomes self-perpetuating and the techniques of climbing the ladder become disseminated among the elite.

I prefer to remain a humble, and occasionally disobedient, servant.

Lorraine I waited for others to reply as they have not I will put the plain facts –
1- it was women’s group’s that originally complained of the inequality in the state pension
2- The government listened to them but instead of reducing male state pension age to equal females they increased the female state retirement age to EQUAL males .
3 – males have laboured under a sexually unequal age retirement for a very long time.
4- its is a fact -both in government figures-insurance company figures -medical bodies figures – funeral parlour figures that males die much earlier than females –do you call that equality ?
5- Many males felt aggrieved they had to work 5 years longer than females to get a state pension while females complained they wanted to work to the same age as males .

HMG has now straightened that out and the retirement age will continue to rise to 68 years old eventually as HMG says- people live longer and it places a bigger burden on young people who pay into the system –that’s their point of view .

Other countries are now upping the retirement age using the same excuse and logic.
I, like you started work at 15 years old – starting at 7am till 5pm , as I was a factory maintenance engineer and other maintenance positions in hospitals/ BT etc I worked 7 days a week continually but had to wait till 65 to collect my pension , I never complained although I saw many males die before they reached retirement .

I agree with most of what you say Hazel .
You say the caring burden has traditionally fallen on women , I wont argue that with you as its true although I am a carer for my wife .
My only point in that direction is equal pay for equal work .
What has happened is that ,as per usual, working conditions have been imported from the USA , it is not unusual to see men & women working into their seventies because they cant afford to stop work due to the heavy burden of things like health care which is very expensive in the USA along with the cost of insurance maybe needing two insurance policies as US insurance in medical don’t pay out 100 % of costs .
The other problem nowadays is that I have to preface my next sentence with -IMO- when I say females are more natural carers than males and this presents a big problem in our future society where its normal for courts to award custody of children to mothers .
This of course brings up social cost and taxes and balancing that with those at the lowest end of the feeding chain.
Just what IS the vision of the future and can the country afford modern dogma while the poverty rate is so high in this country.

Sean–number ONE no hesitation don’t be taken in by the flash talk the web is full of people who now regret the safe method , stuck their money in – x-y-z and had to pay fees etc + company goes down -transferred to another company who takes fees as well .

I can provide many sad tales posted by older people who lived to regret it.
Forget this — look you and -xxxxxx can have a cruise/ expensive holiday /live for the moment etc and then it comes time to go into a care home -not enough money left for one that comes up to scratch .
Think long term not short term – security counts .

It’s only ‘safe’ if your pension is Government-backed, Sean. If it is, then you’ll also be given a lump sum as well as an index-linked pension. If it’s with a private company then it’s not safe – as many have discovered in the past.

If you do take it all and attempt to invest it in other ways you could do even better – but there are no guarantees.

I agree. We have the Financial Services Compensation Scheme to protect those who save with banks and building societies, and it would be good to see all pensions protected in view of what has happened to some companies. Maybe the safer option makes better sense in the present time of uncertainty.

My advice would be to take independent financial advice. We cannot possibly know all the circumstances of your position and your employer’s situation and any risk factors [especially around annuities].

Generally it is hard to beat the benefits of an index-linked final salary [defined benefit] pension scheme but, as you recognise, other options are available. These are big decisions so you deserve to have a professional assessment of the risks and rewards of each scenario. Your occupational pension scheme has closed but you might wish to consider a self-invested personal pension for your remaining working life.

Duncan – Sean’s Option (1) is the ‘safe’ option [staying in the employer’s scheme]. I don’t understand why you are recommending against it. The safe option might not be the most lucrative but it probably has the lowest risk, and a prudent approach would normally favour that option [subject to enquiries into the status and security of the employer’s fund and its management].

Eh ?? John – I said —Number one — no hesitation .
Think long term —not short term .
Unless I am speaking in Swahili that means — number one option .

I have read all the convos and posters on this subject here over the years and cant forget all the mistakes made by many who thought shifting companies etc would bring more profit –all it brought was misery as companies were either taken over or went out of business and each shift incurred additional expenses reducing the pot significantly.

Duncan, inaonekana kwangu kama walikuwa kuweka katika Kiingereza.

Duncan – I am not very good with obscurities of expression on serious issues so I am sorry if I didn’t fully understand your first sentence where you said “the web is full of people who now regret the safe method , stuck their money in – x-y-z and had to pay fees etc + company goes down -transferred to another company who takes fees as well”. It might not have been written in a foreign language but to me your comment was far from clear.

Now you have explained your meaning I fully support your advice to Sean.

Derek as I wont install Google translation due to its tracking and I don’t speak Swahili I am stuck for an answer.

On the very first day the Tory government “liberalised ” pensions an agent from private companies was standing outside the door of most big DHSS buildings.
I should know after fixing a phone in one one the way out I was harassed by a non-gentleman who sounded like he used to work for the Mafia in Las Vegas.
As I was working for BT at the time I couldn’t reply the way I wanted to.

Pia Duncan nadhani kuwa mara ya kwanza kwa kila kitu.

PS – nilijua si kama Google ili mimi ni kwa kutumia huduma hii ya Tafsiri tovuti mbadala:

imtranslator.net/translation/english/to-swahili/translation/

My first browser blocked it–my second said- HTTP –and blocked it so I temporarily stopped the blocker .
Then I was able to access it Derek – thanks for the offer but –Google -Microsoft -Bing – Waaaaaa-yaaaaa !!!! three of the biggest trackers in the world .
If I installed it my blockers would rise up in anger and stop it working.

Bitcoin is getting known for far worse than simply losing everyone’s cash.