State pension to be £7.5k in today's money

[Welshbeef]

davepoth said:

I'm not convinced by the private pension argument either, so I'm looking into other methods of securing an income.

But if its a pension scheme defined contribution whereby the company matches your investment then it the arguement changes.

I believe currently if your a low rate tax payer and have no company contribution at today's annuities your getting very close to just getting your cash back out by the time you die!!!! If your a higher tax rate payer this improves and of course if the company also pay into the pot it notably improves.


So if it is a case of you only just get your money back then clearly its madness to do so unless of course your family have a history of very long lives if not keep the cash pay off your mortgage sooner or save the money into an ISA you can draw from it at any point you choose.

[singlecoil]

davepoth said:

SpeedMattersNot said:

Just wondering if private pensions still work?

Is it not better to put your money into something that is currently going up in value? I.e. Gold?

I'm not convinced by the private pension argument either, so I'm looking into other methods of securing an income.

I certainly wouldn't rely on any private pension scheme either. How long is it going to be before the major providers of such schemes find they haven't got enough money to pay the pensions?

[DonkeyApple]

As a question for discussion, why does anyone need the State Pension? Surely it is a payment that is surplus to all requirements?

If someone in retirement age has insufficient income then there are standard welfare packages to ensure they are protected. If someone has sufficient income then they have no need of the state pension.

Could it not be rolled into the Universal Credit and be done with?

Putting aside the argument of 'I've contributed, so I'm entitled' what actual logic is there for a State pension?

[Mojocvh]

singlecoil said:

davepoth said:

SpeedMattersNot said:

Just wondering if private pensions still work?

Is it not better to put your money into something that is currently going up in value? I.e. Gold?

I'm not convinced by the private pension argument either, so I'm looking into other methods of securing an income.

I certainly wouldn't rely on any private pension scheme either. How long is it going to be before the major providers of such schemes find they haven't got enough money to pay the pensions?

^^^^ THIS^^^^ I have just cut my contributions back to the minimum, looking at the figures they provided, I would have to contribute approx 25% to make up for the current shortfall going by their calculations.

Now, I can't comment on anyone else, but right now, giving away that amount ain't really feasible......

[Burnham]

DonkeyApple said:

Putting aside the argument of 'I've contributed, so I'm entitled' what actual logic is there for a State pension?

Donkey, this is a genuine question, I don't wish to provoke, but why should the above argument be put aside?

Am I being shortsighted in expecting something back based on what I've contributed over my working life? It seems that if I'm in a position to contribute a lot in taxes over the years, then I'm less entitled to a 'return' than those who have received help over the years and contributed less/not at all?

[RYH64E]

Burnham said:

DonkeyApple said:

Putting aside the argument of 'I've contributed, so I'm entitled' what actual logic is there for a State pension?

Donkey, this is a genuine question, I don't wish to provoke, but why should the above argument be put aside?

Am I being shortsighted in expecting something back based on what I've contributed over my working life? It seems that if I'm in a position to contribute a lot in taxes over the years, then I'm less entitled to a 'return' than those who have received help over the years and contributed less/not at all?

Indeed. There will be a move from the accepted notion of a state pension that is earned through years of NI payments, to a notion that the state pension is purely a benefit that the well off (which is a completely undefined term) shouldn't get because they don't need it, as has happened with family allowance/child benefit. Of course they will still have to pay for it.

You can see what will happen if you look at funding for the road network, we used to pay a road fund license with a notional link to road maintenance, now we pay a vehicle excise duty that goes into a central pot and are told that we need road tolls to pay for the roads. Does that mean road tolls will replace ved? Not a chance, we'll either pay twice for the same benefit, or pay once and get nothing. Same with the state pension.

[DonkeyApple]

Burnham said:

DonkeyApple said:

Putting aside the argument of 'I've contributed, so I'm entitled' what actual logic is there for a State pension?

Donkey, this is a genuine question, I don't wish to provoke, but why should the above argument be put aside?

Am I being shortsighted in expecting something back based on what I've contributed over my working life? It seems that if I'm in a position to contribute a lot in taxes over the years, then I'm less entitled to a 'return' than those who have received help over the years and contributed less/not at all?

Just because I think that argument would cloud a real discussion as to what the State pension is actually for and it's core merits.

If we think logically, the State pension benefits the absolute poorest, yet those who need it least will have contributed the most so there is a dichotomy that skews our honest judgement.

The person with the strongest argument that they should receive something back for the amount they have put in is the person who has the least need for it.

So, a debate putting this to one side (and in no means stating it is not relevant) is likely to raise more interesting views for general discussion.

For example:

if there were no State pension then you would want to see NI reduced accordingly. Would this be a benefit to increasing employment in SMEs?

Or, do you remove the State pension but make it law that the PAYE system invests a minimum % in a real pension and thus we unwind the Ponzi scheme that is not healthy for an economy?

Are there merits to removing a vast and regular payment of cash from the hands of the State which they can actually spend however they wish?

I think there are some very interesting questions to ask and discuss but it is all too easy to fail to discuss these by getting lost in the argument that 'I've contributed so I want'. I'm not saying that is not valid or even wrong just that it is an emotive point that prevents further and deeper discussion.

[RYH64E]

DonkeyApple said:

I think there are some very interesting questions to ask and discuss but it is all too easy to fail to discuss these by getting lost in the argument that 'I've contributed so I want'. I'm not saying that is not valid or even wrong just that it is an emotive point that prevents further and deeper discussion.

But this is the argument, I've paid into the system for 30 years and there is no justification for taking away that which I've paid for. It will probably happen anyway, but there's no justification for it.

It's like paying for a 3 course meal in a restaurant and being told that you're not getting your starter or dessert because as a fat bd you obviously don't need feeding, and by the way, you're not getting your money back either. It's not on.

[Welshbeef]

I like that thought - however reducing NI isn't possible due to the fact there is no fund so those paying NI and income tax now pay for those in retirement drawing state pension.

[DonkeyApple]

RYH64E said:

DonkeyApple said:

I think there are some very interesting questions to ask and discuss but it is all too easy to fail to discuss these by getting lost in the argument that 'I've contributed so I want'. I'm not saying that is not valid or even wrong just that it is an emotive point that prevents further and deeper discussion.

But this is the argument, I've paid into the system for 30 years and there is no justification for taking away that which I've paid for. It will probably happen anyway, but there's no justification for it.

It's like paying for a 3 course meal in a restaurant and being told that you're not getting your starter or dessert because as a fat bd you obviously don't need feeding, and by the way, you're not getting your money back either. It's not on.

Except in the current system you are paying others to eat, not yourself. In fact you are not even doing that you are paying many times the price of the meal, more than you will ever get back.

If someone offered you a scheme where you pay £100 a month you whole working life and when you stop working they will pay you back £10 a month would you not think them a little bit mental?

The current mechanism when you really look at the nuts and bolts is properly barking.

[RYH64E]

DonkeyApple said:

Except in the current system you are paying others to eat, not yourself. In fact you are not even doing that you are paying many times the price of the meal, more than you will ever get back.

If someone offered you a scheme where you pay £100 a month you whole working life and when you stop working they will pay you back £10 a month would you not think them a little bit mental?

The current mechanism when you really look at the nuts and bolts is properly barking.

But I've already paid, 30 odd years of NI contributions, and as I understand your proposal it would take away the very little bit of a return that is still left for me.

There's no way the government would give up a scheme where I pay £100 per month and get £10 back, the only modification likely is that I'll continue to pay £100 per month (or more if they can get away with it) and get nothing back when I retire, that's not progress.

[oyster]

Countdown said:

I think even that will be too much for the State to afford.

People should assume no State pension and much lower State spending in future

Agree witn your sentiment, but the reality in your thinking is that those who contributed all their lives will get naff all, whilst those who contributed naff all will get looked after.

Which is why all should get the state pension, regardless of income, savings or whatever else.

[davepoth]

And therein lies the problem. National Insurance has not been a proper insurance scheme for most of the time it has been in existence. It's just another income tax.

Dismantling the whole NI edifice and replacing it with the equivalent on tax would be the sanest way to go about things. I believe a flat rate pension is the first step towards that.

[oyster]

RYH64E said:

the only modification likely is that I'll continue to pay £100 per month (or more if they can get away with it) and get nothing back when I retire, that's not progress.

Bingo.

Just like with child benefit, anyone who thinks cutting back on pensions spend will be reflected in lower deficits or taxes has rocks in their head. The money will be 'redistributed' to the feckless and workshy.

[Welshbeef]

Firstly I'm a Tory supporter.

However I believe benefits or allowances should be universal that's NHS, Pension, job seakers, OPA retirement home Uni fees etc.

Question is how much it should be - now personally I'm not too much in favour of paying in loads to a pension and another pays in nothing yet come retirement we end up with similar ie state pension plus a tiny private pension.

[Welshbeef]

For others benefit does everyone know how to check if they are in the second state pension or not??

[ralphrj]

Welshbeef said:

For others benefit does everyone know how to check if they are in the second state pension or not??

If you are contracted out and paying the reduced rate of national insurance then you are not in the second state pension. If you are playing the full rate then you are contracted in to the S2P.

Anyone can ask the DWP for a forecast of their state pension which will tell you:

1. How many years contributions you have to the main state pension.
2. How much your second state pension contributions are currently worth.

Any changes to the S2P will not remove any entitlement you have already built up but you will no longer be able to accrue any more benefits under S2P.

Link for requesting a forecast:

https://www.gov.uk/state-pension-statement

[Welshbeef]

ralphrj said:

If you are contracted out and paying the reduced rate of national insurance then you are not in the second state pension. If you are playing the full rate then you are contracted in to the S2P.

Anyone can ask the DWP for a forecast of their state pension which will tell you:

1. How many years contributions you have to the main state pension.
2. How much your second state pension contributions are currently worth.

Any changes to the S2P will not remove any entitlement you have already built up but you will no longer be able to accrue any more benefits under S2P.

Link for requesting a forecast:

https://www.gov.uk/state-pension-statement

That link will only give statements if you are 6 months or less away from retirement age

[ralphrj]

Welshbeef said:

That link will only give statements if you are 6 months or less away from retirement age

If I click on the link it says

DWP said:

You can get a statement online if:
you live in the UK
you’re more than 4 months away from State Pension age

However, you can also request a forecast from the Future Pension Centre on 0845 3000 168 monday to friday 8am to 6pm.

I know that it works if you call in as I did it 3 months ago and I am a lot more than 6 months from retirement.

[BoRED S2upid]

I heard some pensions minister trying to explain this on the news today. You need to pay in 10 years of NI contributions to get anything. Why don't I believe that? If you have never worked a day in your life come 66 or whenever your pension kicks in you will be cut off without a bean because you haven't paid 10 years NI? never in a million years. Did I hear him wrong?