Uk state pension forecast

[Robert Dyson]

1 hour ago, Marisawright said:

They don't, because it's too late to worry about where it came from. Robert is saying that when they're younger, they should be more interested in where it's going to come from, because otherwise there's a chance it won't come from anywhere.   

It does show how tricky it is to get into the right mindset before you're too old for it to make a difference.  As i've admitted before, I had precious little knowledge in the UK except for my defined contribution statement every year with a rough estimate of what would happen at 65...40 years in the future....nothing else useful.

Just a simple Google search for Superannuation Australia compared to Superannuation UK, or Pension UK shows the vast difference in available information.

[Parley]

1 hour ago, Marisawright said:

They don't, because it's too late to worry about where it came from. Robert is saying that when they're younger, they should be more interested in where it's going to come from, because otherwise there's a chance it won't come from anywhere.   

The government will always cover the pensions. If there is a shortfall in the NI contributions it will top it up from other revenue. I would certainly not be fretting that the government is going to default on its pension obligations. 

Obviously young people should be planning to build up their private pensions if they want a good standard of living in retirement.

[Marisawright]

3 minutes ago, Parley said:

The government will always cover the pensions. If there is a shortfall in the NI contributions it will top it up from other revenue. I would certainly not be fretting that the government is going to default on its pension obligations. 

It would take a disaster for them to default, but they can reduce the amount they  have to pay out.  For instance, they've already raised the age at which you can collect it.  The plan was to increase it to 68 years old by 2040-something, but that's already changing, now it's likely to happen ten years earlier than planned.  How long before they decide, oh, we can't afford it, we need to increase it faster.   It's very likely that today's workers, in many countries around the world (including Australia), won't get their pension till they're 70. 

[Parley]

With medical science improvements people's life expectancy has greatly improved. When people are routinely living to 90 years or beyond the paradigm of retiring at 55 or 60 is no longer appropriate.

Many people would love to work longer if they are healthy in their mid to late 60s.

[Robert Dyson]

35 minutes ago, Parley said:

With medical science improvements people's life expectancy has greatly improved. When people are routinely living to 90 years or beyond the paradigm of retiring at 55 or 60 is no longer appropriate.

Many people would love to work longer if they are healthy in their mid to late 60s.

It's an interesting conundrum.  Does society need to force old people out to make room at the bottom for younger people to enter the workforce?  Young workers are the lifeblood of the tax system to keep paying in to fund services, including pensions and healthcare.  If they don't get on the career path are they ever going to reach the level required to earn high wages and provide higher tax receipts?   Do aged workers need to have special dispensation and priority for part-time jobs to make them leave full-time work?  Do we need to create an economy of jobs for the elderly?

An example of buggering that up is China and the inexplicably slow realisation that the 1 child policy has created a gigantic problem in that there are simply not enough workers to provide the tax receipts to cover the aged welfare system.  After 35 years of a 1 child policy, it became a 2 child policy in 2015, and now there is a 3 child policy to desperately try and fill this looming gap in the workforce required to keep funduing the state.  A required baby boom and trebling of the workforce.  Their pension, the biggest in the world, is projected to run out in 2035 and runs over a 100 billlion dollar deficit today, and how big will it grow ever single day as oldies keep hitting pension age and there is less and less money coming in to fund it?

The other thing is that in a technology driven world, some countries (like China, Korea etc) have a pretty consistent policy of not hiring people over 35 for tech jobs, because anybody older is not going to be educated enough to have kept up with the rapid rate of change.   On the other hand, they may need to keep older people working longer?  So what do they do?

They may be forced into making people work until they die because they will have no pension to give them, or start cutting healthcare funds and accepting that people will die earlier. 

Edited October 2, 2021 by Robert Dyson

[Ken]

On 30/09/2021 at 15:52, Paul1Perth said:

Personally I think the UK system is light years in front. They didn't have a system here till 92. Reason I remember that was the week I got my first job here was the same week compulsory contributions to super came in. 

How many youngsters would contribute to a pension scheme if they didn't have to? Not many I'd bet, no matter how much education you give them.

It's not as easy as saying the UK scheme is unsustainable as the amount paid in doesn't cover your pension. That money paid in by everyone would have amounted to billions of pounds, which has been invested and made billions more.

Much like your super here.

I can't see the benefit in self managed super. How would I know what's a good or bad investement more than the guys running the super funds, who's sole job is to know how to invest.

Compulsory contributions were introduced in Australia in 1992 and in the UK in 2012. Personally I don't think that 20 years behind is light years in front. Obviously many employers had excellent pension/superannuation schemes even before 1992 - but they weren't compulsory and so not all employees had one.

Don't confuse Super with government pensions. It's a private scheme equivalent to a UK personal pension.

The Age Pension was introduced in Australia in 1909 (the same year the old age pension began in the UK) but some states had their own schemes even earlier.

[Paul1Perth]

1 hour ago, Ken said:

Compulsory contributions were introduced in Australia in 1992 and in the UK in 2012. Personally I don't think that 20 years behind is light years in front. Obviously many employers had excellent pension/superannuation schemes even before 1992 - but they weren't compulsory and so not all employees had one.

Don't confuse Super with government pensions. It's a private scheme equivalent to a UK personal pension.

The Age Pension was introduced in Australia in 1909 (the same year the old age pension began in the UK) but some states had their own schemes even earlier.

I'm not getting confused.

Everyone in the UK has paid the NI contribution from their wages since the day they started work and when you finish you are guaranteed a pension. That's the part I mean that the UK has had right for a long time.

When you start work you aren't thinking of what's being subtracted from your salary for retirement. When I started with the NCB at 16 it was the days when you queued up for your pay packet Friday and a guy gave you actual money with your payslip. I don't think I took any notice of the deductions and what they were for. All I was interested in was how much I'd got to spend on having a good time for that week, until the next payday. 

My mates were all the same, we thought we'd be lucky to make it to 40, let alone think about retirement.

 

[Paul1Perth]

On 01/10/2021 at 11:50, Marisawright said:

There are two sides to it.  One is the money going out (how much the pension is), but the other is the money coming in (how much they collect and how well that money was looked after/invested). 

The UK version is unsustainable because the money coming in has been inadequate for many years, and I believe there were some shenanigans in the management of it too.

However it's also true that some other countries are struggling.  Just look at Greece, once one of the most generous pension schemes in the world.  That pension scheme is one of the reasons their economy crashed.  France has been trying to cut down its pension payouts, too, because they can't afford them. 

I was surprised to see how generous the US is, but how many people actually receive it?

I can only assume that the countries paying good retirement payouts must be taxing, or calling it something else, off the workers to fund it.

I guess it's a case of get a bit more when you're young to waste on booze, holidays, fast cars and faster women, maybe pay down your mortgage quicker when you settle down or get a fatter pension when a lot are too old to enjoy it.

People living a lot longer has really thrown a spanner in the works.

[Paul1Perth]

5 hours ago, Parley said:

With medical science improvements people's life expectancy has greatly improved. When people are routinely living to 90 years or beyond the paradigm of retiring at 55 or 60 is no longer appropriate.

Many people would love to work longer if they are healthy in their mid to late 60s.

Strange concept that. Just about al the friends I have in their 50's are looking to retire asap. The ones in their 60's still working were jealous as anything when I pulled the pin. I was 66 when I retired and the 4 day, 3day transition to retirement was great.

[Tulip1]

7 hours ago, Marisawright said:

They don't, because it's too late to worry about where it came from. Robert is saying that when they're younger, they should be more interested in where it's going to come from, because otherwise there's a chance it won't come from anywhere.   

Sorry Marisa but your response was to me stating I did not say what he accused me of saying.  Nothing to do with it being too late and what they should have done when they were younger.  I never said what he said I did (that people were happy as long as they can get a coffee and cake from M&S)  he twisted my words to fit his agenda.   

[Robert Dyson]

20 minutes ago, Tulip1 said:

Sorry Marisa but your response was to me stating I did not say what he accused me of saying.  Nothing to do with it being too late and what they should have done when they were younger.  I never said what he said I did (that people were happy as long as they can get a coffee and cake from M&S)  he twisted my words to fit his agenda.   

you actually said they don't "give a shit where it evolves from", but you then completely ignored the important posts detailing that the UK has the worst state pensions in the developed world.  Have you ever considered that the two may be related and perhaps promoting a more thoughtful input might encourage people to improve their outcomes ?

 

[Cup Final 1973]

I suppose you should also factor in that OAPs in the UK pay nothing at all for any medication and also get free bus travel throughout the country.

[Robert Dyson]

 

2 hours ago, Paul1Perth said:

Strange concept that. Just about al the friends I have in their 50's are looking to retire asap. The ones in their 60's still working were jealous as anything when I pulled the pin. I was 66 when I retired and the 4 day, 3day transition to retirement was great.

We did our financial review this week and afterwards the bloke emailed and said he forgot to ask if we wanted to look at bringing retirement forward, given what's gone on.  I said no, but get us some figures anyway just to have a look.  Obviously can't touch super until 60 anyway and UK pension comes 7 years after that.

[Drumbeat]

8 minutes ago, Robert Dyson said:

 

We did our financial review this week and afterwards the bloke emailed and said he forgot to ask if we wanted to look at bringing retirement forward, given what's gone on.  I said no, but get us some figures anyway just to have a look.  Obviously can't touch super until 60 anyway and UK pension comes 7 years after that.

You can draw your super before 60 if you've reached your preservation age.

[Ken]

18 minutes ago, Drumbeat said:

You can draw your super before 60 if you've reached your preservation age.

But for anyone born after 1 July 1964 preservation age is 60

[Drumbeat]

3 minutes ago, Ken said:

But for anyone born after 1 July 1964 preservation age is 60

I know.

[Marisawright]

5 hours ago, Paul1Perth said:

Everyone in the UK has paid the NI contribution from their wages since the day they started work and when you finish you are guaranteed a pension. That's the part I mean that the UK has had right for a long time.

No, they haven't.  I take it you haven't read any of my posts.  We were all told that we were paying NI contributions in, and that would pay for our pensions when we retired.   When the system began, that was true, but then they didn't increase NI contributions enough.   In reality, our contributions were never going to be nearly enough to fund our pensions, even taking investment income into account and the government knew it.  However no government wanted to be unpopular for increasing them. 

This is what Robert was saying. In Denmark, a big chuink of their pay goes into the state pension and people can see how their money is performing.  That's what I'd call "right".  

[Robert Dyson]

1 hour ago, Marisawright said:

No, they haven't.  I take it you haven't read any of my posts.  We were all told that we were paying NI contributions in, and that would pay for our pensions when we retired.   When the system began, that was true, but then they didn't increase NI contributions enough.   In reality, our contributions were never going to be nearly enough to fund our pensions, even taking investment income into account and the government knew it.  However no government wanted to be unpopular for increasing them. 

This is what Robert was saying. In Denmark, a big chuink of their pay goes into the state pension and people can see how their money is performing.  That's what I'd call "right".  

Exactly.  Also with defined benefit schemes in the UK where you co-contribute with the employer...you know what you're entitled to upon retirement and your scheme owes you that benefit.. 

The trouble is, during the 90's where staff continued to pay in their 6% or whatever,  employers took secret "payment holidays" from their own contributions because they calculated that with high interest rates, any shortfall they made on employer contributions would be more than replaced by compound interest over the years.  It was working really well until interest rates hit the floor...the pots are now not big enough to cover the outgoings, and the employer has spent the contributions long ago and cannot make up the shortfall....so where are they going to look for more money?

It is another reason for having externally managed superannuation schemes where your employer is obliged by law to pay money into a fund for you.  They cannot shirk, and they cannot grab the money back.

 

 

 

[winter1]

On 26/09/2021 at 05:43, Ken said:

More difficult perhaps but far from impossible. The UK scheme has always been a welfare benefit paid out of current taxation receipts even though the narrative has portrayed it as an insurance scheme paid out of past NI contributions. If they changed the narrative now there would be some protest of course, but the need to change the narrative so as to tell the truth is easy to justify. Plus most pensioners in Australia have already been out of the UK for more 15 years and so have lost their right to vote - so why would UK politicians be concerned?

Not sure it is paid out of current taxation:  https://en.wikipedia.org/wiki/National_Insurance_Fund

[Marisawright]

7 hours ago, winter1 said:

Not sure it is paid out of current taxation:  https://en.wikipedia.org/wiki/National_Insurance_Fund

I used to be an editor at Wikipedia.  You would be well advised never to trust a word that you read on that website.   It used to be great, but the system is completely overwhelmed and an enormous percentage of the information is now completely inaccurate and unreliable. 

I haven't read the page you linked to, but I would be checking other sources of information rather than trusting the Wikpedia version.

Edited October 2, 2021 by Marisawright

[Robert Dyson]

8 hours ago, winter1 said:

Not sure it is paid out of current taxation:  https://en.wikipedia.org/wiki/National_Insurance_Fund

you are right in so far as that is the information available and that is what people have been led to believe. In reality State Pensions have always been made up of NI contributions and "other contributions" from general taxation, but they have never produced the figures

For a pensioner to obtain their state pension, the amount you get is based on contributory years to NI.  It doesn't mean that your pension is entirely comprised of just what's in the NI pot.  With wage suppression and lower NI contributions, plus historically low interest rates...the Government's own investment of the NI fund is coming up short.   So they either need to raise NI, raise taxes, pay you less, or pay you later.

 

 

[Parley]

12 hours ago, Marisawright said:

No, they haven't.  I take it you haven't read any of my posts.  We were all told that we were paying NI contributions in, and that would pay for our pensions when we retired.   When the system began, that was true, but then they didn't increase NI contributions enough.   In reality, our contributions were never going to be nearly enough to fund our pensions, even taking investment income into account and the government knew it.  However no government wanted to be unpopular for increasing them. 

This is what Robert was saying. In Denmark, a big chuink of their pay goes into the state pension and people can see how their money is performing.  That's what I'd call "right".  

It doesn't really work like that or matter.

What is important is whether all the NI contributions of current workers in the UK this year is enough to fund all the State Pensions of pensioners this year.
Sometimes there is a surplus and they use the extra premiums to pay down government debt. If there isn't enough in any year the government tops it up.

[Ken]

9 hours ago, winter1 said:

Not sure it is paid out of current taxation:  https://en.wikipedia.org/wiki/National_Insurance_Fund

If you want to be strictly accurate, no it's not paid out of current taxation. Current taxation is used to repay borrowing. Money is borrowed (to be repaid out of future taxation) to pay pensions.

[newjez]

6 hours ago, Parley said:

It doesn't really work like that or matter.

What is important is whether all the NI contributions of current workers in the UK this year is enough to fund all the State Pensions of pensioners this year.
Sometimes there is a surplus and they use the extra premiums to pay down government debt. If there isn't enough in any year the government tops it up.

It's not just pension, it's jobseekers, sickness, maternity etc. 

Edited October 3, 2021 by newjez

[Paul1Perth]

On 02/10/2021 at 20:04, Marisawright said:

No, they haven't.  I take it you haven't read any of my posts.  We were all told that we were paying NI contributions in, and that would pay for our pensions when we retired.   When the system began, that was true, but then they didn't increase NI contributions enough.   In reality, our contributions were never going to be nearly enough to fund our pensions, even taking investment income into account and the government knew it.  However no government wanted to be unpopular for increasing them. 

This is what Robert was saying. In Denmark, a big chuink of their pay goes into the state pension and people can see how their money is performing.  That's what I'd call "right".  

You're talking about amount, I'm talking about whether it happened for working people. 

Everyone who's had a job in the UK paid their NI. Lot's of people die before they get to retirement age, lots don't last long after it. Not saying that there's still a shortfall but that's mostly to do wirh inflation.