Greek Pensions - and how much you need to save in the UK

ToneControl

Evilmags said:

ToneControl said:

Evilmags said:

UnclePsychosis said:

The thing that really pisses me off about pensions is that people have known for decades this was going to happen. However anyone who'd put up National Insurance contributions in the 90s would have been committing electoral suicide so instead the people who buried their heads in the sand get their pensions paid for by the workers of today, many of whom will never be able to afford to retire, the way things stand.

They Knew. Google "Ponzi Scheme". That is exactly how UK social security works. 

hence why the idea that "the EU immigrants will pay for our pensions" will not help our kids

Educated children in the virtues of saving. They will have no choice. Immigrant bankers, doctors, dentists, lawyers, and other professional classes pay a lot of tax and will contribute to pensions. Immigrant tradesmen as well. Immigrant unskilled Labour will not. Canada gets this. The EU does not. Every employee on my house reformation was either eastern European or south american. Their bosses were all Spanish. Spain has 25% unemployment... 

but as well as that, the 20-45 year olds from the EU settling here now will need pensions when my kids are earning, and unless more migrants arrive, my kids will bear the brunt of the demographic timebomb to pay for those pensions

ToneControl

exocet said:

Evilmags;1140916" said:

Sporky said:



octatonic said:

I simply don't believe pensions are the best way to save for the future.










I concur.

For starters it's just too easy for totalitarian governments to raid them for tax.














This. If you are saving for retirement get an offshore SIPP and keep shtum about it. I know a lot of guys still working in their late 70s thanks to El Gordo....

....and continued by Osborne who continued to extract even more from pension funds. A friend of mine was hit with a £250k tax bill last year for breaching the max annual allowance within a company pension scheme. He's in sales, not exactly wealthy. HMRC demanded that the money be taken directly from the pension fund. It's shattered his retirement plans too. This year, the allowance was reduced even further, all under Osbornes "low tax" regime...

It was a loophole letting people put their entire salary for a year into their pension, but anything up to 40% should be permitted

the lifetime cap is evil, and pushes people further away from pensions into BTL 

A5D5E5

exocet said:

A5D5E5;1141149" said:

exocet said:

HesA5D5E5;1141066" said:exocet said:



Evilmags;1140916" said:Sporky said:















octatonic said:







I simply don't believe pensions are the best way to save for the future.











































I concur.







For starters it's just too easy for totalitarian governments to raid them for tax.



























































This. If you are saving for retirement get an offshore SIPP and keep shtum about it. I know a lot of guys still working in their late 70s thanks to El Gordo....



....and continued by Osborne who continued to extract even more from pension funds. A friend of mine was hit with a £250k tax bill last year for breaching the max annual allowance within a company pension scheme. He's in sales, not exactly wealthy. HMRC demanded that the money be taken directly from the pension fund. It's shattered his retirement plans too. This year, the allowance was reduced even further, all under Osbornes "low tax" regime...











Your friend is telling some porkies.  To be hit with a £250,000 tax bill, his pension pot would have had to increase in value by £500,000ish over the year.  That is somewhat unlikely for a humble sales guy.  And of course, it means that after tax it still increased in value by £250,000 - not exactly likely to "shatter" any retirement plans.



Finally, having the fund pay the tax charge is an option (to avoid having to find a large cash lump sum).  It isn't compulsory.

He's definitely not telling porkies. There were a few others impacted as well although he was the worst impacted. The calculations for taxable benefit on pension contributions have changed significantly - it's not based purely on what you earn, it's biased against variable earnings, which in Sales, you're going to experience. HMRC apply a "multiplyer" to your contributions where they vary wildly from previous years. So, he had a very good year but was then hit by a massive tax bill. I'm missing out some important detail here, he was silly in ignoring advice that was given to him in terms of "do you want us to treat these earnings as pensionable". Employers are in a difficult position because officially can't advise.



So, his contributions did not increase by £250k (probably they were in the region of £75k for the period) but the tax bill was as near as dammit £250k. His future pension has been reduced by approx £20k a year...he won't starve but the tax man has done very well.










The tax charge for a defined contribution scheme is simply the contributions paid in by the person and their employer in excess of the annual allowance multiplied by the individuals marginal tax rate.  There is no multiplier for variable earnings.  For a defined benefit scheme it is based on the change in amount of pension over the year multiplied by 16.  Earnings are only a factor for determining the amount of the annual allowance from 2016 - it tapers down from £40,000 to £10,000 as earnings increase from £150,000 to £210,000.  

Even if this is what your friend is subject to it would only serve to reduce the annual allowance by £30,000 and hence increase the tax charge by £15,000 ish.

Last year the annual allowance was £40,000 so with £75,000 of contributions his tax charge would be (75,000 - 40,000)* 45% = £15,750.

Regardless of all this, the fact remains, in order to get a tax bill of £250,000 you first have to benefit by £500,000 so something is a bit off.

There is a multiplyer - my wife has been subject to the same restrictions.

I'll try and post the relevant legislative details once I lay my hands on it but I can say that your estimates of the situation are very wide of the mark. My wifes liability under the pension scheme changes were in the order of £15k.

I will be fascinated to see what you can come up with.  In the meantime, here is a link to HMRC's annual allowance tax calculator. 

http://www.hmrc.gov.uk/tools/annualallowancelimit/index.htm

You will note that variability of earnings is not one of the inputs.  You can also try putting the figures above into it (you will have to put some dummy prior year figures in as well to use up any carry forward).  If you do then you will see that it produces a taxable excess value of £35,000 exactly as my figure above did.

It really isn't as complex or as penal as your friend and your wife are telling you.  

exocet

I think that this case relates to "transitional arrangements" that applied in 2015 tax year.

I found this document that relates to the Unilever DB Pension scheme that makes reference to the x16 multiplier that I was referring to in addition to other ways by which the annual pension allowance is reduced.

https://www.google.co.uk/url?sa=t&source=web&rct=j&url=http://www.myupfpension.co.uk/documents/leaflets/annual_allowance_2015.pdf&ved=0ahUKEwj734C-6N_NAhVDbRQKHdN1CG4QFggyMAU&usg=AFQjCNFpwgaCkNBnX3J1kssLC3OYfbQDxg&sig2=vfeKs2SFqvpFjQg8tSs3Ig

Certainly for the tax year that I am referring to, the rates applied by HMRC were indeed penal. There were around 100 people in the company who were impacted...I know this because my wife is European HR director.

exocet

Here is an extract from a document that was prepared for my company by external taxation consultants.




It largely follows the same format as the Unilever document in my previous post. To be clear, I am referring to a Defined Benefits scheme here. The taxation treatment of DB schemes is different to other personal pension schemes.

The key information is the calculation of the "Annual Input". As you can see, it is based on the difference between two accounting periods and there is a x16 multiplication factor. So, in the case of my sales colleague who had his best year ever (probably earning over £200k gross) this was preceeded by a poor year (he actually had some severe health issues which inhibited his ability to work / hit targets etc). So in his case, there was a large "difference" that was them multiplied by 16 to arrive at his notional "annual input". My guess is that this figure would have been in the region of £1M - I'll admit that I don't know whether this was then taxed at 40% or some other rate but I do know that the liability was in the region of £250k.

So, my point is that Gordon Brown wasn't the only one to stick the knife into pension schemes. In the case of my company scheme, the legislative changes introduced by Osborne were the final straw - scheme administration became too expensive and it effectively closed at the end of last year. Whilst my colleague will still be fine financially despite handing over a large chunk of money to HMRC, many other lower paid employees will now have to make different arrangements to prepare for their eventual retirement.

ToneControl

exocet said:

Here is an extract from a document that was prepared for my company by external taxation consultants.


It largely follows the same format as the Unilever document in my previous post. To be clear, I am referring to a Defined Benefits scheme here. The taxation treatment of DB schemes is different to other personal pension schemes.

The key information is the calculation of the "Annual Input". As you can see, it is based on the difference between two accounting periods and there is a x16 multiplication factor. So, in the case of my sales colleague who had his best year ever (probably earning over £200k gross) this was preceeded by a poor year (he actually had some severe health issues which inhibited his ability to work / hit targets etc). So in his case, there was a large "difference" that was them multiplied by 16 to arrive at his notional "annual input". My guess is that this figure would have been in the region of £1M - I'll admit that I don't know whether this was then taxed at 40% or some other rate but I do know that the liability was in the region of £250k.

So, my point is that Gordon Brown wasn't the only one to stick the knife into pension schemes. In the case of my company scheme, the legislative changes introduced by Osborne were the final straw - scheme administration became too expensive and it effectively closed at the end of last year. Whilst my colleague will still be fine financially despite handing over a large chunk of money to HMRC, many other lower paid employees will now have to make different arrangements to prepare for their eventual retirement.

that form reads to me as looking at the difference between the notional "pension pot" at the beginning and end of that year

Therefore, he could have earned zero in the previous year, and it would make no difference, it's the amount of extra benefit that's been added in this year

if your notional pension pot goes over £1m, you pay charges, but that's when you get the pension

If you have contributions into your pot over the yearly limit, you get taxed now - HMRC classes it as income

"The annual allowance is currently capped at £40,000 although a lower limit of £10,000 may apply if you have already started drawing a pension. "

also:

"For every £2 of adjusted income over £150,000, an individual’s Annual Allowance, the limit on the amount of tax relieved pension saving that can be made by an individual or their employer each year, will be reduced by £1, down to a minimum of £10,000.

This results in an Annual Allowance of £40,000 for those with an adjusted income of less than £150,000; a reducing Annual Allowance for those with adjusted incomes between £150,000 and £210,000 and an Annual Allowance of £10,000 "

so we can assume his annual limit on pension contribution was £10,000

that means that anything above £10k into the pension pot was income

"In simple terms, the amount of the annual allowance excess is treated like any other income and is added to the top part of the person’s taxable income.

The part of the excess that falls:

• within the basic rate band is taxed at 20%
• within the higher rate band is taxed at 40%
• in excess of the additional rate threshold is taxed at 45%"

so that means, to get a £250k (total) tax bill:

If he'd been paid £220k salary, he'd pay 40-45% on most of it, so say £80k tax (I'm too lazyto be exact, since we don't have an exact salary anyway)

so if there was a £170k tax charge on the pension contribution, that would have to be because his pension pot went up£378k

this would be if his projected annual pension went up by £23.6k

Perhaps the employer bumped up the final pension by £24k????

thomasross20

I'd be ok (I think) with £25-30k per annum pension. 

I pay 11% of salary in and employer pays 9.8% or so. It's quite a lot each month now but still not enough, and life is what happens when you're making plans so who knows if I'll always be earning and paying so much in. 

I'm 32 this year and have about £40k in pension pot but also would only have a 4-5 year mortgage if I bought a house(in Scotland, that is), so could hopefully pile into the pension a lot from age 36 or so. 

Fireman at my old gym returned at 50, I think - think he gets £40k per annum, inflation-linked? 

Old police pension - I know one person getting a £150k lump sum and £30k per annum pension. 

New police pension: £20k lump sum and £15k (I think!) per annum - that doesn't include state pension. 

--> Still bloody good pensions and not representative of what is paid in (it's unfair, but that's life). 

thomasross20

exocet said:

For the past 20 years I've maintained that people don't earn enough to fund both:

a) Pension

b) House

If Housing gets cheaper, we can save for pension - you can't have it both ways unless you are very fortunate with having Double Income family.

As others have said, the presence of Final Salary pensions for both Public and Private sector employees is masking the financial horrors that are heading our way (not talking Brexit here by the way - this financial issue was coming our way regardless of Brexit).

Once Final Salary schemes finally disappear ( as they have been for a while), more people will be exposed to the reality of saving for retirement. At which point, something else will have to "give" because there won't be the money to spend on other large purchases.

Agree!

thomasross20

Sporky said:

octatonic said:

I simply don't believe pensions are the best way to save for the future.

I concur.

For starters it's just too easy for totalitarian governments to raid them for tax.

What else do you do other than save in a pension? 

I guess most people look at BTL.

The state pension in Germany / Austria seems a LOT better - can anybody put numbers on it because I forget - I remember being impressed, though.

exocet

ToneControl;1141542" said:

exocet said:

Here is an extract from a document that was prepared for my company by external taxation consultants.





It largely follows the same format as the Unilever document in my previous post. To be clear, I am referring to a Defined Benefits scheme here. The taxation treatment of DB schemes is different to other personal pension schemes.



The key information is the calculation of the "Annual Input". As you can see, it is based on the difference between two accounting periods and there is a x16 multiplication factor. So, in the case of my sales colleague who had his best year ever (probably earning over £200k gross) this was preceeded by a poor year (he actually had some severe health issues which inhibited his ability to work / hit targets etc). So in his case, there was a large "difference" that was them multiplied by 16 to arrive at his notional "annual input". My guess is that this figure would have been in the region of £1M - I'll admit that I don't know whether this was then taxed at 40% or some other rate but I do know that the liability was in the region of £250k.



So, my point is that Gordon Brown wasn't the only one to stick the knife into pension schemes. In the case of my company scheme, the legislative changes introduced by Osborne were the final straw - scheme administration became too expensive and it effectively closed at the end of last year. Whilst my colleague will still be fine financially despite handing over a large chunk of money to HMRC, many other lower paid employees will now have to make different arrangements to prepare for their eventual retirement.










that form reads to me as looking at the difference between the notional "pension pot" at the beginning and end of that yearTherefore, he could have earned zero in the previous year, and it would make no difference, it's the amount of extra benefit that's been added in this year

if your notional pension pot goes over £1m, you pay charges, but that's when you get the pensionIf you have contributions into your pot over the yearly limit, you get taxed now - HMRC classes it as income"The annual allowance is currently capped at £40,000 although a lower limit of £10,000 may apply if you have already started drawing a pension. "also:"For every £2 of adjusted income over £150,000, an individual’s Annual Allowance, the limit on the amount of tax relieved pension saving that can be made by an individual or their employer each year, will be reduced by £1, down to a minimum of £10,000.This results in an Annual Allowance of £40,000 for those with an adjusted income of less than £150,000; a reducing Annual Allowance for those with adjusted incomes between £150,000 and £210,000 and an Annual Allowance of £10,000 "so we can assume his annual limit on pension contribution was £10,000that means that anything above £10k into the pension pot was income"In simple terms, the amount of the annual allowance excess is treated like any other income and is added to the top part of the person’s taxable income.The part of the excess that falls:within the basic rate band is taxed at 20%within the higher rate band is taxed at 40%in excess of the additional rate threshold is taxed at 45%"

so that means, to get a £250k (total) tax bill:If he'd been paid £220k salary, he'd pay 40-45% on most of it, so say £80k tax (I'm too lazyto be exact, since we don't have an exact salary anyway)so if there was a £170k tax charge on the pension contribution, that would have to be because his pension pot went up£378kthis would be if his projected annual pension went up by £23.6kPerhaps the employer bumped up the final pension by £24k????

The calculations are based on annual inputs and NOT the pension pot value. To answer your direct question about whether the employer bumped up the projected annual pension by £23.6k - that is quite possible because the scheme was based on final salary but with an option to use the average of your best 3 years over a 13 year period. As I said earlier, he made a mistake - when asked if he wanted his variable earnings for that period to be treated as pensionable, he said yes. If he'd said no, there wouldn't have been such a large issue. Once HMRC got hold of it, there was no going back I.e no way that he could change his mind. The tax liability was settled by the pension scheme - a process that is known as "scheme pays". HRMC effectively taxed him now on future benefits that he will not receive because of the settlement that was made from his pension pot. Instead of retiring at 55 he'll have to carry on until 65 before receiving the reduced benefits - not a hardship I grant you, but a massive change to his plans.

I'm not directly involved in any of this and I'm not going to pretend that large numbers of people in u.k have been impacted and indeed those that have are more likely to be higher earners. All I do know is that a number of taxation specialists who were engaged to deal with this issue on behalf of the company scheme, struggled with the calculations that were required.

ToneControl

exocet said:

ToneControl;1141542" said:

that form reads to me as looking at the difference between the notional "pension pot" at the beginning and end of that yearTherefore, he could have earned zero in the previous year, and it would make no difference, it's the amount of extra benefit that's been added in this year

if your notional pension pot goes over £1m, you pay charges, but that's when you get the pensionIf you have contributions into your pot over the yearly limit, you get taxed now - HMRC classes it as income"The annual allowance is currently capped at £40,000 although a lower limit of £10,000 may apply if you have already started drawing a pension. "also:"For every £2 of adjusted income over £150,000, an individual’s Annual Allowance, the limit on the amount of tax relieved pension saving that can be made by an individual or their employer each year, will be reduced by £1, down to a minimum of £10,000.This results in an Annual Allowance of £40,000 for those with an adjusted income of less than £150,000; a reducing Annual Allowance for those with adjusted incomes between £150,000 and £210,000 and an Annual Allowance of £10,000 "so we can assume his annual limit on pension contribution was £10,000that means that anything above £10k into the pension pot was income"In simple terms, the amount of the annual allowance excess is treated like any other income and is added to the top part of the person’s taxable income.The part of the excess that falls:within the basic rate band is taxed at 20%within the higher rate band is taxed at 40%in excess of the additional rate threshold is taxed at 45%"

so that means, to get a £250k (total) tax bill:If he'd been paid £220k salary, he'd pay 40-45% on most of it, so say £80k tax (I'm too lazyto be exact, since we don't have an exact salary anyway)so if there was a £170k tax charge on the pension contribution, that would have to be because his pension pot went up£378kthis would be if his projected annual pension went up by £23.6kPerhaps the employer bumped up the final pension by £24k????

The calculations are based on annual inputs and NOT the pension pot value. That's whats so unfair about it. Your pension pot can be well within the LTV but you are treated for taxation purposes on the annual input which of course is based on an annual allowance. I'm not making this up! As I said earlier, he made a mistake - when asked if he wanted his variable earnings for that period to be treated as pensionable, he said yes. If he'd said no, there wouldn't have been such a large issue. Once HMRC got hold of it, there was no going back I.e no way that he could change his mind. The tax liability was settled by the pension scheme - a process that is known as "scheme pays". My colleague now has reduced pension benefits as a direct result.

I'm not directly involved in any of this and I'm not going to pretend that large numbers of people in u.k have been impacted and indeed those that have are more likely to be higher earners. All I do know is that a number of taxation specialists who were engaged to deal with this issue on behalf of the company scheme, struggled with the calculations that were required.

I can't see how you interpret the form that way

There is no specific contribution to a DB scheme, it's a promise to provide a benefit made by the employer, hence the wording "benefits at" start/end of current pension input period

the annual input is deemed by multiplying the change in final benefit by 16

so they are looking at the change in deemed value in the pension pot (minus inflation on the amount from last year)

What other way would be possible for a DB scheme?

There is an annual limit on pension contributions, because it was a very good tax loophole 

normally it's £40k, but for someone over £210k salary, it's £10k

I don't see how ticking a box saying pensionable would affect the annual allowance - HMRC would still see £210k+ salary, and impose a limit of £10k for the year, and if the deemed DB pot increases more than £10k, tax will be due, which as you say, can be paid from funds in your deemed pension pot. Presumably, because he ticked "treat as pensionable", his final DB has increased in proportion to that extra variable pay. It's extra money into his pension, so he should be glad, he won't be worse off than if he didn't get it

Most likely the reason the "taxation specialists" struggled to understand this is that most of them are not numerate enough and have a poor grasp of reading statements of law, which is why I now read up on all this myself.

"Box 10 Amount saved towards your pension, in the period covered by this tax return, in excess of the Annual Allowance The Annual Allowance test is only for increases in your pension savings, which have arisen in a ‘pension input period’ ending in 2013–14. For this purpose increases in your pension savings (your ‘pension input amount’) means increases in your benefit rights (for defined benefits arrangements), increases to your promised pension pot (for cash balance arrangements) or amounts of contributions paid into your pension pot (for defined contribution or money purchase arrangements)."

exocet

ToneControl said:

exocet said:

ToneControl;1141542" said:

I can't see how you interpret the form that way

There is no specific contribution to a DB scheme, it's a promise to provide a benefit made by the employer, hence the wording "benefits at" start/end of current pension input period

the annual input is deemed by multiplying the change in final benefit by 16

so they are looking at the change in deemed value in the pension pot (minus inflation on the amount from last year)

What other way would be possible for a DB scheme?

There is an annual limit on pension contributions, because it was a very good tax loophole 

normally it's £40k, but for someone over £210k salary, it's £10k

I don't see how ticking a box saying pensionable would affect the annual allowance - HMRC would still see £210k+ salary, and impose a limit of £10k for the year, and if the deemed DB pot increases more than £10k, tax will be due, which as you say, can be paid from funds in your deemed pension pot. Presumably, because he ticked "treat as pensionable", his final DB has increased in proportion to that extra variable pay. It's extra money into his pension, so he should be glad, he won't be worse off than if he didn't get it

Most likely the reason the "taxation specialists" struggled to understand this is that most of them are not numerate enough and have a poor grasp of reading statements of law, which is why I now read up on all this myself.

I agree with parts of your assessment of the situation although there is / was an option to withhold payment into the pension for the period being assessed. By agreeing to treating the "additional pay" as pensionable, the employer added their 10% contribution on top. I know this because my wife was given the same option and she chose wisely. You also have the ability to carry forward unused allowance from previous 6 years which can also reduce your liability if you have unused allowances available to you. 

The end result was a hefty tax liability for him (paid for by the company pension scheme but out of his accumulated fund,  which in turn had an impact on his projected future benefits). So, yes, his total lifetime fund increased, but it was subsequently reduced by the tax charge. 

As to my comment about "specialists" and "struggling" - I think it was more to do with being able to process the figures from payroll given relatively tight timescales in order to produce a "personal projection". From what I hear though, the legislation was not exactly clear!

The point that I really wanted to make right at the outset was that Gordon Brown is not the only Chancellor who has chosen to erode the taxation benefits of Pension Schemes. The changes introduced in 2010 have continued to be tightened by Osborne and have contributed still further to the decline in company pension schemes.

http://www.bbc.co.uk/news/business-11605558

quarky

thomasross20 said:

I'd be ok (I think) with £25-30k per annum pension. 

Plenty of people live on less. With no mortgage, I think between £10-£15k on top of the state pension should be OK for a lot of people. They won't be rich, but they won't be living hand to mouth. The more then better, but having reasonable expectations and a cheap lifestyle goes a long way to happiness!

thomasross20

Yeah that's probably fine - I just pulled a number out of thin air!

Snap

When most of us retire we will be able to use equity in property to supplement pensions. It just means that our kids won't inherit as much as we do/will do as there will likely be no property. We will see a surge in equity release schemes and companies, already happening. And as a consequence its likely that the BRitish obsession with owning your property will steadily erode, moving us to more like a continental way, where most people rent, long term. Economically, that might not be such a bad thing in the long run, as it willl reduce the economic pump from property equity.

The pension income projection assumes you buy an annuity of course, which is not always the best pension option. THere are lots of things you can do with your pension money to gain as much as possible. Same goes with pensions contribution investment.

The problem is, its complex and requires thought and time.

ToneControl

exocet said:

ToneControl said:

exocet said:

I agree with your assessment of the situation although there is / was an option to withhold payment into the pension for the period being assessed. By agreeing to treating the "additional pay" as pensionable, the employer added their 10% contribution on top. I know this because my wife was given the same option and she chose wisely. You also have the ability to carry forward unused allowance from previous 6 years which can also reduce your liability if you have unused allowances available to you. 

The end result was a hefty tax liability for him (paid for by the company pension scheme but out of his accumulated fund,  which in turn had an impact on his projected future benefits). So, yes, his total lifetime fund increased, but it was subsequently reduced by the tax charge. 

As to my comment about "specialists" and "struggling" - I think it was more to do with being able to process the figures from payroll given relatively tight timescales in order to produce a "personal projection". From what I hear though, the legislation was not exactly clear!

the problem is that many people registered to give personal advice on insurance and investments are just salesmen, and they don't have much capacity for working things out for themselves. HMRC documents are a bit awkward, but you can usually work out what they mean.

Carry forward is just 3 years, and if your friend is already drawing a pension from elsewhere, annual allowance can be reduced to only £10k a year

http://www.thisismoney.co.uk/money/pensions/article-3153336/Workers-earning-150k-plus-face-cut-pension-annual-allowance.html

btw, I think your original point was that people are being shafted on pension contributions, and that is correct, very strange that the tories have imposed this. The Lifetime Cap is the worst thing

PolarityMan

exocet said:

Hes

A5D5E5;1141066" said:

exocet said:

Evilmags;1140916" said:Sporky said:







octatonic said:



I simply don't believe pensions are the best way to save for the future.





















I concur.



For starters it's just too easy for totalitarian governments to raid them for tax.





























This. If you are saving for retirement get an offshore SIPP and keep shtum about it. I know a lot of guys still working in their late 70s thanks to El Gordo....

....and continued by Osborne who continued to extract even more from pension funds. A friend of mine was hit with a £250k tax bill last year for breaching the max annual allowance within a company pension scheme. He's in sales, .





Your friend is telling some porkies.  

He's definitely not telling porkies. 

You might want to rethink that.....

LoFi

ToneControl said:.......

red brick uni lecturers have indeed paid into a real fund, which has been invested well, and can afford to pay out

Local govt schemes are "funded" too, and old Polys use those. I don't know if all unis use these 2

Are you sure on that? I'm sure I read something that said on average, 1/3 of council tax receipts go to paying pensions for local govt retirees.

Now, that's 1/3 of council tax receipts, not total LG income, so clearly a figure designed to shock, but still not indicative of a funded pension pot.

Garthy

Snap;1141774" said:

When most of us retire we will be able to use equity in property to supplement pensions. It just means that our kids won't inherit as much as we do/will do as there will likely be no property. We will see a surge in equity release schemes and companies, already happening. And as a consequence its likely that the BRitish obsession with owning your property will steadily erode, moving us to more like a continental way, where most people rent, long term. Economically, that might not be such a bad thing in the long run, as it willl reduce the economic pump from property equity.



The pension income projection assumes you buy an annuity of course, which is not always the best pension option. THere are lots of things you can do with your pension money to gain as much as possible. Same goes with pensions contribution investment.



The problem is, its complex and requires thought and time.

My mother in law had just started an equity release scheme. Before she signed on the dotted line and "sold" her house for about a fifth of its market value I read about ER exhaustively, coached by another relative who is actually qualified to sell these schemes but doesn't due to her moral compass. How anyone can think ER is a good or ethical idea is beyond me. When the money runs out you are fucked, proper fucked and it shouldn't be legal, especially considering the penalty clauses means that once the genie is out of the bottle there is no reversing the decision.

thumpingrug

I don't think I will ever be able to retire.  With a bit of luck I might be able to drop to part time working, but even that seems unlikely.