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Watch out for your pensions


NormanH
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Idun, the proportion of people on a pension "far and above a current working wage, that the young are expected to keep their families with" is really very small. To have a big pension you have to have had a big salary and that isn't true of my husband and me and most of the people I know. Our occupational pensions are a long way below the average wage in the UK, but we manage.
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Negative equity? Well I reckon that at some point when my generation is popping it's clogs regularly, then house prices are going to fall a lot. It is just the when, and if they do fall, there will also be a lot of people that will be able to afford to buy at reasonable prices and no longer rent.......

As soon as that happens the law of supply and demand will kick in and prices will rise again......especially in areas like this where there is work.

In additition the price of a house does not really reflect what you pay for it in most cases, only how much you borrow.....add interest and goodness knows how much most people pay over the years.

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KathyF wrote "most of the people I know"

I agree Kathy and it seems to be true of most of the people on this board too.

I've spent some time looking at the five people who wrote this and, as Norman says, their own backgrounds are interesting, particularly in regard to their work experience and none of them appear to have done anything which would put them in touch with ordinary working people.

Perhaps other people on this board share my experience of knowing quite a lot of people born in the 70s (children's friends) who are living their lives pretty much as I did. Working hard, paying their taxes, worrying about their children's education and so on who do not share their views.

I find their view that British workers should be more like those in Hong Kong or Singapore insulting.

It really is rather worrying that such inexperienced people can be elected.

Hoddy
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[quote user="idun"]

. In France one pays in a lot, in fact a lot more than in the UK as a sort of insurance of having something in old age rather than a right to a big amount. AND there is no 20%/25% of the pot, or whatever it is, tax free which I do not understand and never ever will.

[/quote]I think you are comparing the french state pension system with the UK private pension system. The 25% pot you refer to is just getting back some of the voluntary contributions made during your working life instead of puting the entire pot into a pension fund. Obviously your pension depends on how much you buy it for but  it can be useful to have some money available while you are still relatively young and hopefully healthy.

As Norman said the basic state pension is only £107.45 pw rather less than a person working 37 hours/week gets even if they are on the minimum wage. The big pensions you mention only go to a relatively few people mainly working in banking or similar.

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Idun, do you think that £107.45 a week is excessive? Is that more than your French pension? From what I've read the UK state pension is very poor in comparison to other European contries (eg Ireland has a non contributory pension of €219 per week, or €230,30 if a person has paid full contributions). The vast majority of occupational pensions in the UK (which aren't funded by government) are a small amount of money for all except those fortunate few retired from very well paid jobs.

We were also stuck in the mortgage trap, paying at one time 15.5% interest which took up most of my wages. I didn't/don't think we were greedy; we started with nothing and worked and saved until we'd achieved a reasonable standard of living, our own house and (usually) one inexpensive holiday a year. Now we're lucky enough to have some savings, their value is constantly eroded by inflation whilst the interest earned is negligible.

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It is not the private pensions for which people have contributed (that G Brown buggered up) which the article is aimed at, but the undefunded, under contributed taxpayer funded occupational pensions which are the problem. Whether they are deserved is another matter, given that people were getting enhanced pensions plus lump sums at 50 some time ago.

Frankly, far too many people went too early, contributed too little and did not really work hard enough for what they have got and they are the ones who are screwing the next generation. Others may have done so.

No system could ever have foreseen the wildly crazy expansion of the State in various forms of the fact that state workers defined their own terms ( eg retirement at 60, final salary and not total career pensions, defined their own work loads and work pace,) which has led to the present mess.

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Wooly, I worked in local government for many years and paid 6% of my salary in superannuation contributions. When I was made redundant and took early retirement, my pension certainly wasn't enhanced and indeed I've only ever known people get full pension early on serious health grounds. As for your contention that "state workers defined their own terms ( eg retirement at 60, final salary and not total career pensions, defined their own work loads and work pace,)" you are joking, aren't you?????
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I paid in 15% of my salary for best part of 20 years to which was added a company contribution of 5%.

Still nowhere near enough to achieve the commonly recommended pension of 2/3rds salary though.

Including 2x full UK state pensions when everything else kicks in we'll be lucky if we get 50% of what I was earning whilst employed.

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Been following the thread but no time to take part, just a couple of things that stick in my mind.

Re house prices and the comment about mobile work force. The idea of the mobile workforce is old and not valid anymore. We have better high speed train links with people living in Leeds (for instance) yet working in London. OK they spend half their life on a train but that's their choice. Most industry is in the place where once there was a more traditional industry like ship building, steel making etc, the Nissan and Toyota factories are typical examples and have replaced some off the jobs lost in both areas. Technology also takes a part in the reduction of mobile workforce. My wife now works from home most of the time, there is no need for her to be in chambers five (or more) days per week. A person I know is a dealer, rather than be at their traditional trading desk they work from home in France.

Private pensions. Let us not forget that for many of us who were looking forward to a nice comfortable private pension that Brown raided them not just once but three times in total. The value of my pension, for which I worked very hard for, certainly harder than some of the public sector workers I came in to contact with, has reduced by half whilst public sector workers are complaining that they need to put a bit more in to get the same out. I didn't get that opportunity and neither did a lot of other private sector workers.

Public sector workers, well I am out of touch a bit but people I worked with within the public sector were on lesser wages that somebody in the private sector doing the same work. However for many the reason they were willing to accept lower wages was because of the 'final pension' scheme that they were offered with only a slightly lower pension if they retired early plus a nice 'pot'. In the private sector I certainly can't afford to take a 'pot' and have deferred my pension in an attempt to get back some of the money Brown stole form me.

The old age pension is a problem in much as the same way that health care is in the UK. The bottom line is that there are far to many taking out than there are putting in and 'the books' just don't balance. Personally I am more in favour of a mixture of French and English systems where as your pension is collected by approved companies working on behalf of the government but they keep the annuity system which they don't have in France.

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Part of the problem is that public sector workers' wages caught up with the private sector but their pension contributions did not increase beyond the 6%. The old idea that they took a deferred wage in the form of earlier retirement and higher pensions is just no longer true.

What I cannot understand is why lump sums are paid out on retirement in the public sector. How is this justified?

 

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Since the recession took hold in 2008 most private companies made cuts in the working week and salary. Basically in terms of salaries and 'perks' they have remained stagnant or worse whilst public sector works have noticed very little change to their annual salary increases and 'perks' so the public sector has overtaken the private sector. Now things are starting to change in the public sector with pension schemes, wages and reduced hours (no overtime etc) because there is not the money available. With effectively lower wages and increased VAT private sector workers are just not spending money. The biggest tax income in the UK is not direct tax (PAYE) but VAT etc so with people hanging on to their money the tax income is either staying the same or actually reducing. This in turn reflects on public sector employment, wages and pensions as there is not enough money to pay their increases. Other areas of spending have to change as well like for instance state pensions by increasing the age and by 'consolidating' the pension in to a standard amount with no means tested extra money for the very poor (or those without a company pension).

As to the 'lump sum' payments well in the private sector you have the choice to take a lump sum or not, if you do your monthly cheque will be less. Public sector workers demanded the same opportunity but then it's not really them that are paying the bulk of the money in to their scheme (although they may feel differently) it's the tax payer.

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True, Wooly, I was a public librarian and we were notoriously poorly paid. Our employers added 7% to our 6%, and I ended up with a pension which was about one third of my final salary. Even with the state pension, my income is nowhere near the recommended two-thirds of salary which was mentioned. I have no way of knowing how this compares to an equivalent private pension.
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Normally you have to pay a minimum percentage with the option to increase the percentage. I used to put 15% in and the company would match whatever I put in. This of course was before tax so the calculation went in the following order, NI, pension money, tax allowance then you paid the tax on what was left. What Brown did is say that we had to pay tax on the pension money we put in and it came out the pension pot.
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[quote user="Hoddy"]KathyF wrote "most of the people I know"

I agree Kathy and it seems to be true of most of the people on this board too.

I've spent some time looking at the five people who wrote this and, as Norman says, their own backgrounds are interesting, particularly in regard to their work experience and none of them appear to have done anything which would put them in touch with ordinary working people.

Perhaps other people on this board share my experience of knowing quite a lot of people born in the 70s (children's friends) who are living their lives pretty much as I did. Working hard, paying their taxes, worrying about their children's education and so on who do not share their views.

I find their view that British workers should be more like those in Hong Kong or Singapore insulting.

It really is rather worrying that such inexperienced people can be elected.

Hoddy[/quote]

This was my reaction. I am sure that all generations  will need to make efforts, but to see these people (two of whom have come from other countries and been brought up  and educated by the hard work of people they are branding as lazy) speak like this  smacks of 'biting the hand that feeds'

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Actually there was a marked distinction in Hiong Kong too: those who worked for themselves did work hard but could save and make their own way, many very successfully, but many civil servants were not overworked or hard working and very keen on ensuring that they screwed every penny out of their generous terms and conditions, including their rank. 

I was able to make choices and did stick to them. Most of my earning years were abroad and I stashed money away at that time. My feeling towards Britain was that I would not ask them for anything and they should not come snivelling to me for taxes. When I was on enforced stay in UK for a few years, (unlike Norman, I was not being kept at Her Majesties Pleasure!) I kept out of the system as much as possible by, for example, staying out of the teachers pension scheme. Though I always paid the correct taxes.

However, there does seem to be a quite shameless attitude to public money these days in all sectors - ie that the pot can be emptied as much as possible without caring for the consequences. Examples are the enormous salaries and perks being paid to senior and middle management in the BBC, NHS, local government and tons of others. Whether these are all baby boomers remains to be seen.

My belief is that it is the duty of government to constantly reduce spending by ensuring efficient and fair use of public funds, and that there should be a crime of Abuse of Public Funds, which would include work contracts that are out of line with reasonable contract norms in any field and exaggerated pension pots.

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unlike Norman, I was not being kept at Her Majesties Pleasure!

I categorically deny the scurrilous accusation that I was Her Majesty's faithful servant , à la John Brown, during the period that Her Consort was no longer UP to it due to the intimations of mortality that the first signs of his prostate cancer gave rise to ( or did NOT give rise)

On the other hand my lips are sealed about my relations on  a rug before a gas fire with her sister in a certain ancient University in East Anglia.

In a similar fashion I am sworn to secrecy about what I know of the goings on of Her Majesty's children  from  my friendship with an officer and a gentleman with whom I used to drink in a Devon wine bar and who was an intimate friend of the wife of an heir to the throne..

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