YOUR pension provision

[chand]

What are you supposed to do if you're quite badly paid? Lots of people work minimum wage jobs - the maximum they could afford to pay into a pension fund each month would still give them bugger-all after 40 years of work. What advice are they given, except 'get a better job'?

Quite. I work for an above-minimum-wage £6.50, but out of my £180 weekly pay £50 goes on basic expenses (getting to work, eating lunch at work, mobile bill). Every month I go skint for a week because of my credit card bill, so that eats a huge chunk from my monthly wage. I'm lucky in that I still scrounge accomodation from my parents, frankly on this wage I wouldn't be able to afford to pay rent and utility bills and shop for my own food. I don't know how people do it. As far as I can see, the only solution for me is 'get a better job', until then the idea of paying money into a pension is laughable; I just went through weeks of scrimping and fighting with my bank in order to cobble together enough money for a plane ticket to see my girlfriend...pensions are way down on my list of priorities.

[weekender]

Right, here we go then.

It's a final salary one and from the reports I get it seems to be doing OK at present.

I assume the reports you get are an informal Trustee report every year which summarises the financial position of the scheme.  Useful, but not half as useful as the Actuarial Valuation which schemes have to undergo every 3 years at a minimum.  This big document basically tells you how fucked (or not) your pension scheme's financial position is, and it's worth getting hold of a copy.  The Trustees don't automatically have to provide you a copy of this, but if you ask for a copy of the last report they should oblige.  They can charge a nominal amount for providing this, like £10, but it's worth it so you can see the likelihood of your pension being provided when you reach retirement age.

At present I'm on course for either a lump sum and half my final salary or 2/3rds my final salary. Of course, it's all more complicated than that, if I left today, I'd get something like 14/40ths of 2/3rds my final salary. Though I might buy a few years service in a few years.

40ths eh?  That's quite good.  You should watch out though, you won't get 2/3rds of your final salary, as it's really not that simple.  What you've been quoted there is the Inland Revenue maximum pension based on the pre-1987   pension regime.  It's not necessarily your entitlement under the pension scheme itself.  Also, new Revenue limits are being introduced with effect from 2006, which will generally be more generous than the old limits.  It's best to think of your pension in monetary terms as opposed to percentages of things - by the sounds of it you'll get a pension equal to the following:

Number of years service x 1/40 x final pensionable salary

You should get a pension statement each year confirming the amount you're likely to get at normal retirement age.  If you want to maximise your retirement income, you'll need to look at what the Inland Revenue will allow, what your pension scheme provides, and see if there's a big difference.  Buying added years is a great idea, it might seem like a pain now but it's probably the best and easiest way of increasing your pension.  The Trustees could also remove the facility in future years if the financial position of your pension scheme deteriorates, so my advice would be to buy as many added years as you can.

I'm confused. Am I fucked because I have a final salary scheme? It's not too late for me to change it - should I be going for a stakeholder scheme instead?
Everyone always said that final salary schemes were the best.

Nonono, final salary schemes are probably the best way of providing you with a pension, and you certainly don't want to change it and go into a stakeholder instead, that's financial suicide.

What the programmes like the one on BBC2 tell you is that your company pension scheme is probably fucked, so you may as well not rely on it at all.  This isn't necessarily the case, they're highlighting the worst-case scenarios.  As I've said, what I want more people to understand is that you're not necessarily guaranteed a pension, so it's best to understand more about the following:

1) Your pension entitlement under your pension scheme
2) The financial position of your pension scheme - i.e. how well-funded it is

The position regarding most final salary schemes isn't that bleak.  A change in accounting procedures a few years ago meant that some schemes didn't look as financially healthy as they were before.  With a structured 'recovery' package and additional contributions from the employer, there's no reason why they can't continue as they did before.

However, as with all things that people don't understand, it's caused a lot of panic.  A lot of schemes have undertaken emergency measures, such as closing their final salary schemes, reducing the accrual rate, refusing early retirements, loads of things.  Whilst all of these will obviously help the funding position, some of them are just panic measures.

The one thing I keep stressing to people is find out what your pension entitlement is and find out about the financial position of your pension provider.  I don't mean to cause panic or anything, but if more people are educated about this sort of thing, the more likely they are to be able to provide themselves with a good retirement income.

Then I'll be ignoring any pension advice you may feel the need to offer, sir.

Why?  I've considered my own financial position and life expectancy and decided I don't want to maximise my retirement income at the moment.  That doesn't mean that I'm not able to comment on ways to maximise people's retirement income, because I work in the industry, understand it and know what I'm talking about.  I'm only trying to help and get people to understand how important financial awareness is.  I'm not a complete expert though, if you're in any doubt, you're best off seeing an independent financial adviser.  They'll charge you money though.  I won't, but then I don't claim to be providing complete independent financial advice.

Take your pension details to an independent pensions advisor. Don't ask weekender.

Don't wait until you find your employer asks for permission to change contribution levels and/or retirement age. Be prepared.

Quite.  You can ask me first though, as I may be able to help in explaining your pension entitlement, as this is what I do for a living.  I'm not doing this to wind people up or force anyone into making stupid investment decisions.  My aim is just to make people more aware about the issues surrounding pension provision.  I don't claim to be able to solve any of those issues, nor advise as to your best course of action.  

To my mind he's [the Chancellor] created a terrible ennui if not despair about personal finances.

That's almost certainly not his aim though.  The government are trying to do what they can to encourage people to plan their personal finances adequately, instead of relying on someone else to sort it out.  This concept I admire, and it's one that I strongly encourage.  Don't rely on the state and/or your pension scheme to fully cater for you in retirement, find out more about it yourself.  See an IFA if you need help.

Hmmm. Well, I've read some papers sent to me by my Council (that's who I work for) and I *think* the review of the Local Government Pension Scheme was coming from Prescott's office. It said that the third stage of the review of the scheme by the Deputy Prime Minister's office would include "looking at" the final salary aspect of it.

Do you mean that I signed up to the deal and they can't change it through protection by legislation?

No, what I mean is they can't change what you've already accrued to date, if that was based on a 'final salary' basis.  They're perfectly within their rights to change the scheme basis to whatever they like in future, as long as they believe that it's within the financial interests of the scheme.  They may change the accrual rate, they may change the basis to money purchase.  Either way it's worth keeping an eye on any scheme changes or proposals that are being made.

So they can offer it only once, when I sign up, or can it be retracted and offered again? Sorry for the simplistic questions, I like to be clear on things.

They can offer it when you sign up, but if you don't take them up on it they can refuse to let you join again if you didn't join at your first opportunity.  Going forward, they can change what they offer you, but they can't change what has already been offered.  So you might find that your pension could be worked out like this:

Service to date x accrual rate (60ths, 80ths, whatever it is) x final pensionable salary

Future service could be based on a money purchase basis, so you'll have a pot of money which is used to purchase a pension on retirement

So your LGPS pension could become quite complicated, let alone any other pension provision you may have made.

Fuck it all away now and not worry about the future? Hardly a responsible attitude, but a tempting one given the horrible political climate.

It's up to you.  That's effectively what I'm doing.  If I do reach old age though, I'm not going to be moaning about the small pension I'll be expected to live on - I understood the risks, I understood what was involved, and I decided that when I was 25 I wouldn't worry about it.  This may change when I reach 30 and am allowed to join my employer's final salary scheme on a 30ths basis though ;).

The information provided seemed to be sound enough at the time I joined, and since, to ease any worries I may have had. The problem with that I suppose, is that I have no comparative idea of what to judge it against. This may sound trite, but is pensions analysis as broad and infinite as other forms of finance?

Yes, basically.

Only, every time I've dabbled in money-orientated things in my life they've seemed to have a fractal-esque ability to provide ever more complex layers of choice and information the deeper you look into it. How much pensions knowledge is a good amount, and where do you obtain it?

I'd say as much knowledge as you need to make sure your pensions fears are alleviated is a good amount.  Your pension scheme provider is obviously the place to ask questions about your entitlement under their scheme, but they won't be able to give you any financial advice as to the best course of action - that's where IFAs come in.  I'm an administrator, so I don't claim to have the answers to the best course of action for you either - I'm not trained to deal with people's personal investments or to recommend any particular product (in fact, as an administrator, I'm prohibited from giving financial advice professionally by law).

What I do claim to have is an excellent knowledge of how pensions work (particularly final salary pensions, as that's what I deal with every day) and the issues surrounding pension provision.  All I'm trying to do is pass on a bit of that knowledge and make people a bit more aware of the issues they need to worry about if they want to have a decent retirement income.

They never educate you about pensions at school do they? They should do, because it's always been a complete mystery to me. I used to have this vague thought at the back of my mind that I'd get free money as soon as I turned 65 - like the dole, only with no hassle. It's only quite recently that I released this isn't the case.

Quite.  It's the lack of financial awareness that I'm trying to encourage people to consider.

What are you supposed to do if you're quite badly paid? Lots of people work minimum wage jobs - the maximum they could afford to pay into a pension fund each month would still give them bugger-all after 40 years of work. What advice are they given, except 'get a better job'?

Win the lottery?  Seriously, it's difficult for the lower-paid people, so the only advice I'd give them is to save as much as they can now.  Every little helps.

I don't know how people do it.

£50 goes on basic expenses (getting to work, eating lunch at work, mobile bill)

Well, cut that lot right out.  I take a packed lunch to work these days, I carpool with two other people so only have minimum fuel expenses and I don't really use my mobile.  It's quite easy to live without what, essentially, are luxuries.

I hope this has all helped.

[All Surrogate]

Question.

Answer.

Thank you very much, weekender.  I think I understand now.  The "2/3rds of final salary" is a bit of a red herring then, in that it's a crude simplification of the subtleties of pensions.

As for meself, I'm 22 and do not have a pension.  I really have very little idea about how they work.  Basically, you pay money to someone to invest, and then they pay you back.  Making them pay you back more than you gave them seems to be the crucial point, but also the most hideously complicated.

To go on a bit, the pensions-problem that's looming because people are living longer and longer seems to be a missed opportunity.  If people are living longer, then they can work longer, surely?  If we somehow managed to change the system so that as our abilities begin to fade with age, we don't just suddenly become a burden as opposed to an asset.  A person's workload should be eased, by a mixture of simply reducing hours and shifting the emphasis of work (more towards training - pass on their experience; it makes the younguns more productive!), not ceased altogether.  How many sprightly (uh, cliché) eighty year olds do you have to see before you realise that most people could do a little work right up to their death?  We all look forward to having a rest from work at the end of our lives, but we also want to be able to enjoy our money while we're still able to enjoy it.

In summary, the whole work ethic in this country needs to be changed; ageism hurts the young too.

[bill hicks]

Quite. I work for an above-minimum-wage £6.50, but out of my £180 weekly pay £50 goes on basic expenses (getting to work, eating lunch at work, mobile bill). Every month I go skint for a week because of my credit card bill, so that eats a huge chunk from my monthly wage. I'm lucky in that I still scrounge accomodation from my parents, frankly on this wage I wouldn't be able to afford to pay rent and utility bills and shop for my own food. I don't know how people do it. As far as I can see, the only solution for me is 'get a better job', until then the idea of paying money into a pension is laughable; I just went through weeks of scrimping and fighting with my bank in order to cobble together enough money for a plane ticket to see my girlfriend...pensions are way down on my list of priorities.

I work in a proper minimum wage job at £4.85 an hour and my monthly pay is about £550, of which £220 goes on rent plus food and internet pornography after that. I have no chance of saving cash. Essentially if you're poor and single without any kids then you are royally fucked.

(My only hope is get a better job, unlikely as I'm comfortable in my misery, or miraculously become the new Scargill and actually get the Union to do something about the pay. Even a simple concession like Anti-Social hours pay would help immensely...it really is the shittest job in the world and I recommend you all boycott Cineworld immediately.)

[slim]

Lots of useful information there, 'ender, thank you muchly.

Another simpleton question: 30ths? 80ths? What is this? Why would 30ths tempt you whilst you guesstimate a figure of 60ths or 80ths for my scheme?

I can see you cupping your head in your hands, shaking it and sighing. :) Back to obtaining information: are there any good web sites about you've come across that are good for learning more about pensions? Then I can analyse what information my employer gives me.

[weekender]

The "2/3rds of final salary" is a bit of a red herring then, in that it's a crude simplification of the subtleties of pensions.

Exactly.  It was used historically on the grounds that people stayed at the same company for life, and would therefore have a good chance of being restricted to the Inland Revenue maximum pension - which is 2/3rds of Final Remuneration (not necessarily the same as your final salary, but will do as an approximation).  As this is not usually the case nowadays, people need to rethink their ideas regarding pension provision.

As for meself, I'm 22 and do not have a pension.  I really have very little idea about how they work.  Basically, you pay money to someone to invest, and then they pay you back.  Making them pay you back more than you gave them seems to be the crucial point, but also the most hideously complicated.

Well, yes and no.  The scenario you describe is more for 'money-purchase' based pensions where a pot of money is accrued and then used to purchase an annuity on retirement   Final salary pension schemes are different.

To go on a bit, the pensions-problem that's looming because people are living longer and longer seems to be a missed opportunity.  If people are living longer, then they can work longer, surely?  If we somehow managed to change the system so that as our abilities begin to fade with age, we don't just suddenly become a burden as opposed to asset.  A person's workload should be eased, by a mixture of simply reducing hours and shifting the emphasis of work (more towards training - pass on their experience; it makes the younguns more productive!), not ceased altogether.  How many sprightly (uh, cliché) eighty year olds do you have to see before you realise that most people could do a little work right up to they're death?  We all look forward to having a rest from work at the end of our lives, but we also want to be able to enjoy our money while we're still able to enjoy it.

In summary, the whole work ethic in this country needs to be changed; ageism hurts the young too.

Very true, and you raise some good points.  The trouble is though, that people have historically been able to take early retirement from age 50 onwards.   Most people still expect this right, without conisdering the change in UK demographics.  People still want to retire early, but they also want to spend 30 odd years in retirement, as opposed to 20 or 30 years ago when you could expect five or ten years in retirement tops.  Do people want to consider the additional funding this will require and contribute to it themselves?  Not really, no.

30ths? 80ths? What is this? Why would 30ths tempt you whilst you guesstimate a figure of 60ths or 80ths for my scheme?

This is the accrual rate for final salary pension schemes.  Your pension will be worked out by the following formula:

Service x accrual rate x salary

Please note that all three have different definitions depending on the individual scheme.

I'm guessing that your pension scheme is 60ths or 80ths simply because these are the most common accrual rates on final salary schemes.  I've dealt quite a lot with your scheme (when transferring benefits to/from pension schemes I work on), so it was an educated guess.  To answer your question as to why 30ths tempts me so much, a couple of examples should suffice.

Let's say I retire at age 65 with 30 years completed service.  My final salary under the pension scheme rules is £30,000.  Now, if the accrual rate was 60ths, the pension would be:

30 x 1/60 x £30,000 = £15,000

However, if the accrual rate is 30ths, the pension would be:

30 x 1/30 x £30,000 = £30,000

So the higher the accrual rate, the better the pension.  That's why I'll probably leap at the chance to pay 30ths, because I'll get a better pension out of it.  I'll be expected to contribute more, but it's a price I consider worth paying.

Back to obtaining information: are there any good web sites about you've come across that are good for learning more about pensions? Then I can analyse what information my employer gives me.

I've no idea. Let me have a quick Google.

[weekender]

The LGPS website is pretty good by the looks of it:

http://www.lgps.org.uk/

For general information, the best place to start is the government's pensions websites:

http://www.pensionguide.gov.uk/
http://www.thepensionservice.gov.uk/

As I've said before, the government is doing what it can to educate people about pensions, and the information on their sites is excellent.  That first link should be a great starting point for general information - obviously you'll need to glean the information for your own particular circumstances from your pension providers.

[slim]

Thanks very much. All bookmarked and due to be read tomorrow over a nice sober cup of tea. The explanation on nths was very clear, thank you.

[greencalx]

weekender, sorry to be rude, but do you know anything about USS?  I always trusted colleagues who Know About This Kind Of Thing that it's a goodun, but...

[Pinball]

This is a great thread, Weekender - thanks! Question: what's the best way to arrange a SIPP?

[chand]

Well, cut that lot right out.  I take a packed lunch to work these days, I carpool with two other people so only have minimum fuel expenses and I don't really use my mobile.  It's quite easy to live without what, essentially, are luxuries.

I already get cheap lunches from Tesco, and use the bus. I do need to use my mobile; if I had a choice in the matter, believe me, I wouldn't. But anyway, if you're suggesting I spend the next 40 years fucking around not buying anything, not talking to my girlfriend and making my own stale bread sandwiches to take into work in a bag to save 75p, then fuck it, I'll just kill myself on my 65th birthday and blow my money on crazy luxuries like £1.05 Tesco ham & mustard sandwiches like the true rock'n'roll nutter I am. Today I went out and bought my own jar of Marmite. I could have waited til next Friday when mum goes to the shop again, but I really fancied some Marmite. To think, if I'd put that £1.39 into a pensions scheme...

I'm trying to save up some money to get married as well eventually, that's turning into a sorry fucking tale. Even with saving money on luxuries (I have a massive CD collection and yesterday I spent ages fretting over the new Sole album and had to not buy it in the end), my personal situation is such that I need money for things, and it's surprising how little I have considering I don't pay rent or utility bills. My mum bought a car for me and my brother to share, and I've declined driving lessons because even the discounted rate I'd get from my driving-instructor uncle is a bit too much of a dent at the minute. Pension planning can fuck off til I'm in a position to afford to put something into one.

[mayer]

Frankly, reading this thread I hope I die before I get old (or at least before I stop working).

[Pinball]

If the retirement age is raised to 70 or 75 (by the time us lot retire), are pensions really worth the effort??

[weekender]

weekender, sorry to be rude, but do you know anything about USS?  I always trusted colleagues who Know About This Kind Of Thing that it's a goodun, but...

I know quite a bit about the USS.  It's a 60ths scheme, which is alright, but you may wish to consider additional investments if you want a comfortable retirement.

The USS is also run by a bunch of halfwits who understand nothing about pensions nor the pension scheme they administer.  Don't let that put you off it though, as a final salary scheme it's obviously worth being a member of it.  If I were you though, I'd check your benefit entitlement very carefully, in line with any of the scheme documentation you may have.

As always, if you're in doubt about anything, best to see an IFA.

Question: what's the best way to arrange a SIPP?

It's not really my area of expertise, but I'd imagine the best thing to do is see an IFA, explain your position and ask what they recommend.  There's some good general information here:

http://www.sipp-provider-group.org.uk/index.htm

Although to be honest, as investments go, I reckon you'd be just as well off if you invested in loads of ISAs and then considered SIPPs afterwards.  But then I'm not sure about any tax relief on SIPPs or anything like that, so please don't rely on me for investment advice - see an IFA!

If the retirement age is raised to 70 or 75 (by the time us lot retire), are pensions really worth the effort?

It depends on whether or not you expect to live long in retirement I suppose.  Anyway, what you're talking about is the State Pension Age, which isn't necessarily the retirement age under a specific pension arrangement.  The government is raising the minimum retirement age to age 55 in 2010, but that doesn't mean you won't be able to retire before the State Pension Age, whatever it is at the time.  Obviously any pension you take early will probably be reduced to take into account the fact that it's being paid longer.

To think, if I'd put that £1.39 into a pensions scheme...

It may sound daft, but if you add up the money you save by taking a packed lunch to work, and look at it in terms of what you could invest for the future, then yes, it could make a considerable difference.

[ccab]

It may sound daft, but if you add up the money you save by taking a packed lunch to work, and look at it in terms of what you could invest for the future, then yes, it could make a considerable difference.

What kind of person breaks down all his minutes into pounds & pence like that? Whatever future that takes you to, I wouldn't want it.

I've never seen the point in pension schemes, I think most people enter into them under the illusion that their scheme is going to be permanently sound, that the economy, politics & lifestyles won't change in the intervening time, & that the pension will actually be necessary. If you're 40, looking ahead to retiring at 55 isn't such a feat of prophecy. But asking 20 your olds to peer across 40 years is idiotic.

I think if you're that petrified of ending up a poor pensioner, you should do something practical about it. Start a business, invest properly, slog at something more profitable and accumulate - instead of this pathetic half-measure of funnelling a few pence each week into a pension pot and fooling yourself that when it comes, old age will be a less miserable ordeal because of it.

[chand]

It may sound daft, but if you add up the money you save by taking a packed lunch to work, and look at it in terms of what you could invest for the future, then yes, it could make a considerable difference.

Well, that £1.39 wasn't for a work lunch, I was at home and wanted something to eat which I didn't have in my house, so I went out and bought it. Anyway, at one point due to some massive credit card chaos I was skint for a while and had to take packed lunches to work and I hated it. First I had to make sure that there was bread in my house which hadn't gone stale. Then I had to make sure I had enough ham (which is fairly expensive anyway, even to buy from a supermarket), then I had to make it the night before cos I don't need an extra thing to do in the morning, and I ended up with kinda crappy-tasting ham-and-cheese sandwiches in a bag which didn't work out that much cheaper than buying cheap fresh ones every day.

Of course, in theory, you're right. I could cut out 'luxuries'. I could dump my foreign girlfriend and get one that's cheaper to see. I'm sure she'd understand. I could stop paying every month for my website, but you know, I don't want to. I could sell my CDs and DVDs and make some money. I could reject my mates even more often than I do ('Sorry, I can't come to the pub to spend £4 on alcohol!'). But it's hard to save money. In the last couple of months while I've been trying to get enough money to get married, all kinds of shit came my way that I had to pay for. Mother's day, my girlfriend's birthday/Valentine's day and the expensive posting of her gifts, my brother's birthday, my brother's band's gig, my mates' band's gig, my website hosting plus the yearly domain renewal, my monthly credit card bill, a webhosting bill that didn't go through last November suddenly being taken out of my account in February without warning. Yesterday I had to buy a new razor and some boxers. I could have grown a beard and continued with my pairs with holes in, I suppose. That's really a luxury, but it doesn't feel like it.

Plus, I have the problem that I'm still on a temp contract hoping to get a permanent one. It's looking good at the moment but in theory I could go in tomorrow and instantly have no job. I felt like shit the other day but went into work because if I take a day off I don't get paid for it and I can't afford to miss a day right now. I could cut down my spending in theory, but I'm not a hugely greedy person and I don't feel like I'm buying such a ridiculous amount of luxuries that I should have to feel shamed enough to cut down and save money for an unforeseen future 40-odd years hence.

[greencalx]

I know quite a bit about the USS.  It's a 60ths scheme, which is alright, but you may wish to consider additional investments if you want a comfortable retirement.

By additional investments, do you mean extra years on the USS, or something else entirely?

The USS is also run by a bunch of halfwits who understand nothing about pensions nor the pension scheme they administer.  Don't let that put you off it though...

:)

As always, if you're in doubt about anything, best to see an IFA

Good idea.  There's a possibility a couple of circumstances might change over the next year or so (viz, moving into permanent employment and possibly moving in with Ms calx), part of which might encourage me finally to sort out buying a place which I think would be a good time to sort out all my finances properly.

Thanks for your help.

[Emergency Lalla Ward Ten]

I'm with Chand on this - saving tiny amounts of cash might be a good idea generally (especially when it comes to overpriced supermarket sandwiches), but doing it solely to get a basic pension is really depressing. What kind of life would you have pre-65?

Saving £1.39 a day, incidentally, gives you (assuming you work 5 days a week) £361.40 a year. Which, if you work for another 40 years (I don't know your age, Chand), is £14,456. So that's one year taken care of - what do you when you hit 66?

I haven't really got any spare cash left over ecah month after rent, bills, council tax, travel, food etc (and there are no cuts to be made in these areas that I haven't made already). I could probably put a small amount aside, but I'd have to live pretty puritanically to do so.

Investing in property isn't an option - even the idea of getting my *own* house is laughable.

I always used to be jealous of OAPs as a child - no school to worry about on a Sunday night, free money for doing bugger all, a righteous sense of 'I've done my bit, now it's time to sit in my armchair'. I suppose that's still true of most current pensioners, but probably not for my generation. What's going to happen - are we all going to hit our 70s and think 'Fuck, I can't afford to eat'? There's going to be millions of us.

[weekender]

ccab's opinions.

I don't necessarily disagree with you, you make some salient points.

but you know, I don't want to.

I don't disagree with you much either, in fact, I employ many of the same attitudes myself.

[intermission]

By additional investments, do you mean extra years on the USS, or something else entirely?

I wasn't aware that you could buy extra years under the USS scheme, but if you can, then I'd do that first.  If you can't, then maybe something else entirely.  See an IFA.  How well-prepared an IFA will be to deal with concerns regarding the stock-market and lack of oil in 40 years time, I don't know.  Maybe they'll only be able to help you with regards to the next 5-10 years.  Either way, it's better than nothing.

[/intermission]

What kind of life would you have pre-65?  What's going to happen - are we all going to hit our 70s and think 'Fuck, I can't afford to eat'? There's going to be millions of us.

Probably, yes.

I'm not disagreeing with anyone's individual attitude per se, as I employ those attitudes myself.  However, I am aware that there is going to be a massive problem with pensions over the next few decades, and that problem is twofold:

1) People don't understand enough about the need to provide for their future
2) People don't care enough about the need to provide for their future

I'm trying to do what I can to address problem 1.  Problem 2 I have no idea about, simply because I employ the same attitude at age 27.  That said, I do have the small cushion of a great final salary scheme to enter when I'm 30.

The overall point that I want to get across is that financial planning for the future is important.  I'm fed up of reading stupid fucking idiots in the media who assumed that they would automatically get a pension of 2/3rds of their final salary when they retired, when they hadn't:

a) checked their actual entitlement under their pension scheme
b) checked the financial position of their pension scheme

If in expressing that annoyance, I've helped one person understand their pension entitlement, made one person think a bit more about their future financial provision, or at least helped one person understand about the issues regarding pensions, great.  If I haven't, fine, ignore me, I'm probably winding you up anyway.

But for fuck's sake, if you haven't done any of the above, nor care about any of the above, please don't go running to a fucking newspaper, running to the internet television or whatever they have in 40 years time, and start moaning that you weren't warned, because you were.

[Alberon]

Thanks for the info Weekender!

My union rep is on the board that oversees the Pension Fund so we get frank comments from him about how well the fund is doing, but I will have to get more information direct from them about how well they're doing.

EDIT - I'm also saving enough to fill my ISA entitlement each year as well. It's 30 years until I hit 65, and I've no idea how those three decades will pan out, but I hope to go into retirement with more than just my salary and a paid-off house behind me.

[Pinball]

Taking a step back, if the current (and likely future) scenario is the end result of tens of thousands of years of civilisation, then it's a pathetic endictment of the exploitative nature of the human race.

Think - why is life so expensive? It shouldn't be. It should be possible to live in a £10,000 house in the woods, but look at what we have as an alternative. Pokey little flats for £160k (in the South at least), with ongoing taxes draining our meagre incomes. No wonder the government (and Tories alike) are bashing "travellers" - they see it's what we'll all have to do, and are taking pre-emptive action!! The Tories want to imprison travellers. Um, what crime have they committed exactly, apart from opting out of the ridiculous "system"?

No, far better to force everyone to partake in the current system that maximises tax take. Who cares if it renders the lives of most Britons pitiful...

[chand]

Investing in property isn't an option - even the idea of getting my *own* house is laughable.

God, yeah. I'm still living with my parents (at the age of 24), and once I get a better-paid full-time job I might be able to rent somewhere. But getting my own house is a pipe dream for now, because I don't have a house to sell.

[weekender]

Think - why is life so expensive? It shouldn't be. It should be possible to live in a £10,000 house in the woods.

I went on a nice walk earlier today, Avebury it was.  I stood on the top of some ancient burial ground or other, and just looked around at the scenery.  There were no man-made buildings in sight, it was a joy to behold.  Must have been at least a  100m radial viewpoint.  Marvellous.  Puts life in perspective, anyway.

Doesn't help me plan financially for the future though.

[Emergency Lalla Ward Ten]

I could always get a big bunch of credit cards when I turn 70, run up ridiculous debts and then die flicking the Vs. Then again, they probably don't give credit cards to 70 year olds. And knowing my luck I'd probably live till I was 106.

In all seriousness, why do people bother with pension schemes when they could just chuck spare money into an ISA every month? At least you'd know the money would always be there, and you'd know exactly how much was in the pot.

[Dusty Gozongas]

Dear weekender,

Confusion abounds.  My pension was "set in stone" and now it ain't.

By way of explanation, imagine this scenario:

In the beginning there was a globally successful company whose employees paid into the pot. All was secure and the lord said "this is groovy".  But it came to pass that the company fragmented somewhat and was sold verily in lesser portions to various buyers.

So then, we first find ourselves in the position of being assured that our final salary pension is protected (set in stone, trust us) and that our portion of the contributions are safe within the framework of a scheme in which the other members pay a higher contribution with less benefit.  But we're safe.  Set in stone, like. Honest.

Then came the £180M shortfall due to the wholesale investment in bonds wot didn't work out too well.  So, we was cajoled into changing our x/yth contributions even though I'm convinced the small number of 'set in stone' members should've told our employers to fuck off.

This came about a few years ago.  It's worth noting that since agreeing to the changes in contributions, the company has seen fit to make their long held tradition of below-inflation pay rises non-pensionable.

Should I defer my pension now, or should I have done that the day they got suckers to agree to a change in terms?

[weekender]

Should I defer my pension now, or should I have done that the day they got suckers to agree to a change in terms?

I would get hold of the latest Actuarial Valuation, which should show the scheme's financial position in great detail, and also explains what the Company's going to do about the shortfall in the long run.  Then I'd take these details to an IFA and ask their opinion on what to do with your benefit - as I've stated before, I'm not trained to give financial advice, but I can encourage people to look at their benefits and the issues surrounding pension provision, which you've understood with more clarity than a lot of members of final salary schemes.

[Gazeuse]

I don't have a pension because one of my businesses is a sort of pension in itself, as it brings in royalties. By investing in that, I increase the amount of return I get.

Also, I won't be retiring.