We have been deluged with articles this week, urging us to reduce our reliance on the state pension in favour of auto-enrolment.
Don’t rely on the state pension. Hope for it of course but rely on auto enrolment instead. pic.twitter.com/56jZ4ALlfz
— Merryn Somerset Webb (@MerrynSW) February 18, 2024
I will have to rely on Citywire’s report for Phoenix CEO’s detailed take on the issue
‘The state pension just can’t cope in the way it was designed to do,’ he said. ‘State pensions are going to have to be paid later and at a lower level, and people are going to have to make greater personal provision.’
With no disrespect to Mr Andy Briggs, whose company runs a plethora of open and closed workplace pensions “he would say that wouldn’t he?”
The day after The Sunday Telegraph had featured Andy’s dire warnings about us under-saving for later life, along comes Abrdn’s Stephen Bird , saying the same to the Times
The government should double the minimum contribution rate in pension pots to prevent a wave of people entering retirement without enough financial resources to live comfortably, a leading City investment firm has recommended.
Abrdn has sponsored The Resolution foundation to give us this “precautionary tale”
Phoenix were riding on the coat-tails of the International Longevity Centre’s dire prognosis
The UK and other ageing populations will have to increase their state pension age to 71 by 2050 to maintain the number of workers per retiree
The “dependency ratio” is back with a bang, just when we thought that the PLSA’s retirement living standards were worrying enough.
You’d almost think these great people and think-tanks had read GAD’s quinquennial review of state pension funding in 2015, which contains this nugget
Could private pensions take the strain off the state pension? Merryn says the public purse can afford tax-relief or the state pension but not both.
They have the same problem. But we also spend a lot on auto enrolment tax relief etc so we have 2 state supported systems on the go.
— Merryn Somerset Webb (@MerrynSW) February 18, 2024
The paranoid consensus is that we are sleep-walking into a half-decent state pension support system without compelling ordinary citizens to save sufficient for themselves.
Many will argue that we need means-testing , as happens in Australia , so that our funded “pension” system” can dominate to the extent Super’s dominate Australian’s pension thinking (and the imagination of many in our DWP).
We need better pensions to rely on.
I am not a think-tank or even a “thinker” but I am 62 and I have a DC pot that gives me daily palpitations as it rises and falls on equity and bond markets. Having a “pension” that rises and falls by a quarter in a year, as my “pot” is no replacement for what the Government is offering or what DB pensions have offered since the war.
Triple lock or no triple lock, most people trust the outcomes of their national insurance payments more than a “lifestyle” program that says it delivers security in the lead up to “retirement” , but can deliver the disastrous results of 2022.
The inquest into what happened to DC savers, once QE was unwound is one that I’d like the Work and Pensions Committee spend more time on. Value destruction in DB pensions is an economic disaster, value destruction in workplace pensions is a personal one.
We need what the Pensions Regulator calls “full service” and what the CDC people call “whole of life”. I think most people understand the state pension to provide a whole of life pension that provides the “full service”, that is a monthly payment based on a lifetime or working.
The efficiency of the state pension in reaching parts workplace pensions cannot reach should not be under-estimated.
The capacity of workplace pensions to provide the full service that people want , should not be over-estimated.
We need better pensions to rely on, the state pension may be expensive, but it is fit for purpose; it cannot easily be replaced by the private sector, especially if that sector’s only remedy is to pour more money into a gaping maw that eats our money.
Wokey’s greedy offspring – the workplace pension that pays no pension
The trouble with most comments on pensions is that the population is not homogeneous.
Take for example the figures for this years 3 levels of pension. Which one are you aiming for?
Now identify the cost of an annuity with full indexation allowing for a spouse 5 years younger at 100% of the income inherited.
Now you have your target capital at your chosen age of buying the annuity. For half the population this approaches their total earnings in a working life so depends upon investment performance in excess of inflation. Good luck with that one.
It just does not add up.
How do the recommended levels of retirement income behave in the current market. See the article below
https://www.theguardian.com/uk/money
We learned yesterday how the IFA dealing with DB transfers have been added to the endangered species list.
Advising not to transfer or missing the opportunity to transfer will eventually be added to the redress list finally killing off the most Darwin resistant of the herd.
I am delighted to be retired after 50 years of wrestling with the pension minefield.
https://www.ftadviser.com/your-industry/2024/02/21/britain-has-lost-435-financial-advice-firms-since-2022/?xnpe_tifc=hkQsxFsuhIHDbDbZbd4_b9psafeWaeiWhFWAbMQ6hMHcRui6a_B9afeWaG8.adJShIVdbuUsxfo84IxdbIxJx1TT&utm_source=exponea&utm_campaign=FTA%20-%20Morning%20Bulletin%20-%20Newsletter%20-%2021.02.24&utm_medium=email
The reduction in numbers continues. HAs anyone seen the New (business ) Model Adviser sound bite in a spreasheet?