Raise State Pension age to 75

[om15]

Our exciting new Prime Minister has a team of advisors that wish to raise the state pension age to 75, this beneficial change will allow us to continue enjoying the benefits of working right up to the point of expiry, here is their thoughts,

Andy Cook, CSJ chief executive, said: “Working longer has the potential to improve health and wellbeing [and] increase retirement savings... Right now, we are not doing enough to help older people stay in work, and the state pension age doesn’t even closely reflect healthy working life expectancy...

“By increasing the state pension age, we can help people stay in gainful and life-enhancing employment while also making a sound long-term financial decision.”

I might not vote for that.

[Capetonian]

I am not sure if this is voluntary, in which case it may be a good thing for those who choose it for the right reasons, or mandatory, in which case it's appalling. I haven't looked into it as it doesn't apply to me having already reached pension age.

Anyone who has worked for the majority of their life is entitled to 'time out' to enjoy the fruits of what they hopefully accumulated during their working years, to spend time travelling, or with family and friends, or simply vegging out on the sofa if that is what they want.

Sadly many people will have to work until they drop as they have not made adequate contingency for their old age, in which case they are the victims of their own improvidence or stupidity to put it bluntly.

This article is interesting (I don't normally quote from or refer to the Guardian). I was surprised to see that the country with the highest level of poverty amongst pensioners is Switzerland (= with Spain) followed by Belgium and then the UK.
https://www.theguardian.com/society/201 ... s-pensions

[Rwy in Sight]

A former top lady judge here tried to raise the retirement age for judges from 65 to 67, I think. Obviously her state pension is much smaller than her salary and being the top judge is much more interesting than being a pensioner no ones pay attention to. And this is my objection to raising the state pension age: it all comes down to how good and fulfilling (every one defines those terms as one sees appropriate) one's job is. Unfortunately very often the currently available jobs are bad enough for one to look forward to retirement.

I understand that there is a lot of subjective room in the terms I used but I hope the point is clear: a good job is worth to keep it as long as possible and postpone the retirement.

[Slasher]

Yep - work till ya dead like the good ol' commie way did tovarich. Just fleece it up a tad so that the less intelligent Unwashed agree with comrade Cook da?

[OFSO]

I checked whether my 2018-2019 income tax assessment had been processed this morning. This came up on screen. They are wrong, of course but WTF !

Obviously are not short of funds so why not continue to pay pensions as at present .

[Fox3WheresMyBanana]

There is a great problem in a lot of jobs, teaching for instance, where the large majority of the workers are not capable of carrying on full time work past 60 and achieving the same standard. In the UK at least, the pay, tax and pension systems highly penalise people at present for switching to part time work for a period before finally retiring. Just shifting the pension age without fixing all the associated problems is a disaster in the making.
Then there's the stealth rejection for very many jobs of any candidate over 50. HR do it all the time, and the Government hasn't shown the slightest interest in doing anything about it.
The Government must fix both of these problems before it even considers changing the pension age, but I bet they won't.

[Pontius Navigator]

I understand that there is a lot of subjective room in the terms I used but I hope the point is clear: a good job is worth to keep it as long as possible and postpone the retirement.

Good is indeed subjective. I would define it as enjoyable and stress free.

My last 10 years in the RAF met that criteria. For 3 years I had to make 3-4 one week trips around Europe from Norway to Turkey. Tough but some one had to do it.

Then I became a computer manager, job that was largely reactive and conducted our of sight. When someone tried to Joe me for a secondary duty that would be good for my career I told her to stuff it.

The next 10 years as a civil servant/reservist and my own boss was perfect. A variety of roles but controllable to one at a time. I ran my own programme. One day my distant boss asked me to do something which would clash. I said not a word and he withdrew the request.

Once the Army took over things became more of an embuggarence but still manageable. They couldn't get rid of me so they got rid of the job.

Now I work for money maybe 5 days per year and voluntary 3-4 weeks over the year. Quite enough to maintain social contact which I think is what is important.

[om15]

The enthusiasm in which we might greet this opportunity is tinged with the realism that some people such as shop assistants, oil rig workers, lorry drivers, deep sea divers, airline pilots, warehouse people, lion tamers and policemen can't in fact work until they are 75, to think that they can is completely risible.
Not everyone can be a cabinet minister, a librarian or tv host.

What needs to be sorted out is the rip off charges attached to private pension schemes, one of my private pensions ( I don't have a government or military pension) levied an administration charge of six thousand pounds when I bought an annuity, this probably took a low paid clerk a morning, if that, to deal with.

I too carry out about 5 days paid work a year, this is to support an old friend of mine running a Part M, I could if I wanted carry out much more, congenial work at home writing MELs, AMPs and so on, but have chosen not too because I don't need to and it releases work to people who might be pleased to do it.

This is a daft idea being forced through because the Government has run out of money and can't afford to pay those who have spent their lifetime paying into the scheme. If they just said that they have spent our money on other things they would at least be honest.

[Alisoncc]

Sadly many people will have to work until they drop as they have not made adequate contingency for their old age, in which case they are the victims of their own improvidence or stupidity to put it bluntly.

Sorry Sir, but that would have to be one of the most stupid statements I've ever read on Ops-Norm. On a par with that supposedly spoken by Marie Antoinette as in "Let them eat cake".

I spent the last ten years of my working life as the part-time accountant for a few community legal centres in Sydney. Our funding was such that we were always running on empty. No one, but no one was paid anywhere near what they worth. Typically we provided free legal advice to people who all to often had been screwed by their bank, superannuation provider, insurer, etc.

Alison

[Fox3WheresMyBanana]

Depending on the shop, many shop assistants can work to age 75 and beyond. Older shop workers are very common here, and we have some in their 80's. They generally do 3 days a week, but some are full time. Their expertise is often invaluable, especially in navigating their company's own systems for orders. There are a lot in hardware and builders' merchants. They still operate the fork lifts, etc, but don't hump the heavy stuff around - the youngsters do that. The trick is having a pay and pensions system that allows a gradual reduction in working hours.

[Capetonian]

Sorry Sir, but that would have to be one of the most stupid statements I've ever read on Ops-Norm. On a par with that supposedly spoken by Marie Antoinette as in "Let them eat cake".

The fact that you don't agree doesn't make it stupid.

I know a number of people, in UK, Spain, Portugal, South Africa, and Switzerland who for various reasons are battling to make ends meet. With one exception, and he was screwed by his wife, all are the victims of their own bad decisions or lack of providence. Some were sold policies or financial instruments that they didn't understand, and that is very sad, but they weren't (quite) forced to invest in those schemes. People need to be far more circumspect in what they invest in, and there are a couple of golden rules.
1) If it seems too good to be true, it is.
2) If you don't understand it, don't invest in it.
3) The harder the sell, the less likely it is to be a good investment.

I can't speak for Australia, clearly you can, but I would guess that in respect of pensions and retirement it is broadly similar to the UK system.

The basic state pension in the UK is about £600/month. People could work out, or obtain, a forecast, years in advance of retirement age. Anyone who thought that they would be able to live decently on that was living in a fools' paradise, and should have put money aside. Well invested money put away from an early age, even just a few pounds a week, less than many people spend on booze and cigarettes, could have provided a sizeable fund for old age.

I may sound as if I'm saying 'let them eat cake' but most people who find themselves in hardship simply lacked foresight or financial discipline when it mattered. Bearing in mind that if you were to start with, say, a modest £5 (or whatever currency) per week, and that the relative value of of that £5 decreases as time goes on, if someone contributed to a fund with a 4% growth rate compounded monthly, after 40 years they would have contributed £9605 and would end up with £23750. That assumes no tax, charges etc, nor does it account for the ravages of inflation, but the numbers are valid.

By depositing £50 a week, the figures are more impressive.
The capital amount paid in after 40 years is £28800 and the final value is £71200

[Rwy in Sight]

I am with Alison with that not about you but your statement. This article on Slate explains why people tend to accumulate less than necessary for after the retirement. The point is that often unemployment or medical bills destroy any savings or not allow any to accumulate.
And unfortunately good jobs with spare income are getting harder to find. Crap jobs allow a limited monthly income to be earned but not enough to save for retirement.

[Pontius Navigator]

1) If it seems too good to be true, it is.
2) If you don't understand it, don't invest in it.
3) The harder the sell, the less likely it is to be a good investment.

We were within a gnat's whisker of buying a property in Spain (£1=€1.45).

1. They offered a low interest mortgage for first year, they offered a 40 year mortgage (I was 63), they offered a €1,000 cash back, they offered 3 free flights.
2. We didn't understand the Spainish market.
3. They lined up a notary and interview at the bank etc.

The following morning the agent turned up to drive us to the notary. Gobsmacked when we decided it was too rushed.

[OFSO]

No 2 is the most important. I have friends currently building a multi-million euro house in Spain as a retirement project. Knowing what I now know about the bankrupt Spanish state's attitude to privately owned property, I would not invest a cent here. That's not to say that the past quarter century hasn't been most pleasant, but it was Deutschmarks I used from a sale in Germany to finance the purchase and not any form of retirement fund.

I wouldn't invest a cent in France, either. Or Italy. Or Portugal. Or Greece. Or anywhere in Europe except the UK.

[Pontius Navigator]

A Gibraltarian I know became a property developer in Spain. He fell out with everyone. Easy?

[Capetonian]

The UK State Pension is the developed world’s worst, but there’s one thing you can do about it

Harvey Jones | Sunday, 18th August, 2019
A golden egg in a nest
Image source: Getty Images.

Everybody knows the British like to moan, but sometimes we have cause to be glum. Our State Pension is a good example.
The State Pension we’re in

The UK State Pension is the worst in the developed world, according to OECD data. It pays out just 29% of average earnings, compared to 100.6% in the Netherlands, 94% in Portugal and 93.2% in Italy. The OECD average is 62.9%.

The new single-tier pension is worth just £8,767.20 a year, leaving most people with a massive shortfall unless they have income from other sources.

This means you cannot rely on it to give you a comfortable retirement. Worse, you have to wait longer to get it. New figures show the number of people claiming the pension fell by 120,000 in the year to February 2019, due to gender equalisation and rises in the qualifying age. This trend should continue as the State Pension age climbs to 66 and beyond.
Plan of attack

You can grumble as much as you like, but ultimately, there is only one thing you can do about it. Start saving under your own steam. That way you are not wholly reliant on the State but have your own pot of funds to dip into as well.

So if your company offers a workplace pension, do NOT opt out of it. This is the best way to save, because you get employer contributions, plus tax relief on top.

Don’t stop there. You could supplement this by taking out a self-invested personal pension (SIPP), which allows you to manage your own portfolio of stocks and funds, and claim tax relief on your contributions.
Open a Stocks and Shares ISA

Alternatively, you could take out a Stocks and Shares ISA. You do not get tax relief on your contributions, but the money grows free of income tax and capital gains tax, so you won’t pay any tax on it for the rest of your life.

The ideal combination is to split your money between a pension and an ISA. That way you get tax relief on half of your contributions, and escape income tax on half your withdrawals.

You can pay up to £40,000 or 100% of your income into a pension each year, plus £20,000 into an ISA. This is of course far more than most people can afford, but even small, regular amounts will grow into a major sum over time.

If you are between 18 and 39, you should also consider a Lifetime ISA. This allows you to invest up to £4,000 a year (part of your £20,000 allowance) and claim a 25% government top-up worth to £1,000. The money can only be used for a property deposit or retirement.
Get the balance right

Next, you have to start building a balanced portfolio of stocks and shares or funds. This is where Fool.co.uk comes in. GA Chester has some great tips for a FTSE 100 starter portfolio, and there are plenty of other recommendations on the site.

Shares are the best way to build your long-term wealth because over time, they offer superior returns to low-risk rivals such as cash, albeit with short-term volatility on the way. But when investing for 10, 20, 30 or 40 years (as you should be for retirement), you can afford to ignore daily dips and lurches.

The UK State Pension may be worst in the developed world but your retirement doesn’t have to be.

[om15]

That is exactly what I did, my pensions were money purchase schemes with various airlines which I rolled into one, a small index linked final salary and tax free ISAs, during my last few years I used my full 40K allowance to boost the pension pot, and at the time of retirement I had approximately half my money in pension and half in savings.

The problem is that most jobs don't pay enough for people to utilise the allowances, the average salary is about £36,500, so for example someone putting 10% in being matched by 5% employer contributions would be putting in £5.4K per annum.
Lets say that this person accrues £250K in his/her pot, at the time of retirement this will give a cash sum of £62,500 and an annual income of £9,400 (taxable) less if it is a joint pension with spouse and even more less if rising with the index.

Should Corbyn achieve power the resulting inflation and run on the pound will put all but the most wealthy in skid row and we will all have to return to work.

[Capetonian]

Should Corbyn achieve power the resulting inflation and run on the pound will put all but the most wealthy

Then he will have failed, as his policy is to hit the most wealthy hardest, he would like to see then on skid row first. Obviously that's not realistic as they have their assets too well protected.
It is a nightmare scenario, I'd rather the UK stayed in the Evil Union than see Corbyn as PM and McDonald (McDonell?) as CoE.

[Smeagol]

I agree with many things stated by Cape: making provision for the future; not squandering money on fags, booze and satellite TV etc etc. but it is going too far to label everyone who has not made prudent investments as stupid and improvident. The sums about saving are valid but again not everyone, however prudent, has £50/week or even £5/week to squirrel away.
There are many who try to make an honest living but just get by on a week by week basis and if, as so often happens, they fall out of work through no fault of their own due to redundancy, seasonal work ending and no alternative employment available or whatever they are well and truly stuffed!
Many on this forum, I suspect are 'comfortable' if retired (and many obviously are) have had well paid jobs and the nouse to use that income wisely. We are lucky, if I may use that word, many are not so fortunate.
I am able to continue my career past retirement, part time, when it suits me because I have the knowledge and experience that is valuable to others. As I write this I am sitting in Taipei where I chose to take a short term assignment because I wanted to. I had never been here I had free travel, accommodation and a reasonable allowance, my wife could come with me and I was well paid. The money whilst not essential to my life style is always welcome.
And before anyone gets the wrong idea, I am no left wing huggy fluffy , Attilla the Hun was a bit of a pinko in my opinion, on many things I echo Cape's sentiments but on this I think he exaggerated a little.

[OFSO]

Put your money in an insurance wrapper in a discretionary trust. Current rate of return on bonds hovers around 5% . And you can withdraw up to 5% of the capital per year and it's not declarable for tax if you are a UK taxpayer. And you can rollover any unused portion of the 5% to the next year, etc.