pension forecast explained as Britons warned they may see money 'knocked off' their state pension

HAYSIE

People born in 1970 could have to wait until they are in their SEVENTIES to get the state pension





But the research suggests that this is not enough, and that anyone born after April 1970 may have to work until they are 71 before claiming their pension.

https://uk.yahoo.com/finance/news/uk-state-pension-age-soon-050005827.html

Essexphil

Experts. Show me an expert who says 1 thing. And there will be an expert that says the opposite.

That article is reliant on all sorts of assumptions, most of which seem to deny the inevitable changes that time brings.

To give 1 example, the number of workers compared to pensioners is going to be relevant. But that ignores a whole load of other factors, for example how much you tax those workers. Or the fact that, for a large percentage of those pensioners, if you don't give them a pension, you are just going to have the additional costs of providing and assessing alternative benefits.

In my view, the biggest problems are not pensions. They are:-

1. The explosion in full-time degree level education. 40 years ago, the vast majority of workers commenced full-time employment at either 16 or 18. Now? Very, very few at 16, some at 18, but the majority at 21+. Why are Degrees still overwhelmingly full-time? Why do they usually operate as 3 year/30 weeks a year, instead of 2 year/45 weeks? The advantages in terms of revenue would be massive, to everyone except the Universities. People are starting full-time work years later than before

2. The cost of Care, particularly of the elderly. The costs are increasing massively year-on-year. The major cause of Local Authorities running out of money. An ever more urgent crisis, that is being ignored by many different Governments

madprof

It's tough on the young...pension age going up to 67 in 2044....I didn't last till after 55....still...another 8% in April...I might even be able to afford to go to Brighton!

HAYSIE

madprof said:

It's tough on the young...pension age going up to 67 in 2044....I didn't last till after 55....still...another 8% in April...I might even be able to afford to go to Brighton!

The UK pension age of 66 is set to rise to 67 between May 2026 and March 2028. From 2044, it is expected to rise to 68.

HAYSIE

People born in 1970 could have to wait until they are in their SEVENTIES to get the state pension as report warns costs are becoming 'unsustainable'


https://www.msn.com/en-gb/money/other/people-born-in-1970-could-have-to-wait-until-they-are-in-their-seventies-to-get-the-state-pension-as-report-warns-costs-are-becoming-unsustainable/ar-BB1hNZuL?ocid=msedgntp&pc=NMTS&cvid=c504bfcf8b3248b9801986d297b5660e&ei=124

HAYSIE

State pension age needs to increase to 71 by 2050 to ‘maintain status quo’, ‘alarming’ new report finds


https://www.msn.com/en-gb/money/other/state-pension-age-needs-to-increase-to-71-by-2050-to-maintain-status-quo-alarming-new-report-finds/ar-BB1hNxTc?ocid=msedgntp&pc=NMTS&cvid=198a127e146144db96ec84f243ccbeea&ei=33

HAYSIE

Essexphil said:

Experts. Show me an expert who says 1 thing. And there will be an expert that says the opposite.

As more people live longer, this does seem logical.

That article is reliant on all sorts of assumptions, most of which seem to deny the inevitable changes that time brings.

The situation has been exacerbated by the triple lock, and the recent reduction in NI contributions.

To give 1 example, the number of workers compared to pensioners is going to be relevant. But that ignores a whole load of other factors, for example how much you tax those workers. Or the fact that, for a large percentage of those pensioners, if you don't give them a pension, you are just going to have the additional costs of providing and assessing alternative benefits.

Clearly.

In my view, the biggest problems are not pensions. They are:-

1. The explosion in full-time degree level education. 40 years ago, the vast majority of workers commenced full-time employment at either 16 or 18. Now? Very, very few at 16, some at 18, but the majority at 21+.

I am not sure that this has an effect.
To qualify for a full state pension, you need 35 years of NI contributions.
So this is unlikely to be affected by the the age you start work.
You can argue that someone that starts work at 16 is making a contribution quicker.
Although I think that the likelihood is that someone that starts work at 21, after getting a degree, will have much higher lifetime earnings than someone that starts work at 16, and therefore make substantially higher contributions, as would their employers.


Why are Degrees still overwhelmingly full-time? Why do they usually operate as 3 year/30 weeks a year, instead of 2 year/45 weeks?


I dont think you can argue with this.
Maybe the the qualifying threshold for the number of years of contributions for a full pension should be increased.
Although as you rightly say this might be counter productive, as it may merely result in an increase in the number of people claiming benefits, to make up the difference.

The advantages in terms of revenue would be massive, to everyone except the Universities. People are starting full-time work years later than before

I am sure that Universities could fill the hole with foreign students.

2. The cost of Care, particularly of the elderly. The costs are increasing massively year-on-year. The major cause of Local Authorities running out of money. An ever more urgent crisis, that is being ignored by many different Governments

The Government has been threatening to address the social care funding problem for years.
I thought the biggest problem with the state pension scheme, was that it is not a fund, therefore has no investment value, and the contributions are paid out pretty much straight away.
I think some imagination is required to come up with alternative methods of funding some of our public services is required.
What a good idea the Norwegian Sovereign Wealth Fund was.
Many of our public services are black holes, that continually demand more funding, and we have the highest rate of taxes for 70 years.
That is unsustainable.

stokefc

I should be more clued up on this but I try not think about it but I have a question
People who die before reaching pension age what happens to their contributions?
Does it go into the pot to help the pensioners?
Where does it go?

HAYSIE

stokefc said:

I should be more clued up on this but I try not think about it but I have a question
People who die before reaching pension age what happens to their contributions?
Does it go into the pot to help the pensioners?
Where does it go?

How is the state pension funded?
The state pension is paid for by national insurance contributions, which come from the wages of people working today.

Effectively, each working generation pays for the older generation above them. However, NI is also used to pay other benefits, such as to the unemployed.



The CPS report says the money in National Insurance Fund is running out because not enough is coming in – with the surplus down from £53billion in 2009 to £29.1billion last year.

It says: 'The Government Actuary’s Department recently forecast that the National Insurance Fund will be exhausted by 2035-36.

'While fund exhaustion may be of little economic significance (it is an accounting curio rather than a real fund), it will be a symbolic event, indicating that the new state pension is unsustainable.'

https://www.thisismoney.co.uk/money/pensions/article-2787888/how-state-pension-funded-cash-runs.html

HAYSIE

Moderate standard of living in retirement costs £8,000 more a year, industry body says


https://uk.yahoo.com/finance/moderate-standard-living-retirement-costs-192200225.html

Essexphil

Absolute tosh.

This isn't any "industry body". It is the one that wants people to invest in their members' pensions.

It's not just what the article says. Although that is stupid enough. Start by looking at what it does not say. It completely ignores Capital and Assets. You cannot pretend that someone who owns their own home without a Mortgage has the exact same monetary needs as one renting. Or one with a second home, or £100k in the bank.

The supposed "middle" target, which claims to be for a "moderate" retirement says a single person requires £31,300 p.a. This "budget" has gone up by £8,000 since last year, and includes £1,000 per month for helping younger members of family.

That might just possibly what the average person hopes to achieve. Although that might change when they discover that, to attain this, you have to save £43,000 a year, every year, into pensions. Like the "average" person has a "spare" £43,000 a year...

Tikay10

It just struck me as an industry sales pitch.

HAYSIE

State pension age hike to 71 would be a brutal blow to poor and ill people, says ROS ALTMANN


https://www.msn.com/en-gb/money/other/state-pension-age-hike-to-71-would-be-a-brutal-blow-to-poor-and-ill-people-says-ros-altmann/ar-BB1hQQYq?ocid=msedgntp&pc=NMTS&cvid=6e040bfa75f0454cb4b95cb08e167f88&ei=78

HAYSIE

State pensioners born before certain date could get £2,991 a year pension boost


https://www.msn.com/en-gb/money/other/state-pensioners-born-before-certain-date-could-get-2-991-a-year-pension-boost/ar-AA1s288e?ocid=msedgntp&pc=NMTS&cvid=b76a900c086a4995bfafc2a61a0f92b9&ei=95#fullscreen

HAYSIE

State pension to rise by £450 in April, Reeves confirms


https://www.msn.com/en-gb/money/other/state-pension-to-rise-by-450-in-april-reeves-confirms/ar-AA1sfCb8?ocid=msedgntp&pc=NMTS&cvid=bef3b2f3464b438286b9393d7d6c151a&ei=22#fullscreen

HAYSIE

State pension forecast explained as Britons warned they may see money 'knocked off' their state pension


https://www.msn.com/en-gb/money/other/state-pension-forecast-explained-as-britons-warned-they-may-see-money-knocked-off-their-state-pension/ar-AA1sfDjD?ocid=msedgntp&pc=NMTS&cvid=bef3b2f3464b438286b9393d7d6c151a&ei=89#fullscreen