FMP

Pension and retirement poverty: Your views

Source: http://www.bbc.co.uk/news/business-11938045

I had a work-place pension, almost 50% of my contributions went in fees. I will not pay in any more - what is the point in lining someone else's pockets? I'm 30 now and honestly believe that by the time my generation does get to retire the state pension will be dead. Private pensions, irrespective of provider, do not provide even close to the promised return and companies have repeatedly raped their pension funds. Mac, Marlow

I've had a pension plan since I was 23 (I am now 27). It's especially relevant to me I think since my boyfriend has only recently finished a PhD so hasn't got anything yet. We have a small amount of debt but the pension comes out of my wage so we don't see it. We've also got a trust fund for our daughter to ensure that we don't get complacent about that. I was lucky - I was surrounded by older men who encouraged all us "young-uns" to join up to the schemes at work because they are particularly good ones. Wendy, Manchester

I have advised my sons not to contribute to a pension plan because they will lose control over their own money. I have contributed to one since I was 28 and it has been a complete waste of money. The pension companies have taken huge management fees while investing unwisely. Even when the value of my pension was falling there was nothing I could do to save it - the money would have been better off in a building society.Angela Smith, Annan, Dumfriesshire

I don't think it's that people are "turning their backs" on getting a pension - it's that the high cost of living prevents poor workers from being able to afford to pay in to one. The costs involved in buying property today are astronomical compared to previous generations. It is a great worry for me that I don't have a pension, but at the same time, I don't have a penny to spare so what can I do? Glenn Parrington, Boston

I'm 27 and have had a pension plan through my work since I started three years ago. However, I think there's a perception for my generation that retirement is a very long way off. There are so many financial pressures for young graduates these days - paying off student debt, getting on the property ladder... pensions are being viewed as more and more unreliable - you can understand why many people my age are disillusioned with the idea. Ellie, Edinburgh

I still have not started a pension and I am 36. To be honest isn't that what National Insurance is for? If not then why do we pay it? I would like all the money I have put into NI to be used for me. Wayne Martin, Tilbury, Essex

I was a good girl, I started paying into company pension schemes from the age of 22. However when I left full-time work to become self employed a few years ago, I found that my pension pot was smaller than the amount that I had been put in over 16 years of full-time employment! What a waste of money - I would have got more by sticking it all in a current account! So now I am self-employed I have no intention of sticking any more money into pensions, and will look at other investment options. Someone will have a hard task of convincing me that pensions are a good way to go. Rachel, Southampton

Why would an intelligent person invest money in a fund over which they have no control yet, in doing so, give ultimate control to the political whims of whatever government happens to be in power at the time - and which is likely to change with time? Chris, Wiltshire

Parents are twice as likely to talk to their children about the birds and the bees than they are about pensions, according to a government survey.
A lack of awareness about saving for retirement is among the reasons for millions of people not saving enough to pay for the lifestyle their expect when they grow old.
A basic state pension is the income which the state provides to people who have reached pension age.
At the moment, it is up to £97.65 a week for men aged 65 and above and women aged 60 and above.
But, as we are all living for longer, the pension age is starting to rise and is likely to reach at least 68 for all men and women just setting out on their working life now.
To get a full state pension you need to have paid National Insurance contributions - usually deducted from your pay packet - for 30 years.
Pensions experts say that you should top-up the pension provision from the state with a workplace pension or a private pension.
In a final-salary scheme, the investment risk is taken by the employer and you are guaranteed a retirement income based on pay and length of service.
But generally a pension is a long-term investment. Remember investments, unlike savings, can go down or up in value depending on the success of the investment - such as shares on the stock market.
You will not be able to spend the money you put in now until you retire. However you do not have to pay much tax on this investment.
When you retire, the pot of money that you have built up can be used to buy a regular income in retirement, called an annuity.
If you join a workplace pension scheme, money comes out of your pay packet and into a pension pot. Your employer also puts money in, and there is tax relief on all this from the government.
The alternative private, or personal pension, is offered by a provider such as an insurance company, High Street bank, building society or most typically, a pension company. You do not get any contribution into this from your employer, but it may offer more flexibility over how and where the money is invested.
The success of the investment and the fees charged by the provider will determine how much you get on retirement.
But from 2012, the government wants all firms to offer a pension to their workers and they will be enrolled automatically unless staff opt out.
If employers do not offer membership of a pension scheme, they will have to enrol their staff into the new National Employment Savings Trust (Nest) set up by the government. To be enrolled, staff must be aged 22 or above, earn more than £5,715 a year, and have been in the job for at least 13 weeks.
Pensions experts have suggested that contributions into this scheme will not be enough for people to have a comfortable old age, but the Pensions Minister Steve Webb says it will get youngsters into the habit of saving for retirement.

Public and private sector pensions compared

Source: http://www.bbc.co.uk/news/business-15925017

The UK has a workforce of 29 million people.
There are also 6.4 million people paying into personal pensions, which have no contribution from their employer. This is the only option for the self-employed.
Some 23 million of these are employed in the private sector. Of these, only 3.2 million contribute to a workplace pension scheme that also includes a contribution from their employer.
The number of people actively saving in company pension schemes in the private sector has almost halved since 1991.
The median average salary-linked public sector pension that is currently being paid out to a pensioner, is worth £5,600 a year.
That compares with £5,860 in the private sector, according to the National Association of Pension Funds (NAPF).
Using a mean average, some £7,800 a year is being paid in a public sector pension compared with £7,467 for a private sector salary-linked pension.
Some 87% of public sector employees are currently paying into a salary-linked pension scheme, compared with 12% of private sector employees.
Many of the salary-linked pension schemes in the private sector have been shut by employers.
Instead, 32% of the private sector workforce, including the self-employed, contribute to personal pensions and other schemes where there is no promise of a particular level of retirement income.
So the "generosity" of these schemes depend on many variables, including the performance of investments funded by these savings and the state of the market at the time people decide to retire.
At present, one pensions analyst calculates that a "typical" personal pension pot of £30,000 could buy an inflation-proof annual pension income (called an annuity) of £1,115 a year.