It was set up exactly for the reason that lots of Brits think that putting aside 4% of thier income each month to pay for the 20 or so years they want in retirement is a waste.

I thought that both employees and employers combined already put aside about 25% of income for this?

Plus I’m not sure what sort of pension 4% of minimum wage is going to get you…

Are you referring to Income Tax? That pays for Schools, Hospitals, Roads, Dodgy Foreign Wars, Nuclear Submarines and such.

National Insurance – rates vary from 0% up to 9% and then down to 1% I think, it’s an odd one because unlike Income Tax it drops down the more the earn. Anyway, that supposedly pays for State Pension and Benefits – but in all but all cases it’s really doesn’t it just allows the Government to further muddy the waters when it comes to PAYE deductions.

Either way, State Pension can pay the bills if you like – but it’s only about £600 a month, even if by then you’ve hopefully paid off your mortgage – it’s hardly the stuff of dreams, and the age it starts is getting older and older – it’ll never die completely – it’s a vote killer, but expecting to life of it alone in old age is no fun.

Anyway, that supposedly pays for State Pension and Benefits

All taxation just goes into one big pot from which we pay for everything…..

in a nutshell at 60 this method will give me a final salary equivalent pension
of 13445.

So you’ve saved £500,000 over your working life to get a pension of £13445 per year. You’d have to live to 97 to break even.

That figure is odd – is it assuming 25% taken tax free and income received on the rest? We don’t have to take annuities now so more likely to do well by investing the capital and living off the income plus a proportion of the capital – so estimate when you’re going to die! If you outlive that date then sell you’re house if you have it still, need to live in a home then anyway I imagine.

I’m in Alpha (the new Civil Service defined benefit scheme).

Not sure what my monthly contribution is percentage-wise (edit: 5.5% I think – it varies, going up to 9% if you’re on north of £60k), but you can make additional voluntary contributions on top of that to buy extra pension.

I was fiddling with the calculator the other day – the max extra I can appear to put in is £43k, which would buy me £6k per year on retirement at 68. Sounds like a pretty sweet deal to me 8) . Although obviously that’s compensating for 38 years of below private sector wages in the meantime.

Although obviously that’s compensating for 38 years of below private sector wages in the meantime.

http://www.bbc.co.uk/news/business-26512643

Anyway, the post wasn’t about willy-waving of those with pensions (especially ones ‘backed’ by the taxpayer), but to draw all those folk with nothing to grime reality of probable negative pay rises (and staff cuts) over the next 3 years.

the post wasn’t about willy-waving of those with pensions (especially ones ‘backed’ by the taxpayer),

I was responding to several posts that appear to be moaning about changes to the CS scheme – no longer final salary, no longer 1% contribution or whatever it was back in the day, etc. It’s still a good deal for new entrants.

even if you paid 50% youd be better off in retirement.. my next door neighbour retired at 56 after 31 years now 89 hes been retired on an index linked final salary pension for 33 years.. plus his state pension he gets nearly 650 a week.. one of my customers draws an nhs pension of 5k a week.. cant wait till i m 68 for my state pension.. when i was 21 i had pe#is envy today its pension envy..

5k a week? £250,000 a year pension?

The pension rules mean we couldn’t do that now but if they did I’d rather enjoy it now than in old age.

in a nutshell at 60 this method will give me a final salary equivalent pension
of 13445.

So you’ve saved £500,000 over your working life to get a pension of £13445 per year. You’d have to live to 97 to break even.

[/quote]

You’ve missed the fact that the pension increases each year in line with the RPI.

You’ve missed the fact that the pension increases each year in line with the RPI.

Except they haven’t included RPI/interest on the invested amount.

Yes. But the annuity is guaranteed to match inflation, the returns on the invested capital might or might not.

IMHO there are two reasons for getting an annuity, however I will be doing it later in my retirement, guessing about 75ish, as I think drawdown is better and annuity rates go up with age.

This is because:
– drawdown for me is a guaranteed loose (unless I top myself), if I don’t die on the day the money runs out I will either leave money in the pot or have no pot – neither appeals but to be fair having money left sounds better, but irritating.
– I’m suspecting for me (*and most people) the older I get the less phsyically and mentally capable I’ll be, so the idea of having an RPI linked pension (and again that might be a bad call – but again I don’t know what inflation will do or how long I will live) will at least enable me to know that I have a guaranteed income till death. Again an annuity is irritating (as you give away your money) but I really don’t see any other viable option.

Based on the only folk who posted already understand and have pensions – there’s going to be a load of poor folk in the future; when the minimums kick in and again when they retire…

Based on the only folk who posted already understand and have pensions – there’s going to be a load of poor folk in the future; when the minimums kick in and again when they retire…

There’s going to be a load of poor folk now and in the future with or without this scheme!