Thank you for listening, you can find the full report on whether people are saving enough into their pensions here: ifs.org.uk/articles/are-people-saving-enough-their-pensions Live podcast sign up: ifs.org.uk/events/ifs-zooms-live-how-make-your-first-budget-success Timecodes: [00:00:00] Introduction: Self-Employed Pension Trends [00:00:36] Live IFS Podcast Event [00:02:00] Overview: Private Pensions Focus [00:03:10] Why Private Pensions Matter [00:04:00] Defined Benefit vs. Defined Contribution [00:05:50] Key Differences in Pension Types [00:08:10] Automatic Enrolment Explained [00:10:00] Who Qualifies for Auto Enrolment? [00:12:00] Is 8% Enough for Retirement? [00:13:59] Measuring Pension Adequacy [00:16:50] Improving Pension Savings: Recommendations [00:18:50] Employer Contributions and Wages [00:27:00] Pension Savings for the Self-Employed [00:30:00] Encouraging Self-Employed Pension Savings [00:36:20] Small Pension Pots: Consolidation [00:37:30] Conclusion: Pension Challenges and Future Plans
My opinion of the IFS has completely changed watching these videos. I have enjoyed the debate, discussion and pragmatism. Well done. Pity the government cant be like this!
My concern is a lot of assumptions about pension levels think people will have zero or very limited housing costs at retirement. Given the cost of housing so many more people will be in rented housing at retirement and those rents will be as high as ever. I worry it's going to be tough for a lot of people in 25-30 years
One thing is certain. UK governments will punish people who save enough for their retirement. The only thing that will give people the confidence to save more is a guarantee that politicians won't launch tax raids on pensions and savings. Currently the message is that those who defer consumption now will be punished for their sacrifice later.
@@basicfilmblog Taxation on money made from work isn't. Taking the life savings off pensioners that have already paid tax on their life savings isn't tax. It's THEFT.
@@basicfilmblogtrue, and we don’t know what the changes will be in the budget, but if it happens that the pension tax reliefs are materially changed to tax more of the income that goes in the pension then it makes pensions less interesting as a saving vehicle and taxing on the way in and the way out of the pension fund is directly a disincentive to saving in pensions which would be a disaster for the country.
Great video, however, the main reason people aren't saving more for retirement is the cost of living crisis combined with wage stagnation. You can't save what you don't have.
The biggest concern especially for lower earners is the investments and the fees. Some are shockingly expensive and have very low returns. I looked at a family members works scheme recently and its 55% equities (overly UK weighed), 40% bonds and 5% cash. If she was 5 years from retirement then I could understand but she is 23. While I understand they can't tailor it to every employee they could group ages to invest it more appropriately for them. I also think there should be industry standard videos explaining about pensions to new employees as a part of their enrollment so people understand pensions and what their money will be invested in and how the fees line up with other providers.
Then change where the money is put, I know of no scheme that does not allow tou to change it. Yes, I agree that many default options are awful. The first thing I did was to change from the defaults. My pot has now grown exponentially. Now having a larger pot than staff that worked far longer than I have there
@@MinkieWinklehow do you know the size of pots of people at your workplace? Do you all discuss it? At my work some people have never even looked at their pension, don't have login details, no idea what it's invested in let alone how much is in it.
@@palmtree-e2l Thankfully yes, It is a open conversation where i work for most people, there are some that do not want to talk, and that is fine. we are all engineers, we are number nerds :) More people need to have such discussions in my opinion, i have learned so much from my work mate, especially the older ones that know it like the back of their hands.
@@palmtree-e2l that is saddening to hear, that there are people that have not looked at it, since it is their means to retire with pride. open discussion about it it what everyone needs to be honest.
Two points: Employers need to be made to contribute more. 3% is not generous when you are being paid minimum wage. The employee has no option as to the choice of the scheme provider. This choice can be made for reasons that do not benefit the employees. NEST for example levy eye watering charges of 1.8% on deposits. Employing a top heavy grossly overpaid board. This is not in the employees favour for growth.
3 percent is 3 percent, whether your earning 10k or 20k That's how percent works. If you have a problem with low wages, then upskill, get a better job. Be more valuable in the job market
Totally agree it is not done to benefit the person that is compulsorily opted in. But for now at least you can still choose to not support the thieving fat cats and opt out. Your money, your choice where and how you invest it. 💷💷💷💷
Given recent graduates have £30k to £50K debt before they start work and some pensioners are paying £7k to £9k per month in care home fees a lot of people have "given up" on sensible financial management and have decided to "P*ss it against the wall". Also lots of these pensions companies are charging eyewatering fees for non company pensions.
Indeed. I'm interested to see what comes up in this video, but something that seems to go overlooked so often when people discuss what younger people 'should' be doing is... Reality. I fucked around a bit (I.e. like most, didn't know what I wanted to do and wasn't happy to go right into a 'career' that I knew I'd hate), and also had the fortune of being university age and graduating around the time of the Financial Crisis. I then worked via agencies, earning decent enough money (if we ignore agency fees/theft and whatnot) but nothing went into any pension. To get into my current career I had to do a masters/'conversion course'. So, greater graduate tax/saving/paying my way into an industry with a skills shortage. Makes total sense, because why wouldn't government make it difficult for people like me? I've never been a particularly 'woo, children' person, and the state of the world has reinforced that, so newborns are probably a no. I'm looking another 33 years, should nothing change, until state pension age. I should spend most of that time earning over £100k. Does it really make sense for me to stick loads into a pension? What can we really know about 3 decades time?
Fees for nothing need to be avoided at all costs. An ISA would be a better option for most, allowing you access if you are destitute and retirement when you need it. Start early, parents start a child one and even have a LISA as well to get the most “free money” as you can. Take care M.
No it does not, mean testing mean they will have a reduction in STATE welfare. Which is fine because in the private pension market, depending on where it is sat, you can double your pot in as little as 8 years. Si in the end, you will be on far more private than you ever will by Continuing to receive state pension.
For instance, I work with a man, he is near retirement age now, a few years to go. His private pension is already in the millions, he would earn double retiring now, than what his current wage is. He would earn over 80,000 a year retired. State Pension is like 10k if your lucky. Lose 10k to earn 80k. Do the maths. He is still far better off. And anyone could do that, even low earners could have pots like he does
@@MinkieWinkle changing the rules on state or private pensions risks undermining what Samuelson referred to as the social contract. Everyone knows that we’ve had a bull market, overall, for 42 years. Interest rates fell to zero. That era’s over. Just have a look at the transfer value of public sector pensions versus those of DC schemes where employees have contributed the same amount over time.
Auto-enrolment is hideous. I found I had dozens of pensions, all £1000 each from over the years ... and every single one of them was paying £20-30 a month in fees! My pots had barely grown at all, the brokers are the main beneficiaries of auto enrolment. We have been promised a dashboard for hunting these down for years ... no government has delivered it.
I think from a usability perspective, it would be better when the self employed complete the end of year HMRC tax form, it offers a "redeemable" voucher (which is effectively the tax/NI rebate they would get) that can be added to a pension for that tax year when they add x% to their pension plan in that tax year. So person says yes to voucher, they get sent a unique voucher code, the person makes minimum payment to validated pension pot, they add the HMRC voucher code in the payment page, both payment and voucher values are added to the pot.
Personal savings are under attack from fiscal drag so people are faced with a few choices: 1. Do nothing and pay tax on anything outside personal/savings allowance. 2. Move into an ISA and pay tax on anything above the £20k threshold. 3. Pay more into your pension to get 20/40k% relief. 4. Stocks and shares. 5. Spend anything above the thresholds on assets such as your house although you’ll pay VAT on items you buy. 6. Premium bonds (up to £50k) which should return about 4%. I’m doing a mixture of 3/5/6 and will move into 4 once I’ve finished 5.
Hopefully public sector pensions will be phased out, the tax payer can’t afford to fund them anymore. Everyone should have a private pension which they fund themselves.
@welshhibby good luck recruiting teachers etc if they do remove one of the very few perks of the job. (The public sector workers also pay in quite a tidy chunk of their salaries into them - which just gets sucked back into the general taxation pot).
Public sector pensions need cutting its ridiculous how high they are compared to normal working people. State pay is comparative with private and you get a load of benefits. So pleased I moved from private to state, its like a gravy train this side of the fence 😂 hurm I best shut up I guess 😂😂😂
I've been autoenrolled even though I pay a lot into a sipp through salary sacrifice but can't be bothered to change it, will merge the when I retire soonish
I am 45 years old with very little set aside for retirement at this point. I have always been curious about the stock market and have witnessed some people who played the game right and retired early because they used the stock market. When I ask them, most said that they invested very little to start with, but their portfolio grew. I do have a significant amount of capital that is required to start up but I have no idea what strategies and direction I need to approach to help me make decent returns
Focus on long term investments in property, stocks, and bonds. Avoid copying, daytrading and 'chart astrology'. Diversify across different geographies, industries, and value chain stages - to reduce your risk. You can do this with ETFs, or by selecting different stocks yourself. This is the best way to invest for more than 90% of people
investing isn't hard at all the guys that do it full time don't know what they're doing. Look into passive index fund investing and learn some more. Buy Companies stock which you think has huge potential to grow. Internet is your pal, do some research
"That is why I enjoy having a portfolio-coach guide my day-to-day market decisions, because their entire skill set is built around going long and short at the same time, both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, and when combined with the exclusive information/analysis they have, it's nearly impossible not to outperform. I've been using a portfolio coach for over two years and have made over a million and fifty-seven thousand dollars"
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?.
Something that we need to do in the UK is allow employees to have one singular pension provider that 'follows' them around and then individuals can just use that given provider e.g. Aviva, II, NEST etc. (Mentioned briefly at ~37.30) This allows people can choose their investments more effectively, pensions aren't just about saving money it's about investing correctly. Australia do it.
What pension! I am now inside ir35 and can't afford a penny. I am classed as a contractor but can't claim expenses and no spare money to save for a pension! Revoke ir35!!!!!
Too many people have the "government will look after me" mentality The reality is, when has government ever ran/ operated anything that has work out well. Most people can not name one thing, yet they still think government will lookvafter them
@@stuartregan1627 exactly. it is not worth paying. no value for money, for every pound the gov collects only half will actually be used to do anything with, the rest is funding their own inefficiency, bureaucracy. So much of what the gov does, would be better to be funded directly by the public from their own pockets. Case and point, state pension, on average the a worker will be paying about 2000 a year or 160 to 170 a month in National insurance. so that at the end of their work, when they retire, they will get about 12,000 back a year from stat pension. OR that same 160 to 170, could a month from age 18 could have been put into a private pension instead, that would mean you would have a pension pot of over 1 million come retirement and from that pot having a pension that is several times more than what state pension provides, With the added bonus of, if you pass, the pension then stays in the family unlike state pension where it is just taken. which is better value, state or private...
in other words, the money is better in the hands of those that earned it, instead of being taken by wasteful governments that could not possibly know what is best for you. They don't even know who you are. but so many still believe the gov is here to help.
It's clear you work for the Civil service & want thousand of jobs to be created for your cronies. 13 million pensioners need means tested . How many thousands of jobs for your cronies?
You say that people should be banging money in at the age of 50 onwards. It's important to note though. If you bang money into your pension in your 20s and choose an investment with a good historical long term ROR, they're easy to find. Start in your 20s and with the benefit of compounding interest, any payments you make in your 50s and 60s would be dwarved by the growth of the investment. I wish I'd known this 20 years ago.
At present I am putting in 14% of my salary into my workplace DC Pension. But this is not enough. So I am putting in an aditional £50 a month. I get 20% Tax Relief on this raising it up to £62.50p per month. After my Credit Card is paid off I will then re-direct that monthly payment towards the Pension Pot. As I approach retirement ( 59 yrs young now ) this pool of money will transition jnto 'Bonds' which is a bit safer than 'Equities'. I know I will have to redirect even more cash to get the requried pot size. Aiming for £300k plus. But will it be enough?
Instead of transferring it all to bonds when you retire, you might want to transfer enough for 5-10 years of living expenses and keep the rest in the stock market. That way you are protected against short term dips in the market as your bonds will not be affected, but in the long term the shares will continue to grow during your retirement and leave you better off. Worth doing your own research on this though, or getting advice. Lots of youtubers who do proper financial modeling of this sort of thing. James Shack is probably my favourite. 300k should be enough for 12-15k per year depending on what returns you get during retirement.
Forgot to mention, that not all bonds are thr same. You would want to be buying actual bonds, not investing in a bonds fund which is unfortunately what they usually mean by “bonds”. Owning part of a fund that invests in bonds doesn’t protect you as well because if bonds become unpopular, the value of the fund will drop when everyone sells. If you own the bonds directly and hold them to maturity, you are guaranteed the interest payments each month as well as the return of your principal when the bond matures. The process of buying different length bonds and holding to maturity to stagger the release of equity is called bond laddering.
What's the rationale for the 8% topping out at £50k? It was mentioned 8% is too low particularly for high earners, so in that context it seems oddly counterproductive to cut off at 50k.
Qualifying Earnings is defined as earnings between £6,240 (the Lower Earnings Limit) and £50,270 (the Upper Earnings Limit). It takes account of basic pay (inc statutory pay components) plus bonus, commission, overtime, etc. Some bright spark reckoned that 8% of that figure was roughly equivalent to 9% of basic pay without adjustment or 7% of total pay. And so there came to be 4 earnings bases, these 3 plus another slightly more complex. All are woefully inadequate as the video points out. A recalculation is required.
Not sure you're being cynical enough. How many people think auto enrolment means the "underlying" long term intent is to remove their eligibility to state pension down the line? Either through means testing or increasing the pension age to the point it's above your healthy life expectancy.
Given the chance they will remove it whether you enrolled or not. Doesn't matter either way, as for all except the very lowest payed, a private pension at 8% contribution that's properly invested will be worth more than the state pension.
However cynical you are, it will always be more politically expedient for governments to tax anything you save into something other than a pension. Much easier to portray such people as "the rich"
Self employed put a large chunk of their venue\income “off the books” as cash to reduce their tax bill That money will never find its way into a pension.
I have been. I’m 36 and have £51k in my SIPP. Although the lack of government transparency around tax reliefs and the cost of living is making me consider reducing my contributions.
HMRC tax relief is 25% you pay in £100 the taxman will pay in £25 so don’t reduce your contributions aim for 15% of your salary if you can and you’ll be in a good position obviously how much you pay is variable depending on age if you’re starting later you’ll need to pay in more.
The SIPP plays it part if you get a company contribution. Stick it away in stocks and shares ISA to get the snowball of compounding working. An ISA for spare cash that you can access is also a good idea. It also has the advantage of no tax! Take care M
Is this because self employed people were allowed to claim the state pension? I remember Mr Hammond not being able to increase the self employed NI contribution to compensate for the extra outgoing
I have a friend who is self-employed, makes £250k as a plumber (or, rather, a plumber who employs lots of other plumbers, so owns a plumbing firm). Doesn't pay anything into a pension. I asked him why, he simply invests in income generating assets instead. Primarily property. Not everybody who decides not to invest in a pension is somebody who isn't investing for retirement, in his case he'll just have property income rather than an annuity or drawdown. He also has his firm, which if it continues to do well he could flog for a lump sum or pass down a generation whilst retaining a chunky share of it for the dividends. Not everybody needs a pension, although I'd personally always have one of some sort of diversification.
I would add , now the top rate was abolished under the last government put in , and is likely to be put back for most , it was the main reason I retired at 64 fully fit and a loss to my employer was because I was within 10k of the top limit for a varying number of pensions . I now know I should have stayed employed and put money elsewhere and then moved this into my pension when the limit was removed …. You can never have too much money in a pension funds , there will be many ways you can spend this as inflation showed be when it was running at 15 points … now 69 and had to increase my drawdown number to keep pace and will run out in 24 years … and if I live as my father did 96 as did his dad and also his father .. I have a problem to solve now before I get there. I now will have to down size the house I live in at the moment … so two years or so I will do this and release equity to bridge that gap…
without finishing the video the answer is no people are not saving enough for their pensions. My assumption is most people are only contributing the minimum, if they're even contributing at all.
People that saved for retirement are now losing their winter fuel so its not worth saving . They could also get pension credit if they didnt save . Obvious conclusion. Dont save for retirement.
How on earth does the new government think they are going to encourage more pension (or any other) savings (or bothering to work at all or beyond 55) while reducing returns on their scheme investments via windfall taxes, dividend taxes, CGT, higher inflation, etc? And, importantly, what is the scale of the wealth transfer between private sector DC scheme members and those in public sector DB schemes, the liabilities of which are well over 100% of GDP (almost 200% on some estimates).
100% taxing people to death and the wondering why people have no money. Only way they will do that is to increase tax on income and reduce tax on pension contributions. 2.5% on each would benefit a person by 5% which could make a nice increase over time. Everything these guys have said will increase production coats and mead to more inflation.
None of the things you list there directly affect pensions, either in contributions or in payout. Of course they affect the economy in general which has a knock on effect, but nothing direct. Only exception is for non index linked annuities which are quite rare and IMO should be banned. There is zero transfer between private DC pensions and public DB pensions, except for the taxes that you pay when you start receiving the pension, as some of that money will pay other people's pensions. There is no public DB pension pot, there is no investment. The government receives taxes from working people one month, and pays that out as state and public pensions the next month.
@@1ForTheShieldz You couldn't be more wrong. Taxing people more on income will mean they have less to invest in a pension. Because of compound interest, and the fact that retirement income is almost always lower than when you're working, investing another 2.5% of your income into your pension would increase your pension by more than double that.
@JPEight you clearly misunderstood as you have written is what I was talking about. You have also misunderstood income meaning pension income while I mean working income during your life as you said. Read it again and you may understand what I was saying is the same as you. I'm arguing for compound interest and increasing pension income to 5% by allowing contributions to increase by a further 2.5% thats the carrot. The stick would be to increase income tax so its a penalty on workers.
@@1ForTheShieldz No, I understood perfectly. Taxing worker's income more, will mean they invest less, meaning smaller pension pot. That will make much more of an impact on retirement income than reducing retiree income tax.
And if you are saving/ have saved, you need to know it's worth it. That because you have saved instead of partying in Ibiza, you arent going to be penalised bybremovalnofvsrate pension.
You honestly think you will be able to retire if you DON'T put any money aside for it? That's the whole point. You NEED to put money aside, else you will NEVER be able to afford to retire with dignity
@@stuartregan1627 - Oh I'll be retiring one way or another, even if it requires me to move to Bulgaria or somewhere with a low cost of living. Can buy a woodland there for a couple of grand, there's your firewood.
Your NI number is linked to your pension, it is already easy to transfer. I did it a couple weeks ago, took about 5 clicks and 3minutes to do online after logging in.
@@JPEight I was more thinking you get an NI number at birth and a pension account. Then when you start work it’s just government the number and it goes to your pension account with the provider you have chosen or been given if you have not.
@@hadphild Typically you only receive your NI at 16, though you can apply before that if you plan to start work earlier. You can open a pension for a child as soon as they are born, but from what I can find, you don't need a NI to do so. I understand what you are saying, but I don't see how it's that different from what we have now. The reason employers get to choose which provider they use is because doing the accounts would be a nightmare if they had to make payments to dozens of different providers. Your way would be a little easier for the employee though. Nothing stopping you from transferring all your pensions into one provider though. You can even transfer out of your active workplace pension whilst they are still paying into it if you want to.
@@hadphild Not really, as to pay your bank account they have one finance system, and one bank account to pay everyone from. All they need is the sort code and account code, put it into the system and done. To pay into your pension they also need to set up an account with every pension provider. You can't just pay straight from bank to pension, as there isn't a sort code and account number to send the money to. They pay the provider who credits your account, and then buys assets on your behalf. The provider needs to know how much money you're sending and who it needs to go to. From my understanding the company will make a single deposit with the pension provider who then splits it up between the employees based on the info they're been given by the employer.
Saving WHAT money? Those who need a pension the most, don't have the spare income to spend on one. Those that can, are already doing so. FAR better is to engineer a decent State Pension and let those with higher incomes add to that as they wish. Really, this ought to be OBVIOUS!
A lot of the benefits for saving into a pension are not available for those who need it most. Low income = less to put in, lower employer contribution, job more likely to only provide the minimum 3% with employer match.these payments will also only on qualified earnings ignoring the first 6k, salary sacrifice is also off the table as it would put you below minimum wage. Then you don't get the 40% tax rebate higher earners get, only the 20%.
Why save if your punished for saving at retirement ? Pensioners that did wish they didn't has its cost them their winter fuel allowance for starters & maybe even the state pension down the line . One thing for sure is the 2.6 TRIlLLION Gold plated Civil service pensions are not going to be cut despite apparently having no money .
My “gold plated” local government pension has already had £26,000 taken from it. Government has saved paying me 7.9% of my salary now and save £26,000 in todays money in 2035 & 2036. Doing trust this government not to screw with it further. You should also know that the local government scheme is very well run and is funded from the people’s contribution, not government money, but labour want to take over the schemes and move it centrally. So they’ll steal the money in the scheme and leave the liabilities. Not all the public sector schemes are a drain on the tax payer.
@@ster2600 what I am on about is IF there is no money then why are Gold plated Civil servents pensions not the target ? Why should they get 30 k plus & a state pension to boot of tax payers money ?
It’s a nice idea but hard to put this much or close to it every month. I’m trying! Depending on what changes in October budget it may be a move towards an ISA based strategy. Take care M.
Assuming you can get to 50 with your house paid off and zero pension saved to date, if you earn around 60k and have a matched contribution pension where you both put in 10% then do a 37% salary sacrifice you can save £500k in 10 years and retire at 60 and this strategy will reduce your take home by around 1k a month which is assuming the mortgage you just finished was 1k so no net change. The main enabler is zero debt here.
No, the label of 'black hole' is nonsense. Labour knew about how much money there was all along, they are pretending so that they can blame conservatives for when they raise taxes. The government never has enough money, there is a 'black hole' every year. And every year they borrow money to fill it, which is why the national debt goes up every year. If Labour wanted to they could have just borrowed the shortfall. Not that I want them to increase the national debt mind, but the point is there was no need to remove winter fuel allowance or change taxes etc. if they didn't want to.
@@69spookIt is terrible compared to the S&P500. I moved my early years pension into a BR tracker of this and its gaining despite me not contributing to it any further, whereas it was stagnant for a few years under a FTSE100 derivative tracker. I have an NHS pension coming but move 1/3 of my monthly salary into something no government will ever touch and returns more than the stock market, crypto or property could.
@@69spook FTSE isn't the best, but far from the worst. Much better than cash and bonds. Would be better to invest in a mix of US and GLOBAL given the choice.
@@69spook Not at all, those funds are buying a small amount of hundreds, or thousands of different companies. That's hardly putting all eggs in one basket. Yes they are all 'shares', but across different sectors including tech, medical, property, manufactuing etc. You are still exposed to global events like market crashes, but even after 2008, the stock market had recovered to it's pre-crash value within 3 years, and covid only took a few months to recover. The short term risks of being invested in the stock market are higher than other investments, but the long term risk of investing in large index funds is almost zero. The bigger risk of investing elsewhere is that of not returning more than inflation. If you look at the statistics for whether your investment will return a return greater than inflation, over a long period of time) stocks are less risky. There's great video by James Shack called "Why Holding Cash Now is a Terrible Idea" which explains it better than I can.
What is my incentive to save into my pension pot? I'm 36. I've so far put in £500 willingly into a private pot. My argument is; I'd much rather have more money now, than more money later in life. What am I going to do with a large pension? I'm just going to exist, either alone or in a care home, and likely have a ton of spare cash. I have no kids, and don't want kids in the future. So no one benefits me having a larger pension fund. The entire idea is illogical to me. Give me more money now, let me live in squalor later. I'm fine with that.
Depends how bad your health is now I guess, I plan to live a very good and active 60 to 80+ years and that needs money. Plus the more pension you have the earlier you retire.
Well yeah you're old when you use that money but you can decide when you retire and you actually get to retire. With the UK population ageing in the way that it is you really should entertain the idea that the state pension will be drastically different by the time you come to need it.
@@connorwilloughby1696 you clearly dont know how means testing works . People that save for retirement dont get pension credit , hence why theres no point .
Nonsense. The vast majority of working people in this country are not struggling financially. They just think they are because they had to cut down on foreign holidays or new cars.
why doesnt the govt just make it so that employers MUST offer the employees atleast 1% pay rise per year. many low paid workers on minimum wage never get pay rises
minimum wage rises every year - correct. but its not fair for someone who has been working at the same company for a year to earn the same (min wage) as a less productive new starter. in Britain we have this no wage growth culture that needs to be tackled. p.s if a company goes bust for offering a 1% pay rise to its staff then it cant handle any of the regular supply chain shocks and would've gone bust soon anyways.
Because its not the government's job to dictate wages. It's a free market. The price of labour is always changing, following the supply and demand. Upset that with government intervention, then you create far worse problems. Such as recessions, depressions, market crashes/ corrections, inflation etc. Almost always caused by when government gets involved.
@@MahmoudAhmed-oq2dn I couldn't agree more. I'm in a junior project position working 50 hour weeks on an equivalent salary of £9.52 an hour with a great deal of responsibility. I've already been informed that I might not get a pay rise next April because of the planned minimum wage rises and the company are concerned about the effects of this on their budget. I might see if the local council might take 'gaining experience' tokens in payment for my ever increasing council tax.
I'm reading a lot of very cynical but ill thought out comments here. However much future governments might want to tax your money, the surest way to political suicide is to hit the homes people live in or their pension provisions. If you invest in anything else it will be much easier to just categorise you as "the rich".
@@stuartregan1627 Yes, because they are still far better off than those who did not save. I hope to retire on an income of about 40k. An extra 3900 is nothing in comparison to what you will get by contributing to your pension.
@@JPEight Only better if you put hundreds of thousands into your pension & not many can afford to do that . People who saved that are missing out on pension credit wish they hadn't bothered .
Zero. Because money saved was money earned. Money saved is then, banked/ invested, which means it is either loaned back oyt by banks, or is invested in business that grow and hire more people. Create more products
@@MinkieWinkle This is simply untrue. You can decide when to spend the money you earn, but you can't move the work you did into the future, someone else has to do your work and then you take the proceed off them
The idea that the majority of people are doing enough is bollocks. Anyone on the average wage on auto enrollment would be better off not saving at all leaving the state to pick up the tab. It's perverse and the only way to fix it is to ask the employer to do more.
Nope, not what the maths says. full time minimum wage is ~22k. 8% of that is £1760. Investing that with a 5% return for 49 years (18-67) would give a retirement pot of 366k, which is enough for a retirement income of ~15k. And yes, that's accounting for inflation. Even with no state pension at all you would still better off by ~4k per year. Or, with the state pension you could potentially retire on as much or even more than when you were working.
@@iplaywaytoomuch That is true, most funds do not give good returns, but it's easy to choose which fund your money goes in. S&P500 has averaged 10% return over the last 50 years, which after subtracting inflation comes to more like 6%. I was being conservative by saying 5% to account for fee's and such. Of course, the next 50 years might not be as good, but it's a reasonable estimate. The default fund for my pension returned 14% in the last year, but I've moved to one that returned 24% in the last year.
@@JPEight So you would pay in hundreds of thousands of pounds into a private pension to enable the Government to deny you a state pension ? How on earth would you be better of by 4 K a year ? You've spend hundreds of thousands . Not Carol Vorderman are you .
Success is not built on success. It's built on failure, It's built on frustration. it's built on fear that you have to overcome. I pray that anyone who reads this will be successful in Life
I am grateful for this informative video. I think there is a higher chance that BTC and ETH will retest resistance and then fall. But as always, things change every day and all we can do is act responsibly, monitor the markets and re-evaluate our strategies regularly. I would like to thank John Preston for being my source of crypto education as I comfortably earned 3.7 BTC..
I agree that there are strategies that can be used to generate solid profits regardless of the state of the economy or market, but such implementations are usually carried out by investment experts or advisors with experience.
You are right and thank you John Preston. I started investing last year and I don't regret it for a second (except that I didn't start investing years ago). I made a lot of money with BTC and XRP without any worries.
One where they don't waste money on alcohol, cigarettes, gambling, lavish cars, TV's, phones, holidays, trips out, takeaway... Yes there are plenty of people that really do have nothing, but for most people it is a mindset issue, as most people could find and extra 5% of their income to invest if they really wanted to. Even those that don't realise it. I too wish the economy was healthier, and that wages had kept up with inflation etc. but that doesn't excuse people's poor choices.
@@JPEightvery true. Most people in this country are not struggling, the press just keeps telling them that they are in a 'cost of living crisis'. Plenty of nice cars around, plenty people on foreign holidays, plenty people paying a fortune to watch a pop group or go to Glastonbury.
@@TheDavecroftmaybe ….maybe not given the number of foodbanks around……..90%plus of our assets are held by 1% …….thats maybe a little unhealthy……that is not the way to have a just fair and happy society…….trouble coming?
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Thank you for listening, you can find the full report on whether people are saving enough into their pensions here: ifs.org.uk/articles/are-people-saving-enough-their-pensions
Live podcast sign up: ifs.org.uk/events/ifs-zooms-live-how-make-your-first-budget-success
Timecodes:
[00:00:00] Introduction: Self-Employed Pension Trends
[00:00:36] Live IFS Podcast Event
[00:02:00] Overview: Private Pensions Focus
[00:03:10] Why Private Pensions Matter
[00:04:00] Defined Benefit vs. Defined Contribution
[00:05:50] Key Differences in Pension Types
[00:08:10] Automatic Enrolment Explained
[00:10:00] Who Qualifies for Auto Enrolment?
[00:12:00] Is 8% Enough for Retirement?
[00:13:59] Measuring Pension Adequacy
[00:16:50] Improving Pension Savings: Recommendations
[00:18:50] Employer Contributions and Wages
[00:27:00] Pension Savings for the Self-Employed
[00:30:00] Encouraging Self-Employed Pension Savings
[00:36:20] Small Pension Pots: Consolidation
[00:37:30] Conclusion: Pension Challenges and Future Plans
My opinion of the IFS has completely changed watching these videos. I have enjoyed the debate, discussion and pragmatism. Well done. Pity the government cant be like this!
My concern is a lot of assumptions about pension levels think people will have zero or very limited housing costs at retirement. Given the cost of housing so many more people will be in rented housing at retirement and those rents will be as high as ever. I worry it's going to be tough for a lot of people in 25-30 years
Yep, the increase in housing benefit will be another nail in the welfare states coffin and when will we run out of money?
Hi, for most it will be Buy some land- forest and move in.
Failing that live with family and share costs.
Take care all M.
I agree, I think there is a significant risk of a rise in homelessness
One thing is certain. UK governments will punish people who save enough for their retirement. The only thing that will give people the confidence to save more is a guarantee that politicians won't launch tax raids on pensions and savings. Currently the message is that those who defer consumption now will be punished for their sacrifice later.
Tax raids on Pensions are the lowest of the low.
This stores up problems for later, at a time when we are not saving enough.
Take care M.
Yeah it's clear not to bother
Taxation isnt punishment.
@@basicfilmblog Taxation on money made from work isn't. Taking the life savings off pensioners that have already paid tax on their life savings isn't tax. It's THEFT.
@@basicfilmblogtrue, and we don’t know what the changes will be in the budget, but if it happens that the pension tax reliefs are materially changed to tax more of the income that goes in the pension then it makes pensions less interesting as a saving vehicle and taxing on the way in and the way out of the pension fund is directly a disincentive to saving in pensions which would be a disaster for the country.
Great video, however, the main reason people aren't saving more for retirement is the cost of living crisis combined with wage stagnation. You can't save what you don't have.
The biggest concern especially for lower earners is the investments and the fees. Some are shockingly expensive and have very low returns.
I looked at a family members works scheme recently and its 55% equities (overly UK weighed), 40% bonds and 5% cash. If she was 5 years from retirement then I could understand but she is 23.
While I understand they can't tailor it to every employee they could group ages to invest it more appropriately for them.
I also think there should be industry standard videos explaining about pensions to new employees as a part of their enrollment so people understand pensions and what their money will be invested in and how the fees line up with other providers.
Then change where the money is put, I know of no scheme that does not allow tou to change it.
Yes, I agree that many default options are awful.
The first thing I did was to change from the defaults. My pot has now grown exponentially. Now having a larger pot than staff that worked far longer than I have there
@@MinkieWinklehow do you know the size of pots of people at your workplace? Do you all discuss it? At my work some people have never even looked at their pension, don't have login details, no idea what it's invested in let alone how much is in it.
@@palmtree-e2l Thankfully yes, It is a open conversation where i work for most people, there are some that do not want to talk, and that is fine. we are all engineers, we are number nerds :)
More people need to have such discussions in my opinion, i have learned so much from my work mate, especially the older ones that know it like the back of their hands.
@@palmtree-e2l that is saddening to hear, that there are people that have not looked at it, since it is their means to retire with pride. open discussion about it it what everyone needs to be honest.
Your family member at 23 needs to move the bonds & cash into international stocks for maximum growth.
Two points:
Employers need to be made to contribute more. 3% is not generous when you are being paid minimum wage.
The employee has no option as to the choice of the scheme provider. This choice can be made for reasons that do not benefit the employees. NEST for example levy eye watering charges of 1.8% on deposits. Employing a top heavy grossly overpaid board. This is not in the employees favour for growth.
The government should be paying 40% tax relief as well. 20% isn't enough for lower earners.
3 percent is 3 percent, whether your earning 10k or 20k
That's how percent works. If you have a problem with low wages, then upskill, get a better job. Be more valuable in the job market
Totally agree it is not done to benefit the person that is compulsorily opted in. But for now at least you can still choose to not support the thieving fat cats and opt out. Your money, your choice where and how you invest it. 💷💷💷💷
@@kinggeoffrey3801If they earn £50k they will get 40%
Employers pay 13.8% Nics.
Given recent graduates have £30k to £50K debt before they start work and some pensioners are paying £7k to £9k per month in care home fees a lot of people have "given up" on sensible financial management and have decided to "P*ss it against the wall". Also lots of these pensions companies are charging eyewatering fees for non company pensions.
Indeed. I'm interested to see what comes up in this video, but something that seems to go overlooked so often when people discuss what younger people 'should' be doing is... Reality.
I fucked around a bit (I.e. like most, didn't know what I wanted to do and wasn't happy to go right into a 'career' that I knew I'd hate), and also had the fortune of being university age and graduating around the time of the Financial Crisis.
I then worked via agencies, earning decent enough money (if we ignore agency fees/theft and whatnot) but nothing went into any pension. To get into my current career I had to do a masters/'conversion course'. So, greater graduate tax/saving/paying my way into an industry with a skills shortage. Makes total sense, because why wouldn't government make it difficult for people like me?
I've never been a particularly 'woo, children' person, and the state of the world has reinforced that, so newborns are probably a no. I'm looking another 33 years, should nothing change, until state pension age. I should spend most of that time earning over £100k.
Does it really make sense for me to stick loads into a pension? What can we really know about 3 decades time?
Fees for nothing need to be avoided at all costs.
An ISA would be a better option for most, allowing you access if you are destitute and retirement when you need it.
Start early, parents start a child one and even have a LISA as well to get the most “free money” as you can.
Take care M.
Why pay for care home?. No need.
they not graduates, they are victims of a scam.
@AG-so4gl ah yeah be senile and homeless.. fantastic plan
Furthermore, logic suggests that means testing benefits - and potentially the State Pension - completely destroys the incentive to work and save.
Great Point. Work to lose your state pension. Errrrrrrr no thanks.
No it does not, mean testing mean they will have a reduction in STATE welfare.
Which is fine because in the private pension market, depending on where it is sat, you can double your pot in as little as 8 years.
Si in the end, you will be on far more private than you ever will by Continuing to receive state pension.
For instance,
I work with a man, he is near retirement age now, a few years to go. His private pension is already in the millions, he would earn double retiring now, than what his current wage is.
He would earn over 80,000 a year retired.
State Pension is like 10k if your lucky.
Lose 10k to earn 80k.
Do the maths. He is still far better off.
And anyone could do that, even low earners could have pots like he does
@@MinkieWinkleno they couldnt.
@@MinkieWinkle changing the rules on state or private pensions risks undermining what Samuelson referred to as the social contract. Everyone knows that we’ve had a bull market, overall, for 42 years. Interest rates fell to zero. That era’s over. Just have a look at the transfer value of public sector pensions versus those of DC schemes where employees have contributed the same amount over time.
and if you're too good at it, we'll suggest ways you can pay for those who couldn't be bothered!
Auto-enrolment is hideous. I found I had dozens of pensions, all £1000 each from over the years ... and every single one of them was paying £20-30 a month in fees! My pots had barely grown at all, the brokers are the main beneficiaries of auto enrolment. We have been promised a dashboard for hunting these down for years ... no government has delivered it.
Oh definitely. Those default pension pots are only created to benefit the pension provider!
Dozens in 10 years . Aye very good mr screamer.
Pension Fees & charges are ridiculously expensive.
I think from a usability perspective, it would be better when the self employed complete the end of year HMRC tax form, it offers a "redeemable" voucher (which is effectively the tax/NI rebate they would get) that can be added to a pension for that tax year when they add x% to their pension plan in that tax year. So person says yes to voucher, they get sent a unique voucher code, the person makes minimum payment to validated pension pot, they add the HMRC voucher code in the payment page, both payment and voucher values are added to the pot.
Personal savings are under attack from fiscal drag so people are faced with a few choices:
1. Do nothing and pay tax on anything outside personal/savings allowance.
2. Move into an ISA and pay tax on anything above the £20k threshold.
3. Pay more into your pension to get 20/40k% relief.
4. Stocks and shares.
5. Spend anything above the thresholds on assets such as your house although you’ll pay VAT on items you buy.
6. Premium bonds (up to £50k) which should return about 4%.
I’m doing a mixture of 3/5/6 and will move into 4 once I’ve finished 5.
One of the biggest threats currently is the reduction in the 25% tax free lump sum which I think you (the IFS advocate.
If they change this I will be reducing my contributions the next day and re directing to isas.
@@philipjones3599depends how much you earn now and in the future, you still avoid NI and possibly higher rate depending on the expected income.
@@philipjones3599 Even without tax free cash, pensions are still far better than ISA's, even more so if you have a salary sacrifice scheme.
Would be very interested in a video on public sector pensions. I work in the NHS and am curious to know the future of it
Hopefully public sector pensions will be phased out, the tax payer can’t afford to fund them anymore. Everyone should have a private pension which they fund themselves.
@@welshhibby I'm not sure that's actually true.
@welshhibby good luck recruiting teachers etc if they do remove one of the very few perks of the job. (The public sector workers also pay in quite a tidy chunk of their salaries into them - which just gets sucked back into the general taxation pot).
Public sector pensions need cutting its ridiculous how high they are compared to normal working people. State pay is comparative with private and you get a load of benefits. So pleased I moved from private to state, its like a gravy train this side of the fence 😂 hurm I best shut up I guess 😂😂😂
@mrmeldrew693 lol no it does 😂 pension provisions are not held in state coffers and are tax free.
I've been autoenrolled even though I pay a lot into a sipp through salary sacrifice but can't be bothered to change it, will merge the when I retire soonish
I am 45 years old with very little set aside for retirement at this point. I have always been curious about the stock market and have witnessed some people who played the game right and retired early because they used the stock market. When I ask them, most said that they invested very little to start with, but their portfolio grew. I do have a significant amount of capital that is required to start up but I have no idea what strategies and direction I need to approach to help me make decent returns
1. Limit your spending/cut off retail therapy
2.Put the extra cash towards investing in high yielding or steady investment.
Focus on long term investments in property, stocks, and bonds. Avoid copying, daytrading and 'chart astrology'. Diversify across different geographies, industries, and value chain stages - to reduce your risk. You can do this with ETFs, or by selecting different stocks yourself. This is the best way to invest for more than 90% of people
investing isn't hard at all the guys that do it full time don't know what they're doing. Look into passive index fund investing and learn some more. Buy Companies stock which you think has huge potential to grow. Internet is your pal, do some research
"That is why I enjoy having a portfolio-coach guide my day-to-day market decisions, because their entire skill set is built around going long and short at the same time, both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, and when combined with the exclusive information/analysis they have, it's nearly impossible not to outperform. I've been using a portfolio coach for over two years and have made over a million and fifty-seven thousand dollars"
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?.
Something that we need to do in the UK is allow employees to have one singular pension provider that 'follows' them around and then individuals can just use that given provider e.g. Aviva, II, NEST etc. (Mentioned briefly at ~37.30)
This allows people can choose their investments more effectively, pensions aren't just about saving money it's about investing correctly. Australia do it.
What pension! I am now inside ir35 and can't afford a penny. I am classed as a contractor but can't claim expenses and no spare money to save for a pension! Revoke ir35!!!!!
Too many people have the "government will look after me" mentality
The reality is, when has government ever ran/ operated anything that has work out well.
Most people can not name one thing, yet they still think government will lookvafter them
What on earth do you think people pay trillions in tax for ?
@@stuartregan1627 exactly. it is not worth paying. no value for money, for every pound the gov collects only half will actually be used to do anything with, the rest is funding their own inefficiency, bureaucracy.
So much of what the gov does, would be better to be funded directly by the public from their own pockets.
Case and point, state pension, on average the a worker will be paying about 2000 a year or 160 to 170 a month in National insurance. so that at the end of their work, when they retire, they will get about 12,000 back a year from stat pension.
OR that same 160 to 170, could a month from age 18 could have been put into a private pension instead, that would mean you would have a pension pot of over 1 million come retirement and from that pot having a pension that is several times more than what state pension provides,
With the added bonus of, if you pass, the pension then stays in the family unlike state pension where it is just taken.
which is better value, state or private...
in other words, the money is better in the hands of those that earned it, instead of being taken by wasteful governments that could not possibly know what is best for you. They don't even know who you are. but so many still believe the gov is here to help.
It's clear you work for the Civil service & want thousand of jobs to be created for your cronies. 13 million pensioners need means tested . How many thousands of jobs for your cronies?
@@stuartregan1627 are you actually going to make sense today, or just make crap up ?
You say that people should be banging money in at the age of 50 onwards. It's important to note though. If you bang money into your pension in your 20s and choose an investment with a good historical long term ROR, they're easy to find. Start in your 20s and with the benefit of compounding interest, any payments you make in your 50s and 60s would be dwarved by the growth of the investment. I wish I'd known this 20 years ago.
I think the Government would love you to lock loads of money into a saving product the politicians can change on a daily basis .
At present I am putting in 14% of my salary into my workplace DC Pension. But this is not enough. So I am putting in an aditional £50 a month. I get 20% Tax Relief on this raising it up to £62.50p per month. After my Credit Card is paid off I will then re-direct that monthly payment towards the Pension Pot. As I approach retirement ( 59 yrs young now ) this pool of money will transition jnto 'Bonds' which is a bit safer than 'Equities'. I know I will have to redirect even more cash to get the requried pot size. Aiming for £300k plus. But will it be enough?
300k now.. no. 300k in 20 years.. get a 6 pack of beer
Instead of transferring it all to bonds when you retire, you might want to transfer enough for 5-10 years of living expenses and keep the rest in the stock market. That way you are protected against short term dips in the market as your bonds will not be affected, but in the long term the shares will continue to grow during your retirement and leave you better off. Worth doing your own research on this though, or getting advice. Lots of youtubers who do proper financial modeling of this sort of thing. James Shack is probably my favourite.
300k should be enough for 12-15k per year depending on what returns you get during retirement.
@@JPEight Thanks will look into this.
Forgot to mention, that not all bonds are thr same. You would want to be buying actual bonds, not investing in a bonds fund which is unfortunately what they usually mean by “bonds”.
Owning part of a fund that invests in bonds doesn’t protect you as well because if bonds become unpopular, the value of the fund will drop when everyone sells.
If you own the bonds directly and hold them to maturity, you are guaranteed the interest payments each month as well as the return of your principal when the bond matures. The process of buying different length bonds and holding to maturity to stagger the release of equity is called bond laddering.
@@JPEight Good to know. Thanks.
What's the rationale for the 8% topping out at £50k? It was mentioned 8% is too low particularly for high earners, so in that context it seems oddly counterproductive to cut off at 50k.
Qualifying Earnings is defined as earnings between £6,240 (the Lower Earnings Limit) and £50,270 (the Upper Earnings Limit). It takes account of basic pay (inc statutory pay components) plus bonus, commission, overtime, etc.
Some bright spark reckoned that 8% of that figure was roughly equivalent to 9% of basic pay without adjustment or 7% of total pay.
And so there came to be 4 earnings bases, these 3 plus another slightly more complex.
All are woefully inadequate as the video points out. A recalculation is required.
Not sure you're being cynical enough.
How many people think auto enrolment means the "underlying" long term intent is to remove their eligibility to state pension down the line? Either through means testing or increasing the pension age to the point it's above your healthy life expectancy.
Given the chance they will remove it whether you enrolled or not. Doesn't matter either way, as for all except the very lowest payed, a private pension at 8% contribution that's properly invested will be worth more than the state pension.
100% correct . Should know how dishonest Government is by now
@@JPEight the "properly invested" is the key. One of my pensions lost £10k last year.
Yeah starting to think auto enrolment is just a way to steal your state pension.
However cynical you are, it will always be more politically expedient for governments to tax anything you save into something other than a pension. Much easier to portray such people as "the rich"
Self employed put a large chunk of their venue\income “off the books” as cash to reduce their tax bill That money will never find its way into a pension.
I have been. I’m 36 and have £51k in my SIPP. Although the lack of government transparency around tax reliefs and the cost of living is making me consider reducing my contributions.
HMRC tax relief is 25% you pay in £100 the taxman will pay in £25 so don’t reduce your contributions aim for 15% of your salary if you can and you’ll be in a good position obviously how much you pay is variable depending on age if you’re starting later you’ll need to pay in more.
The SIPP plays it part if you get a company contribution.
Stick it away in stocks and shares ISA to get the snowball of compounding working.
An ISA for spare cash that you can access is also a good idea. It also has the advantage of no tax!
Take care M
no shit you get penalized for saving and trying to get a better income when your in the lowest bracket
Is this because self employed people were allowed to claim the state pension? I remember Mr Hammond not being able to increase the self employed NI contribution to compensate for the extra outgoing
I have a friend who is self-employed, makes £250k as a plumber (or, rather, a plumber who employs lots of other plumbers, so owns a plumbing firm). Doesn't pay anything into a pension. I asked him why, he simply invests in income generating assets instead. Primarily property.
Not everybody who decides not to invest in a pension is somebody who isn't investing for retirement, in his case he'll just have property income rather than an annuity or drawdown. He also has his firm, which if it continues to do well he could flog for a lump sum or pass down a generation whilst retaining a chunky share of it for the dividends.
Not everybody needs a pension, although I'd personally always have one of some sort of diversification.
I would add , now the top rate was abolished under the last government put in , and is likely to be put back for most , it was the main reason I retired at 64 fully fit and a loss to my employer was because I was within 10k of the top limit for a varying number of pensions . I now know I should have stayed employed and put money elsewhere and then moved this into my pension when the limit was removed …. You can never have too much money in a pension funds , there will be many ways you can spend this as inflation showed be when it was running at 15 points … now 69 and had to increase my drawdown number to keep pace and will run out in 24 years … and if I live as my father did 96 as did his dad and also his father .. I have a problem to solve now before I get there. I now will have to down size the house I live in at the moment … so two years or so I will do this and release equity to bridge that gap…
without finishing the video the answer is no people are not saving enough for their pensions. My assumption is most people are only contributing the minimum, if they're even contributing at all.
Once the have ramped up the auto enrolment they'll remove the state pension.
People my age are going to be in for a shock.
Yeah only the workshy get pensions.
People that saved for retirement are now losing their winter fuel so its not worth saving . They could also get pension credit if they didnt save . Obvious conclusion. Dont save for retirement.
Precisely save to lose your entitlements .... Nah Pass
How on earth does the new government think they are going to encourage more pension (or any other) savings (or bothering to work at all or beyond 55) while reducing returns on their scheme investments via windfall taxes, dividend taxes, CGT, higher inflation, etc? And, importantly, what is the scale of the wealth transfer between private sector DC scheme members and those in public sector DB schemes, the liabilities of which are well over 100% of GDP (almost 200% on some estimates).
100% taxing people to death and the wondering why people have no money. Only way they will do that is to increase tax on income and reduce tax on pension contributions. 2.5% on each would benefit a person by 5% which could make a nice increase over time.
Everything these guys have said will increase production coats and mead to more inflation.
None of the things you list there directly affect pensions, either in contributions or in payout. Of course they affect the economy in general which has a knock on effect, but nothing direct. Only exception is for non index linked annuities which are quite rare and IMO should be banned.
There is zero transfer between private DC pensions and public DB pensions, except for the taxes that you pay when you start receiving the pension, as some of that money will pay other people's pensions.
There is no public DB pension pot, there is no investment. The government receives taxes from working people one month, and pays that out as state and public pensions the next month.
@@1ForTheShieldz You couldn't be more wrong. Taxing people more on income will mean they have less to invest in a pension. Because of compound interest, and the fact that retirement income is almost always lower than when you're working, investing another 2.5% of your income into your pension would increase your pension by more than double that.
@JPEight you clearly misunderstood as you have written is what I was talking about. You have also misunderstood income meaning pension income while I mean working income during your life as you said. Read it again and you may understand what I was saying is the same as you. I'm arguing for compound interest and increasing pension income to 5% by allowing contributions to increase by a further 2.5% thats the carrot. The stick would be to increase income tax so its a penalty on workers.
@@1ForTheShieldz No, I understood perfectly. Taxing worker's income more, will mean they invest less, meaning smaller pension pot. That will make much more of an impact on retirement income than reducing retiree income tax.
"50, you've got rid of the kids, you've got rid of the mortgage"....er, no. Not me, and no one I know.
And if you are saving/ have saved, you need to know it's worth it. That because you have saved instead of partying in Ibiza, you arent going to be penalised bybremovalnofvsrate pension.
What's the point in saving when it looks like the younger generations will never get to retire?
This makes zero sense, you can't retire if you don't save you mean, if you choose not to save then you are choosing to not retire.
You honestly think you will be able to retire if you DON'T put any money aside for it?
That's the whole point. You NEED to put money aside, else you will NEVER be able to afford to retire with dignity
Zero point. Look at the people now losing their winter fuel allowance because they saved . . 100% correct.
Zero point. Look at the people now losing their winter fuel allowance because they saved.
@@stuartregan1627 - Oh I'll be retiring one way or another, even if it requires me to move to Bulgaria or somewhere with a low cost of living. Can buy a woodland there for a couple of grand, there's your firewood.
I think the government should use your NI number is your pension number. Every NI gets assigned a pension company that could be easily transferred.
Your NI number is linked to your pension, it is already easy to transfer. I did it a couple weeks ago, took about 5 clicks and 3minutes to do online after logging in.
@@JPEight I was more thinking you get an NI number at birth and a pension account. Then when you start work it’s just government the number and it goes to your pension account with the provider you have chosen or been given if you have not.
@@hadphild Typically you only receive your NI at 16, though you can apply before that if you plan to start work earlier.
You can open a pension for a child as soon as they are born, but from what I can find, you don't need a NI to do so.
I understand what you are saying, but I don't see how it's that different from what we have now.
The reason employers get to choose which provider they use is because doing the accounts would be a nightmare if they had to make payments to dozens of different providers.
Your way would be a little easier for the employee though.
Nothing stopping you from transferring all your pensions into one provider though. You can even transfer out of your active workplace pension whilst they are still paying into it if you want to.
@@JPEight I find that employers can pay into your bank account very easily. Would that not be the same
@@hadphild Not really, as to pay your bank account they have one finance system, and one bank account to pay everyone from. All they need is the sort code and account code, put it into the system and done.
To pay into your pension they also need to set up an account with every pension provider. You can't just pay straight from bank to pension, as there isn't a sort code and account number to send the money to.
They pay the provider who credits your account, and then buys assets on your behalf. The provider needs to know how much money you're sending and who it needs to go to.
From my understanding the company will make a single deposit with the pension provider who then splits it up between the employees based on the info they're been given by the employer.
Saving WHAT money? Those who need a pension the most, don't have the spare income to spend on one. Those that can, are already doing so. FAR better is to engineer a decent State Pension and let those with higher incomes add to that as they wish. Really, this ought to be OBVIOUS!
A lot of the benefits for saving into a pension are not available for those who need it most. Low income = less to put in, lower employer contribution, job more likely to only provide the minimum 3% with employer match.these payments will also only on qualified earnings ignoring the first 6k, salary sacrifice is also off the table as it would put you below minimum wage. Then you don't get the 40% tax rebate higher earners get, only the 20%.
Why save if your punished for saving at retirement ? Pensioners that did wish they didn't has its cost them their winter fuel allowance for starters & maybe even the state pension down the line . One thing for sure is the 2.6 TRIlLLION Gold plated Civil service pensions are not going to be cut despite apparently having no money .
My “gold plated” local government pension has already had £26,000 taken from it. Government has saved paying me 7.9% of my salary now and save £26,000 in todays money in 2035 & 2036. Doing trust this government not to screw with it further.
You should also know that the local government scheme is very well run and is funded from the people’s contribution, not government money, but labour want to take over the schemes and move it centrally. So they’ll steal the money in the scheme and leave the liabilities.
Not all the public sector schemes are a drain on the tax payer.
Civil service employees will be losing the winter fuel payment too, I'm not sure what you're on about.
Pensioners who miss out on WFA are already losing out on pension credit. Nothing has changed
Save stu. In an ETF 100 dollars a month.
It will go nowhere for many years. Then it will go up like crazy.
@@ster2600 what I am on about is IF there is no money then why are Gold plated Civil servents pensions not the target ? Why should they get 30 k plus & a state pension to boot of tax payers money ?
Average person: "Yes, by the standards of the upper middle class, the other 7.2 billion of us humans aren't saving enough into our pensions"
As a yardstick, stacking away £2500 a month from 40 to 67 will give you a £50k a year retirement
It’s a nice idea but hard to put this much or close to it every month.
I’m trying!
Depending on what changes in October budget it may be a move towards an ISA based strategy.
Take care M.
I'd prefer to trade money for time and retire younger with less income. Time can never be bought.
Assuming you can get to 50 with your house paid off and zero pension saved to date, if you earn around 60k and have a matched contribution pension where you both put in 10% then do a 37% salary sacrifice you can save £500k in 10 years and retire at 60 and this strategy will reduce your take home by around 1k a month which is assuming the mortgage you just finished was 1k so no net change. The main enabler is zero debt here.
These people not saving enough into their pensions, what money have they got over to do so?
Was there or wasn't there a black hole inherited by Labour does anyone know
There was, 100 billion Blackhole
£22b. Which is tiny amount compared to things like Track & Trace (£38b).
yep. 100 billion
It's out in space.....
No, the label of 'black hole' is nonsense. Labour knew about how much money there was all along, they are pretending so that they can blame conservatives for when they raise taxes.
The government never has enough money, there is a 'black hole' every year. And every year they borrow money to fill it, which is why the national debt goes up every year. If Labour wanted to they could have just borrowed the shortfall.
Not that I want them to increase the national debt mind, but the point is there was no need to remove winter fuel allowance or change taxes etc. if they didn't want to.
But where are these pension contributions going to be invested? Investing in the FTSE has been a bad idea for the past thirty years.
Nope, look at the statistics. That's not true.
@@69spookIt is terrible compared to the S&P500. I moved my early years pension into a BR tracker of this and its gaining despite me not contributing to it any further, whereas it was stagnant for a few years under a FTSE100 derivative tracker. I have an NHS pension coming but move 1/3 of my monthly salary into something no government will ever touch and returns more than the stock market, crypto or property could.
@@69spook FTSE isn't the best, but far from the worst. Much better than cash and bonds. Would be better to invest in a mix of US and GLOBAL given the choice.
@@JPEight I agree.
But that's putting all your eggs in one basket & past performance is not a guarantee of future performance & all that.
@@69spook Not at all, those funds are buying a small amount of hundreds, or thousands of different companies. That's hardly putting all eggs in one basket.
Yes they are all 'shares', but across different sectors including tech, medical, property, manufactuing etc.
You are still exposed to global events like market crashes, but even after 2008, the stock market had recovered to it's pre-crash value within 3 years, and covid only took a few months to recover.
The short term risks of being invested in the stock market are higher than other investments, but the long term risk of investing in large index funds is almost zero.
The bigger risk of investing elsewhere is that of not returning more than inflation. If you look at the statistics for whether your investment will return a return greater than inflation, over a long period of time) stocks are less risky. There's great video by James Shack called "Why Holding Cash Now is a Terrible Idea" which explains it better than I can.
*7 million people may not be able to save enough.
Fixed it for you.
What is my incentive to save into my pension pot?
I'm 36. I've so far put in £500 willingly into a private pot. My argument is; I'd much rather have more money now, than more money later in life. What am I going to do with a large pension? I'm just going to exist, either alone or in a care home, and likely have a ton of spare cash. I have no kids, and don't want kids in the future. So no one benefits me having a larger pension fund. The entire idea is illogical to me. Give me more money now, let me live in squalor later. I'm fine with that.
Depends how bad your health is now I guess, I plan to live a very good and active 60 to 80+ years and that needs money. Plus the more pension you have the earlier you retire.
Well yeah you're old when you use that money but you can decide when you retire and you actually get to retire.
With the UK population ageing in the way that it is you really should entertain the idea that the state pension will be drastically different by the time you come to need it.
Yeah save for all the work shy & spend happy get £3900 pension credit. Errrrr no thanks I will pass.
@@stuartregan1627 What are you on about, others are going to get pension credit whether you save or not?
@@connorwilloughby1696 you clearly dont know how means testing works . People that save for retirement dont get pension credit , hence why theres no point .
Poor people can look firward to being poor in retirement too? Dear Jesus.
Why wouldnt they be?
Saving? People dont have enough to survive on and saving is a luxury
Nonsense. The vast majority of working people in this country are not struggling financially. They just think they are because they had to cut down on foreign holidays or new cars.
Meanwhile boring old me saving to my workplace pension and a LISA 🤦
why doesnt the govt just make it so that employers MUST offer the employees atleast 1% pay rise per year. many low paid workers on minimum wage never get pay rises
The minimum wage increases every year.
This is a great way to make companies go under, and people will lose jobs.
minimum wage rises every year - correct. but its not fair for someone who has been working at the same company for a year to earn the same (min wage) as a less productive new starter. in Britain we have this no wage growth culture that needs to be tackled.
p.s if a company goes bust for offering a 1% pay rise to its staff then it cant handle any of the regular supply chain shocks and would've gone bust soon anyways.
Because its not the government's job to dictate wages.
It's a free market. The price of labour is always changing, following the supply and demand.
Upset that with government intervention, then you create far worse problems. Such as recessions, depressions, market crashes/ corrections, inflation etc.
Almost always caused by when government gets involved.
@@MahmoudAhmed-oq2dn I couldn't agree more. I'm in a junior project position working 50 hour weeks on an equivalent salary of £9.52 an hour with a great deal of responsibility. I've already been informed that I might not get a pay rise next April because of the planned minimum wage rises and the company are concerned about the effects of this on their budget. I might see if the local council might take 'gaining experience' tokens in payment for my ever increasing council tax.
More like at least 50% 😅
I'll probably die at work
I'm reading a lot of very cynical but ill thought out comments here. However much future governments might want to tax your money, the surest way to political suicide is to hit the homes people live in or their pension provisions. If you invest in anything else it will be much easier to just categorise you as "the rich".
What’s the point, the Government will just penalise you for saving.
100% do you think the people why are losing £3900 because they saved are glad they saved ?
@@stuartregan1627 Yes, because they are still far better off than those who did not save. I hope to retire on an income of about 40k. An extra 3900 is nothing in comparison to what you will get by contributing to your pension.
@@JPEight Only better if you put hundreds of thousands into your pension & not many can afford to do that . People who saved that are missing out on pension credit wish they hadn't bothered .
@@stuartregan1627 My pension will hopefully be hundreds of thousands, but the amount I put in will be much less due to compound interest.
My thoughts too. Look at winter fuel allowance & pension credit. All available if you don't save.
What about the economic impact of people saving money rather than spending it in the economy, particularly high earners?
Zero.
Because money saved was money earned. Money saved is then, banked/ invested, which means it is either loaned back oyt by banks, or is invested in business that grow and hire more people. Create more products
@@MinkieWinkle This is simply untrue. You can decide when to spend the money you earn, but you can't move the work you did into the future, someone else has to do your work and then you take the proceed off them
Nobody will save anything under a Labour government. Taxed out of saving.
What are you on about 😂😂 anyone with sense is still saving
@@jaju123456 - He's saying that people won't have the spare cash to save, obviously.
10k a year.. serious activity... that is nothing, doesn't pay rent!! Do you guys live in your moms basement???
Honestly, might as well work at McDonals, pays much better. These people are delusional.
@@yesmarioo does McDonald's even pay that low? Part time work perhaps??
The idea that the majority of people are doing enough is bollocks. Anyone on the average wage on auto enrollment would be better off not saving at all leaving the state to pick up the tab.
It's perverse and the only way to fix it is to ask the employer to do more.
Great point . We see now though winter fuel & pension credit that the spendhappy & work shy get £3900 if they didn't so why bother?
Nope, not what the maths says. full time minimum wage is ~22k. 8% of that is £1760. Investing that with a 5% return for 49 years (18-67) would give a retirement pot of 366k, which is enough for a retirement income of ~15k. And yes, that's accounting for inflation.
Even with no state pension at all you would still better off by ~4k per year. Or, with the state pension you could potentially retire on as much or even more than when you were working.
@@JPEight except most of the funds these pensions are investing in are lucky to break even and £15k in 47 years time is going to be peanuts.
@@iplaywaytoomuch That is true, most funds do not give good returns, but it's easy to choose which fund your money goes in. S&P500 has averaged 10% return over the last 50 years, which after subtracting inflation comes to more like 6%.
I was being conservative by saying 5% to account for fee's and such.
Of course, the next 50 years might not be as good, but it's a reasonable estimate.
The default fund for my pension returned 14% in the last year, but I've moved to one that returned 24% in the last year.
@@JPEight So you would pay in hundreds of thousands of pounds into a private pension to enable the Government to deny you a state pension ? How on earth would you be better of by 4 K a year ? You've spend hundreds of thousands . Not Carol Vorderman are you .
Success is not built on success. It's built on failure, It's built on frustration. it's built on fear that you have to overcome. I pray that anyone who reads this will be successful in Life
Crypto scam bots 🤖 in the comments !
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starver will steal it anyway.
I am grateful for this informative video. I think there is a higher chance that BTC and ETH will retest resistance and then fall. But as always, things change every day and all we can do is act responsibly, monitor the markets and re-evaluate our strategies regularly. I would like to thank John Preston for being my source of crypto education as I comfortably earned 3.7 BTC..
He often interacts on Telegrams, using the user-name...
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I agree that there are strategies that can be used to generate solid profits regardless of the state of the economy or market, but such implementations are usually carried out by investment experts or advisors with experience.
You are right and thank you John Preston. I started investing last year and I don't regret it for a second (except that I didn't start investing years ago). I made a lot of money with BTC and XRP without any worries.
Only 7 million? You must be deluded.
Saving what’s that most people now are living from month to month what reality are some people living in
One where they don't waste money on alcohol, cigarettes, gambling, lavish cars, TV's, phones, holidays, trips out, takeaway...
Yes there are plenty of people that really do have nothing, but for most people it is a mindset issue, as most people could find and extra 5% of their income to invest if they really wanted to. Even those that don't realise it.
I too wish the economy was healthier, and that wages had kept up with inflation etc. but that doesn't excuse people's poor choices.
@@JPEight oh dear 🙄🙄🤔
@@JPEightvery true. Most people in this country are not struggling, the press just keeps telling them that they are in a 'cost of living crisis'. Plenty of nice cars around, plenty people on foreign holidays, plenty people paying a fortune to watch a pop group or go to Glastonbury.
@@TheDavecroftmaybe ….maybe not given the number of foodbanks around……..90%plus of our assets are held by 1% …….thats maybe a little unhealthy……that is not the way to have a just fair and happy society…….trouble coming?