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How long have you got?

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Following the budget changes to pensions, giving access to lump sums and the natural assumption that many will blow their savings, leaving themselves destitute and reliant on benefits. The Gov has come up with yet another off the wall idea; pensioners will be given estimates of when they are likely to die !   Is this possible? If it is, then presumably, the Life Insurance Companies will be altering their premiums - won't they?

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Insurance companies do this already, this is how they match the premium to the risk.

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Can't be an exact science though Asp, merely a balance of probabilities; neither can it predict accidents, crime or terminal illness.

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Of course it's a balance of probabilities Obs. This is whythe younger (and presumably fitter) you are the smaller the premiums. The insurance companies weigh upthe risks and price the policies accordingly. They've had a lot of practice and wouldn't be in business if they got it wrong.

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But this is Government, predicting one's future or lack of it !   Let's say for example, they predict someone will die before they are 70; so the 65yo goes on a spending spree for 5 years, but what if they got it wrong?  Also, what about ill health and disability; many may want to spend up while they're fit and healthy, so death isn't the sole criteria, for a spending spree. Think maybe, the Gov have sussed a flaw in there pension policy and are now trying to mitigate the damage?

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You asked if it was possible to make an estimate of someoneone's life expectancy. This is what insurance companies have done since their inception, taking a gamble on what will happen.

 

What this government has said is that whatever money people have put into their pension fund remains their money to gamble with as they wish. If you have a pension pot when you retire and want to withdraw it all to spend on fast cars and holidays you will have to pay a high rate of tax on what you take out. If you decide to use it to buy an annuity the pension you will receive will be taxed at a lower rate.

No matter how you look at it a pension fund is a savings account with deferred taxation. People who save this way and people who don't save at all are still entitled to the same pension provision from the state. The government still gets the tax from you whatever you do.

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Of course, but pensioners who "blow it", will become dependent on the state.

 

which they are perfectly entitled to do..... just as the ones who never saved anything to "Blow" will be

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Of course, but pensioners who "blow it", will become dependent on the state.

Why shouldn't they spend the money they have saved up? The state doesn't lose anything as the same people are entitled to a state pension regardless. If the state can't afford to pay pensions the state shouldn't have promised to do so in the first place, it's not the pensioners' fault that it was set up as a Ponzi scheme.

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That doesn't answer why it is OK for people who haven't saved for their pension having rely on those who have been making contributions. Would you think it right that those who had made contributions getting less of a state pension because they have a private pot than those who didn't save so they could then get bigger state pensions?

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Told you before Baz, I've no time for the feckless; but I don't want to be tripping over them begging in the street either - benefits are supposed to be a safety net, and we're realising now, an inadequate one; hence the reliance on food banks.  There's a elderly care time bomb, just down the road, and we're walking straight into it; so the more folk who do make provision for themselves, the less social trauma there will be; hence the original Government insistence on works pension schemes.  The problem with Governments, is they come up with ideas, but don't think them through or calculate people's reaction to them; hence this desperate after thought, attempt to reduce the numbers "blowing" their lump sums, by attempting to tell them how long they will live.

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Obs, the problem with governments is their  forever moving the goalposts. Also their meddling with what people do with their own money,and you are guilty of doing the same. The state pension was, allegedly, set up to provide for people past working age and funded (again allegedly) by contributions made during their working lives. Private pensions are additional to the state pension, not instead of it, and are simply a way of people who can afford it saving money for their retirement. If someone foregoes foreign holidays, new cars every couple of years, designer clothes, the latest in electronic entertainment equipment etc during their working life in order to save for a secure retirement (although there is no guarantee of the length of the retirement) then why not let them change their minds and blow the money after retiring instead. The impact on the state is just the same (in fact the state may make a short term gain should the retiree choose to take enough out of his/her retirement pot to incur the 40% tax rate).

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If your suggesting that the State Pension should be adequate, I would agree; but this would require higher NI and/or tax contributions in any case. It's clearly inadequate, hence Governments encouraging folk to supplement it with works pensions, then allowing them the option (in the budget) to "blow it" - sort of defeats the original purpose.

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Telling somebody they may only have ten years to live does as well. I know of a case where somebody was given a year at most due to a terminal illness. They sold thier house to one of those equity release firms, took out several credit cards aned then went on a world splurge. In the end they owed the best part of half a million in debts to various agencies and went out with a smile on thier face. The person died at the age of 56 of their illness well short of pension age and having paid into the state and a works pension for all of their working life. Feckless maybe

 

Then there was two of the wifes relatives who again had worked all their lives had a good works pension and the state pension, a nice house in a good area. both were taken ill and had to go into a nursing home. The house was sold and their pensions were used to pay the fees of £600 per week per person. He lived for twelve months in the home before passing away and she lasted a further two years by which time all the money they had saved and the money from the sale of the house and their pension had gone and there was not enough left to pay for her funeral.

 

Not a burden on the state in both cases but both could have been if they had,in the first case gone into remission and in the second case lived past the end of their money for several years.

 

I drew my works pension at fifty the lump sum I recieved went ot pay off the debts I had at the time, debts that i could not avoid if i wanted to do the normal things in life like eat at least one meal a day. I am more fortunate now in that I do not need to work but for a few years at the beggining of my marriage and a few years after I became unemployed life was a struggle from one day to the next. How much state pension I will recieve in ten years time I do not yet know but hope that it will be sufficient to help pay the bills.

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Then there was two of the wifes relatives who again had worked all their lives had a good works pension and the state pension, a nice house in a good area. both were taken ill and had to go into a nursing home. The house was sold and their pensions were used to pay the fees of £600 per week per person. He lived for twelve months in the home before passing away and she lasted a further two years by which time all the money they had saved and the money from the sale of the house and their pension had gone and there was not enough left to pay for her funeral.

 

But they would have had people living with them in the home who didn't prepare for their old age and had no assests to strip and your wifes relatives would have been paying for them in the final days and weeks as they had done during their working lives....

 

It is all wrong to put people in a home; forcing them to pay for their upkeep while people who saved nothing get the same treatment.

 

I for one will certainly be taking what I can from my private pensions and houses and assets and blowing the bloody lot and making sure my kids are all right for their lives ahead..... why shouldn't I? I've provided for myself and my family all my working life so far and along with my business partner have provided employment and paid massive amounts of tax over the years to pay for the feckless..... and those who couldn't be bothered...... I intend to get a little of what we've contributed back again!

 

If I make it that far that is :)

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You can't blame folk for "looking after Jack" and making the best of situations, hence there's a current boom in equity release schemes - folk want to spend it before their time is up.  But you can blame Governments for not realising this, and ensuring sufficient funding is available for the inevitable elderly care bill; which suggests a State Pension scheme that is adequate and properly funded. Dependence on private schemes to supplement State provision, aside from this potential to "blow it"; is a rather bleak prospect in any case, as many youngster in part-time and zero hour work won't even be paying into one; so what's going to happen to them?

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