observer Posted March 21, 2014 Report Share Posted March 21, 2014 On the face of it, the idea that pensioners should be able to cash in annuities and spend their savings on sports cars etc; seems a reasonable one, after all, it's their money so they can do what they want with their own money. BUT, what happens if and when the money runs out, and these pensioners finish up in poverty - who pays then? Quote Link to comment Share on other sites More sharing options...
Dizzy Posted March 21, 2014 Report Share Posted March 21, 2014 I don't understand what it all means Is it something to do with the state pension that everyone gets or private pensions Quote Link to comment Share on other sites More sharing options...
observer Posted March 21, 2014 Author Report Share Posted March 21, 2014 I think "private" Diz, usually with a private company. But not long back, politicians were arguing that youngsters should enter a pension scheme, as the State Pension may not suffice for a reasonable income in retirement. Now they're encouraging grumpies to blow it, which is an attractive proposition if you think the grim reaper is breathing down your neck; but for the creaking gates that last into their eighties and nineties; who's going to finish up paying for them IF they've blown their nest eggs? Quote Link to comment Share on other sites More sharing options...
Bazj Posted March 21, 2014 Report Share Posted March 21, 2014 I think it is a brilliant idea. At the moment, when you retire, you buy an annuity that is supposed to give you a monthly income until you die. If you pay £100.000 for it and you die after 12 months that's it.... money gone and you've probably had about 10k if you are lucky. This way, take your 100k, invest it, buy property with it but if you die after 12 months, your wife or kids get whats left instead of the insurance companies.... Win Win.... I hardly think that someone who has saved all their lives for a pension is going to drag it all out and buy a Ferrari as some of the Labour lot have been suggesting 1 Quote Link to comment Share on other sites More sharing options...
observer Posted March 21, 2014 Author Report Share Posted March 21, 2014 Fair comment Baz; but there will be those who, by accident or design, will blow it. So my question is - who will then pay for their old age? Not forgetting of course, that there is already a financial time bomb in elderly care, set to increase in effect as the number of ailing grumpies increases. The NHS wards are already groaning under the pressure of those "reaching the end of retirement"; and bed blocking the system; so a little foresight by Gov would help. Quote Link to comment Share on other sites More sharing options...
Bazj Posted March 21, 2014 Report Share Posted March 21, 2014 IMHO the same people who have saved all of their lives for their private pension should not be frowned upon if they DO decide to blow the lot; after all, their contributions will have gone towards paying for people who had never saved for their retirement (whether they could afford to or not) and have spent their money which could have gone towards their private pensions on fast cars and loose women all of their working lives (and there are plenty of those types about too) Why would you consider that it is OK for them to rely on a state pension and yet those who decide to save but blow their pension pot when they retire get your wrath? 1 Quote Link to comment Share on other sites More sharing options...
observer Posted March 21, 2014 Author Report Share Posted March 21, 2014 No "wrath" involved Baz; and simply no time for the feckless either. Merely thought that any Gov would have the foresight to safeguard against big calls on public expenditure in the future. Mind you, it's a big ask to expect any political party to see beyond the next election ! Quote Link to comment Share on other sites More sharing options...
Evil Sid Posted March 22, 2014 Report Share Posted March 22, 2014 I paid into a works pension from the day I started works at sixteen. My contratcted "retirement" age was sixty at which point I would have got a substantial lump sum and a decent monthly payout for the rest of my life. My life plan was to retire at fifty five have five years doing something different and then take my works pension. However after a nervous breakdown at 47 followed by a heart attack at 49 I decided that at fifty I would take the works pension as at the time I did not think that I would reach sixty and so reasoned that I may as well get something out of it even if it was just the option to have enough to live on without having to work. the other week i recived a letter to say that |I would be getting my state pension when I am 66 and a bit. So provided I stay alive for the next nine years or so I will get a state pension. if I pop my clogs then all the money I have paid in over the 36 years I worked will be in the hands of the government. Mrs sids pension will go up a bit as she will be entitled to some of my contributions but only about fifteen percent. One other thing that I have yet to find out, mainly due to a lack of interest at present, is if they introduce a "flat rate" pension (£140 per) how will that affect the extra years part that they currently pay if you have over 30 years of contributions. Crrently you need 30 years of contributions to get the "maximum" state pension, every year after that is classed as a "top up" pension and works out roughly about £1.50 a week for every year over the thirty. so with 6 extra years i would get £9.00 per week on top of my "standard" state pension. Also by encouraging the "elderly" to cash in their private pensions and "get it spent" maybe they figure that most of them won't live long enough to be a burden on the system and that the sudden injection of cash will enable them to say "look the economy is doing well, consumer spending is up, we did that vote for us again" Quote Link to comment Share on other sites More sharing options...
observer Posted March 22, 2014 Author Report Share Posted March 22, 2014 Think your last paragraph sums up the Gov's motivation Sid - but, as I'm suggesting, very myopic. All the main parties are agreeing a cap on the £1billion benefits bill, country's in the red and public expenditure has to be reduced if the books are to be balanced. Thus they wanted everyone contributing to an occupational pension scheme, in order to supplement what will become a pittance of a State pension; making retirees less reliant on benefits - which seems to make sense. The time bomb of demand on care services by an increasing demographic of ailing grumpies, appears to have been swept under the carpet. Quote Link to comment Share on other sites More sharing options...
Davy51 Posted March 22, 2014 Report Share Posted March 22, 2014 One suggestion put forward by the Daily Express today is that future pensioners with a massive lump sum will rush to buy property to rent out in return for a monthly income. I would imagine that would fuel further the present dog eat dog society & condemn some people to a life in rented accommodation as property prices spiral out of reach & low income means they can't get on the property ladder. Quote Link to comment Share on other sites More sharing options...
Bazj Posted March 22, 2014 Report Share Posted March 22, 2014 A lot of people already do buy property to rent; mainly because of the raping of the pension system by Gordon and the crap interest rates (if you are a saver)....dog eat dog maybe, but you also have to look after number one sometimes and why can it be right that if you save all of your life for a private pension that if you die before you retire or not long afterwards, the pension companies get to keep all of what's left in your pot? Quote Link to comment Share on other sites More sharing options...
observer Posted March 23, 2014 Author Report Share Posted March 23, 2014 It's a lottery Baz; some folk die young and never see their pension savings; but Dave's on the button with the "dog eat dog" anarchy of not having a system in place to ensure folk have enough to live on in old age. Quote Link to comment Share on other sites More sharing options...
Robbo Posted March 23, 2014 Report Share Posted March 23, 2014 and why can it be right that if you save all of your life for a private pension that if you die before you retire or not long afterwards, the pension companies get to keep all of what's left in your pot? If you have dependants you would choose a joint lifetime annuity. Most company pensions pay out a percentage to your wife/husband if you die, normally in the region of 50 - 75% for the rest of their lives.. Quote Link to comment Share on other sites More sharing options...
Davy51 Posted March 23, 2014 Report Share Posted March 23, 2014 Also what will happen if every future pensioner decides to take the full entitlement ,will it pull the rug from under the pension funds in general by leaving them with no money to invest to keep the schemes solvent ? The difficulty with pensions & retirement is that you don't know how long you need assets for....it could only be till tomorrow or for another 35 years. My wife will get 50% of my pension after my death but the company scheme i am in is one of the last decent schemes around & i doubt very much, with modern working practices , whether many people will be able to benefit in the long term from proper schemes where it has been possible to make regular contributions over a long working life. Quote Link to comment Share on other sites More sharing options...
Bazj Posted March 23, 2014 Report Share Posted March 23, 2014 If you have dependants you would choose a joint lifetime annuity. Most company pensions pay out a percentage to your wife/husband if you die, normally in the region of 50 - 75% for the rest of their lives.. which is all well and good, but if I die two weeks into getting my pension; the likelihood that my wife will get anywhere near the value of what I have paid in is extremely unlikely and so the pension company (and their highly paid directors) get to cream off what's left after we both die... plus they have already screwed the returns down to the bone with massive charges over the lifetime of my contributions I like the new idea that me and my family are the ones who will benefit; not some huge global corporation. Don't forget that this is money paid in over and above the state pension contributions so the feckless who don't prepare for their old age will still get something..... albeit eventually! Quote Link to comment Share on other sites More sharing options...
observer Posted March 24, 2014 Author Report Share Posted March 24, 2014 A problem for many grumpies, is that they are asset rich, but cash poor; and are being preyed on by equity release companies, trying to get properties at knock down prices. One would have thought that more responsible "social" landlords would buy the larger properties for young families and provide the grumpies with rented flats/bungalows - instead of imposing the bedroom tax on their existing tenants? Quote Link to comment Share on other sites More sharing options...
Bazj Posted March 24, 2014 Report Share Posted March 24, 2014 A problem for many grumpies, is that they are asset rich, but cash poor; and are being preyed on by equity release companies, trying to get properties at knock down prices. One would have thought that more responsible "social" landlords would buy the larger properties for young families and provide the grumpies with rented flats/bungalows - instead of imposing the bedroom tax on their existing tenants? Where do you get that idea from? Many older people are more than capable of selling a house and downsizing; the older couple next door but one to me (in their mid-70's) have recently sold their house, no mortgage and £350k better off. They have bought a house in Yorkshire for cash and plan to enjoy some of the rest of their windfall and buy a car, holiday etc.... It doesn't need equity release companies to provide a cash windfall! Quote Link to comment Share on other sites More sharing options...
observer Posted March 24, 2014 Author Report Share Posted March 24, 2014 But that still leaves one with an "asset" Baz. Quote Link to comment Share on other sites More sharing options...
Robbo Posted March 26, 2014 Report Share Posted March 26, 2014 Seems the government have been rather clever with this, as only 25% of the lump sum is tax free, so a £100,000 annuity will leave £75,000 taxed at 40% which by my reckoning is £30000 in tax, I suppose it's better than giving it to the insurance companies. Quote Link to comment Share on other sites More sharing options...
Davy51 Posted March 26, 2014 Report Share Posted March 26, 2014 Although if the residue is taken monthly ,as it is now, the annual tax free allowance still applies & tax will only be paid above that amount. Quote Link to comment Share on other sites More sharing options...
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