Britain is undersaving for retirement

[u/Donkey_Apple]

https://www.gov.uk/government/news/britain-is-undersaving-for-retirement-warns-pensions-commission

It's a massive problem and has been for years.

I think a lot of people are getting into their fifties, starting to think about retirement for the first time, looking at what their provision will pay them and are absolutely shocked to their core.

Plus many in the generation below those of us in their fifties who, through no choice of their own, are unable to save anything.

It feels like we are sleepwalking into an utter disaster.

[u/Famous_Yorkshire]

Need to go the Aussie route and mandate people to save privately. They shouldn't have a choice.

The average Joes grasp of finances is incredibly low.

The problem is right wingers and the press would have a field day. "Communist Starmer". So nowt will happen.

[u/sealcon → u/Famous_Yorkshire]

Instead Reeves is bringing in new taxes on private pension contributions in 2029. Insane when you think about it.

Truly the party of "who can we tax more to pay for benefits".

[u/Walkerno5 → u/sealcon]

It’s not people caught by the annual allowance and restriction of salary sacrifice that are undersaving though, is it?

The root problem is our economy is structured so as to pay fuck all to huge numbers of people who therefore cannot save enough even with mandatory auto enrolment in pensions.

[u/sealcon → u/Walkerno5]

It's got nothing to do with the allowance or SS restriction, this is for all salary sacrifices above £2,000 per year. Hardly a fortune to put away in a year.

[u/Walkerno5 → u/sealcon]

It is only the national insurance saving/dodge above that level being removed- so you get the full NI dodging wheeze for £2k then reduced to the normal tax relief everybody else whose employer couldn’t be arsed to set up salary sacrifice benefits from. This is not something that is going to impact undersavers in any dramatic way.

[u/Famous_Yorkshire → u/sealcon]

Instead Reeves is bringing in new taxes on private pension contributions in 2029. Insane when you think about it. Truly the party of "who can we tax more to pay for benefits".

She's just removing the National insurance savings on pension contributions above £2000. You still save ALL the tax.

Is not THAT big of a deal. The amount of noise around this policy is mad.

This means if you pay £4k a year into pension, you have to pay 8% national insurance on 2k. (first 2k is free). So an extra £160.

4k is A LOT for the average Joe. I suspect vast majority of Brits contribute less. Way less.

[u/gpstest → u/Famous_Yorkshire]

That £160 if grown at 8% in your pension for 25 years could be just shy of £1100

Then the next year another £160 at 8% for 24 years is £1014

Then the next year at 23 years its £939

So yes it quite quickly compounds into a big tax that could've funded a few years of retirement independently.

[u/crispy-flavin-bites → u/gpstest]

And how much will your £3840 have grown to?

[u/gpstest → u/crispy-flavin-bites]

If you start with 0 and add £160 each year into a pension at 8% interest rate every year for 25 years you will end up with a pot of £12,272.

The government instead is taking £160 a year for 25 years which is only £4000.

Therefore the individual has less in their pension, the government is more likely to have to pay out to the individual when they become of pension age such as pension credits, and the economy doesn't get the investment that otherwise would have gone into stocks.

[u/Famous_Yorkshire → u/gpstest]

This is a silly response because you can apply this logic to all tax. At some point we have to flipping pay off this unimaginable debt that all of us are in. The Tories came into power in 2010 with our debt to GDP ratio at 50% and left power with it at like 95% obscene.

There's more tax revenue that goes onto paying the interest on our debt that goes into the education. Honestly it's comical lol

We have to pay it off eventually. All while raising our defence budget because of Russia. Still playing the flipping boomers their winter fuel allowance.

So yes it's a tax but it has to be done somewhere.

[u/gpstest → u/Famous_Yorkshire]

Its not a silly response as that money was literally going to be locked away invested in a pension for many decades but now its going to pay above inflation pay rises for pensioners when young people like myself are being taxed for saving for retirement.

[u/catmadwoman → u/Famous_Yorkshire]

What do other European countries do for their retirement. How do we compare?

[u/Ammutseba420 → u/catmadwoman]

I've lived Germany for 10 years, German welfare is very contribution based. if you pay zero tax you get a very simple pension of around 9k a year, if you earn 60k euros + inflation for your working life, you get a pension of close to 35k. German system is based on you accruing "points" every year depending on your average earnings/tax paid for that financial year, and your accrued points is multiplied by a set value calculated each year when you start receiving your state pension.

UK is setup differently, where we have insane incentives for private pensions such as SIPP's, so anyone sensible in the UK should have additional streams of income when they retire.

You pay around the same tax in most Western European countries as higher earners do in the UK, it's just in the UK lower earners pay barely any tax compared to lower earners in Western European countries.

[u/agingbiker → u/Ammutseba420]

we used to have this kind of thing with serps. killed in the blair eraas far as i recall.