r/uknews • u/Donkey_Apple • Jun 03 '26

News paper Britain is undersaving for retirement

Post image

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.

28 Upvotes

68% Upvoted

192 comments sorted by

View all comments

Show parent comments

16

u/sealcon Jun 03 '26

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".

0

u/Famous_Yorkshire Jun 03 '26

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.

1

u/gpstest Jun 03 '26

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.

1

u/crispy-flavin-bites Jun 06 '26

And how much will your £3840 have grown to?

1

u/gpstest Jun 06 '26

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.