State pension shortfall

My accountant reckons that paying up one's NICs to get the basic state pension is worth doing.

SERPS is a separate argument, in years gone by people were told to not bother (to opt out) but nowadays a lot of people are being told the opposite. I don't think there is a clear case either way.

You may never see a state pension if you die before you retire. But they can't abolish it otherwise a huge chunk of the country (people who will never have personal pensions) would end up in the gutter.

They will make everyone they can make to do their own personal pension. Whether that is worth doing (compared with alternative investment vehicles e.g. ISAs) is yet another argument...

You don't actually require an 100% contribution record in order to get the full state pension. I didn't pay any for the 5 years I was at university ( I recall it being mentioned that one could make them up within a certain time - but hey, I didn't even know what a state pension was ). According to the Pension people, I will get a full pension when I reach 65 in about 2 years time. I can't recall what the % is, but the IR site has information on the subject. (About 90% of 49 years, I think)

In any case, you'll probably have to work till you are 75 :-(

Yup. In the end I ended up thinking it was worth paying (eventually thanks to the extension).

My conclusions were:

One. The government can't get rid of the pension, and the more that the populace are recommended to get their own pensions as they seem to be doing, the more the state will be in a position to pay a reasonable amount when you do retire. I don't foresee any circumstance when a very basic state pension will not be paid.

Two. You are diversifying away from the financial markets, and governments never actually go bankrupt, just print more money to pay yr pension. If that became an issue, my guess is that any pension fund will be pretty well worthless too.

Three. You should eventually consider putting more money aside for your eventual retirement -- but not before you make sure that you have invested in yourself to maximise your income generating ability for your working life, e.g. courses to develop skills, equipment purchases and so forth. You might also consider reducing your mortgate if you have one.

Cheers Fred

Also be very careful which woman you marry. That has a far bigger effect on one's long-term financial position than anything else :)

I think they could abolish it quite easily (and I'm sure there is at least one right wing think tank proposing it), but not retrospectively as it would be an electoral disaster.

Thom

Good point. And have a vasectomy while you're at it. ;-)

Cheers Fred

But what would count as retrospective? They've promised us a pension, but they haven't said how much it will be. Also they could pay it but skew the tax system to claw some back, e.g. there is already the age allowance which you only get if you have a sufficiently low income.

Ah, *that* John Smith :-))

A somewhat gloomy statement in this age of so-called equality, but I know where you are coming from.

It may be gloomy but if you decide badly on that one, all the financial planning in the world is a complete waste of time :)

Unless you stashed a load of assets offshore somewhere (shelter from divorce)... difficult to do so that a wife doesn't find out, and anyway *when* do you propose to spend the money? You've got to spend it someday.

I think they'd have to make changes for say 2030-2040 to avoid an electoral problem (based on the view that changes affecting today's 20 and 30 year olds won't have much electoral impact).

Thom

But won't the government in 2020 get flak for failing to undo changes made today?

Possibly, but what makes you think the party introducing it would think that many elections in advance?

Thom

I don't. I'm talking about the 2020 party's then immediate election prospects when faced with today's 20-30 years olds (meanwhile aged

40-50) who will by then have a bigger electoral impact, because they will be more concerned over their dwindling pension prospects which will then seem much more real than they seemed to them when they were 20 years younger.