Low-Cost Pensions For Everyone

Agree with comment above.

I work in a large FTSE 100 company, with a generous money purchase pension. They will contribute upto 14% of salary, if you contribute 8%, and there is a staggered structure for less personal contributions met with less employers contributions.

However, it never ceases to amaze me how many people complain about being forced to contribute for this. Even though they are effectively getting free money from the company. I think people resent being forced to do anything, even if it is blatently in their interests.

Saying that, I think people just like to complain.

Unless the government does something about the means testing benefit system I can't see the point of anyone on a low/modest income joining NEST.

Labour encouraged debt while paying lip service to saving for the future. The new Coalition government appear to be saying the right things but I'll not hold my breath.

LastChip and uutasyw - you have identified the big flaw in this. However isn’t it time that we stopped punishing the prudent and started punishing the feckless? What is needed is for the government to announce a date (obviously well in the future) when everyone will get a basic state pension and that is it … period. If you want more than that then save up for it yourself, don’t expect future taxpayers to pay.

Bravo YeadonLad!

We have a significant part of a generation, who for a variety of reasons, have grown up in an environment where they can rely upon the state for "handouts" offering precious little in return.

The safety net should be nothing more than a Basic State Pension with additional retirement provision being a matter of personal responsibility.

Australia adopted the "Compulsion Route" in 1992, there was kicking and screaming then, and yet 18 years later they have a pension culture that should be envied (Superannuation) - maybe that is the direction we should be going!

As for NEST - many comments come from the ill informed and the ignorant. NEST will be an extremely keenly costed arrangement, which, for modest contribution levels, will charge significantly less than traditional Providers can offer. Yes there are better options for very short term saving, but aside from that it's a good option. There is no obligation for any employer to use NEST, it is merely a simple, low cost option available to any employer who wishes to use it in order to fullfill their Workplace Pension duties. So, if through advice or research there are better private sector options - use them.

Question to "ytrewqytrewq". In what ways is this NEST / Workplace Pension duty on employers different from the Australian compulsory superannuation scheme?

I'm in favour of some degree of compulsory scheme (i.e. automatic enrolment with an opt out if make a comparable arrangement). Any scheme also has to be simple for users - remember that those of us on message boards like this are the tiny % of people who are motivated and at least partly (in my case) informed about £ options.

The success of this depends on who the benficiary of all this money is going to be. The fund managers or the pension owner? If it's anything like my niece's son's Child Trust Fund managed by Scottish Friendly (a default scheme), they manged to turn £250 into £178 in the first year. That £250 is now standing at just over £200 after the second. I can just imagine what's going to happen with NEST!!! They'll all have their snout's in the trough!

Schemes like ISAs and the various National Savings products are good because they are capped - the less well-off benefit proportionately more than the very wealthy.

But the present tax relief on pension fund contributions is just the opposite - high earners who need no incentive to save and who can easlily afford to do so, get tax relief at a higher rate - daft.

I would immediately limit such tax relief to the standard rate of tax. In fact, I would cap it so that there would be NO tax relief at all above the maximum amount of tax relief which a standard-rate taxpayer could obtain.

Then I would make a promise that when it came to retirement, the first £1,000 per annum paid out by a qualifying pension scheme would be exempt from income tax for standard-rate-income-tax-paying pensioners.

That would only cost the government £200 a year - the cost of the winter fuel allowance. But to get a pension of £1,000 a year the pensioner would probably need to have amassed a pension fund of at least £20,000, which could take many years. So for the low earners - just the people who need the greatest incentive to save for their retirement - there would be the attraction of getting tax relief on their contributions AND tax exemption on the eventual pension payments.

Of course, most people would need a lot more than £1,000 a year when they retire, but that initial incentive would at least have encouraged them to START saving.

At least something is being done, in an effort to get people to save for their old age. We need to educate people in real life. Companies/Govt should set up training schemes where by at the age of say 40, everyone has to live on the basic state pension for a month to find how hard it is.
There has to come a time when any Govt runs out of money to give/pay. I guess within 20 years, pensions will be paid from age 70.
The hardest part is to get everyone to do something.

Has everyone missed the point. Savings, interet rates are zilch!!!!
Why would you save? Also the way the world works with the stock markets speculative ups & downs you are going to get caught out with your pension fund if you are 5 years up to retirement through to if you are 5 years into it somewhere down the line. If we didn't pay out so much in different kinds of Social security to our lazy, single mom's as the "yanks" would say & all of the other so & so's along with immigrants who sponge off the state & I do not mean legitimate immigrants who come here to get va better life & work I think that there would be enough to cover a decent state Pension & health system. We have the money it is just miss- appropriated.