According to the Interactive Investor survey, more than half of people between the ages of 24 and 29 are uncertain whether they will receive a state pension after retirement.
There is growing concern that Prime Minister Rishi Sunak and future governments will continue to interfere with state pensions across all age groups, making it increasingly difficult for many to properly plan their future lives.
“I don’t know if I even have a state-owned pension by the time I reach the pension age. I hope it does, but I don’t know,” said one young respondent.
“When the prime minister plays Dick Turpin on his pension, it’s no wonder that people’s faith is undermined and their tolerance grows,” said an interactive investor expert.
Fear: More than half of people between the ages of 24 and 29 are uncertain whether they will receive a state pension after retirement.
Confidence in the government to fulfill pension promises is waning, worsening because the total amount of state-owned pensions people will receive in the coming years is unclear. Great British Retirement Survey..
One in five people who haven’t retired said they weren’t sure if they would receive a state pension. This uncertainty rose to 26% among people in their 30s and 53% among people aged 24-29.
Moira O’Neill, Head of Personal Finance at Interactive Investor, said:
“So when the Prime Minister plays Dick Turpin on a pension, it’s not surprising that people’s faith is undermined and their tolerance grows.”
What about the state pension?
The government has confirmed that it will suspend the “triple lock” for the annual increase of state-owned pensions for one year.
The huge amount of government borrowing and economic turmoil caused by the pandemic urged the government to take action.
This year’s average revenue also surged 7.3%. Under Triple Lock, this rise translates into a 7 percent rise in state-owned pensions. The government believes such an increase is not feasible in the current economic climate.
Triple lock refers to the concept that state-owned pensions rise along the maximum of these three measures each year. (1) 2.5% flat rise. (2) Average profit growth rate measured from May to July every year. Or (3) Inflation measured each year from September to one year.
If the government suspends triple lock next year, it will have a significant impact on the amount received by cash retirees on state-owned pensions.
Almost half of the more than 10,000 respondents admitted that they were worried about retirement money shortages, possible stock value declines, and rising living costs.
And in the workplace and personal pension arena, the issues surrounding lifelong allowances are particularly troublesome, and people are increasingly concerned about the prospects for further tax reforms on later life savings.
“It’s crazy that lifetime allowances could go down further as inflation rises,” one respondent told Interactive Investors.
Last March, the Prime Minister confirmed the following: Lifetime allowance refers to cash that you can have on your pension without paying taxes, £ 1,073,100 instead of increasing in line with inflation.
“Many long-term investors see lifetime allowances as highway robbers and are even more angry as the Treasury repeatedly signals tax attacks on pensions,” said O’Neill, an interactive investor. Stated.
Uncertainty is imminent, but many are surprisingly optimistic (perhaps too optimistic in some cases) about how much money they have in every pension pot when they retire.
Twenty-one percent of non-retired people expect to have at least £ 1 million in pensioners after retirement, and 13% say they expect to end up between £ 700,000 and £ 999,999. ..
Still, on the other side of the spectrum, 6% believe that all pension pots will be shy from zero to £ 20,000.
Nearly half believe that retirement is a time to enjoy financial freedom and independence, and more and more people are giving top priority to travel when they quit their jobs.
How big will you be? 21% believe that the total pension pot will be at least £ 1m.
As for the number of pension pots people have, the list seems to get longer as people move from work or career more often.
Sixty-six percent of respondents who have not yet retired said they had one or more pension pots, and 15% claimed they had four or more.
One in 17 people who haven’t retired yet, or 6%, admitted that they didn’t know how many pension pots they had.
In her first speech this week as chair of the Pension and Life Savings Association, Emma Douglas warned that Britain was “entering a pension crisis.” Because people either couldn’t or chose not to save enough cash for later life.
Douglas said: “The savings gap is a big social problem, and even with 8% auto-registration, the amount of money currently spent on long-term savings is not enough for most people and we are in a pension crisis.”
Did you get the collection? 15% said they currently have 4 or more pension pots
How long do you need to retire?
After the pension industry spending forecast guidelines have been revised following the pandemic, couples will need to find an additional £ 2,200 per year to maintain a comfortable retirement lifestyle after the pandemic.
This means that a couple will need an additional £ 54,400 and a total pension savings of £ 250,000 to enjoy a £ 8 wine retirement, two annual vacations to Europe, and a £ 500 restaurant budget per month. Means to be. PLSA’s latest “Retirement Standard of Living” guide.
The survey also revealed how spending priorities changed, and retirees wanted to pay more cash for eating out and haircuts, and insisted on joining Netflix.
This is because while Britain is facing a crisis in living costs, energy prices are skyrocketing ahead of winter. The Bank of England expects inflation to exceed 4% by the end of the year, and supermarkets have warned of a 5% price increase.
According to PLSA, about half of single employees expect a minimum to moderate lifestyle. Couples who can share the cost will be higher in this range.
Tom Selby, head of retirement policy for investment broker AJ Bell, added: .. ”
Pension budget forecast
On October 27, the Prime Minister announced his latest fall budget, and potential attacks on pension pots and related tax incentives will be scrutinized.
Raj Mody, Global Head of Pensions at PwC, said: ‘The government has already announced the suspension of the triple lock guarantee for state-owned pensions. If the current wage pattern continues, similar behavior may be seen next year.
Many experts in the sector are urging the Prime Minister to move forward with further reductions in lifetime or annual allowances.
However, given the enormous amount of money the government has borrowed over the past year, Mr. Snack’s aspirations and the need to strengthen the Treasury’s financial resources, the future of pension savers is still uncertain.
According to Handelsbanken Wealth Management experts, it has long been rumored that the current form of pension tax exemption could be reduced at some point. At some stage, we believe that a single flat rate of 25 percent could potentially be introduced.
“This benefits taxpayers with a base tax rate of 20% relief, but with higher additional tax rates that can be considered for increased contributions,” said Christine Ross, client director of Handelsbankenwealth Management. Will limit the relief of the taxpayer. “
Mr Mody of PwC also believes that the Prime Minister may be able to address the issue of self-employed auto-registration.
He states: “One of the premise of a going concern is how self-employed people are excluded from the auto-enrollment pension savings scheme.
“What we should be aware of in the next budget is a pension grant system that allows the government to give incentives to self-employed people for long-term savings.”
There are also reports suggesting that the government is trying to dilute the 0.75 percent cap on annual management costs. The cap was introduced in 2016 to help auto-registered workers prevent their pension pots from being eroded by high plan fees.
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Half of young savers are afraid to never receive a state pension
Source link Half of young savers are afraid to never receive a state pension