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The pension crisis is honestly terrifying. I’m 52 and have been relying heavily on my pension, but with all the news about underfunded plans and inflation eroding savings, I’m starting to wonder if it’ll be enough.
You’re not alone. Many pensions aren’t keeping up with rising costs, and some plans are even on the verge of insolvency. It’s not just about having a pension anymore; it’s about creating other streams of income or growing your investments to fill the gaps.
True, but managing investments on your own can be overwhelming. I’ve tried, but it’s hard to know if I’m doing the right thing. I’ve heard horror stories of people losing their life savings because they didn’t diversify or took on too much risk.
I felt the same way until I started working with Joseph Nick Cahill, a Chartered Financial Analyst. He’s helped me restructure my portfolio to not only cover potential pension gaps but also build wealth for the long term. He offers free consultations, so it’s worth a try if you’re looking for personalized advice.
I got started with a cfa, Joseph Nick Cahill He’s helped a lot of people navigate these challenges. One big takeaway for me was understanding how to balance risk and growth-something I never really considered before working with a professional.
Thank you so much for the suggestion! I really needed it. I looked him up on Google and explored his website; he has an impressive background in investments. I've sent him an email, and I hope to hear back from him soon!
Without you guys I wouldn’t be paying more money into my pension, my wife wouldn’t have a vanguard account pension and I wouldn’t have a trading 121 stocks and shares lsa we are learning more every podcast and gaining confidence at my age of 54 about my retirement. Thank you 🙏
Same here. These guys and Pete Matthew. As the guys discussed, it's nuts that this critical stuff that will fund your life for perhaps 40-50% of it is not taught more widely and as a priority.
@@kirkster501or is not actually taught at all, something you learn from colleagues, tv, UA-cam, friends etc which is crazy. Same with credit / loans etc, many never look at the total amount something costs if on credit.
You guys have literally changed our families lives for the better! Thankyou. My children now have a personal pension, JISA and I set up a LISA, SIPP and S&S ISA with your tips and ‘advice’. These videos are so good and so valuable. Great content and guests as usual 👏
The Government found the money for a track and trace app that flopped but no money for starting the £5k deposit to a sips for every new born baby pension fund.
It's not a lack of money, it's how government's decide to spend it. £125b a year to pay the current state pension, gov paying £40b a year to the BoE (a bank that can't go bust) for losses because it's selling bonds cheap instead of just holding them to duration. US and other countries don't waste tax money on their central banks if they make losses but we do.
I would say the cost of housing has had a unexpected effect on a wide range of issues from marriage and children, to saving for pensions. It’s a bigger iceberg then people want to admit.
I had no idea my employer matched 10% for the work place pension. They auto-enroll you on 3%. I only found out about the 10% max limit by accident. It's really worth checking what your employer does!!
Exactly, I only learnt about salary sacrifice from a work colleague, plus pension matching. HR would only allow one change a year. We were taken over by another American co, and you could salary sacrifice and adjust the amount monthly via a simple app in the phone/ computer
@@thomaspowell2043 they should be legally bound to provide details Like this as well as show typical projection figures for base, middle and max contributions which are company matched. Eg £150/250/400 a month in total for 30 years @ 5% average return. I’m sure if employees saw these numbers they would be putting more than the minimum away. Also have it explained this money is theirs and moveable into other funds should they wish on leaving. I have done simple spreadsheets for friends showing potential end values even with modest contributions and you can see it trickling into their brains they can afford more and the potential at the end much more valuable.
Great episode. Highlighting how good our pensions are in the Armed Forces to those serving is something I've been doing for the last few years. People genuinely don't realise how amazing and valuable it truly is. And as mentioned in the episode, it's also really hard for young 18 year olds to understand the importance of something they wont rely on for about 50 odd years.
Schools do not teach what money is, how it circulates, how it works, or how to use it as an investment tool. They only teach how to spend it. This is deliberate.
Very interesting episode. My only criticism for this one would be there was only the briefest introduction to who the guest is. Would have appreciated a couple of minutes at the beginning for Tom to give his background to set the scene. Love the channel(s). Keep up the good work!
Really great to meet the pensions monkey TM 😊 as a 71 years old man with a decent income/pension I really enjoyed this discussion - the public service value of your work is immense - so many vital social issues raised and discussed. I'm sure you are thinking how to engage more young people with this challenge
Gen-x here. 51 years. First time I was offered any pension at all was just 13 years ago and it was DC of course. Nobody my age that I know has DB, or adequate pension provision.
Me too. 46. Had a local council pension pot. But they robbed it. Outsourced and spun off etc. Then all the various other spammers and criminals that stole money from your accounts and enticed you to buy stuff. Lots of CRM marketing. Scammers stealing your phones. Out of 20 years around 7 phones are stolen ?... I could go on and on. Funds the insurance sectors but.....
@@MeiinUK 50 here, between health issues and working as a contractor on shortish contracts, mine is pretty much non-existent. Also every company I worked for enrolled me in a different pension scheme, so i probably have 20 quid here, 10 quid there and so forth. Occasionally I would get the same provider over several different contracts, NEST being one of the ones that came up from time to time. But i'm now 50 realising I will probably never retire, trying to save for the cheapest house (or wreck) I can find (something around 40-50k). My reasoning is if I have a roof over my head, that's half the battle. If I can grow some food (that's a bit more). If the dividends I get from investing will cover my bills, then i can exist. The pension though is I think a write off at this point. I feel i would be better sticking all that money into an ETF. I'm now stuck at that point of do i buy some years in my state pension and hope there is still a state pension in 20 years, or invest it.
A big problem is government continually tinkering with pension and tax rules. Trust is gone. People can be reluctant to invest (or invest further) given the government can and does change pension & tax rules, pulling the rug from underneath you, whenever they so desire...
I contribute 38% of my wage and my employer contributes 12%. Plus i sacrifice my bonus towards it. I am 43 and have only 27K savings in my pension pot, trying to catch up.
That seems too much at your age. You should do as Damon says, make sure HOW it’s invested, NOT default funds, is far more important that reducing your standard of living for 25years.
If you want to retire early or have a large Salary then this sounds fine. Honestly a simple rule of paying a percentage of your salary simply isn’t a valid thing. Some people put in 30% of their salary and their employer pays only 3%. But if this keeps their income under £100,000 then it stops them having the effective tax rate of 60%, so the government pays loads of tax back. Others know they want to retire way before 67 and so contribute more, I can’t imagine how fit you’d have to be to do certain jobs at 67 or 71. But the previous comment is worth considering, live your life also.
I am also 43, I wish I had more in my pension just £105k I feel so behind but thankfully we woke up in time we can still be financially independent by 53 if we play it right 🎉
Brilliant podcast Damien. One point which is rarely covered & I think is actually quite important to help engage those without pensions (mainly the opt-outs but also low earners & those confused by the system) is the name itself. It is overly confusing that the state PENSION and private defined contribution PENSIONs share a similar name but do not have any similarities at all. I strongly believe if private ones were called 'Retirement Investment Accounts' (or something similar!) via auto-enrollment - you would see even fewer opt-outs. I'm a high earner from a modest family so have learnt to follow content around it all - but I fear it's confusing if you're the type of person that comes from a background where the only pension you've ever heard family mention is the state pension. Would be interesting to hear your thoughts?
I agree. It’s actually called an annuity when a pension pot starts paying out (pension = a vehicle to accrue a pot of money, and annuity = when the pot of money pays out to you during retirement). I would have no idea what an annuity is if I hadn’t have happened to be assigned to the annuity department of an insurance company in my first job, and I see that misunderstanding all the time.
You can learn it at school but ultimately it’s up to the person to have the foresight to start saving up early. Some people just don’t know the importance of it
Good information. I am now retired , and had a light bulb moment , when a fellow who was a good friend met me and said the company pension I had worked 16 years for pension fund was completely trashed by the company who bought it out . So I then put 25% thereafter into my pension . Employer matched up to 8% as well , then 3 companies later carried this on for 20 plus years … the funds allowed me to retire early , and I now manage the risk of where the funds are . And the future looks bright , it needed heavy lifting for many years though , it was a balance of my life becoming less expensive as well… the government could fund a second system by having tax relief at the base rate and would be fairer to the less well off …..
I was late getting started. I do thank whoever came up with auto enrollment because I was hard up at the time with a mortgage I was struggling with but I knew I could not afford to not sign up for it. Ten years later I got a job with a DB pension. I wish auto enrolment had come earlier as I have nothing to show from my 20s but at least a tolerable retirement ahead of me. My sister bless her has nothing.
Warren Buffet says private equity is basically a scam. Plus here in the UK average wages haven't even kept up with inflation let alone beaten it. From 2010 up until 2019 average wages adjusted for inflation went down by minus 2.5% for the whole period , and since 2019 that figure has to be a lot worse now
It's frightening that near enough anyone outside the C-suite, business ownershio or born into some wealth is unlikely to be able to build any real wealth for themselves. Public sector workers get a lease of life on their 20/30% pensions, but that's the only bright spot.
@@SaintWill70 Hopefully our new Labour government will start to tackle some of these issues. Now the tory con artists have left the building, things should start to move in the right direction. Of course it will take a long time to sort out 14 yrs of tory mismanagement and corruption
Also agree.That it is mad that we have foreign companies owning our mandatory infrastructure like water and pump all the profits abroad so we lose out. Too much money going abroad and not being kept in the UK for UK citizens. No investment in UK for upkeep of infrastructure. Save in a pension and have it taken away by government taxes.. where would a minimum pension income land to help everyone have a good standard of living?
You can open a sipp(say, with vanguard, for example), then periodically transfer 99% of your workplace pension into the sipp, that way you still benefit from your companies match, as the workplace pension remains open, plus you have full control of where your money is invested in the sipp 👍
Some workplace defined contribution pensions don't allow you to change to a higher equity scheme and they don't allow you to transfer your money into a SIPP either. Basically you are trapped in the default low performance scheme which usually comprises of their own funds, so they make money on the pension charge of 0.5pc and the high fund charges whilst your pension barely beats inflation. This should not be allowed. Check your pension scheme options and it's performance, if you can find it as it's usually well hidden!
There are plenty of us in our early 60's who never were members of a defined benefit pension scheme, and who also couldn't benefit from the current rules on workplace pensions for the start of our careers. As a result, our pension pots are smaller than they could have been. It's also not true, although it is often repeated, that we are "all living for longer". In some areas in the UK, that may be true, but in others life expectancy is below the state retirement age, and has actually started to fall.
Because people are being absolutely fleeced for housing (both rental and purchase) there is no spare money for "luxuries" like pensions. It's terrifying
There doesn't feel like there is any 'give'. Near everything is privately owned and in the price gouging stage of economic development. Housing seems to be just one/two generation away from being entirely. absorbed by private equity. Public services hat remain seem to be going the same way. I just don't see the way out, Techno-feudalism seems inevitable within 50 or so years unless we have a miracle.
@@Pablosammy1 let’s say I earn £125,000 it’s very easy to put £60k into my my pension as the government pays 50% of that. If I earn a £500,000 I have very little option to put in to a pension,. If I earn £50,000 I simply can’t afford to put in to pension.
With auto enrolment it should be two options 1) default employers fund or 2) your own private pension. All pension providers have to give you a standard account number to give to your employer so they can automatically pay into your sipp. There’s lots of ways payment could be made all that matters is finding a secure cost effective way of doing it.
Create a market weighted index fund of publicly listed UK companies of all sizes. Anyone who contributes towards it in their sipp get 35% instead of 25% tax relief. Anyone who contributes it to an ISA is given 25% provided they hold on to it for a minimum of 5 years or pay a penalty
My dad is in the exact same situation. Put a bit in his pension early on, but then basically stopped since he was a contractor, until a decade ago when he began working as an employee again. Then he realised how much he needed to save *right now* in order to retire in 10 years and have a good pension to live on.
This is so on point - there are huge parts of the currently working population that are not saving anywhere near enough for a reasonable retirement. More people are now self employed and working in the gig economy. As a Gen X at 57, I'm incredibly fortunate to have a part DB and part DC pension, but I Imagine that retirement at 67 is an impossible dream for many, particularly when the SP age is being pushed back as well.
Yes, because Rent, Mortgage, Student Loan payments are so high that larger savings aren't viable. In addition the loss of generous pension schemes means they'll have to contribute so much more of their income for so much less return.
We may be at a very precarious position, as rumours circulate about the state UK pension becoming means tested. Depending on when a means test would kick in, there may be a nunber of individuals who have barely crossed a certain threshold, thus losing their right to a state pension. I'd be interested to hear the opions of others about this.
'if you want to know where we're going with the uk system just look at australia. the interesting thing about australia is that they completely means test their state pension so if you have lots of private savings you don't get any state pension at all' i want to know what australia defines as 'lots of private savings'. please.
They apply an assets and income test- it is possible to get. a part pension. If you search on line the ATO website - Australian Taxation Office - wil give you the details - look up aged pension
But the difference is that this has been the case in Australia for 50 years, their tax system reflects this and so people have planned over five decades and saved accordingly. To just foist such a system onto us here without two or three decades of notice would be grotesquely unfair and disincentivise the saving levels that are needed and discussed in this video and cripple the pensions industry. Why save if you lose your state provision???? There are laws of unintended consequences here.
My workplace pension is with nest, I'd really like to see something done for providers to offer a better range of funds as nests selection is not great.
Most allow pension to be moved to a SIPP. If you do a partial transfer then your nest pension remains open for your employer to continue contribution. That’s what I do.
Sounds like your Pension Fund is underfunded and at risk of closure or PPF. 😮. A better Pension Fund would be one which is fully funded and requires your company not to need to add to it.
@@thaibillyboy Hope it’s there when you need it…most DB schemes are getting closed if the scheme is underfunded and it is costing your company loads. But if it is there…you are right, way better than DC.
Not necessarily better than DC. DB can be tax inefficient and there's no pot to pass onto children. I plan on paying no tax in retirement with a combination of pension below personal threshold and ISAs and will pass on SIPP to children or grandchildren which will be an extremely substantial amount by the time we pop our clogs!
@shellyperera2010 good on you. I plan to pass my DC on too. My DB would be heavily taxed, but I'm taking a large amount PCLS, which will be put in ISAs and drawn down tax-free.
Love the podcast but can you please give your guest one of the SM7B microphones? The guest talks for maybe 70% of the time so give them the best mic. Thanks
i've heard a lot about moving funds within your pensions. I want to do it. But its a very daunting thing to actually do Especially when words i dont understand are being thrown around. I would love a video dedicated to how you do this with all the big companies.
the default pension fund is a complete con. I wish I had watched your videos 25 years ago. It was only a year ago I realised how poor the returns have been on all my different company pensions that were all assigned to the default funds, that offered incredibly poor returns & haven't kept pace with inflation. You assume your employer would look after your interests, but that's where the education needs providing. Its really really poor - particularly with the fees they charge
I got access to my pension after 20 years.I was invested in bonds for 20 years with a 1 % return per annum. Pension funds are scum. They only care about their fee's.
Even the new auto-enrolment firms charge ridiculous rates for no real service. They have almost no competition risk and generally offer a standard suite of 'fund of funds' options. The charges based on such little real effort is outrageous. I've pushed my kids to SIPPs. HL have been great, though once they are old and savvy enough I'll be recommending cheaper options like Trading212 & InvestEngine.
Completely agree. Auto enrolment is great except if your company chooses a terrible default fund it's no better than just saving your money in your bank account. Auto enrolment isn't going to improve the pension provision for younger people if they don't receive education about how and where to invest the money going into their pension.
Couldn't agree more, the default funds and management fees are unbelievably awful. I feel like I have lost 11 years of returns because I was put into the default fund, and I didn't even start a pension until I was 40 due to a lack of education in pensions and auto-enrolment wasn't a thing when I was younger.
Always take the free pension money! Wish I’d saved more into a pension in my 20’s but no one really talked about it. I’ll defo be hammering this home to my kids and helping them early if/when I can.
Because most of those pensions are kept in some sort of fund that can grow. The uk literally takes money out of my paycheque and gives it to a pensioner. That’s all national insurance does and it’s why the triple lock is unsustainable by design
Just clarifying about the NI for self employed- if you earn above certain amount and pay your income tax it automatically counts as a full year. If your income is under that amount, you can still make voluntary NI contributions and you get a full year that counts toward State pension
You may have already done this but it would be good to get a video on, what age you can access pensions state & personal, to help people plan accessing different pots for retirement. Great video again!
I remember as a child being told by my economics teacher that if any parent had a repayment mortgage, they were mugs. Everyone should have an endowment mortgage because it not only repay hlthe mortgage but also gives you a lump sum for retirement. Less than a decade later, there was the endowment misselling scandal, and people were getting to retirement and finding the fund was not large enough to repay mortgage.
Nothing wrong in principle just what was actually sold didn't match what was promised due to high fees and bad allocation. D.I.Y and you would have smashed it out the park.
Lady behind the desk at the bank asked me if I was interested in opening a pension when I was 17.. I laughed and walked out.. my 41 year old, no savings, no mortgage self wishes so much I’d listened to her
I missed out on a Halifax share account not listening to the kind lady behind the counter late 80s ! We can be young and dumb at 16-17 but boy have I made up for that. Had a flat,them semi detached house now detached house and over paying the mortgage and paying into pensions hard so hope to be ok by the time I retire and pay off the mortgage 👍
The other issue with migration is recent waves the absolutle majority are not paying into the state so they are just a burden on the tax payer which will collapse the pension system faster.
Default funds and NEST, I was in with them for 2 1/2 years and paid just the legal minimum, the company offered no matches for extra payments, no salary sacrifice etc. with my age I put extra payments into my personal pension ( an ex works pension) as the nest was only going to be worth £6-8 K by the time I retired. I moved the money from the default investment system (I was 63) 70% was going into consolidation funds returning nil growth effectively. Moved it all into growth funds as have another DC scheme and DB scheme plus full state pension due. This fund with Aviva has grown substantially over the year and a bit of now being in the growth fund.
I wish school showed me examples of compound interest off a modest salary or if you bought a older car and not a new one on monthly payments and used the payments to invest in index funds and show you practical differences that then can be life changing long term. I am 36 now so hopefully not too late got max match rate for pension and also a stocks and shares snp 500 T212 ISA and ultimately living on less than I earn. My work friends are consumed by the latest things clothes tech cars klarna buy now pay later rubbish. i am glad for these videos that have changed my mindset and value of money.
With their gold plated final salary pensions, the politicians and the civil servants who run the country can never understand this issue. Officials in the Treasury and in the Bank of England are some of the biggest beneficiaries of taxpayers’ largesse.
great interview, you raise some really good long term and wider issues. I had only ever considered my personal situation. and I havent always contributed. I am lucky to have a good sized pot, and 7 years to contribute heavily. the country as a whole has a big problem. I will be encouraging my children in their 20's to act, i would bet there wont be a state pension when they need it.
The retired people we see today often benefited from inflation linked final salary DB pensions. I suspect younger people look at retired people, many of who retired at 55-65 and see them travelling or playing golf etc and presume that is what happens to everyone as they get older without questioning how it works financially. Consequently they didn't make any provision, assuming it would simply be OK for them as it was for the pensioners they see today. The reality is that the golden age of pensioners has passed and many people are going to be poverty stricken in retirement. It's also too late for many people who are never going to get the 1m pot that you need to have a moderately comfortable retirement. Not a lavish retirement, but a comfortable one.
Is it better to have one pension or multiple? Initially I had a pension for each company I had worked for, but some of the pots ended up losing a lot of money due to fees and market conditions. I currently have three, two of which I dont contribute to but they dont seem to be losing a lot of money. My biggest worry is having my pension in one place and then the company goes bad or loses all of my money. Should it be legal for these companies to charge fees and lose money in bad investments?
21:00 "The state pension is a Ponzi scheme"... How do we fix it? I think creating some sort of migration to an investment-based scheme, maybe similar to the Canadian Pension Plan but you cannot just turn off the existing state pensions, nor can you say to working people that you must now fund two schemes. It's a major challenge for future governments!
Working into the 70s will be one of the options people will be condemned to do, in your 30s or 40s now and not aware of saving as much as you can into a pension will find a horror when it’s time to retire.
Young people who probably will never ever see a state pension, would be able to save more for their retirement, if they shouldn’t have to pay taxes for promise of state pension which they won’t get. It’s easy to say save 12% for pension, but with this cost of living crisis, and the state of our economy, it is really hard. Everything goes up, including taxes. The only thing that stays the same or even decreases is all kind of allowances. Meaning less and less spare money to invest. With regards to housing, it would be great to have own home, but it’s UK, repairs costs tone of money, poor standard of our housing means sky high energy bills etc. First someone should implement proper standards, as UK houses are really poor quality, and u need to fix them as soon as u get the keys -.-
I'm doing 16% up from 3.5% That initial hit did hurt ngl but 24m in and I'm used to it, I've decided that for each payrise I'm going to put half to my pension. I'm also putting 10% into shares for the short term purchases. I'm trying to get my mortgage down over then next 10 years then I'll be saving what was mortgage payment was. Just hope its enough, it a worry. I'm 41 and have only been doihg it properly for 2 years. It's definitely a major concern.
Perhaps a slight help for the future pension crisis is to let people opt out of state pension claims in return for a cap on pension tax to a maximum of the basic rate?
It’s funny to hear him speak of the benefit for Canada that Canadian pension funds are investing abroad and repatriating gains - the exact same conversation about requiring more domestic investment is happening here.
Agreed with more Damien said than the guest tbh. I don't like the pot for life idea, I prefer what we have. You can collect your pots up and move them where you want, multiple pots or a single pot. It would be good if partial transfers on workplace pensions was more universal, to help people who stay in the same job for 20 years. Not mandatory, but strongly encouraging people to speak to good IFAs at five year intervals would help protect unsophisticated investors getting permanently dumped into default funds, or sleep walking into an awful annuity, etc.
The UK should have created a Sovereign wealth fund decades ago, like Norway (and others) have done. Instead, North Sea oil revenues and the proceeds from all the privatisations was squandered on current spending and tax cuts. It's basically too late now as the oil has almost run out and there's nothing left to privatise.
@@TheGodpharma I don’t think it’s the North Sea oil that is the issue, it is selling council houses that is the issue. It was a a good vote winner selling houses cheaply. But it stores up future costs for councils to provide housing. Norway has. Huge natural resources with energy, it’s not a fair comparison
Yep a Sovereign Wealth Fund is a no brainier - it’s a win, win. It would have been a great way to fund infrastructure projects, which would have created more growth, wealth, etc, etc.
36:29 I have successfully moved my personal+employer pension contributions to another provider while still employed. Doable, but enough admin it will put most people off.
On the topic of over saving at the end. I struggle with this. Having grown up poor and not figured out personal finance until about 25. I have spent several years saving upwards of 50% of my income and heavily investing alot of it. For example yesterday I decided to treat my mum to a trip away, and the thought of spending £200/400 on a little trip was really hard for me, when obviously I have tens of thousands. What a weird situation to have found myself in. I wanted for money so much, I've forgotten how to use it😅
Worked in HK for 4 1/2 years and took all the money at low tax to put towards my house when I returned to UK last year. Now for last 18 months back in UK been putting 50% of my salary a year into pension via salary sacrifice along with work contributing another 13% on top along with giving me the NI savings back so i max out the £60k yearly allowance. Seems a no brainer when money would have been 40%+ taxed otherwise. Plan to is do that for 5 years and then take my foot off the gas so to say and let compounding do the heavy lifting. In my mid 30’s but want to take a low stress / low paid job when i hit 50 and then retire at 57/58 when i can access pension pot
Make a competitive online sim/football manager game for finances. Like a fantasy football game for schools. Give the kids the info and they have a month to go from 18 to 68. All with the same job. Winner is the one that has the most pension.
@@_Information_ I think they would play if you made it play like a video game however most educational games have been shit since the 80s so it won't be any good. Heck I would play that game.
yea picking up on the default funds idea,my daughter (17) joined a well known bakery company a few years ago while at 6th form, i has to ring them to get her enrolled into the pension at 17teen but then had to go through the default funds. No idea why they had bond in a default fund for a 17teen year old in her portfolio. Its madness and just changed it all for a simple cheap index tracker fund, spool on a few years and she is it university still working there part time and the default funds haven't changed.The disappointing but great part for me is if i hadn't spent the best part of a few years watching channels like yours ( and its great) and others ( james,Ramin,pete) i would have been none the wiser and my Daughter would be loosing out ever month and in her retirement it would have lost her thousands per yer
Why are the self employed not mandated to pay in to pension? If their employer is themselves then they should be paying in for their employee (themselves) as in any other company. I dont understand why this is not happening still
great content guys, can yiu please make a program about NEST pensions, different funds, what they mean, and also other programs like NEST , self employed people can use?
That whole thing about the government putting money into a pension at birth, I thought that was my idea lol. I’ve been saying that for about 20 years, it makes far more sense to me than the current state pension system.
I went the house route first then later went for the pension with higher percentage contributions. I calculated I would pay off my mortgage long before retirement and as my salary went up with promotions etc I could contribute 16% with employer matching up to 8%, playing catch-up. I can see how the other way round can pay off with the exponential growth of pension pot so it's not clear cut.
im self employed , the way i look at it Is why invest in a sipp as you dont have any control unitl you reach a certain age( 55 as we speak..may go up ) i invest into a isa (VWRP) and i look at this as my pension. If you have plenty of spare money then of course a sipp would be cool addition . With the isa if you want to wait till 55 (like a sipp ) to acsess your investment then you can do this.i just prefer to have the opiton to retire sooner then later.. I just feel its vey important to be the one who has the power/control of your own funds .. thats just my thoughts
You can do both - if you are a higher rate tax payer the 40% tax relief on the SIPP is a no-brainer, as you'll resch the amount you need to retire much sooner, but you can also invest into an ISA to bridge the gap between when you want to retire and the age you can access the pension.
@@Ryhm14 yes true that's there is great benefits if your a high tax payer (not my case at the moment ) but I still feel the true power is having control, I see they will move the private pension age to 57 (in 2028) who knows what this will be in there future .. But yeah the more options you have the better. It's just about working to your strengths and the tools you have in front of you
I'm doing the same for the same reasoning. Was thinking about this hard but for me it felt too risky to trust my money on any goverment who can change retirement age any time, change taxing of pension pots any time in a country where economy has been languishing for many years and no one seems to be competent enough to do anything about it.
Yep, I'm doing the same thing.. I think without the employers 3% contribution to the pension, it becomes a lot less appealing to contribute to a pension as opposed to just sticking it in an ISA..
A S&S ISA is far more important. You have control, you are not being dictated too on when you can retire. You have the power to sell and buy. A SIPP is something I will open when my mortgage is paid off, but that's only because I have frozen pensions scattered all over the shop. It will be an addition rather than the main option. Let's face it most of us are being forced to work until we are 70, that has to be part of the planning.
I was only auto enrolled in my late 30s with my employer and im now early 40s however i prioritised my mortgage and should have that paid in 3 years. I then plan to put most of that mortgage into savings and investments.
@Calgacus-i9k lol definitely, I can't wait. The way I look at it, I could lose my job and I would still have my pension however what's the point if I lose my house. We live quite frugal, we don't have new cars or go on big fancy holidays, just want the mortgage done now.
Yes, mortgage-first (for the surety of owning a house) is one tactic many take, and it is a very simple thing to understand. Others take mortgage-longest, as the returns on investments are higher than the interest rates on mortgages (even recently) so the net gain over time should be higher. I think it is a wholly personal decision to make. IMO if you are lucky to live at home in your early 20s whilst working, this is a great time to get a pension boost even though you are probably also saving for a house deposit.
The “pot for life” idea is I think a must have. Otherwise the people entering the work force now and those only half way through their career will end up with at least half a dozen pensions.
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The pension crisis is honestly terrifying. I’m 52 and have been relying heavily on my pension, but with all the news about underfunded plans and inflation eroding savings, I’m starting to wonder if it’ll be enough.
You’re not alone. Many pensions aren’t keeping up with rising costs, and some plans are even on the verge of insolvency. It’s not just about having a pension anymore; it’s about creating other streams of income or growing your investments to fill the gaps.
True, but managing investments on your own can be overwhelming. I’ve tried, but it’s hard to know if I’m doing the right thing. I’ve heard horror stories of people losing their life savings because they didn’t diversify or took on too much risk.
I felt the same way until I started working with Joseph Nick Cahill, a Chartered Financial Analyst. He’s helped me restructure my portfolio to not only cover potential pension gaps but also build wealth for the long term. He offers free consultations, so it’s worth a try if you’re looking for personalized advice.
I got started with a cfa, Joseph Nick Cahill He’s helped a lot of people navigate these challenges. One big takeaway for me was understanding how to balance risk and growth-something I never really considered before working with a professional.
Thank you so much for the suggestion! I really needed it. I looked him up on Google and explored his website; he has an impressive background in investments. I've sent him an email, and I hope to hear back from him soon!
Without you guys I wouldn’t be paying more money into my pension, my wife wouldn’t have a vanguard account pension and I wouldn’t have a trading 121 stocks and shares lsa we are learning more every podcast and gaining confidence at my age of 54 about my retirement. Thank you 🙏
well said and well done to you
Same here. These guys and Pete Matthew. As the guys discussed, it's nuts that this critical stuff that will fund your life for perhaps 40-50% of it is not taught more widely and as a priority.
@@kirkster501 would also suggest James Shack videos
Better late than never....
@@kirkster501or is not actually taught at all, something you learn from colleagues, tv, UA-cam, friends etc which is crazy.
Same with credit / loans etc, many never look at the total amount something costs if on credit.
You guys have literally changed our families lives for the better! Thankyou. My children now have a personal pension, JISA and I set up a LISA, SIPP and S&S ISA with your tips and ‘advice’. These videos are so good and so valuable. Great content and guests as usual 👏
That was really good. Thanks Louis Therouz of finance
The Government found the money for a track and trace app that flopped but no money for starting the £5k deposit to a sips for every new born baby pension fund.
It's not a lack of money, it's how government's decide to spend it.
£125b a year to pay the current state pension, gov paying £40b a year to the BoE (a bank that can't go bust) for losses because it's selling bonds cheap instead of just holding them to duration.
US and other countries don't waste tax money on their central banks if they make losses but we do.
@@caracal9458Don’t forget the dinghy tax
Track and Trace is Royal Mail. Test and Trace was the government covid one
Tom was fantasitc on this podcast. A fountain of knowledge, really articulate easy to listen to. Thanks Tom for your time and valuable perspective!
I would say the cost of housing has had a unexpected effect on a wide range of issues from marriage and children, to saving for pensions. It’s a bigger iceberg then people want to admit.
I had no idea my employer matched 10% for the work place pension. They auto-enroll you on 3%. I only found out about the 10% max limit by accident. It's really worth checking what your employer does!!
Exactly, I only learnt about salary sacrifice from a work colleague, plus pension matching. HR would only allow one change a year.
We were taken over by another American co, and you could salary sacrifice and adjust the amount monthly via a simple app in the phone/ computer
@@thomaspowell2043 they should be legally bound to provide details Like this as well as show typical projection figures for base, middle and max contributions which are company matched. Eg £150/250/400 a month in total for 30 years @ 5% average return.
I’m sure if employees saw these numbers they would be putting more than the minimum away.
Also have it explained this money is theirs and moveable into other funds should they wish on leaving.
I have done simple spreadsheets for friends showing potential end values even with modest contributions and you can see it trickling into their brains they can afford more and the potential at the end much more valuable.
Thank you Tom!
What a good interviewee Tom is. Very clear positioning and great video
Great episode. Highlighting how good our pensions are in the Armed Forces to those serving is something I've been doing for the last few years. People genuinely don't realise how amazing and valuable it truly is. And as mentioned in the episode, it's also really hard for young 18 year olds to understand the importance of something they wont rely on for about 50 odd years.
Another brilliant guest, great work Damien and the team
All down to our wonderful produce Ruth
@@MakingMoneyPodcastShe done a great job, this guy was great!
I saw 1hr video, thought, oh no. But then this guy was great and watched it in one go.
Schools do not teach what money is, how it circulates, how it works, or how to use it as an investment tool. They only teach how to spend it. This is deliberate.
Very interesting episode. My only criticism for this one would be there was only the briefest introduction to who the guest is. Would have appreciated a couple of minutes at the beginning for Tom to give his background to set the scene. Love the channel(s). Keep up the good work!
Really great to meet the pensions monkey TM 😊 as a 71 years old man with a decent income/pension I really enjoyed this discussion - the public service value of your work is immense - so many vital social issues raised and discussed. I'm sure you are thinking how to engage more young people with this challenge
Gen-x here. 51 years. First time I was offered any pension at all was just 13 years ago and it was DC of course. Nobody my age that I know has DB, or adequate pension provision.
I'm 61, and totally agree. There seems to be an idea out there that we all have DB pensions. I wonder how many people actually have DB pensions.
Me too. 46. Had a local council pension pot. But they robbed it. Outsourced and spun off etc. Then all the various other spammers and criminals that stole money from your accounts and enticed you to buy stuff. Lots of CRM marketing. Scammers stealing your phones. Out of 20 years around 7 phones are stolen ?... I could go on and on. Funds the insurance sectors but.....
@@MeiinUK 50 here, between health issues and working as a contractor on shortish contracts, mine is pretty much non-existent. Also every company I worked for enrolled me in a different pension scheme, so i probably have 20 quid here, 10 quid there and so forth. Occasionally I would get the same provider over several different contracts, NEST being one of the ones that came up from time to time. But i'm now 50 realising I will probably never retire, trying to save for the cheapest house (or wreck) I can find (something around 40-50k). My reasoning is if I have a roof over my head, that's half the battle. If I can grow some food (that's a bit more). If the dividends I get from investing will cover my bills, then i can exist. The pension though is I think a write off at this point. I feel i would be better sticking all that money into an ETF. I'm now stuck at that point of do i buy some years in my state pension and hope there is still a state pension in 20 years, or invest it.
These podcasts are soo insightful and not full of fluff. I really appreciate the clean & clear information. Keep going!
A big problem is government continually tinkering with pension and tax rules. Trust is gone. People can be reluctant to invest (or invest further) given the government can and does change pension & tax rules, pulling the rug from underneath you, whenever they so desire...
I contribute 38% of my wage and my employer contributes 12%. Plus i sacrifice my bonus towards it. I am 43 and have only 27K savings in my pension pot, trying to catch up.
That seems too much at your age. You should do as Damon says, make sure HOW it’s invested, NOT default funds, is far more important that reducing your standard of living for 25years.
If you want to retire early or have a large Salary then this sounds fine. Honestly a simple rule of paying a percentage of your salary simply isn’t a valid thing. Some people put in 30% of their salary and their employer pays only 3%. But if this keeps their income under £100,000 then it stops them having the effective tax rate of 60%, so the government pays loads of tax back.
Others know they want to retire way before 67 and so contribute more, I can’t imagine how fit you’d have to be to do certain jobs at 67 or 71.
But the previous comment is worth considering, live your life also.
@@wl660 you are just so wrong it’s actually laughable.
@@crews9789great insight cheers for coming
I am also 43, I wish I had more in my pension just £105k I feel so behind but thankfully we woke up in time we can still be financially independent by 53 if we play it right 🎉
Brilliant podcast Damien. One point which is rarely covered & I think is actually quite important to help engage those without pensions (mainly the opt-outs but also low earners & those confused by the system) is the name itself. It is overly confusing that the state PENSION and private defined contribution PENSIONs share a similar name but do not have any similarities at all. I strongly believe if private ones were called 'Retirement Investment Accounts' (or something similar!) via auto-enrollment - you would see even fewer opt-outs. I'm a high earner from a modest family so have learnt to follow content around it all - but I fear it's confusing if you're the type of person that comes from a background where the only pension you've ever heard family mention is the state pension. Would be interesting to hear your thoughts?
I agree. It’s actually called an annuity when a pension pot starts paying out (pension = a vehicle to accrue a pot of money, and annuity = when the pot of money pays out to you during retirement). I would have no idea what an annuity is if I hadn’t have happened to be assigned to the annuity department of an insurance company in my first job, and I see that misunderstanding all the time.
Financial education at school is key I feel, it’s totally ignored!
You can learn it at school but ultimately it’s up to the person to have the foresight to start saving up early. Some people just don’t know the importance of it
@@markkendall6854 I agree completely
My school taught nothing about financial education. But I learnt a lot of useless stuff I will never ever need in the real world 🤬
Pretty much everything in high school was absolutely rubbish@@cp4512
Yep, if I knew what I do now 20 year's ago, I'd be very comfortable now. In my early 40s, so still have time to catch up.
Good information. I am now retired , and had a light bulb moment , when a fellow who was a good friend met me and said the company pension I had worked 16 years for pension fund was completely trashed by the company who bought it out . So I then put 25% thereafter into my pension . Employer matched up to 8% as well , then 3 companies later carried this on for 20 plus years … the funds allowed me to retire early , and I now manage the risk of where the funds are . And the future looks bright , it needed heavy lifting for many years though , it was a balance of my life becoming less expensive as well… the government could fund a second system by having tax relief at the base rate and would be fairer to the less well off …..
I was late getting started. I do thank whoever came up with auto enrollment because I was hard up at the time with a mortgage I was struggling with but I knew I could not afford to not sign up for it. Ten years later I got a job with a DB pension. I wish auto enrolment had come earlier as I have nothing to show from my 20s but at least a tolerable retirement ahead of me. My sister bless her has nothing.
Top notch content again. So much great discussion and Tom’s passion for pensions is infectious! I’ll be sharing with the youf at work. Thank you 🙏🏻
Warren Buffet says private equity is basically a scam. Plus here in the UK average wages haven't even kept up with inflation let alone beaten it. From 2010 up until 2019 average wages adjusted for inflation went down by minus 2.5% for the whole period , and since 2019 that figure has to be a lot worse now
I know people who earned more than the average wage 30 years ago.
Most people factually don't have the money to pay into a pension.
@@kinggeoffrey3801 Agree
It's frightening that near enough anyone outside the C-suite, business ownershio or born into some wealth is unlikely to be able to build any real wealth for themselves.
Public sector workers get a lease of life on their 20/30% pensions, but that's the only bright spot.
@@SaintWill70 Hopefully our new Labour government will start to tackle some of these issues. Now the tory con artists have left the building, things should start to move in the right direction. Of course it will take a long time to sort out 14 yrs of tory mismanagement and corruption
Also agree.That it is mad that we have foreign companies owning our mandatory infrastructure like water and pump all the profits abroad so we lose out. Too much money going abroad and not being kept in the UK for UK citizens. No investment in UK for upkeep of infrastructure. Save in a pension and have it taken away by government taxes.. where would a minimum pension income land to help everyone have a good standard of living?
You can open a sipp(say, with vanguard, for example), then periodically transfer 99% of your workplace pension into the sipp, that way you still benefit from your companies match, as the workplace pension remains open, plus you have full control of where your money is invested in the sipp 👍
Some workplace defined contribution pensions don't allow you to change to a higher equity scheme and they don't allow you to transfer your money into a SIPP either. Basically you are trapped in the default low performance scheme which usually comprises of their own funds, so they make money on the pension charge of 0.5pc and the high fund charges whilst your pension barely beats inflation. This should not be allowed. Check your pension scheme options and it's performance, if you can find it as it's usually well hidden!
There are plenty of us in our early 60's who never were members of a defined benefit pension scheme, and who also couldn't benefit from the current rules on workplace pensions for the start of our careers. As a result, our pension pots are smaller than they could have been. It's also not true, although it is often repeated, that we are "all living for longer". In some areas in the UK, that may be true, but in others life expectancy is below the state retirement age, and has actually started to fall.
Because people are being absolutely fleeced for housing (both rental and purchase) there is no spare money for "luxuries" like pensions. It's terrifying
...and taxed to the hilt
@@kirkster501 Pensions are a great way to reduce your tax bill
There doesn't feel like there is any 'give'. Near everything is privately owned and in the price gouging stage of economic development.
Housing seems to be just one/two generation away from being entirely. absorbed by private equity.
Public services hat remain seem to be going the same way.
I just don't see the way out, Techno-feudalism seems inevitable within 50 or so years unless we have a miracle.
@@_Information_ Surely your tax return takes into account your pension contributions?
@@Pablosammy1 let’s say I earn £125,000 it’s very easy to put £60k into my my pension as the government pays 50% of that. If I earn a £500,000 I have very little option to put in to a pension,. If I earn £50,000 I simply can’t afford to put in to pension.
With auto enrolment it should be two options 1) default employers fund or 2) your own private pension.
All pension providers have to give you a standard account number to give to your employer so they can automatically pay into your sipp. There’s lots of ways payment could be made all that matters is finding a secure cost effective way of doing it.
I don't even know what this is.....a sipp....
Create a market weighted index fund of publicly listed UK companies of all sizes.
Anyone who contributes towards it in their sipp get 35% instead of 25% tax relief.
Anyone who contributes it to an ISA is given 25% provided they hold on to it for a minimum of 5 years or pay a penalty
My dad is in the exact same situation. Put a bit in his pension early on, but then basically stopped since he was a contractor, until a decade ago when he began working as an employee again. Then he realised how much he needed to save *right now* in order to retire in 10 years and have a good pension to live on.
Brilliant podcast, superb guest. Thankyou Damien.
This is so on point - there are huge parts of the currently working population that are not saving anywhere near enough for a reasonable retirement. More people are now self employed and working in the gig economy. As a Gen X at 57, I'm incredibly fortunate to have a part DB and part DC pension, but I Imagine that retirement at 67 is an impossible dream for many, particularly when the SP age is being pushed back as well.
Yes, because Rent, Mortgage, Student Loan payments are so high that larger savings aren't viable. In addition the loss of generous pension schemes means they'll have to contribute so much more of their income for so much less return.
Warren Buffet quote "Saving is not what is left after Spendiing, Spending is what is left after Saving"
Brilliant Podcast
I didn’t see all of this. I watched about 15 mins of it. The man with glasses spoke a lot of sense. And above all, he was objective, not political.
We may be at a very precarious position, as rumours circulate about the state UK pension becoming means tested. Depending on when a means test would kick in, there may be a nunber of individuals who have barely crossed a certain threshold, thus losing their right to a state pension. I'd be interested to hear the opions of others about this.
'if you want to know where we're going with the uk system just look at australia. the interesting thing about australia is that they completely means test their state pension so if you have lots of private savings you don't get any state pension at all'
i want to know what australia defines as 'lots of private savings'. please.
They apply an assets and income test- it is possible to get. a part pension. If you search on line the ATO website - Australian Taxation Office - wil give you the details - look up aged pension
But the difference is that this has been the case in Australia for 50 years, their tax system reflects this and so people have planned over five decades and saved accordingly. To just foist such a system onto us here without two or three decades of notice would be grotesquely unfair and disincentivise the saving levels that are needed and discussed in this video and cripple the pensions industry. Why save if you lose your state provision???? There are laws of unintended consequences here.
My workplace pension is with nest, I'd really like to see something done for providers to offer a better range of funds as nests selection is not great.
The Islamic one is best
Or cheap!!
Most allow pension to be moved to a SIPP. If you do a partial transfer then your nest pension remains open for your employer to continue contribution. That’s what I do.
Brilliant interview and discussion.
My work place DB pension pays in three times what i pay in every month! Its a no brainer, fantastic. Nice informative vlog, cheers.
Sounds like your Pension Fund is underfunded and at risk of closure or PPF. 😮. A better Pension Fund would be one which is fully funded and requires your company not to need to add to it.
@@wl660 Its a DB Gauranteed pension fund payable for life with inflation increase, i will take that any time.
@@thaibillyboy Hope it’s there when you need it…most DB schemes are getting closed if the scheme is underfunded and it is costing your company loads. But if it is there…you are right, way better than DC.
Not necessarily better than DC. DB can be tax inefficient and there's no pot to pass onto children. I plan on paying no tax in retirement with a combination of pension below personal threshold and ISAs and will pass on SIPP to children or grandchildren which will be an extremely substantial amount by the time we pop our clogs!
@shellyperera2010 good on you.
I plan to pass my DC on too.
My DB would be heavily taxed, but I'm taking a large amount PCLS, which will be put in ISAs and drawn down tax-free.
Love the podcast but can you please give your guest one of the SM7B microphones? The guest talks for maybe 70% of the time so give them the best mic. Thanks
You guys are fantastic hosts and Tom was also fascinating to listen to. Love this podcast.
i've heard a lot about moving funds within your pensions. I want to do it. But its a very daunting thing to actually do Especially when words i dont understand are being thrown around. I would love a video dedicated to how you do this with all the big companies.
36:00 you can partially transfer and keep your occupational scheme running.
I have done it with different employers and different providers.
Mine only let me transfer all out and stop contributions or keep it
the default pension fund is a complete con. I wish I had watched your videos 25 years ago. It was only a year ago I realised how poor the returns have been on all my different company pensions that were all assigned to the default funds, that offered incredibly poor returns & haven't kept pace with inflation. You assume your employer would look after your interests, but that's where the education needs providing. Its really really poor - particularly with the fees they charge
Same here. My company Pension was awful... Transferred it all to Vanguard which has grown considerably in 4 years.
I got access to my pension after 20 years.I was invested in bonds for 20 years with a 1 % return per annum. Pension funds are scum. They only care about their fee's.
Even the new auto-enrolment firms charge ridiculous rates for no real service. They have almost no competition risk and generally offer a standard suite of 'fund of funds' options. The charges based on such little real effort is outrageous. I've pushed my kids to SIPPs.
HL have been great, though once they are old and savvy enough I'll be recommending cheaper options like Trading212 & InvestEngine.
Completely agree. Auto enrolment is great except if your company chooses a terrible default fund it's no better than just saving your money in your bank account. Auto enrolment isn't going to improve the pension provision for younger people if they don't receive education about how and where to invest the money going into their pension.
Couldn't agree more, the default funds and management fees are unbelievably awful. I feel like I have lost 11 years of returns because I was put into the default fund, and I didn't even start a pension until I was 40 due to a lack of education in pensions and auto-enrolment wasn't a thing when I was younger.
Always take the free pension money! Wish I’d saved more into a pension in my 20’s but no one really talked about it. I’ll defo be hammering this home to my kids and helping them early if/when I can.
Great podcast. Really enjoyed it. Drawdown options is such a big decision. Glad i have over 20 years to decide 😂
Why is it that we're struggling to afford our relatively small state pension, when other countries across Europe pay a far higher state pension?
Because most of those pensions are kept in some sort of fund that can grow. The uk literally takes money out of my paycheque and gives it to a pensioner. That’s all national insurance does and it’s why the triple lock is unsustainable by design
Just clarifying about the NI for self employed- if you earn above certain amount and pay your income tax it automatically counts as a full year. If your income is under that amount, you can still make voluntary NI contributions and you get a full year that counts toward State pension
Please can I ask as a self employed person - who is a good company to get a pension with? 🙌 Pension Bee?
Another great interview, well done guys
You may have already done this but it would be good to get a video on, what age you can access pensions state & personal, to help people plan accessing different pots for retirement. Great video again!
Host on the right did well for his son. Awesome guy.
Would you guys consider exploring wealth taxes ?
I remember as a child being told by my economics teacher that if any parent had a repayment mortgage, they were mugs. Everyone should have an endowment mortgage because it not only repay hlthe mortgage but also gives you a lump sum for retirement. Less than a decade later, there was the endowment misselling scandal, and people were getting to retirement and finding the fund was not large enough to repay mortgage.
Nothing wrong in principle just what was actually sold didn't match what was promised due to high fees and bad allocation. D.I.Y and you would have smashed it out the park.
Lady behind the desk at the bank asked me if I was interested in opening a pension when I was 17.. I laughed and walked out.. my 41 year old, no savings, no mortgage self wishes so much I’d listened to her
I missed out on a Halifax share account not listening to the kind lady behind the counter late 80s ! We can be young and dumb at 16-17 but boy have I made up for that. Had a flat,them semi detached house now detached house and over paying the mortgage and paying into pensions hard so hope to be ok by the time I retire and pay off the mortgage 👍
The other issue with migration is recent waves the absolutle majority are not paying into the state so they are just a burden on the tax payer which will collapse the pension system faster.
Default funds and NEST, I was in with them for 2 1/2 years and paid just the legal minimum, the company offered no matches for extra payments, no salary sacrifice etc. with my age I put extra payments into my personal pension ( an ex works pension) as the nest was only going to be worth £6-8 K by the time I retired.
I moved the money from the default investment system (I was 63) 70% was going into consolidation funds returning nil growth effectively. Moved it all into growth funds as have another DC scheme and DB scheme plus full state pension due.
This fund with Aviva has grown substantially over the year and a bit of now being in the growth fund.
I wish school showed me examples of compound interest off a modest salary or if you bought a older car and not a new one on monthly payments and used the payments to invest in index funds and show you practical differences that then can be life changing long term. I am 36 now so hopefully not too late got max match rate for pension and also a stocks and shares snp 500 T212 ISA and ultimately living on less than I earn. My work friends are consumed by the latest things clothes tech cars klarna buy now pay later rubbish. i am glad for these videos that have changed my mindset and value of money.
With their gold plated final salary pensions, the politicians and the civil servants who run the country can never understand this issue. Officials in the Treasury and in the Bank of England are some of the biggest beneficiaries of taxpayers’ largesse.
Thank you guys!!!
great interview, you raise some really good long term and wider issues. I had only ever considered my personal situation. and I havent always contributed. I am lucky to have a good sized pot, and 7 years to contribute heavily. the country as a whole has a big problem. I will be encouraging my children in their 20's to act, i would bet there wont be a state pension when they need it.
Awesome as ever
The retired people we see today often benefited from inflation linked final salary DB pensions. I suspect younger people look at retired people, many of who retired at 55-65 and see them travelling or playing golf etc and presume that is what happens to everyone as they get older without questioning how it works financially. Consequently they didn't make any provision, assuming it would simply be OK for them as it was for the pensioners they see today. The reality is that the golden age of pensioners has passed and many people are going to be poverty stricken in retirement. It's also too late for many people who are never going to get the 1m pot that you need to have a moderately comfortable retirement. Not a lavish retirement, but a comfortable one.
Really interesting one, as I'm super paranoid that I'm not doing enough on pensions! 😱😱
Brilliant and useful, thank you
Is it better to have one pension or multiple? Initially I had a pension for each company I had worked for, but some of the pots ended up losing a lot of money due to fees and market conditions. I currently have three, two of which I dont contribute to but they dont seem to be losing a lot of money. My biggest worry is having my pension in one place and then the company goes bad or loses all of my money. Should it be legal for these companies to charge fees and lose money in bad investments?
21:00 "The state pension is a Ponzi scheme"... How do we fix it? I think creating some sort of migration to an investment-based scheme, maybe similar to the Canadian Pension Plan but you cannot just turn off the existing state pensions, nor can you say to working people that you must now fund two schemes. It's a major challenge for future governments!
What about the previous LTA and the replacements? It’s limiting.
Working into the 70s will be one of the options people will be condemned to do, in your 30s or 40s now and not aware of saving as much as you can into a pension will find a horror when it’s time to retire.
Hi, any advise on who to go with for the junior sipp and adult sipp please
Young people who probably will never ever see a state pension, would be able to save more for their retirement, if they shouldn’t have to pay taxes for promise of state pension which they won’t get. It’s easy to say save 12% for pension, but with this cost of living crisis, and the state of our economy, it is really hard. Everything goes up, including taxes. The only thing that stays the same or even decreases is all kind of allowances. Meaning less and less spare money to invest.
With regards to housing, it would be great to have own home, but it’s UK, repairs costs tone of money, poor standard of our housing means sky high energy bills etc. First someone should implement proper standards, as UK houses are really poor quality, and u need to fix them as soon as u get the keys -.-
I'm doing 16% up from 3.5%
That initial hit did hurt ngl but 24m in and I'm used to it, I've decided that for each payrise I'm going to put half to my pension.
I'm also putting 10% into shares for the short term purchases.
I'm trying to get my mortgage down over then next 10 years then I'll be saving what was mortgage payment was.
Just hope its enough, it a worry.
I'm 41 and have only been doihg it properly for 2 years.
It's definitely a major concern.
Nice work lads
Perhaps a slight help for the future pension crisis is to let people opt out of state pension claims in return for a cap on pension tax to a maximum of the basic rate?
Great video...thank you guys for the time and doing this! Learnt a lot...at 39 years old i feel i have a lot to do!!
It’s funny to hear him speak of the benefit for Canada that Canadian pension funds are investing abroad and repatriating gains - the exact same conversation about requiring more domestic investment is happening here.
Agreed with more Damien said than the guest tbh. I don't like the pot for life idea, I prefer what we have. You can collect your pots up and move them where you want, multiple pots or a single pot. It would be good if partial transfers on workplace pensions was more universal, to help people who stay in the same job for 20 years.
Not mandatory, but strongly encouraging people to speak to good IFAs at five year intervals would help protect unsophisticated investors getting permanently dumped into default funds, or sleep walking into an awful annuity, etc.
I love these podcasts
The UK should have created a Sovereign wealth fund decades ago, like Norway (and others) have done. Instead, North Sea oil revenues and the proceeds from all the privatisations was squandered on current spending and tax cuts. It's basically too late now as the oil has almost run out and there's nothing left to privatise.
@@TheGodpharma I don’t think it’s the North Sea oil that is the issue, it is selling council houses that is the issue. It was a a good vote winner selling houses cheaply. But it stores up future costs for councils to provide housing. Norway has. Huge natural resources with energy, it’s not a fair comparison
Yep a Sovereign Wealth Fund is a no brainier - it’s a win, win. It would have been a great way to fund infrastructure projects, which would have created more growth, wealth, etc, etc.
Well Labour have said they are going to create one, capped at £7.3 billion.
We don’t need one. We have a central bank that generates £ whenever the govt wants to spend.
Or marry a Norwegian like I have - please don't troll me about this - you're only get me goat.
36:29 I have successfully moved my personal+employer pension contributions to another provider while still employed. Doable, but enough admin it will put most people off.
Very good podcast and some great points made
On the topic of over saving at the end. I struggle with this. Having grown up poor and not figured out personal finance until about 25. I have spent several years saving upwards of 50% of my income and heavily investing alot of it. For example yesterday I decided to treat my mum to a trip away, and the thought of spending £200/400 on a little trip was really hard for me, when obviously I have tens of thousands. What a weird situation to have found myself in. I wanted for money so much, I've forgotten how to use it😅
You sound sensible to me.
Worked in HK for 4 1/2 years and took all the money at low tax to put towards my house when I returned to UK last year. Now for last 18 months back in UK been putting 50% of my salary a year into pension via salary sacrifice along with work contributing another 13% on top along with giving me the NI savings back so i max out the £60k yearly allowance. Seems a no brainer when money would have been 40%+ taxed otherwise. Plan to is do that for 5 years and then take my foot off the gas so to say and let compounding do the heavy lifting. In my mid 30’s but want to take a low stress / low paid job when i hit 50 and then retire at 57/58 when i can access pension pot
Insightful video. Really enjoyed it.
Make a competitive online sim/football manager game for finances. Like a fantasy football game for schools. Give the kids the info and they have a month to go from 18 to 68. All with the same job. Winner is the one that has the most pension.
@@_Information_ I think they would play if you made it play like a video game however most educational games have been shit since the 80s so it won't be any good. Heck I would play that game.
yea picking up on the default funds idea,my daughter (17) joined a well known bakery company a few years ago while at 6th form, i has to ring them to get her enrolled into the pension at 17teen but then had to go through the default funds. No idea why they had bond in a default fund for a 17teen year old in her portfolio. Its madness and just changed it all for a simple cheap index tracker fund, spool on a few years and she is it university still working there part time and the default funds haven't changed.The disappointing but great part for me is if i hadn't spent the best part of a few years watching channels like yours ( and its great) and others ( james,Ramin,pete) i would have been none the wiser and my Daughter would be loosing out ever month and in her retirement it would have lost her thousands per yer
Why are the self employed not mandated to pay in to pension? If their employer is themselves then they should be paying in for their employee (themselves) as in any other company.
I dont understand why this is not happening still
great content guys, can yiu please make a program about NEST pensions, different funds, what they mean, and also other programs like NEST , self employed people can use?
That whole thing about the government putting money into a pension at birth, I thought that was my idea lol. I’ve been saying that for about 20 years, it makes far more sense to me than the current state pension system.
I went the house route first then later went for the pension with higher percentage contributions. I calculated I would pay off my mortgage long before retirement and as my salary went up with promotions etc I could contribute 16% with employer matching up to 8%, playing catch-up. I can see how the other way round can pay off with the exponential growth of pension pot so it's not clear cut.
That's a good strategy. Levelise your cost of living and ramp up your pension contribution.
For me, both house and pension…but if can’t get a house, just save/invest like crazy and move to a cheaper country when you retire
im self employed , the way i look at it Is why invest in a sipp as you dont have any control unitl you reach a certain age( 55 as we speak..may go up ) i invest into a isa (VWRP) and i look at this as my pension. If you have plenty of spare money then of course a sipp would be cool addition . With the isa if you want to wait till 55 (like a sipp ) to acsess your investment then you can do this.i just prefer to have the opiton to retire sooner then later.. I just feel its vey important to be the one who has the power/control of your own funds .. thats just my thoughts
You can do both - if you are a higher rate tax payer the 40% tax relief on the SIPP is a no-brainer, as you'll resch the amount you need to retire much sooner, but you can also invest into an ISA to bridge the gap between when you want to retire and the age you can access the pension.
@@Ryhm14 yes true that's there is great benefits if your a high tax payer (not my case at the moment ) but I still feel the true power is having control, I see they will move the private pension age to 57 (in 2028) who knows what this will be in there future .. But yeah the more options you have the better. It's just about working to your strengths and the tools you have in front of you
I'm doing the same for the same reasoning. Was thinking about this hard but for me it felt too risky to trust my money on any goverment who can change retirement age any time, change taxing of pension pots any time in a country where economy has been languishing for many years and no one seems to be competent enough to do anything about it.
Yep, I'm doing the same thing.. I think without the employers 3% contribution to the pension, it becomes a lot less appealing to contribute to a pension as opposed to just sticking it in an ISA..
A S&S ISA is far more important. You have control, you are not being dictated too on when you can retire. You have the power to sell and buy.
A SIPP is something I will open when my mortgage is paid off, but that's only because I have frozen pensions scattered all over the shop. It will be an addition rather than the main option.
Let's face it most of us are being forced to work until we are 70, that has to be part of the planning.
I was only auto enrolled in my late 30s with my employer and im now early 40s however i prioritised my mortgage and should have that paid in 3 years. I then plan to put most of that mortgage into savings and investments.
@Calgacus-i9k lol definitely, I can't wait. The way I look at it, I could lose my job and I would still have my pension however what's the point if I lose my house. We live quite frugal, we don't have new cars or go on big fancy holidays, just want the mortgage done now.
Yes, mortgage-first (for the surety of owning a house) is one tactic many take, and it is a very simple thing to understand. Others take mortgage-longest, as the returns on investments are higher than the interest rates on mortgages (even recently) so the net gain over time should be higher. I think it is a wholly personal decision to make. IMO if you are lucky to live at home in your early 20s whilst working, this is a great time to get a pension boost even though you are probably also saving for a house deposit.
The “pot for life” idea is I think a must have. Otherwise the people entering the work force now and those only half way through their career will end up with at least half a dozen pensions.
Pension….laughable when ministers get a guaranteed pension yet the public have to save hard to even get a basic living.