There are those who say that the UK state retirement age should rise because we are all living longer.
I call bullshit on this line of thinking.
The government’s proposed rise in the pension age to 68 – affecting those currently between the ages of 39 and 47 – is nothing short of scandalous given the massive austerity that Joe Public has already endured since the 2008 financial crash.
Not only that but not long ago on this website I shared how there is a massive crisis in private sector pensions across the UK, from the post Private Sector Pension Deficit Widens By 251% In 2016:
According to the retirement consultancy Mercer, at the end of 2015 the combined final salary pension deficit for the FTSE 350 was £39 billion. The FTSE 350 represents approximately 50% of all UK final salary pensions. At the end of 2016 the deficit increased to £137 billion. This massive deficit increase occurred even though firms were making huge contributions and making good returns from investments. Here are the full grizzly details.
As for the public sector according to pensionage.com the UK’s public sector pension liabilities are equivalent to 81% of GDP, according to the National Audit Office.
Figures published by the department reveal public sector net liabilities of £1,493 billion, the single largest liability on the government’s balance sheet. It represents 42% of all UK government liabilities or £55,000 per UK household.
Clearly this is unsustainable and the government’s answer is to make us all work longer in jobs that pay less as a fair way for everyone ensure sustainability of the state pension into the future.
But of course not everyone is entitled to the state pension: you must have made National Insurance contributions during your working life or have paid voluntary National Insurance or be credited with them by the government.
If you are entitled to the state pension then for people retiring since 6 April 2016 you will receive £159.55 a week at present if you made all of your contributions.
The point is this: all these issues are not the fault of working people – the financial crash, the government’s response (austerity), mismanaged AUM in pension funds – the list goes on.
With both mum’s and dad’s from UK households out working to bring home the bacon you’d think that the government would have more than enough income tax to take care of working people fairly in retirement and not force them to continue their wage slavery well into their sixties.
This apparently is too much to ask and so I urge you that if you have not made additional provision for your retirement please see an independent financial adviser (IFA) today to discuss ways you can avoid working until you are ready to croak.
One of several strategies I’ve used to stave off retiring just before being put into a hole in the ground is to open a SIPP and buy stocks in mid to large cap businesses that are selling below their medium to long term PE ratio.
The risk here is that the UK government will at some point in the future start to destroy some of the benefits of SIPP’s that currently make them an attractive way of investing for retirement.
For example according to the Pension Advisory Service ‘under current legislation, you can commence drawing retirement benefits (from a SIPP) from the age of 55 and you don’t have to stop work to draw benefits.’
Not only that but up to 25% of your accumulated fund can be withdrawn as a tax-free cash lump sum with the balance used to provide an income – check out the Pension Advisory Service for more on the benefits you can enjoy from investing in a SIPP.
My view is that it is only a matter of time until the UK government starts to erode the many benefits of SIPPs but for now they remain a very good way to make extra provision for retirement.
As for the UK government’s announcement and in particular Secretary of State for Work and Pensions, David Gauke we the people fart in your general direction.