The pension crisis and how to survive it - we explain all

The state pension fund is running out - Tricia Phillips explains what this means as well as how you can ensure that whatever happens, you can face life after work with confidence

Tricia Phillips

The state pension is groaning under pressure from an ageing population.
A report from Government advisers has revealed the National Insurance Fund, which pays state pensions and other social benefits, will run out of cash in the 2030s .
This means future pensioners face lower state pensions or younger workers may get slapped with higher National Insurance contributions.
Andrew Tully, pensions technical director at Retirement Advantage, said: “There is no cast-iron guarantee that the system pensioners enjoy today will be around in the same guise in the years to come, so it makes sense to take control of our own retirement future.”

With uncertainty ahead, here’s some top tips and advice...

15 top tips to help you save

1. Don’t rely on the state pension - Whatever your age. The state pension age keeps rising. Young people now face working until their 70s and beyond before they will qualify - and get less than they expected.
   
2. Pensions aren’t as complex as they seem - During your working life, you put a bit of cash away from your earnings each month and that builds up to create a pot of money to see you through retirement. Then you cash them in and buy a pension income.
   
3. It costs less than you think to save - Tax relief on pension contributions is a generous Government giveaway. Every £100 you put into a pension only costs you £80 with tax relief. For higher-rate taxpayers it’s even better.
   
4. Start saving early - In your 20s, or as soon as you start work, is the time to start the long-term savings bug. Andrew Tully says to build up a £100,000 pot by age 65, you’ll need to save £91 a month from age 25, £148 from age 35 and £266 from age 45. This is because of compound interest – where you earn interest on interest over the years.
   
   

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5. Stay autoenrolled in your workplace pension - Don’t opt-out of a workplace pension – it’s turning down “free money” from your employer. Under auto-enrolment, you make contributions into your workplace pension and your boss chips in to boost savings.
   
6. Put in more than the minimum - The current minimum legal contributions into workplace schemes are 1% from workers and 1% from bosses. This increases to 3% from workers and 2% from bosses in April, and to 5% from workers and 3% from bosses in 2019. Some firms will match employee contributions up to a higher level.
   
7. Don’t forget about your pension savings - Don’t leave your hard-earned cash languishing. Keep an eye on it to ensure you’re on track to build up the funds you will need. Take notice of annual statements so you know where you stand and can decide if you need to chip in a bit more.
   
8. It’s never too late to start saving - Workers in their 50s still have time to build up a bit of a nest egg. Chances are you’ll be working until your late 60s, so there is time. Every £1 saved into a pension will give you that plus a bit more in retirement.
   
9. If you’re self employed - You’ll need to sort out your own pension savings. Under 40s can use the Lifetime ISA, which gets a 25% Government top-up on up to £4,000 each year, until age 50. Over 40s will need to set up a private pension. Visit unbiased.co.uk to find an adviser.
   
10. Think you can’t afford to save - If you get a shop-bought coffee each day at £2-plus a pop, giving up one or two a week will free-up cash to save for your older age. Once you start looking at small ways like this to make savings, you’ll be well on your way to a more secure financial future.
    
11. Keep an eye on costs - Fees charged by pension providers can vary and eat into your funds. Jamie Smith-Thompson, managing director of pension advice specialist Portafina, says: “What seems like a small change could make a big difference. For example, reducing your annual provider fees by just 1% could mean £25,000 more in your pot over 20 years.” Check the market for schemes with lower fees and think about switching.
    
    
    
12. Review where - your money’s invested - Ensure your pension savings are working hard for you. Check the funds you’re invested in match your attitude to risk. Keep an eye on how your savings are growing, and move funds if you think you can achieve a better return.
    
13. Flexibility to suit your needs - The pensions freedoms put you in control of when and how you access your savings from the age 55. But be wary of dipping into your pot too soon. Get free advice from the Government’s Pension Wise via pensionwise.gov.uk or call 0800 138 3944 to book an appointment.
    
14. Find old pensions - Most of us will work for a number of employers and it can be easy to lose track or forget about funds from past jobs. Get free help to track down lost pensions from the Government at gov.uk/find-pension-contact-details .
    
15. Don’t let crooks steal your cash - If you get a cold call offering a free pensions review or an investment offer that sounds too good to be true, put the phone down. Crooks are just waiting to rip you off. Don’t rush into transferring funds or accessing savings before ensuring a person or firm is on the Financial Conduct Authority’s register at register.fca.org.uk . Also check the FCA Scam Smart page at fca.org.uk/consumers/protectyourself-scams .
    
    Culled from Mirror Pension
    

Start investing at 50, get a £1m pension pot at 67

Too late to start? Lottie Wride is 46 and has no pension Credit: Jay Williams

• Sam Brodbeck

19 September 2017 • 7:45am

Not long ago, people in their 50s would be deemed to have left it too late to begin saving for retirement. Only a lifetime of pension contributions, allied with some investment growth, could produce a large enough pot to produce a viable income in later life, the conventional wisdom went.
But while “the magic of compound interest” does allow money put aside early to grow spectacularly, most young people do not have much spare cash to invest. Only in middle age can most workers begin to put serious sums aside.

Wages peak in the mid 40s and 50s (with men’s salaries reaching their high point about a decade later than women’s), according to official statistics.

Not only are incomes at or near their zenith in middle age, but two major costs of living are likely to have declined or ceased entirely. Mortgage terms are typically 25 years, meaning that many people who bought properties in their early 20s will be debt free by their 50s.
Likewise, the cost of raising children dwindles once they embark on higher education courses funded by student loans.

In figures: the pension pot you can expect if you start at 50

Generous tax perks on pensions and Isa investments help even those who start to save from scratch at 50 to build a sizeable pot quickly.
A 50-year-old who earns, say, £70,000 a year could, starting from nothing, build up a pension worth £985,800 by 67 if they saved the maximum amount allowed each year.
This figure, calculated for Telegraph Money by pensions firm Old Mutual Wealth, assumes annual returns of 4pc after charges, a realistic rate given today’s investment market, and that the pensions “annual allowance” remains at its current level of £40,000 a year.
Even if annual returns were 75pc lower (at 1pc after charges) the pot would be worth £744,600 by 67.

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Saving £40,000 a year may seem a tall order, but remember that this figure includes the tax relief that is applied to all pension savings. Someone who earns £70,000 a year would have to contribute only £27,000 from their own bank account to add £40,000 to their pension pot.
Someone who pays the basic rate of 20pc would have to spend £32,000 to save the same amount.
If saving through a personal pension, rather than a scheme operated by a company, higher-rate taxpayers will need to claim back the extra 20pc tax relief via a tax return. All pension savers receive relief at the basic rate automatically.
Under “automatic enrolment” rules, employers are required to save into a pension on your behalf. Many firms will match the money you save, capped at a proportion of salary; 5pc is a typical figure.
When it comes to taking money out of your pension in retirement, you can take 25pc as a tax-free lump sum and then pay income tax on further withdrawals, just as you would on any other income.
Isas – another main option for building up a pot of savings for retirement – work the other way round: you contribute out of your after-tax income but make withdrawals tax free. In the 2017-18 tax year you can put up to £20,000 into an Isa. Saving at that level for the same period as the pension example (17 years) with 4pc returns would produce a portfolio worth £372,295.
Since the “pension freedom” reforms were introduced in 2015, unspent pensions have been able to pass down the generations extremely tax efficiently. Isas, on the other hand, form part of your estate on death and will be subject to inheritance tax.
It can, therefore, make sense to hold a combination of pensions and Isas in retirement, spending the latter first if you want to maximise your legacy.

Is the decade before you retire the most important?

While some begin to invest only when they reach their 50s, millions of us have been squirrelling money away for decades.
New research produced by Aegon, the insurer, offers useful insight into the relative importance of investment gains and your actual contributions for those who started early. In essence, investment returns become gradually more important, relative to the amount you save (see graphic, up).
If we look at someone who has saved for 40 years, the analysis found that the saver’s contributions accounted for the bulk of the portfolio’s value in the first 30 years – £83,484 against £71,836 from investment returns.
Yet in the last 10 years of investment, the opposite was true. During that period, investment returns were far more important, accounting for £80,680 of the total, against £33,844 in contributions. However, as Aegon’s Nick Dixon pointed out: “It’s important to remember that investment losses will have as big an impact as investment gains.”
Mark Fawcett, the chief investment officer of Nest, the government-backed provider of workplace pensions, said: “This research debunks investment orthodoxy that says you should maximise risk when you’re young. What really matters are investment returns once you’ve built up a decent pot towards the end of your working life.”
Nest, which runs the savings of more than five million people, based its investment strategy around this concept. It takes relatively little investment risk for younger savers on the grounds that any missed returns can quickly be recovered once pot sizes are larger.

Telegraph

One in 5 Brits are being lured into holiday compensation claims - that could lead to a prison sentence

A worrying 9.5 million people have been approached about making a potential claim, according to watchdog ABTA

Emma Munbo

Abta said in some cases, holidaymakers were being talked into making claims while on holiday (Image: Getty)

Millions of holidaymakers are being teased into making compensation claims for sickness abroad - despite not actually falling ill, it's been revealed.
According to a YouGov survey, almost one in five people have been contacted about making a compensation claim for holiday sickness to date - however, they're unaware that false or overinflated claims could lead to a jail sentence.
The most common way people said they were approached was over the phone, followed by text and email.
Some people also reported being contacted on social media and some were approached in person, including in airports or while on holiday.

The figures have been released as part of Travel Association ABTA’s ‘Stop Sickness Scams’ campaign which highlights that false claims are costing the travel industry tens of millions of pounds each year.
The body is now calling for the urgent closure of a loophole in the law, which enables claims management companies and legal firms to make more money in fees from sickness claims abroad, than they’re able to from personal injuries in the UK.

ABTA said that some firms are contacting people out of the blue, encouraging them to make a false claim and often misleadingly saying there is a pot of money waiting to be claimed - which isn't necessarily the case.

In reality, making a false compensation claim is an act of fraud, and if prosecuted could result in a fine, criminal record or jail term of up to three years.
In October 2017 a couple from Merseyside received a prison sentence after being found guilty of making a fraudulent sickness claim. Deborah Briton was sentenced to nine months and her partner Paul Roberts was jailed for 15 months.

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'Insurance scam' as man claims to have swerved for dog

ABTA's findings come six months after the Government announced its plans to clampdown on the rise in false sickness claims.
It's now calling for a summer 2018 deadline to ensure this year's holidaymakers don't fall victim to the so-called scams.
Mark Tanzer, ABTA’s chief executive said: "Unscrupulous claims management companies are encouraging people to make a false sickness claim which could land them with a large fine or even a prison sentence.
"False claims don’t just make UK holidaymakers vulnerable to serious penalties – they’re also costing travel companies and hotel owners tens millions of pounds and tarnishing the reputation of the British abroad.
"Closing the loophole in the law in time for the 2018 holiday season will make a big difference in tackling fraudulent sickness claims."
If you receive a cold-call urging you to make a holiday sickness claim, you can report it to the Claims Management Regulator.
Culled from Mirror pension

Pensions scam: Gov. orders probe into alleged malpractice

Pension

Gov. David Umahi of Ebonyi has ordered probe into allegations of malpractices in the payment of pensions of retired civil servants in the state.
Some staff of the audit unit of the office of the Auditor- General of the state have been accused of extorting money from pensioners to facilitate their pension payments.
Umahi, in a release signed by his Chief Press Secretary, Emmanuel Uzor, expressed dismay over the alleged extortions.
According to him, the state government will do everything within its powers to get to the root of the matter.
“The issues surrounding the non-payment of pension and gratuities in the state had been hinged on criminal padding and inflation of pensions and gratuities.
“This criminal inflation and doctoring of figures as noticed in the payroll of pensioners, led to setting up a special committee in charge of harmonising entitlements accruable to pensioners in the state.
“The committee headed by the Deputy Governor has been working assiduously to ensure that no pensioner is shortchanged or omitted,” he said.
Umahi expressed surprise that some retired civil servants still alleged extortion by officials of the audit unit, even when the accruable payments were not within the jurisdiction of the auditor-general.
“It is possible that those who alleged extortion were the bad eggs who inflated or altered their entitlements in connivance with some staff of the audit department,” he said.
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The governor said that such people had refused to appear before the deputy governor led-harmonisation committee to prevent the determination of their proper entitlements.
“The people involved in this issue should appear before the office of the deputy governor saddled with the speedy payment of pensions instead of looking for shortcuts to defraud the state government. .
“Consequently, all retired civil servants who have not completed their physical capturing should immediately do so as those that have completed theirs have been duly paid,” he said.
The governor said that he had directed the Head of Service, the auditor-general and the Fiscal Responsibility Commission of the state to expeditiously investigate the alleged pension scam.
“Anybody found culpable will be made to face the wrath of the law as this administration will not tolerate such deliberate sabotage of government policies and programmes,” he added.
He directed the pensioners allegedly exploited to report to the office of the Chief Press Secretary, Government House, Abakaliki, and officially lodge their complaints,” he said.

PM news

Biafra: Buhari approves payment of pension to pardoned police personnel

Published
on
October 18, 2017

By
Wale Odunsi

President Muhammadu Buhari has approved the payment of pension to police personnel who served under the defunct Biafran police during the civil war.
The Police officers were granted presidential pardon in 2000.

The Pension Transitional Arrangement Directorate (PTAD) on Wednesday announced that about 162 of such retired police officers and 57 Next of Kin will be paid their benefits in the first phase which kicks off this month.
The statement reads: “The general public would recall that Nigeria witnessed an ugly civil war between July, 1967 and January, 1970 and as a result of that unfortunate period in our history, some members of the Armed Forces, the Nigeria Police and paramilitary officers who took part with the Secessionist were dismissed from the service.
“The dismissal of those officers was commuted to retirement in the year 2000 through a Presidential Amnesty granted on 29th May, 2000 by the Administration of the then President, Olusegun Obasanjo.
“A verification exercise was conducted for the pardoned officers by the defunct Police Pension Office and recently PTAD on one hand and the Police Service Commission on the other.

“Despite the Presidential pardon and verification of these officers, many of them remained unpaid years after the pardon. However, the present administration under the able leadership of President, Muhammadu Buhari has graciously given approval for the payment of pension entitlements to these officers and their Next of Kin.
“PTAD is commencing the payment of pension benefits to the retired war affected police officers on Friday October 20, 2017 in Enugu. 162 officers will be payrolled and 57 Next of Kin who have also not been paid their death benefits will be paid in the first batch.”

Daily post

A couple who paid off $127,000 in 4 years shares their No. 1 money-saving tip

Emmie Martin

In 2008, Cherie and Brian Lowe found themselves deep underwater.

Between credit cards, student loans, car payments and a gap loan, the couple had racked up more than $127,000 in debt, but struggled to make a dent in paying it off.

"At that point, we had been married just about nine years and really we just didn't have a plan for our money," Cherie tells CNBC Make It . "We lived paycheck to paycheck, and when a crisis would arise, if we didn't have the cash to pay for it, we would put it on the credit card."

After several failed attempts at taking control, Brian came home one day and pitched a vision to Cherie of what their family's lives could look like without the debt. The couple decided it was time to make a change and they pledged to finally get a handle on their finances. On April 2, 2008, they set out on the first day of a 15-year plan to become debt-free.

But just shy of four years later, on March 28, 2012, the Lowes made their final Sallie Mae payment, conquering $127,482.30 in debt and interest, which Cherie documented on her blog, Queen of Free, and in her book, "Slaying the Debt Dragon: How One Family Conquered Their Money Monster and Found an Inspired Happily Ever After."

To reach the milestone, the couple worked together to both increase their income and pare down expenses. While many larger factors contributed to their success, including building an emergency fund, rejiggering their tax withholdings, taking on side hustles, giving up restaurant meals and living with less, Cherie's No. 1 money-saving trick is simple.

"Every time you check out at the grocery store, you need to look in your cart and find three to five items that you don't need," she says. "You will save $5 to $10 every time you shop without cutting a single coupon."

The tactic works for two reasons: It puts a barrier between placing an item in your cart and actually paying for them and it shaves down your bills little by little.

"It's the pause before you check out that I think is so effective," Cherie says, noting that the idea holds especially true in grocery stores, where it's easy to nab appealing items without much thought about how they add up. "There some things that sometimes we pick up and maybe we might need them next week — and it's fine to go ahead and buy them next week — but right now you probably don't [need it]. Just pause and only buy what you really need."

Few people religiously stick to their shopping lists, and even those who do can often stand to cut back on a few non-essentials.

Cherie also recommends sticking to cash while grocery shopping, which creates another physical boundary between grabbing an item and bringing it home. "It places a firm fence around how much you're going to spend," Cherie says.

Others who have paid off thousands in debt swear by creating boundaries as well. For Lauren Greutman, a former over-spender who dug herself out of more than $40,000 in credit card debt , that meant ditching the plastic for good. "I absolutely had to stop carrying my cards with me, because I was just too swipe happy," she writes in her book "The Recovering Spender." "I had zero self-control."

Even though going cash-only caused Greutman a few embarrassing moments, including the time she forgot her bills at home and couldn't afford to buy groceries, in the long run it held her accountable for her spending and forced her to stick to her budget. "Those boundaries are there to keep you safe," she writes.

Yahoo Finance/CNBC

How YOUR pension has HALVED over the last 10 years, shock new figures- Lana Clements

How YOUR pension has HALVED over the last 10 years, shock new figures

PENSIONS have HALVED in the last decade, according to shocking new figures.

By Lana Clements

GETTY

Pension income has been hit over the last 10 years

The figures mean Britons retiring in 2017 will be massively worse off than those who finished work just before the 2008 credit crunch and subsequent financial crisis.

Calculations by financial services giant Fidelity have revealed today’s retirees have ben hit by a triple blow of falling real wages, lower market returns and reduced income from annuities.

People finishing work this year will typically have saved pension pots that are £40,000 lower on average than someone in 2007, according to Fidelity.

Lower savings levels add extra misery to this year's retirees who have already seen wage growth eroded by the cost of living by one percentage point below inflation over the past 10 years.

On the other hand, people who retired in 2007 typically earned wages that maintained their buying power at 0.9 percentage points above Consumer Price Inflation (CPI).

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It means that people who retire this year will have paid in £5,179 less to saving schemes over the 10 year before finishing work, compared to counterparts a decade earlier, according to Fidelity.

And it comes amid poorer stock market performance over the past 10 year than the decade earlier.

For someone earning £45,000, the savings pot at the end of the 10 years is £139,110 in 2017, compared with £180,106 in 2007, Fidelity found.

Worse still, savings today buy lower levels of income than 10 years ago.

This results in an annuity income that is at just £6,607 today, compared to £12,193 in 2007.

Martin Lewis on how much to save for your pension

Ed Monk, associate director at personal investing for Fidelity International said: “This all makes grim reading for the 2017 cohort of retirees yet it’s important not to abandon hope.

"In the period since the crisis the pension freedoms reforms have freed many more people to access their pension pot using drawdown instead of an annuity.

“This comes with greater risk but at least provides an alternative to being locked into low paying annuities and gives you greater flexibility over how you manage your income.

"For those still with some years to go before they retire, there’s a chance to make more of the time available left to save.

“Maximising contributions to take advantage of any employer contributions on offer as well as the help available from tax relief makes sense, as does ensuring your pension money is invested to take a level of risk that you’re comfortable with, but that will give you a chance of decent growth.”

Culled from Express