HOW HEALTHY IS YOUR PENSION PLAN? ARE YOU SURE YOU WILL HAVE ENOUGH? – Every time the British Government come out with facts and figures I’m never quite sure whether I should laugh or cry; for most of it is completely and utterly unrealistic.
Just think that someone, somewhere in Government is just sitting around all day thinking stuff up; most of it to frighten the life out of people. Well there’s nothing like a little fear to motivate people but how much of it is just a Chicken Little story?
This time it’s pensions. That’s right the Government are concerned for your well-being once you decided to finally say you’ve had enough of the grind and fancy relaxing with a hobby or two.
According to the Department of Work and Pensions (DWP) thousands of high end earners could end up retiring in poverty; simply because they failed to pay in sufficient into their pension fund.
Now you might probably be sitting there scratching your head and wondering if those days you plan playing the odd round of golf or doing a spot of fly fishing is going to be possible.
The figures below are based on how much you earn and how much you would need in retirement to sustain your current living standards
£12,200 or less – 80 percent of your working income
£12,200 – £22,400 – 70 percent of your working income
£22,400 – £32,000 – 67 percent of your working income
£32,100 – £51,300 – 60 percent of your working income
£51,300 – or over – 50 percent of your working income
The DWP announced that some 12.2 million people in Britain are neglecting to pay in sufficient amounts of their salaries into their pensions and are warning people that it will have dire consequences when it comes to retiring.
According to the report it is likely that most people would have to continue working until they are in their 80’s in order to be able to retire and maintain their current living standard.
As an example a person currently earning £20,000 a year would need to save £1,260; this of course works on the basis that the £20,000 is your gross earnings. After paying tax and national insurance the £1,260 is certainly a fair chunk out of your annual income.
It is of course easy for Government Ministers and MPs to churn out these figures as it’s never going to affect them. They already have a platinum plated pension provided to them by the taxpayer and on top of that they have access to their expense accounts.
If things do get a little tight in the MPs household then they can always employ a family member as a secretary, at an inflated salary, all at the expense of the taxpayer.
Yes it appears Government departments are quite apt at coming up with ways to keep us fearful of our futures knowing it’s never going to affect them.
Considering the recent report it might be a good idea if you sit down with your financial advisor and determine the current health of your pension plan and start topping it up if it is necessary and if you can afford to do so.