Old-age pension pot ‘empty in 30 years’
Wednesday 8th February 2012, 3:00PM GMT.
Dermot Grenham, chief actuary at the UK Social Security Demography and Overseas Pensions Government Actuary's Department, which wrote the report
THE States’ old-age pension pot will be drained within 30 years, according to a new report by the UK government’s pension experts.
But the UK government actuary says that enough reserves have been built up so that politicians do not have to start making the hard decisions about reducing pensions, increasing contributions or delaying retirement age for another five years.
And that means that the Island should be out of recession and into recovery before the changes start to bite. The actuary’s report also said that applying a ‘triple lock’ annual increase to pensions – an automatic increase by the highest of Retail Prices Index, average earnings or 2.5% – would effectively undo the benefits of last year’s decision to increase the pension age to 67.
Buy today’s JEP for the full story
Read the full story in the Jersey Evening Post. Click here for subscription details. Individual editions are also available online.
Saturday 26 May
- Senator charged with grave assault
- J2: Your guide to what's on, including Jubilee Diary
- Queen's Jubilee: Win one of 60 diamonds
- Free cup of coffee for every reader
- More medals at Jeux des Iles
- Win tickets to family teddy concert
The Queen's Diamond Jubilee
JEP Jubilee Editions
Saturday 2 June: Guide to Celebrations
Wednesday 6 June: Souvenir of Events
View The Queen in Jersey supplement
Travel
To, from and around the Island
Airport Arrivals/Departures
Harbours Arrivals/Departures
Bus Information/Timetables
This is Jersey
Jersey Evening Post
Useful links
Bugger that’s just when I rreach retirement age, still thanks for the heads up I’m going to cease paying social contributions immediately and put the money in a HISA.
Report abuse
I suspect that one of the reasons for the pension problem is due to the low interest rates. The funds gathered for pensions have to be invested to get the best and safest return in order to be able to pay the pensioners.
Now that the returns on investments are so low it is necessary to get people who are earning to increase their payments to be able to get a reasonable pension or to make them work longer before becoming pensioners. If the jobs are not there then the option of working longer is not realistic for many people.
As a pensioner with some savings I have to invest to try to achieve a reasonable income. A few years ago I was able to get 7%. I can remember when 15% was possible. Now I am lucky to be able to get 3%. It means that I have less income to spend which does not help the shops that I would normally be buying from. It also means that I pay less tax, both as income tax and as GST so that the funds available from tax are much lower than previously planned for.
The interest rates are not decided here as we are dependent on the decisions made by the Bank of England. The mistakes made, including the low interest rates, were from the days when Gordon Brown was in charge. Sadly the present Chancellor continues to make the same mistakes as he is advised by those who understand economics but not financial psychology.
Report abuse
If they have five years grace then they had better start thinking about it today.
Look at all the things; new incinerator, electoral reform, freedom of information, police authority, etc that have taken more than a decade or are still on some burner somewhere and you will realise that fast decisions, in fact decisions of any kind, are not a States forte.
Report abuse
If interest rates rose there would be a rapid financial collapse.
There are trillions of dollars of loans that are barely being serviced at the moment that date back to the great Reagan / Thatcher free market, ‘let the rich work’ deregulation malarky.
Capitalism across the world is on a cheap money drip that is barely keeping it alive. Loan ‘haircuts’ inflation, etc will eventually get it out of trouble but it will take some time!
Report abuse
So much for the B.S. of you pay for the preceeding generation and you will be taken care of when it comes to your turn.
The demographic time bomb was known about 40 years ago and yet it was ignored and assurances made to future retirees that have turned out to be nothing more than lies as far as I am concerned.
As 1. has pointed out if things don’t change for the better some time soon it won’t be worth paying social security anymore. Why pay for present retirees when there will be nothing/very little for you. The other part of social which is meant to act as security against long term illness has also been erroded as well.
The anger is rising, people have had enough.
Report abuse
Just been made redundant and opening a private pension as social just told me i have to apply for 8 jobs a month. Are there 8 jobs out there?..yes there is ,just applied for a paper round…phew first one out the way…..hey not my fault i got redundant…pick on the lay a bouts before me! never been unemployed in my life!
Report abuse
Every month the Department of Social Security take from my salary approx £225, and my employer pays them approx £245.
This has happened for the past 6 years or so, and for the 16 years before that 6% of my salary with a further 6.5% from my employer.
Apart from the few occasions when I was younger and went travelling, there has not been a day that I have not been out of work since I left school in 1986.
I can count on one hand the number of times I have claimed sick pay for being unable to go to work, the last time I had more than a day off sick was in 2001. If I were to be made redundant I would not be entitled to any income support as I own my house, and now I am being told that I will not receive a pension.
So, to date, I have calculated that I have paid approx £67,000 in contributions and my employer has contributed approx. £77,000. Total = £144,000. I have claimed approx £600 in sick pay.
Why am I paying into this corrupt system?. It’s not in case I become ill or unemployed, but more likely to support the hundreds of people who have no intention of working, and whilst this island continues to encourage the bone idle to sit around all day on their backsides, then the decent, honest and hard working people out there will have no choice but to continue to work their fingers to the bone.
It is soul destroying knowing that there are many people out there who are on a better deal than I and never having worked a day in their lives. They must be laughing at us all the way to the bank whilst clutching their benefit cheque in their hands.
Well done States of Jersey!
Report abuse
you are not alone mate.
you may not want to do this , but you could rent your home, and travel to cheaper countries.
apparently you can work for food in new zealand( its called woofing).
nepal is cheap.
one day myself and the wife are going to leave for a walkabout.
just need to live on £100 a week some where .
the very last resort is to be jailed, free food and lodgings .
Report abuse
I am fuming as much as you are !
Benefits should be looked at more carefully, States overspending and repetitive mistakes are also very costly.
And the most annoying thing is knowing that there is billions going in and out of the Island. Ozouf saying that we are in a strong position and everybody else is coming out with some really bad expensive news.
They done nothing to protect us from the credit crunch. They do not know where to stand with the EU and the UK.
Seems like they are lost, out of idea to find cash, and persisting to act like the roads are made of gold and not willing to tighten the belt of some fat cats (or should I say : friends)
Report abuse
Am self employed and they want nearly 8 k a year from me !! Erm i think not , is it true i can opt out of paying ss ?
Report abuse
Hang on, didn’t the wise Philip Ozouf scrap lifting the ceiling on S.Sec contributions last year saying that we didn’t need the money???
Report abuse
It is also a very good deal for the currently retired.
They are enjoying what is probably the best pension deal that there will be ever.
They paid quite low contributions but are enjoying good pensions.
The currently working in midlife will never see anything like it due to world financial and industrial circumstances, an aging population, etc.
Will any of the politicians be honest enough to tell us this?
Report abuse
The way this is going we will only be able to draw our pensions 2 years post death…..
Perhaps instead of trying to save money by upping the retirement age, why are we not more strict on paying out benefits to the unemployed. Enforce some sort of scheme, i.e. unemployed persons having to do mandatory community work in order to claim benefits. The majority of us work for a living, why should they not? Sorry to go off on a tangent but all these sorts of things have a knock on effect!
Report abuse
@ No 7 – If you are paying £225 a month in SS contributions then you are doing better than most but I do agree with you.
However, I sympathise with the ‘working poor’ those long term residents – in particular single people – who earn relatively low money by Jersey standards, and at the same time are entitled to few if any benefits. For many of this group it is impossible to get anywhere as they are merely working to survive – whilst contributing to an inadequate system that is in desperate need of reform! Furthermore, the impact of uncontrolled immigration on the Island’s Social Security system must not be underestimated
Report abuse
Well said Bean Ranting.I also feel that more and more of my money is being taken whilst some sit idle churning out children with no intention of paying into the pot but get benefit after benefit . I am a single woman own my own house ( never claimed rent subsidy or lived in social housing) and middle income earner (never been unemployed and often had two jobs to save for new cars, holidays etc) with no children( will not be having them) In 23 years of working have only claimed sickness benefit a handful of times.. will not be claiming maternity allowance. job seekers allowance etc.. my tax is approaching 20%.I sometimes feel like getting signed off with a bad back, having several kids getting put up in states housing and never working again.. or maybe the states could give me back my contributions and I’ll invest them myself.
Report abuse
I wonder when the states employees schemes will run dry?
Report abuse
2 Islander – As a pensioner with some savings I have to invest to try to achieve a reasonable income. A few years ago I was able to get 7%. I can remember when 15% was possible. Now I am lucky to be able to get 3%
If you want a better return then stop relying on bank interest, invest your money elsewhere. I’m currently getting 7.2% on a £100K investment in property, I set aside and ring fence 2.2% which equates to £2200 a year for repairs and maintenance. When this figure reaches £10,000 which if nothing needs doing will be in 5 years time the entire 7.2% goes into my savings account to join the £25K already accrued.
My invsetment meanwhile continues to gain value and rent increases in line with inflation. Where is the property – now come on I’m not telling you everything. It is always possible to make money in any market, just think outside the box.
Report abuse
Ahh yes, the classic ‘Location, Location, Grand Designs’ property pr0n line that is ‘property value only ever goes up’
Get real man you’ve been conned as much as the next investor. Property does not always go up in value, infact for the last 12+ months it’s been doing just the opposite and in some places in the UK by as much as 25 to 30%. Current property values are so far detached from their historical norm that you would have to be a complete fool to invest in property now.
It is because of people like you continually aquiring property you have no need for that hard working young families are now unable to own a home of their own. Enjoy the rewards whilst you can because you’ll be out of pocket when the bubble eventually burst. And it will burst, perhaps not until interest rates rise and folk start losing their homes and the market becomes flooded with property but it will burst, bubbles by their very nature always do.
Report abuse
Well my £750,000 Jersey house dropped in value (according to the States’ produced stats) by £100,000 in the last year. I hope you’re not relying on selling at a profit. And if you’re investing abroad, I hope it’s somewhere safe. Look at Spain, Cyprus, Ireland etc. Oh and then there is quantitative easing which means the value of each pound you get back is worth less than the ones you put in. Good luck!
Report abuse
“which means the value of each pound you get back is worthless…”
Well done you’ve grasped the reality of the situation.
Report abuse
I see no sign of economic recovery. Is it possible that increasing demand for resources and overpopulation of the planet with ever greedier citizens means economic growth is over?
Report abuse
Up until recently population growth has been the significant cause of economic growth but the world is probably at the tipping point right now. If population continues to rise at its current rate then population growth will outstrip resource availability and we will see a terminal decline in living standards.
I wouldn’t be too worried though. Nature has a way of balancing itself out. Either humans will find a way to sustain population growth through technology or we’ll start to die out in massive numbers as resources dwindle. There’s also the likely cataclysmic event to curb human numbers. Modern man has only been allowed to thrive over the last 200,000 years because nothing of significance has happened to the world. Some say we’re statistically overdue for an asteroid impact or a 100 year super volcano eruption.
Report abuse
Is it just me, or is anyone else unhappy about paying income tax on the ss contributions we pay (i.e. you have to declare your annual income as a gross figure, not nett of ss contributions paid). Double taxation?
Report abuse
I could suggest that we all save for our old age but Ozouf did away with any incentive to do that when he removed all the tax reliefs on Insurance policies so that Mr Low to Middle income would pick up the costs whilst his rich friends get off cheap.
What a mess!!
Report abuse
The State pension is likely to be means tested in future unless qualifying dates keep pace with increase in longevity and higher percentage of earnings put in.
Property Investor, v few have £100k lying around or can borrow such to help increase the leaden weight of Jersey’s rentier class. Excessive tax breaks for borrowing were one of the causes of that last bubble. What would be far better over here is if our government introduced a more flexible saving vehicle alongside pensions to encourage people to put more away for their retirment like the US 401ks or UK ISAs where there are tax benefits but it is not locked up like a pension.
Report abuse
Indeed the way things are going I wouldn’t blame those, who having worked hard for what they have got, decided to spend everything they have acquired on the good life now and let the state look after them when they have nothing left.
Waiting for a bit of time off, in reasonable comfort in your later years, like you were promised till recently, is turning into a mirage.
There is little incentive to save for the future. Pensions aren’t worth investing in as the cost/return is becoming uneconomic. Factor in the possibility that there is no guarentee of getting there then it is a pretty poor deal.
Report abuse
Numb Nutts – Get real man you’ve been conned as much as the next investor. Property does not always go up in value, infact for the last 12+ months it’s been doing just the opposite and in some places in the UK by as much as 25 to 30%. Current property values are so far detached from their historical norm that you would have to be a complete fool to invest in property now.
How have I been conned, I responded to Islander’s post that he could only get 3% on his savings. I had £100,000 to invest, I bought a house in the UK which rents out for £600pcm. That’s £7200 annually on a £100K investment, the value of the house is irrelevant as the return on rent will only go up, even if it remains static I continue to reap a 7.2% return.
So if the value of the house falls
( unlikely ) I will still reap a minimum return of 7.2%, if rents rise as they always do this will increase year on year. if the value of the house increases at any point during my ownership then the net value of my asset increases.
So if the house does not gain any value and rent does not ever go up I continue to receive 7.2%, if however as is likely given the fact that I carefully studied the market and bought in the right area the value of the house increases and rent rises in line with inflation I will likely receive an ever increasing return on an asset that continues to gain value.
Now carry on kidding yourself your money is better placed in a bank, those with a double figure IQ and who understand the market will continue to make money.
Report abuse
Interesting to note you refer to yourself as having a double digit IQ. As someone with a triple digit IQ (as do most of the population) i find it amusing that you deem a double figure IQ as somehow superior.
You seem to misunderstand the concept of inflation. Sure, your rent may rise in line with inflation however your outgoings also increase by the same amount. It doesn’t take a genius (even one with a double digit IQ) to work out that the net result does not change at all. Your £100k (assuming you could even sell it for that) is worth less today than it did when you parted with it – smart investors use vehicles that protect them against inflation.
If you think it unlikely your property has decreased in value i would perhaps suggest you have a look at the Land Registry for recent selling prices of similar properties – you may be unpleasantly surprised.
For reference i hold little to no money in the bank, given even a pleb can see that most banks are leveraged up to their eyeballs it doesn’t take a double digit IQ to work out that they can be trusted as far as one can spit.
Report abuse
Quite simply – I don’t believe this!
Prove to us that funding will be out in 30 years for starters, exactly how much is in the ‘reserve fund’ and explain what happens to all those contributions paid by people who don’t make it pension age while you’re at it!
More claptrap me thinks!!!
Report abuse
I got no money!how do I make money??
Report abuse