13/10/14‘Some think its all over…is it?’
According to two posts this week, the end of the financial world is doomed, so I thought I’d use the fire image!!
One post says that ‘Generation Y’ (apparently that’s the 18-33yr olds..is it because they ask a lot of questions they got that specific letter?) will have no state pension to look forward to and a separate post says that by the year 2034, we could all be queuing up at soup kitchens for our meals, because we have no money. This last comment was made by a guy in the US who estimates his turnover of business is £60m, though what happens in 2034 to him is anyone’s guess!
Keep calm people, now is not the time to panic and certainly scaring the bejesus out of everyone is of absolutely no use-especially if its for selfish reasons to get you to buy a book or invest in a ‘futureproof’ business.
Lets take a calm, mature look at things:
In State Pension world, the current pension received is around £120 per week for a single person, although this will rise to £140. Given that there are more people over 65 than under 16 in this country right now, it doesn’t scaremongering to point out we have a bit of an issue, with more people living longer and drawing a pension and fewer people paying in. We also have this huge deficit we need to pay down and as such public sector pay is frozen and so the amount of National Insurance payable will not go up in the immediate future, therefore, we need the 16yr olds to become 18yr olds and go out to work, to start paying in, because lets face it, the Sate Pension in my view, is a Ponzi scheme. What’s more likely-again, in my opinion- is that the state pension will decrease in fiscal power, in other words, it wont go up by as much causing to be eroded by inflation. This is nothing new. When the state pension was first introduced, it was hoped to represent 25% of national average earnings, especially with about 10 people working to every one person retired. Its now worth around 20% and potentially back up to 25% with the increase. Not great, granted, but enough to keep someone away from the soup kitchen?
Also with ‘Generation Y’ comes the new pension legislation that is Auto Enrolment, where 4% of an individuals salary will be used to make a contribution to a pension scheme, along with 3% from the employer and 1% from the government. This has been on national rollout since 2012 and will continue until 2018 until anyone, who employs anyone, will have to have been consulted about paying into a pension scheme. Given also the changes to pension legislation that allows remaining capital after death to pass down a generation without a 55% tax charge from April 2015, we can now see that maybe ‘Generation Y’ will not be so worse off as these posts predict?
Remove your head from the sand, put away the sandwich boards and don’t be scared…just be prepared.
See you soon
Victor
