Latest news with #WorkAndPensions
Telegraph
28-07-2025
- Business
- Telegraph
Millions to lose up to £18,000 in savings from pension reforms
Millions of workers in their 50s face losing up to £18,000 if the Government accelerates a rise in the state pension age, a leading wealth manager has warned. Rathbones, which manages the savings of older people, said introducing a state retirement age of 68 earlier than planned threatened to hit people aged 51 the hardest, while people aged 52 and 53 would also lose out. The Government is exploring whether to raise the state pension age to 68 more quickly. It is currently set to be phased in from 2044, but Liz Kendall, the Work and Pensions Secretary, is considering bringing this forward five years to 2039 as part of the Government's pensions review. According to Rathbones, those aged 51 would lose an entire year's worth of state pension payments if the timetable is accelerated. That would be worth £17,774, assuming today's state pension of £12,000 increases by the so-called triple lock each year. Under the triple lock, the state pension rises by the highest of inflation, average wages or 2.5pc per year. Meanwhile, people aged 52 would miss out on £17,340 and those aged 53 would lose £16,918. Each of those age cohorts – 51, 52 and 53-year-olds – comprise some 800,000 people, meaning around 2.4 million risk missing out on significant five-figure sums. Rebecca Williams, from Rathbones, said Britain's ageing population would put a growing strain on the public finances. She said: 'With longevity increasing and population pressures mounting, future generations appear set to face a less generous state pension regime than that enjoyed by many of today's retirees. 'The situation appears particularly precarious for those in their early 50s who face the real prospect of missing out.' The state pension age is currently 66 and will rise to 67 by 2028. Spending increasing Raising the state pension age is likely to prove politically challenging. Previous pension reviews recommended increasing the pension age in the late 2030s, but the move was not put into legislation. However, financial pressure is growing, and Ms Kendall acknowledged when launching her review that she was 'under no illusions' about the scale of the challenge. Estimates from the Office for Budget Responsibility (OBR) show that state pension payments will amount to 5.1pc of GDP this year, up from 3.6pc two decades ago. That bill will keep on mounting, rising to almost 8pc by the 2070s. Overall spending on pensioners, including the state pension, housing benefit and winter fuel payments but not counting healthcare costs, came to £150.7bn last year and will rise to £181.8bn by the end of the decade, according to the OBR. The Government has sought to limit the increase by restricting the share of pensioners who receive winter fuel payments. However, it was forced into a partial about-turn after a backlash from voters and Labour's own backbench MPs, showing the difficulties of reining in benefits spending. It means there is increasing pressure from the public finances to find ways to save money for the long term, potentially including further increases in the pension age. The Institute for Fiscal Studies estimates that raising the pension age by one year saves the Government around £6bn per year. Nigel Farage, leader of Reform UK, last week said the state of the public purse means the pension age should be increased more rapidly, in line with life expectancy. 'I don't think we can really afford to [wait to the 2040s], to be frank,' Mr Farage said. 'If there is a sudden economic miracle, then it might change that. But it does not look to be happening any time soon.' The International Monetary Fund last week said that if the Government stuck to its promise not to raise taxes on 'working people', then it would have to consider reining in spending, 'to align better the scope of public services with available resources'. 'In particular, the triple lock could be replaced with a policy of indexing the state pension to the cost of living,' the global economic watchdog said.
Daily Mail
27-07-2025
- Health
- Daily Mail
Hating your boss is 'not a mental health condition', says ex-high street chief amid fears workplace problems are being 'overmedicalised'
Hating your boss is 'not a mental health condition', employees have been warned. The former chairman of John Lewis has raised concerns amid the 'overmedicalisation' of workplace problems. It comes as one in five people of working age have a health condition that affects their job and there are 2.8million people inactive due to ill health. This is up from 2.1million since before the Covid pandemic - though the numbers have been steadily rising over the years. The ex-high street chief, Sir Charlie Mayfield, has now been appointed by Liz Kendall, the work and pensions secretary, to come up with plans to stop workers leaving their jobs because of poor health. Mr Mayfield's report is due this autumn. He told The Sunday Times: 'The last thing I wish to do is trivialise [mental health conditions] but I agree that things do get over-medicalised. 'That's not to say there aren't medical issues that need to be dealt with through proper clinical medical interventions, but there's a lot more that can be done through the workplace and through encouraging discussion and relationships and processes that encourage that. 'It might be better to say: "What's making you anxious?" Because then we can do something about that. And how do you deal with it if you've got [an employee with a] "I hate my boss syndrome"? Well, we can do something about that. We can say "Is it the case that your boss is hateful?", in which case, that's probably an issue that we should figure out how we deal with.' Mr Mayfield added there were also the possibility the boss was 'quite legitimately doing what they should be doing' meaning it is 'not hateful behaviour' and in fact might be 'what bosses are meant to do'. He went on to say bosses should be routinely in contact with employees when they are signed off to help support their return to work. Sick notes also create an 'impregnable barrier' between employer and employee, according to the former high street mogul, with those in charge often too scared of contacting staff for fear of 'causing offence'. The 58-year-old believes lessons can be learnt from the Netherlands where there is a mandatory six-week intervention meeting requiring employee, employer and occupational health to agree a return-to-work plan with two-week monitoring cycles. He pointed out that statistically the longer someone is away from work, the harder it is to get back and the less likely that person is to do so. Mr Mayfield said it should become normal that people are contacted when they're off sick and that while some organisations are ready to do this, most are not. The former John Lewis chief pointed to a fear of individuals disclosing health conditions and also line managers not wanting to offend people about something obviously personal to them. He also offered 'keeping in touch days' like those used by women on maternity leave as a solution - to help solve the disconnection between employer and employee, improving return-to-work outcomes. Flexibility is also key - particularly among the over 50s - as a way to boost participation, according to Mr Mayfield.
Times
25-07-2025
- Business
- Times
How I plan to survive retirement without a state pension
Generally speaking, I'm not a huge fan of risky moves. I would rather wait an extra hour at the airport than stress over missing a flight, I find it hard to negotiate on price for fear of losing a deal completely and I refuse to get behind the wheel if I've had a single drink. With all these decisions, the anxiety caused by the potential loss outweighs any positive that the risk brings. Rushing through security to walk straight on to a flight may be exhilarating for some, but my heart rate would still be elevated when I landed at my destination. There is one area, however, where I'm simply going to have to take more risk: my pension pot. As a young (ish) saver, the safest thing to do is to assume that the entire responsibility of funding my retirement will fall to me. And that requires more risk. This week the work and pensions secretary, Liz Kendall, said she was 'formally announcing' the next government review of the state pension age. As the last review concluded in 2023 — and the government only has to review the age every six years — this was earlier than expected. It's looking likely that the age at which you get your state pension will rise sooner than planned. The state pension age is 66, increasing to 67 between 2026 and 2028. Another jump to 68 is pencilled in for 2046, but will probably be moved forward. To assume that the state pension age will stay at 68 by the time I get there (in about 38 years) would be foolish. In fact, to assume there will be any state pension at all is unwise. The state pension is a financial headache for the government. It costs about 5 per cent of GDP, up from about 3.5 per cent in the year 2000, according to the Office for Budget Responsibility (OBR), and is forecast to be 7.7 per cent by 2070. It's also getting harder to find the cash to fund it. People are living longer and having fewer babies — aka future taxpayers. The UK's old-age dependency ratio, the population aged 65 and over as a percentage of those of working-age (16 to 64), is set to increase from about 33 to 50 by the mid-2060s, according to the OBR. So my private pension is going to have to do the heavy lifting in my retirement — at least if I want to stop working before I'm 75. And the easiest and cheapest way to boost my pot is to increase my level of investment risk. • How to get a nation of savers investing 'It's important for younger savers to take risks with their pension — that just means investing in the stock market, not taking a punt on bitcoin. If you have 30 or 40 years until retirement, your pension should be heavily, if not exclusively, invested in shares,' said Laith Khalaf from the investment firm AJ Bell. 'The exception would be if you have a nervous disposition and can't bear to see a fall in the value of your savings. Even then, the fact that you are saving regularly into a pension means you get a smoother journey even with a relatively high content invested in the stock market.' Historically, the stock market has provided the best investment returns in the long run. If, 30 years ago, you had invested £1,000 in the Investment Association's global sector of funds that are invested entirely in stocks, you would have £8,150 today. The sector of funds that are 40 to 85 per cent invested in the stock market would have returned £5,657, while the 20 to 60 per cent stocks option would have returned £4,362. But most pensions are not invested in 100 per cent equities, even for workers who are just starting out. Most pension savers are automatically enrolled into workplace pensions and put into 'default' funds — a one-size-fits-all option that has to be appropriate for 20-year-olds and 50-year-olds. This means that many default funds will only have about 60 to 70 per cent of their pot invested in shares. The rest will be in assets such as cash or bonds, that are considered less volatile but are also unlikely to grow at the same rate. Effectively, these pots are simply the least worst fit for the workforce as a whole. • How to stop the taxman taking a big slice of your pension I confess that this is still how my pension savings are invested. James Coker from the wealth manager Quilter Cheviot said this was unlikely to be my best chance at building a hefty pension pot. He said: 'Moving your pots into an equity portfolio will serve you well over the long term. Someone in their thirties or forties is arguably decades away from retirement and stocks have the greatest inflation-adjusted growth potential. Stocks have to form the basis, if not all, of your portfolio.' With the ever-increasing likelihood that my income in retirement will be on my shoulders alone, it's time to make the move. The cheapest way for me to do this is to move my pension pots into a global tracker fund, a low-cost option that replicates the performance of global stock markets. It may feel risky, but the alternative — a pot that doesn't plug the hole left by a disappearing state pension — feels even riskier. • Top of the pension pots: the best place for your Sipp
The Independent
24-07-2025
- Business
- The Independent
How does Britain's pension predicament compare with other countries?
Liz Kendall announced this week that she is reviving the pension commission as the government tries to tackle what she described as a looming 'tsunami of pensioner poverty'. The work and pensions secretary said the government is setting out to 'tackle the barriers that stop too many saving in the first place' after her department found that people retiring in 2050 are on track to be poorer than those retiring today, expecting to get £800 less in private pension income. Currently, just 55 per cent of working age adults in the UK are contributing to a pension pot, and MPs have said that a UK-wide strategy is needed to address pensioner poverty. But the UK's pension dilemma is not unique. Countries across the world are grappling with similar looming crises, driven by a combination of factors including demographic shifts, low interest rates and economic instability. Here, the Independent takes a look at what action other governments are taking to stave off the impending crisis. United States In the United States, half of all private-sector workers are unable to get a retirement plan through their jobs, according to a survey published in June by Pew Charitable Trusts. The US's most common workplace retirement plan is a 401(k), which allows employees to voluntarily put money aside for retirement which is typically matched by their employers. The total employee and employer contributions to a 401(k) cannot exceed $70,000 per year. Around 27 per cent of Americans over the age of 59 have no savings to rely on in their retirement, according to a survey by financial services firm Credit Karma in 2023. Last week, the Wall Street Journal reported that the Trump administration was expected to sign an order that would open up 401(k)s to the private markets. It would order the US Labor Department and Securities and Exchange Commission to create guidance for employers on including private assets in 401(k) plans, which could, in turn, create more investment opportunities for them. Canada Currently, the key challenge for many countries remains the low rate of pension saving. More than half (59 per cent) of working Canadians do not believe they will have enough money to retire, according to a survey conducted this year by Canadian pension fund HOOPP, Healthcare of Ontario Pension Plan. However, Canada is tackling this through rate increases within their savings system. The government has expanded the Canada Pension Plan (CPP), a monthly benefit that replaces a percentage of a person's income after they retire. Between 2019 to 2025, it has increased the percentage of how much of a worker's earnings are replaced from 25 per cent to 33.33 per cent. It has also increased the maximum level of earnings protected by the CPP by 14 per cent over 2024 and 2025. Australia Australia is recognised as having one of the world's top pension schemes where employers are required to pay a percentage of their employees earnings into an account which that employee can then access once they have retired. As of this month, employers are now required to contribute 12 per cent to employees' retirement savings accounts, up from 11.5 per cent. They are also taking steps to close the gender pension pay gap with the Labor Government introducing a superannuation top up for parents taking time off to care for a newborn. The CityUK CEO Miles Celic said: 'total contributions will have to rise if we are to emulate the successes of, for example, Australia and Canada. 'This will involve difficult political choices alongside technical changes to policy and regulation.' France In 2023, French President Emmanuel Macron raised the age of retirement from 62 to 64, which sparked massive public backlash and protests. Macron's administration argued that the reform was essential to prevent long-term deficits in the pension system. At the time, Macron said he did not enjoy passing the reform but called it a necessity, saying 'the longer we wait, the more (the deficit) will deteriorate.' As well as increasing the age of retirement, France has also hiked the minimum contributory requirements by 2 per cent this year across all bands. The minimum contribution applies to retirement pensions under its Pension Insurance scheme. Germany In Germany, the retirement age is gradually being raised from 65 to 67. Like many governments across Europe, it is trying to reduce pressure on the pension system created by aging populations. Last year, it approved pension reform and its new government has set out a series of policies that include maintaining the amount paid to retirees each month - which is 48 per cent of the average monthly salary.
Telegraph
24-07-2025
- Business
- Telegraph
Britain's pension crisis is about to get even worse
The Government's review of pensions is asking some of the right questions. Top of the list is the age at which they should start to be paid. It is not a given that the state should fund the last third of someone's life, regardless of need. That is a choice, and a recent one. When the Old Age Pension began in 1909, it was paid from 70 and you had to have lived in the UK for 20 years and to be of 'good character'. It was means-tested, too – you needed to earn less than £21 a year to qualify. So, Liz Kendall, the Work and Pensions Secretary, is right to look first at the state pension age. And right to commission a report on the proportion of adult life spent in retirement. When the modern state pension was introduced in 1948, a 65-year-old could expect to receive it for just 13 years, about a sixth of their life expectancy. She is right, too, to investigate ways to boost pension savings – 8pc of earnings is not enough – and to broaden the number of people putting money aside for their retirement. Only half of working-age people are doing that, a fifth of the self-employed and fewer still of some ethnic minorities. That's not good. As ever, when it comes to pensions policy, there is also a have-cake-and-eat-it problem. The Government spends about 5pc of GDP on pensions – more than £120bn last year – but it persists with the fantasy that the amount paid to pensioners can rise into the future by the highest of earnings, inflation or 2.5pc. The triple lock is unaffordable. The unavoidable truth about pensions is that small changes in a range of unpredictable variables make a big difference when they are compounded over the decades that we now expect to live after we have stopped working. This is true for the good changes that government policy and personal choice can deliver. And for the bad ones that we can't do much about. That's why the Government is asking only some of the right questions. There are others it needs to address, all of which are difficult. The biggest pensions challenge may well be one that no one is talking about. This all became abundantly clear to me recently when I helped a colleague out with a deceptively simple question. He wanted to know what rate of investment return he needed to aim for in order to achieve the comfortable retirement he was hoping to enjoy. To answer that, I employed my pathetically rudimentary Excel skills to build a spreadsheet with a few variables that we could play with until we arrived at a plausible plan. I plugged in how much he had saved; how much he intended to put aside in future, and for how long; when he planned to wind down into semi-retirement and when he would stop completely; when he would take the state pension; and the return he would aim to achieve on his investments both before and after he stopped working. I ran the numbers from his current age of 52 until, with luck, he turns 90. Crucially, I had to make some quite big assumptions, the most important of which were that the triple lock would continue throughout his life and that the Bank of England would succeed in hitting its 2pc inflation target. By tweaking all these variables and assumptions, we were able to monitor their impact on the cumulative size of his pension pot. As you might expect, saving more for longer in an only moderately inflationary environment ended well. Working for a bit longer made a big difference. Accepting a lower income in retirement helped. None of this is rocket science, and probably doesn't require a Pensions Commission to confirm. That said, I was surprised by some of the things we discovered. One was the remarkable power of starting early. The principal reason that my colleague was pleasantly surprised by his required rate of investment return was that he had spent the previous 30 years studiously paying into his company pension, supported by a generous employer. The first additional question the Government needs to find an answer to is how to get young people engaged with their pensions. It may be boring, but it is not as boring as being old and poor. The second thing the spreadsheet taught us was the power of delay. Working just a few more years, even in a part-time capacity, can transform the arithmetic of our pension savings. Paying in for longer and taking out for less time, together with a few extra years of compound investment growth, is a magical combination. Find what you enjoy and keep doing it. But the biggest eye-opener for me was the devastating impact of even a modest uptick in inflation. A quick and easy way to make your money run out is to stop work and then try to maintain your standard of living by increasing the amount you draw down from your pension in line with rising prices. For my colleague, nudging up the assumed inflation rate from 2pc to 3pc was the difference between a £700,000 pension pot at the age of 90 and running out of cash completely a couple of years earlier. The pensions crisis that no one is talking about, therefore, is on the face of it nothing to do with pensions at all. Yes, more people need to save more, to start earlier and to carry on for longer. The Government has a role to play in encouraging all of those. But it, and the Bank of England, has an even bigger task. To keep inflation at a level where it doesn't blow our plans out of the water.
