I don’t trust the state pension to exist when I’m 67 (or early 70’s). I’m currently 29. Should I set up a SIPP?

[rasico2012]

@loverintruth Why do you think the state pension won't exist?

Older voters will be the biggest voter cohort for the foreseeable future. They absolutely will not vote to have their pensions removed.

And even if they vote to remove younger people's pensions, that's not sustainable, because younger people grow old, and then they vote.

The state pension isn't going anywhere, and retirement age changes will probably be rolled back when millennials age into their 60s.

 

[loverintruth]

@rasico2012 The state pension just seems like a huge pyramid scheme. We have an aging population which will increase the tax burden, coupled with what appears to be a lot of younger people deciding against having children - so less future tax payers.

It seems like a house of cards that won’t be sustainable.

I mean, if it’s rolled back happy days and I want to be wrong but you never know what the future holds and I’d like to enjoy my life for as long as possible and that means not working until I’m in my late 60’s.

 

[rasico2012]

@loverintruth See, killing the state pension doesn't really save any money.

If people are too old and decrepit to work, or to be hired, they will just go on disability or benefits, then the state has to pay anyways. And actually pension credit is worth more than a full state pension once you take into account passporting to other benefits off the back of pension credit.

 

[katshavens]

@rasico2012 UC is a lot less than pensions, they would save a huge amount by scrapping it. A lot of people wouldn't be able to claim UC either due to their capital and private pensions.

 

[cerraco]

@katshavens Plus UC would have to be proved. If your a spritely old fucker, your toast.

 

[christiangirl995]

@loverintruth I agree with the sentiment but the police pension scheme is exactly the same though. It’s an unfunded scheme so doesn’t hold assets (unlike the local government scheme) so your contributions will be paying for the pensions of the retired members.

 

[karen088]

@loverintruth Agreed anything with government and scheme in it I’m out.

 

[wolfwhohowlstoparadise]

@rasico2012 I don't believe it'll go away, but it'll definitely become means-tested.

"Oh, that workplace pension you've been paying into since we introduced it back in 2012 means that you only qualify for 50% of the state pension." - the Government in a few decades, probably.

 

[joyfulnectar]

@rasico2012 Agree. People have been saying the state pension won’t be a thing when they are older for decades. It’ll never go.

 

[katshavens]

@rasico2012 They won't remove it, they will increase the retirement age, as they already are, such that you won't get that much.

This can be done without pissing off older voters, as they are already receiving their pension.

It's not especially unlikely that by the time most young people retire the retirement age is 75 at a minimum.

 

[rasico2012]

@katshavens A retirement age rise is unsustainable politically. As soon as the generation affected by it is in its 60s it will be the dominant political issue in the then-pensioner demographic.

 

[katshavens]

@rasico2012 Increases to retirement age don't impact people in their 60s. It impacts younger people, and they have decades to get used to the fact they won't retire until X date.

 

[rasico2012]

@katshavens Those younger people get old. And they get old together, as a cohort.

Once that cohort is 60, the cohort ahead of them will have begun dying off, making them the new largest cohort.

A large group of old people are a formidable political force. There will be huge pressure to reduce the retirement age if it's gotten ridiculous.

 

[nikkitikki99]

@rasico2012 Generation-wise millennials are currently the largest generation at about 14.5 million people strong. Nearly all millennials are in there 30 and 40's and (like OP) getting serious about pensions.

 

[rasico2012]

@nikkitikki99 Yup. Millennials will absolutely not vote for parties that try to keep the retirement age high as they approach retirement.

 

[julia736]

@loverintruth Depends on when you want to retire.

Also consider increasing your contributions to your S&S ISA.

Neither answer is right, just one is right for you. Read the LISA vs SIPP vs ISA page on the wiki.

 

[loverintruth]

@julia736 Ideally as soon as possible haha but realistically I’d like to retire early to mid 50’s

But yeah, I think my rough plan (I’m still devising!) is to max my S&S first and then either SIPP or GIA

 

[julia736]

@loverintruth As per another comment I made, also consider S&S LISA for a 25% Brucey Bonus.

 

[loverintruth]

@julia736 So 16k in S&S ISA and 4k in S&S LISA?

Good shout to be fair

 

[cheri8708]

@loverintruth Worth bearing in mind that a lisa you won't be able to access (without penalities) until 60. Accessing your Sipp, for now at least, the age is a few years younger.