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Retirement in Jeopardy: The Upcoming Pension Challenge

Pension concernsThere are some individuals who may stand to lose thanks to recent changes in the government’s pension plans. As weekly payments are soon to be set at £155 pounds, such a flat rate has many worried. Although the government claims that such a system will be much easier to understand, certain groups could be worse off. According to an article from The Telegraph, modest earners could lose up to 2,000 pounds a year under this new scheme. To keep things simple, who wins and who loses? Let’s take a closer look.

The Losers and the Winners

Employees may be the first to lose, because the second state pension will soon be eradicated. This will severely limit their chances of earning higher state benefits. Keep in mind that this flat rate is the same regardless of how long someone has been employed. Long-term earners are also likely to take a hit, for there will no longer be any benefits if they work for longer than 35 years; regardless of if they have kept paying into the National Insurance scheme. Children born within the Thatcher era will also see their state entitlements deducted and no longer will inflationary adjustments be made. Finally, those who earn a substantial amount of money may be worse off, likely due to the fact that they have accrued a secondary state pension but cannot add an future contributions. The new system provides nothing for such contributions.

Those who may very well walk away winners are individuals who have not yet contributed to the “old” model of the state pension plans (and who qualify for the new system). Examples could be those who earn extremely low wages or who are just now entering into the mainstream workforce.

The Bottom Line

Pension plans can be confusing and knowing exactly how you will be affected is likewise frustrating. Still, thinking ahead towards your retirement and accounting for such variables as future medical expenses and even funeral costs is essential to provide your family with the financial security that they require.

We aim to help you with these matters at Compare Funeral Plans UK. Contact us to find out more in regards to what we can do for you.

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