The Full English Accompaniment – Pensions problems show societal flaws

I’ve whinged about the NHS Pension situation before, so this week I’ve been following Dr Kate Lovett’s threads on Twitter with interest. The Dean of the Royal College of Psychiatrists, this year she was the recipient of an incremental increase in salary due to experience and an excellence in practice award. This has resulted in a tax bill 120% of her annual salary. How?

As an unfunded DC scheme that has been raided multiple times by the Government, the whole situation is ludicrously punitive. There is no pot of cash which grows, it is all dependent on the pension scheme remaining the same by the time you retire, plus the calculations for tax being correct (1). If you’ve ever dealt with public sector HR you’ll have your own thoughts about this. The taper cap doesn’t work when applied to DC schemes, and in the medical profession it’s demoralising. There’s a whiff that the intention was to drive people out of the NHS scheme and into SIPPs or similar. A drive for a smaller government.

These pushes towards self-invested pensions are important for the self-employed. Despite continuous suggestions and prompting, most self-employed people are not paying into a pension (2). In previous times, a decent state pension could cover you, however our state pension has fallen to one of the lowest in Europe, again evidence of a smaller government dogma. Couple this with the expectation from some parties that the state pension/ national insurance should operate like a DC pension, not an insurance policy, and we see how people have become more ‘me first’ (3). I can understand the drive for a small government, but there will always be some who slip through the cracks or don’t understand. Encouraging everyone just to think about themselves risks leaving those individuals behind. How long can the state pension last in the face of dogma?

Have a great week,

The Shrink

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What I’m reading:

Food Of The Gods: The Search for the Original Tree of Knowledge: A Radical History of Plants, Drugs and Human Evolution – Terence McKenna – An ethnobotanist explores humanitys’ fascination with hallucinogenics, and the role of altered states of consciousness on the development of human society.

References:

  1. https://www.hsj.co.uk/workforce/top-doctor-reveals-huge-tax-bill/7026227.article
  2. https://www.thisismoney.co.uk/money/pensions/article-7554943/Self-employed-nudged-save-2-50-day-pensions.html
  3. https://www.thisismoney.co.uk/money/pensions/article-7538347/Im-terminally-ill-60-state-pension-just-lost.html
  4. https://www.independent.co.uk/voices/brexit-pound-sterling-fall-no-deal-boris-johnson-trade-a9145701.html
  5. https://www.bbc.co.uk/news/business-49959237
  6. https://www.theguardian.com/artanddesign/2019/oct/08/stirling-prize-architecture-goldsmith-street-norwich-council-houses
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  24. https://www.foxbusiness.com/personal-finance/millennials-fire-saving-retirement
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  27. https://www.lifehack.org/340263/aware-these-cognitive-biases-and-youll-much-more-successful
  28. https://www.theguardian.com/science/2019/oct/15/diy-drugs-should-hospitals-make-their-own-medicine
  29. https://moneyweek.com/516430/another-october-stockmarket-crash/
  30. https://www.bloomberg.com/news/articles/2019-10-17/a-guy-on-reddit-turns-766-into-107-758-on-two-options-trades
  31. https://www.ft.com/content/6dff9670-cf26-11e9-b018-ca4456540ea6?shareType=nongift
  32. https://www.ukvalueinvestor.com/2019/10/woodford-closure-ftse-100.html/
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  35. https://theescapeartist.me/2019/10/18/the-inestimable-advantages-of-living-a-more-natural-life-part-2/
  36. http://quietlysaving.co.uk/2019/10/24/dogs-nightmare-and-random-shares-update/
  37. https://firevlondon.com/2019/10/24/angel-investing-2-what-happens-next/
  38. https://www.reddit.com/r/FIREUK/comments/dn3opn/weekly_fireuk_blog_posts/
  39. https://lovelygreens.com/spicy-green-tomato-chutney/
  40. https://agentsoffield.com/2019/10/13/an-autumn-special/