From: "Tim" 
Newsgroups: uk.politics.misc uk.finance
Subject: Re: Gordon Brown knew the devastating cost to British workers of his pension fund raid
Date: Sun, 19 Feb 2006 13:05:22 +0000 (UTC)

"Derek ^" wrote
> The employee contributed 3% the employer 5% ...

Was it a "defined contribution" scheme? ...


"Derek ^" wrote
> The pension would have been 40/66ths of final salary, ...

... so it was a "defined benefit" scheme?

In that case, the employer was unlikely to pay
only 5% throughout, unless the investment
performance of the fund was rather good, or
the mortality/leaver experience rather advantageous.

"Derek ^" wrote
> It would take a combined fund value of  about
> £750k to provide a married couple retiring
> at age 60 a pension for both of them equal
> to 2/3 of the national average salary each...

There was a time when the split of the average lifetime
between "childhood" / "working" / "retirement"
was roughly 20% / 70% / 10%.

Nowadays it's more like 25% / 50% / 25%.

Previously, people saved for 70% of their
lifetime to fund the last 10% of their lifetime
(saving for ** 7 ** times as long as retired).

Now they save for 50% of their lifetime
to fund the last 25% of their lifetime
(saving for ** 2 ** times as long as retired).

Guess what?  You need to save a much larger
proportion of earnings over 50% of lifetime to fund
the last 25% of lifetime, than you would need to
save over 70% of lifetime to fund the last 10%!!

So, even though people start working later on average
(more full-time further education), and live for much
longer, WHY do they still all want to retire by age 60?