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Pensions Advice
Ben_Copeland - 28/12/09 at 07:32 PM

I'm after some pensions advice, i'm guessing a lot of you have them?! I'm heading towards a personal pension, but i have no idea what's a good deal and what isn't.

Any got any good pensions advice for me ??

Thanks

GMPMotorsport - 28/12/09 at 08:22 PM

From my personnel experience I think pensions are a mine field, I have 2 company pensions and each year the value of them goes down, partly due to the economic climate and partly due to the costs that pension companies charge to manage them, if I had my time again I would put money into property. IMHO.

stevec - 28/12/09 at 08:57 PM

Put your money under the bed. Don't give it to a bloke in suit somewhere down the smoke.

wilkingj - 28/12/09 at 09:12 PM

If I had my time again I would buy a house and rent it out. At the end of the day you will have an income from the house, and the capital available as a last resort.

But thats only what I would do. You must make your own mind up.
Think long and hard about this before doing anything rash.

Its like car building... Measure ten times, cut once!


Finally you could always rob a bank... then you get free board and lodging courtesy of Her Majesty. Hey that way you even get a Free TV licence thrown in

Ben_Copeland - 28/12/09 at 09:17 PM

I'd be just starting out with a pension. i have nothing to put in yet (lump sum) so buying houses and stuff is a bit out of my range

dave1888 - 28/12/09 at 09:19 PM

Mattress or short term investments like ISA. Or if you can become a loan shark good returns until you get caught.

skodaman - 28/12/09 at 09:27 PM

"If I had my time again I would buy a house and rent it out. At the end of the day you will have an income from the house, and the capital available as a last resort."
That can be a nightmare as well. It's largely why my locost hasn't got finished cos spend too much time decorating and chasing after dodgy tenants.
Better to invest all your money in a car instead. Then at least you won't be disappointed with the money you lose.

wilkingj - 28/12/09 at 09:35 PM

Yup its a bloody minefield... Best of Luck whatever you decide to do.

spaximus - 28/12/09 at 09:37 PM

If your employer is going to contribute it is a no brainer getting a pension, if not there are several options but you will not get the tax relief a pension gives you. The last thing you need is to make decisions based on what you will get from a car site. Many like me will have seen their pensions devalued by first the goverment stealing from pension funds and now the economic stae we are in. These will bounce back in years to come and that is the key thing to remember, a pension is money you are going to lock away for a long time to get the benefit. As you wealth increases over the years then you can look at other options. I have two pensions, some rental property and other investments, those who say buy to let is a good way need to look at all the elements within it and see how many are currently loosing fortunes with property bought of plan.

You need to find a good finacial advisor and pay for the advice, only then will you be able to tell which is the best options for you.

craig1410 - 28/12/09 at 10:12 PM

My best piece of advice is to consider a pension as only part of your future income not all of it. Look at other investments such as property and cash savings, stocks and shares etc. in addition to your pension. You should also expect to work (and hopefully live) longer than has been the case in the past.

As for the pension itself, be aware you can reclaim tax relief on your contributions if you are a higher rate tax payer and as has been said already, it is difficult to go wrong if your employer is prepared to contribute to a pension fund.

I'd stick with some of the larger pension companies such as Scottish Widows but think twice and get independent advice before transferring any existing pension funds to your new provider. Often you are better off keeping eggs in several baskets.

Final piece of advice is to get yourself educated with regards to how pensions work so that you know what is going on with your money and can make informed decisions to steer its' progress. Don't assume that your money is safe in the hands of the "experts" because as we have seen all too clearly of late, it isn't always the case. Having some knowledge can help you to determine if advice makes sense or not when you do receive it and will help you to ask the right questions. You are off to a good start by asking for advice here so keep up the good work!

Craig.

Ben_Copeland - 28/12/09 at 10:30 PM

Thanks guys for the help, i'll have to see if i have any friends that are Financial Advisors....

Also ask my boss if he fancies putting some money in.. ha ! doubt it!

caber - 28/12/09 at 10:43 PM

Ok I never thought pensions or for that matter insurance linked mortgages were ever a good idea, all my friends who wne down those roads ended up moaning about money lost and promises not kept. I have put my money in cheap buildings. A couple of lock ups for the toys and some shops converted to office use. I have also bought a few antiques and art with money i would otherwise have sunk into a pension. I may or may not have a comfortable retirement however I do have a bunch of capital that I can c ash in when ever I want or need to, If I had a pension fund I would have to buy an annuity, basically give the money back to the theiving bastards who would have been holding it for the previous humpty years and them giving back what they feel like until you croak. If you are unlucky enough to have to draw your pension now when the interest rate is rock bottom then you don't have much choice but live with it.

Caber

craig1410 - 28/12/09 at 10:51 PM

quote:
Originally posted by caber
Ok I never thought pensions or for that matter insurance linked mortgages were ever a good idea, all my friends who wne down those roads ended up moaning about money lost and promises not kept. I have put my money in cheap buildings. A couple of lock ups for the toys and some shops converted to office use. I have also bought a few antiques and art with money i would otherwise have sunk into a pension. I may or may not have a comfortable retirement however I do have a bunch of capital that I can c ash in when ever I want or need to, If I had a pension fund I would have to buy an annuity, basically give the money back to the theiving bastards who would have been holding it for the previous humpty years and them giving back what they feel like until you croak. If you are unlucky enough to have to draw your pension now when the interest rate is rock bottom then you don't have much choice but live with it.

Caber


There is a lot more flexibility these days. You don't just have to buy an annuity. Ultimately, yes you do need to buy an annuity but only once you get to a certain age (75 I think it is). Once you do get to that stage you still have more options than you used to have and there are ways to get better annuity offers than you might otherwise be offered.

As I said though, don't rely on pension alone. I would say the same for any other form of retirement income. Don't rely on any one form of income.

Personally the whole concept of retirement is alien to me. I intend to keep active and working until I am physically or mentally unable. Quickest way to the grave is to stop working in my experience...

Mark Allanson - 28/12/09 at 11:12 PM

After taking the best advice available in 1988, I started up a pension and made regular contributions, it is now worth 24%of the contrubution I have made.

I would recommend digging a big hole in your garden and chuck fivers into it every now and again.

It is very possible I will die before I can retire.

Ben_Copeland - 28/12/09 at 11:28 PM

i think i'll start making regular payments into my ISA account instead

craig1410 - 28/12/09 at 11:37 PM

quote:
Originally posted by Ben_Copeland
i think i'll start making regular payments into my ISA account instead


Ben, don't be put off pensions entirely by stories such as Mark's ( no offence Mark, you know what I mean I'm sure ) - we are at the bottom of the worst recession in modern times but it is very likely that markets will bounce back in the next two years and pension funds will bounce back with them. Pensions are long-term, tax efficient savings schemes so you can expect bumps in the road along the way. Mark's example seems pretty bad but in my own case my pension has pretty much treaded water for two years and is now showing signs of growth again (Scottish Widows, 5% employee, 5% employer group personal pension scheme).

Sounds like you need some professional advice but whatever you do, try to keep an open mind and educate yourself before you make any fundamental decisions.

Craig.

gazza285 - 28/12/09 at 11:38 PM

I have two types of investment, property and guitars. Property is a no brainer, but the guitars are also accumulating value nicely. Nothing too modern like, but I have some nice '60s, '70s and '80s stuff that is slowly appreciating.

Quiet frankly, the best thing to do is pay off your mortgage before doing any saving, as the interest you owe on that will more than offset any savings/pension account I've ever looked into. If you haven't got a house then buy one instead of a pension, and pay it off asap. When I started with my mortgage it was a 25 year one, paid for 3 years and had actually paid off about £600 off the balance, shifted it to a 10 year and the payments were about 70% higher but I saved a fortune overall. Plus every £1 extra I paid off then saved me near enough £100 over the term.

Ninehigh - 29/12/09 at 07:55 AM

So what's your advice for someone who has about 30p left over after the bills?

snapper - 29/12/09 at 08:35 AM

No matter what you decide to do for your future, you really must discipline yourself to put something away.
Even £20 a week, every week becomes £50,000 in 45 years, if you increase this weekly money as your earnings go up, more will be in the pot.
Stakeholder pensions are worth a look, ISA's are a good tax free way to start, then use the saved money to buy things like 5 year bonds.
Make sure you have control over your money and plan for the long haul.

I heard this recently (only some of us may be able to make this work) of your income, 1/3rd for rent/mortgage, 1/3rd for house /living bills 1/3rd for entertainment/pensions/holidays. last 10% emergency/long term savings

Must admit for most of my life the mortgage and bills cam to 70 to 80%.

Some companies have good safe (ish) pension schemes, Ford has a 2/3rd final salary scheme.

If i had put away a little every month since i started work i would be at least £50,000 better off, petrol companies and brewery stock would be down though

rgrs - 29/12/09 at 08:35 AM

Got a nice investment property
3 bed semi, outskirts of canterbury be just right for you.. just about to go on the market shout now if your interested ..


Roger

Ben_Copeland - 29/12/09 at 09:12 AM

Cheers Roger, if you'll accept £1000 for it

sucksqueezebangblow - 29/12/09 at 10:01 AM

Hi Ben,

How about suggesting to your boss that he sets up a salary exchange sheme. This will cost him nothing (unless he decides to do the right thing and contribute). They are offered by a number of pension companies and take advantage of the tax free nature of company pensions.

Essentially you agree to give up a proportion of your salary, and in return your employer pays it all into your pension and throws in what he would have paid in Employers National Insurance Contributions. So what goes into your pension is your Net Pay, plus your Income Tax at whatever your highest tax rate is (usually around 25% but for the lucky ones 40%) plus your Employees National Insurance Contributions at 8%, plus your Employers National Insurance Contributions at 12%.

Essentially you get the gross amount of pay you give up (not net) plus your Employers National Insurance Contributions at 12%. So you get a lot more in pension than you give up in net pay, and it costs your employer nothing because the pension company will manage it with no charge to him.

Ben_Copeland - 29/12/09 at 10:12 AM

Thanks for the advice i'll certainly ask him about it. I know he's just bought a new workshop with his pension so he can rent it to the company!

Knowing my boss, he'll be too busy to help his workers at anything like that !

Steve G - 29/12/09 at 10:15 AM

quote:
Originally posted by caber
If I had a pension fund I would have to buy an annuity, basically give the money back to the theiving bastards who would have been holding it for the previous humpty years and them giving back what they feel like until you croak. If you are unlucky enough to have to draw your pension now when the interest rate is rock bottom then you don't have much choice but live with it.

Caber


I'm afraid this shows just how little you actually know about pensions.

1. You dont have to buy an annuity - there are several options - an annuity is just one of them. Drawdown is another
2. If you buy an annuity - it doesn't have to be to the "thieving bastards" you've been saving with. Look up what an Open Market Option is
3. They dont give back what they feel like - its your pot of money, heavily regulated, and any charges taken are pretty clear . The value at the time of retirement is down to the investments within it and THATS YOUR CHOICE generally.
4. You dont have to keep your pension with the same company for "humpty years" - look at pension transfer if you aren't happy with the charges or fund choice.
5. What's the interest rate got to do with it at time of retirement?? Its the annuity rate (if thats the option chosen) that matters and these vary independently of interest rates.


This is the problem with asking for specialist advice on a forum. You really need advice from someone with the correct qualifications and that means an Independent Financial Adviser. Not just any though - go for a company / adviser who specialises in pensions. There are many options that may be suitable including Stakeholder, Personal Pensions or SIPP's (Self Invested Personal Pensions). Even better these days are the specialist Wrap companies who offer the benefit of lower charges. One i have dealt with is Neucleus Financial Group - they have IFA's dealing with them all over the country so you could do worse than speaking to one of those companies locally. ISA's and so on are not an alternative - they invest in exactly the same funds as are available for Pensions, but you lose the tax relief available to you which is at your highest rate (so if you are a 40% tax payer then your £60 invested becomes £100.

link

These offer lower charges than the mainstream providers much of the time, as well as a huge range of funds to chose from.

Thing is though - get proper PROFESSIONAL advice

[Edited on 29/12/09 by Steve G]

designer - 29/12/09 at 02:15 PM

I have a private pension which I have not drawn yet. It goes up and down like a yo-yo.

The only pension guarantee is to get job in the public sector! Can't go wrong.