fast bloke

Beastie - your numbers don't stack up - Did you speak to an advisor about the scheme or did you just go for it?

BTW


"What then made me mad was a pension advisor on tv, who advised a girl who wanted 10000GBP/annum on retirement that she would need to pay approximately 250000GBP into a pension fund to get this amount. Well it doesnt take a rocket scientist to realise that at 10000GBP/annum she could support herself for 25 years on this amount never mind any interest over the period."

I would imagine that the actual words would have been more like "would need a fund of 250000 to get this amount." Fairly large difference in the contributions required.

Beastie

iTrader: (2)

Fast Bloke - What numbers dont stack up? and which scheme?
The company pension scheme that i had to pay 18% of my wages for a 1/80th return was said to be the best bet by an advisor. He recommended that i stay in it as it was linked to my final salary. I agree that this is the best bet. However, i was mindful of the fact that the return had already dropped from 1/40ths to 1/60ths to 1/80ths and the premum had gone up from approx 9% of my salary to 12% then 18%. As I was paying my employers contribution I was then likely to be liable for any extra payments for shortfalls in the fund, I also couldnt afford to pay 18% of my salary to stay in and i didnt see his numbers stacked up, so i came out with the proviso that i could re-enter before November 2004. This I didnt do because I transferred into another divsion of the company which has a cash purchase scheme. For this I contributed 30% of my salary with my pension being a cash sum of an invested amount.
When my contract was up, i was offered a new one, but deciede to go back to my old job. They then said i would need to come out of the cash purchase scheme as i didnt work for there division any more. I pointed out that i still met the criteria of the fund, but as i could have lost 60% of what i had paid in, (due to small print) I asked for settlement amount. I then managed to recover the money I had paid in.

So my history so far with Advisors:

1) Pension Scheme - Crashed - worth nothing- paid into for 9 years
2) FSAVC on above - Not worth speaking about.
3) Company Pension Scheme A) - 18% of my wages for 1/80 return- advisor said stay in.
4) Company Cash purchase scheme - thrown out - cash recovered.
5) after above 28 years of dicking about with advisors and schemes to my detriment - cash in bank at high interest - guaranteed return but variable - money always there - if i die money still there - also in SERPS and have some pension entitlement from 3) approx. 6000GBP/Year

Im flexible - please point me in the direction of a pension fund that can gurantee 1/2 % above base rate return on investments for its lifetime , compounded, with no management fee - or increase return to accommodate management fee. Please confirm that the government wont change the law and take some of my pension at retirement.

Please instead of all asking questions start giving answers.

Tiggs

You mean you are NOT flexible.

If you require the above then keep your cash in the bank...good luck.

If there was a guaranteed fund that will always perform above base then it would be base! If you want to beat base you need to take a caluculated risk of some sort.....and who does it for you? you want no charges so will it be managed by the shoemakers elves?

There are plenty of funds doing VERY well, i have many clients with large pension funds that have made significant growth even allowing for the drop......they have certainly outperformed the bank!

and how can anyone guarantee what the gov may or may not do? when you buy a car do you ask the dealer to confirm that road tax wont go up?

You sound totaly unable to accept risk of any sort......no problem, just keep it in the bank....sound like you have made the right choice.

T

Nicci

Is there any harm in putting money into a savings account to use as a future pension?

RESSE

iTrader: (1)

When you take retirement you would purchase a LIFE annuity (as opposed to a PENSION annuity), and I do not think there are many providers who offer the life version.

But in answer to your question, yes you can (at present or until the pension rules change, as they are "supposed" to be simplified this year).

JoeyDeacon

Strangely enough I received a letter from the Pension Service this morning for someone who has never even lived at my address.

The interesting thing is it listed what he was entitled to.

State pension is £105.45 a week and this man has a company pension which pays £96.11 a week. Now you would think this would give him just over £200 a week but it doesn't work like that. Anything you receive above the State pension is deducted from the state pension.

Because of his £96.11 a week personal pension the government only pays his £8.70 a week instead of the £105.45 he would have got if he had never bothered with a personal pension.

He is WORSE off because he paid into his own pension!

So not only are you paying into a poorly performing fund for all those years you also have to deduct the state pension from the amount you would receive each week and pay tax on it as well.

Hmmmmm

I did have a pension for a few years but it was worth less than I had paid in so I cancelled it. Personally I would rather just put the money into a high interest account so I can take it all out whenever I want rather than having to buy an annuity at some unknown (very poor) rate in 30 years time.

Beastie

iTrader: (2)

Tiggs - sounds like you are in the wrong profession mate. Perhaps you should consider something less stressful. Your not going to persuade me to take up a pension fund with talk like that.

You are right I dont want to risk my retirement - who would? I have tried pensions and advisors already and wasted 28 years of pension paying time, why would i want to try for any longer? I took the risks and found them not to be worth taking. Why should i take a risk again? I am making provision for myself at pension time and if something does come up i may invest in it.

I accept that there are charges, but I am currently receiving a compounded rate 0.25% over base. I am already earning 1200GBP/annum and i have only done this for 3 years with plenty of time left until retirement.

I see you are not offering anything of substance, just promises/guesses and unsubstantiated claims. I have seen so many people screwed now, at retirement time that I have had to make certain of my provision, even if it may look like better elsewhere but with no guarantees.

My philosophy works well for me, but I am certain it will not work for others. Who can be certain if they will even live until retirement age? At least I can be certain that I have catered for it, some are not even attempting to do so.

Beastie

iTrader: (2)

Joey
Thats a good point which i am aware of. I am afraid it all makes depressing reading.

RESSE

iTrader: (1)

You can obtain a State Pension Forecast from the Department of Work and Pensions using form BR19.

Robert Rosario

Have been quiet on this one, but reading with interest.

To say that all financial advisers are "offering nothing of substance, just guesses and unsubstantianted claims" is ridiculous.

Like anything else, there are good and bad people in the industry.

If you want to be taxed at 20% on your cash deposits, miss out on careful management of funds, face a poor retirement, but still think you have made the right decision, then that is your decision. Good luck to you.

However, do not try to "blame" any financial adviser when you reach retirement that they did not try and warn you.

Tentenths

In fairness to Beastie, he may not face a "poor retirement" - we don't know his full circumstances. Whilst he has chosen to not use the pension route per se, at least he has recognised the importance of making some provison for his retirement.

These days there are other alternatives to traditional pensions to consider - each of which has its own advantages and disadvantages. As Tiggs said earlier on, it's very much a case of horses for courses.

But whatever you choose to do, fund/asset selection remains the key - performance (or lack of it) can make or break anyone's plans.

Whilst cash has done relatively well over the last four or five years this may not persist. In fact, it is most unusual for returns from cash deposits to outpace inflation. Unless the returns from any asset class run ahead of inflation you are losing money in real terms.

Beastie's situation appears a little unusual in that he appears to be subject to little or no UK Income Tax. But for anyone else who favours cash based investments I'd have thought it might be an idea to consider holding it within a pension wrapper (most pensions offer the ability to hold cash these days). Yes, there would inevitably be a charge of some description for the pension plan but it would be more than offset by tax relief on contributions at, say, 40%. And the interest would then roll up in a tax free environment.

So, for a 40% taxpayer, the cost of investing £1,000 into the pension fund would be reduced to £600. The interest generated by the £1,000 would then be added without deduction/liability for income tax.

Compare this with saving the money in an ordinary bank/building society account. It would cost £1,000 to get £1,000 into the bank account i.e. post tax income. The interest is then subject to income tax at, say, 40%. So the 5% gross gets whittled down to 3% net.

But, unfortunately, inflation is currently 3.5% - so in "real terms" the value of the £1,000 has actually fallen.

Of course, there are other factors that would need to be taken into account e.g. accessibilty, intended retirement age etc. But the fact remains that a pension fund of some description remains a sensible choice for many - but not all.

Beastie

iTrader: (2)

Tentenths - that sums it up for me. Well said!

There is no blame being placed here. I am now happy with my situation as i have control of it. Thats about as good as it gets I am afraid. My options are still open to join a pension scheme, but unfortunately my current employer does not have a final salary pension scheme. It is important, and I think the final salary scheme must be the way to go as it is as guaranteed as it gets.

I now need to find an employer that will pay his share of the fund and be liable for any shortfalls in the fund and I will be happy.

Tentenths

Final salary schemes - good plan... if you can find an employer that's still accepting new members

If your existing employer offers a money purchase scheme might still be worth considering - esp. if you're not obliged to contribute yourself

I'm intrigued - how come you're employed but not subject to Income Tax?

Tiggs

Actually i'm in the perfect profession...i just dont touch pensions anymore......full of people wanting the impossible while moaning that their mate down the pub knows more about it.

I work with elderly clients now but im glad i'll have retired before the current generation get old......because most of them will be broke!

fast bloke

Have to agree with Tiggs - beastie is looking for the place that people in Utopia would dream of

Consider this. 15 years ago, anyone taking out a mortgage would probably have taken an endowment. Interest rates were well over 10%, and MIRAS made it more worthwhile to go for interst only loans over repayment. When MIRAS had been abolished by Gordo and rate had dropped to 3.5%, suddenly endowments were the biggest piece of **** on earth. Anyone want to take a guess about the number of complaints made last year because your advisor never told you that rates could drop by 70% and you might only pay a third of what he told you you would pay in interest? I don't know the exact figure, but I would hazard a guess at none. If anyone who had been sold an endowment had maintained the same overall monthly payment to their mortgage, the only people to lose out would be those who had taken endowments between July 1998 and Dec 1999. By mid 1999, most decent companies has started to reprice low cost endowments to reflect potential future gains. Even the fact that you had a choice of full cost endowment (guaranteed to pay the GSA) and low cost endowment (might pay the GSA) and every feker selected the low cost option shows your attitude to risk - It is high. I firmly believe that not one penny in endowment misselling compensation should ever have been paid. Everyone who had an non guaranteed low cost option endowment went for the cheap option. You don't get something for nothing

Tentenths

Tell me about it FB! And do you remember who were amongst the biggest advocates of endowment mortgages? Which?/Consumerist's (sic) Association and virtually all the financial journalists in the national newspapers I lost count of the number people who approached us asking for an endowment mortgage because Which? or The Daily Mail et al said they were the best method. If asked whether they wanted to consider the other options the response was invariably to the effect "No, just do it". More by luck than judgement we always recorded this on the file.

For my sins, I have the dubious honour of being our Compliance Officer. It's quite uncanny how accurate some clients' memories of supposed events/conversations 15 to 20 years ago are - until presented with copies of their files/notes that prove their imaginations are, how shall I put it, somewhat fertile! Others seem to have appalling problems with selective memory.

What really galls me is that we are assumed guilty until we can prove ourselves innocent - imagine the outcry if the justice system operated on that basis. And even after a lengthy investigation when we've proved ourselves entirely innocent against a vexatious "charge" we are forbidden from claiming costs.

There must be easier ways of making a living.

Rant over.

fast bloke

Are you thinking bank robbery?

Argh - 10/10 is a compliance officer. EVERYONE RUN AWAY - compilance is like a tsunami made from paper and boredom


Endowment selling doesn't really bother me. With every endowment i sold, I offered the client a cast iron guarantee that if they didn't get their mortgage paid off and enough money for a new car and a holiday, then I would personally give them 10 million GPB. Sounds fair to me

Tentenths

Ah but I'm one of the good guys i.e. not a full time, never-done-anything-else-but-compliance because accountancy-was-far-too-exciting, Business Prevention Officer

I'm trying to foist it on to one of my colleagues at the moment (having done it for 10 years I think it's only fair that I let him have a go) - but, surprisingly, without much success so far. Time to pull rank me thinks.

No, chosen alternative career = drug dealing. Pretty lucrative, no regulation, I get to do the money laundering, and if anyone complains they get shot.

fast bloke

I am at this very minute mailing a new business card to our printer PMSL

Beastie

iTrader: (2)

One thing that has come out of this is that pensions cannot even guarantee base rate interest as a return. The pensions industry believe we all have no alternative than to invest in a pension. I have tried the system for 28years and have have in that time managed to obtain a pension provision of approx. 7000GBP/annum. For a further 1/80ths return on final salary i would have to commit to 18% of my salary until retirement age. I just cannot accept that this is good value. The pension company did not recognise those of us that had to pay both employers and employees contributions, because they still look at the old system where employers did cough up. The result is that almost everybody dropped out unless they were close to retirement and then they struggled on.
Some people took out stakeholder pensions, but if you ask them about retirement they say themselves that they are not convinced. One thing we all agree upon is that we have to do something. I hope that the government will at some time realise the seriousness of this and do something to actively encourage a good lifestyle on retirement by removing some of the currently inflicted restraints on the pension industry. However, as the government is using the pensions industry as a milking cow I believe they are unlikely to do so.

Look at the pension fund collapses that have happened. Robert Maxwell and the power that companies have to use pension funds for their own benefitsin times of need to the detriment of the employees. Even if you leave a company with a company pension scheme before retirement and work elsewhere, if that company is subsequently taken over your pension entitlement may be affected due to whatever deal takes place. Companies often raid pension funds as sources for capital for new machinery etc.

I am using legal methods to recover/not pay UK income tax.I always file a tax return through my accountant who checks my claim.
I then reinvest this in a 5% High Interest Account. There are better deals out there, you can earn more than 5 %. However, my account gives me flexibilty to move fast.

Isa's are still available so you can still invest cash for retirement without having to pay tax on the interest. 5.15% tax free seems a typical return.

Consider if I save 10000GBP/annum for 20years. I then have minimum 200000GBP in an account earning 5%. This amounts to a pension of 10000GBP/annum and you still have the capital. In reality of course you would have a lot more as interest would have been earned at 5% each year for the 20 year duration and then compounded the next year and so on. Perhaps you would then have 250000GBP after 20 years depending on interest rates over the prevailing period.
This would give you 12500GBP/annum in interest But say you estimated that you would live for 25years then you could also start reducing the capital over the 25 year period and take more money out than the interest return, but with diminishing results.

Furthermore you may sell your house and live in your apartment or sell your house and buy an apartment thus releasing capital. You then have higher capital to earn interest on and can sustain your lifestyle.

If you die unexpectedly you have capital to leave to your wife and children.

Nothing is certain, we can all only do what we think is best. Lets hope we all have a happy retirement!

Tiggs

you are confusing "pensions" with "funds"...you can put your pension in a cash fund if you want...just a bit shortsighted.

Robert Maxwell is dead and so is the ability to do what he did with the pension scheme

£250,000 in 20 years will be very little indeed.

I have cleints with pensions that will pass to their family on death (and avoid IHT) so you have gained nothing in that sense......except such a small fund would prob duck IHT anyway

Beastie

iTrader: (2)

Tiggs
any pointers mate for something I can go for and retire on?
I need something that i can take with me, from company to company.
It is likely that I will continue to avoid UK tax.

Actually I sold myself short in my calculation at 10000/annum and 5% this would be worth with interest compounded 320000GBP after 20 years and after 25years 501000GBP (encouraging i think.)

I never confuse money with "money"

Diesel

I think it a litte unfair (if fun) to apportion a lot of blame on the IFA's for the appaling state of our pensions - look further to Zurich's glass towers and the fleets of Bentleys [rather than 3 series] outside Scot Am etc...

I am looking forward to hearing about the 'property as pension' offers that may become availible. This looks like a good option as managed pension investement funds are seemingly useless, and whilst I need to take proper advice from experts here such as some here, it might avoid IHT and be an ACCESSIBLE capital reserve for any emergency/yacht-in-the-med!

Beastie

iTrader: (2)

My wife tells me her pension is going backwards as well. Think ill stick to my plan for now..... at least i cant lose the capital.
Might invest in property later.

Tiggs

The battery in my brothers Ford Focus is flat....you cant trust cars....i'm going to get a bike instead.

fast bloke

What happens to your half million in 25 years if the bank goes bust........



Millions of barings/BCCI customers can't be wrong

Beastie

iTrader: (2)

Fastbloke :- Well that is a consideration. We are all doomed i tell you!!
What happens if a giant asteroid crashes into the earth and we are killed before we take our pensions? Does God get the money?
Will the bank be re-opened by extra-terrestial life? Will my pension money still be there when i come back from the moon?

Think we have said it all now - best to just step back and leave it alone

Apart for when i have my 1/2 million I wont be giving any to you punters whose pension hasnt stood up.

ProperCharlie

That seems a bit unfair (to say the least). So if I pay my NI all my life, and also have a private pension that pays over £105 a week, I basically get no state pension?

How the hell can they justify that?

Vegescoob

Apart for when i have my 1/2 million I wont be giving any to you punters whose pension hasnt stood up. [/QUOTE]
Tempting fate there. Because the Chancellor at that future time will probably have to find a way to relieve you of a good proportion to "give" to those without provision.

Beastie

iTrader: (2)

Vegescoob (Sigh) you are probably correct - he is already trying to nobble those of us that are buying property as a pension investment.

Anyway it wont be long before we are ALL forced to pay into a pension scheme irrespective of our circumstances. As pensions do not currently pay any sort of return and in fact, you would be better burning the money and heating your house, instead of paying into a scheme, then i am afraid the whole outlook for everyone is dismal.

Having said that, I know many people that are not paying into any pension scheme apart from state, basically because of the pension returns of people they know.

I see a huge problem brewing and no way out.