vallumlj

I need to sort out a pension I am 27 and have not a clue what the best one would be for me.

My company contacted me last week saying from 2012 they needed to offer every employee a pension. They will contruibe the following

2012 1% 2013 2% 2014 3%

They are going to be used lloyds tsb for this.

I am thinking about setting a side £50 a month for the next year then upper this to £100 a month.

Would a company one be best or should i get a personal one.

Any advice would be good.

Thanks

Gear Head

iTrader: (2)

I would also be interested in this.
Won't be able to do it until the Mrs goes back to work in the new year, but I need to sort something out.

RobJenks

I am retired and have always been wary of "pensions" and the people that market them and the Companies that provide them.
I paid into a Norwich Union pension over 30 years ago -25 quid a month ( That was obviously worth a lot more then than today ). Norwich Union don't exist any longer and I still have not received a penny !
DON'T pay into a pension fund - You can't trust the kunts Put your money in an asset that will appreciate over time .
Land cannot to a better form of investment.
Once you own it , you have equity , so you can borrow money to buy more land .
Don't worry about property .
Land is finite , Land is a tangible asset and It can always be liquidated if the need arises.
I hope you guys make the right choice .

TelBoy

Rob, your solitary experience should not form the basis of "advice" to others. I'll bet you a pound to a penny there's a deeper reason why your NU pension appears worthless. People without pensions, by and large, will have a crap retirement, unless they've been wealthy enough to be able to invest lump sums elsewhere.

Mr Vallium, generally a pension provided by your work will be an umbrella policy, one size fits all, medium risk. If they do it properly, you'll get an interview with a rep from the Assurance company underwriting the policy so you can tweak the risk profile. Generally, fees will be lower if they've negotiated a good deal.

On the downside, a company pension is less flexible. I have some "paid-up" pension plans from former employers which, while they're not doing any harm, tend to become harder to track.

At the end of the day though, do *something*. Anything is better than nothing. It's always hard to imagine when you're young that you'll get old, but you will, and State pensions will probably be phased out by the time you retire in any case. The sooner you start, the better placed you'll be in future years. Don't be one of the millions who think the State will be their nest-egg. Or you'll be one of those deciding whether to eat or stay warm.

Leslie

I would say that it is vital that you do set up a pension, when you do retire, even if that sounds a long time in the future, if you have not got a pension, you will be very poorly placed!

Les

Coffin Dodger

Get a good Independent Financial Advisor (IFA) to talk you through it. Most will offer free advice for this kind of stuff.

Also Norwich Union do still exist, just called Aviva now. Our non-contributory company pension is with them which I also top up with my own contributions.

LEO-RS

I was part of a FSP (Final salary) scheme where I paid in 6% and qualified for x/60 of my final salary. x = How many years paid into scheme, so 40yrs service = 2/3 final salary.

The barstewards binned that last year and we now have a GMP scheme where personal contributions have been increased to 7% (Now salary sacrifice so still 6% in real terms) My employer beats that and pays in 7.5% and every 5yrs they increase their contribution by a further 1%. I'm 28 and currently 14.5% of my pay is going into my fund each month. Instead of 66% of final pay it should probably see me on around 50% now.

With tax relief, better if you are a 40% earner then it's a no brainer. Working it out, my net pay reduction by having a pension is only 4.8% but yet I'm getting 14.5% put into my pot.

If you are offered a pension, take it, you would be stupid not too as it's free money into your pot. You're effectively giving yourself a pay rise should you opt in.

EddScott

These days a company pension scheme is really not that different under the bonnet to a personal pension - assuming both are defined contribution.

Companies these days offer Group Personal Pensions so no different to a personal pension. As Telboy says the group offering will probably have fixed investment options - although I would hope that will at least ask you basic "attitude to risk" questions.

I'd not be overly impressed with the group scheme being handled by LloydsTSB - it will be Scottish Widows underneath. ScotWids have never been the same since being bought by LloydsTSB and the selection of available funds is probably not that great.

Bank advisers are notoriously poor quality - although the chap you see probably has no real influence on what funds your money will be invested in.

If you fancy having more control you could ask if your company will provide the same contribution but into a PP of your choosing rather than the group scheme? Don't really see why not unless some deal has been done behind the scenes.

I would ask for factsheets of the funds you are going to be invested in - it's your money and you have a perfect right to know. Where your money is invested is far more important than who is investing it for you.

The biggest single issue with pensions is that YOU MUST keep them up or it's not worthwhile.

Not the best place to ask here as most will tell you they are pointless and the only way to be safe is to have lots of Buy To Lets and become a property tycoon (as most of NSR appear to be )

For the rest of us its ISAs and Pensions in the main. I'd be tempted to try and do both.

chris-boris

iTrader: (7)

First off, a general response to the op's question. Starting in 2012 the Government will be bringing in what they are calling N.E.S.T. (National Employment Savings Trust) and Automatic Enrollment. This basically means that employees will all be enrolled into a pension of some description unless they chose not to be. As things stand at the moment employees have to chose to be in a pension scheme if they wish. Ask your HR department or company pension administrators for further details. For personal pensions speak to an Independant Financial Advisor who should point you in the right direction for what you need.Rob, without wishing to be nasty, you sir are an idiot! Norwich Union changed name to Aviva, still the same company in the same offices with many of the same staff. If you have moved house since you finished paying into the 'Norwich Union' pension did you bother telling them? Also, are you over 64 years and 6 months old? If not you do not have to be contacted by Aviva until this time at the earliest. If you wish to draw your benefits before your Normal Retirement Age then simply call your provider and ask for a quote - it couldnt be simpler! For anyone who can not find contact details of their old pension(s) then the Government run a service to trace all you old pension arrangements providing you can locate certain bits of information. I would strongly advise anyone to visit http://www.direct.gov.uk/en/Pensions...ns/DG_10027189 and read the information at hand before taking things further or, jumping to rediculous conclusions as above.

BlkKnight

I can recommend our IFA - drop me a PM and I'll give you their link.

stevebt

iTrader: (8)

£50 pound a month for a pension will get you nothing. I have never upped my pension in years as they have a terrible return so I just leave it running as its better than nothing. I have been paying £80 a month for about 24 years now and the pension equates to about £1k per annmin real terms when you see the statemes and thats if I leave it for another 20 years .

Most people I know have cancelled their pensions, I was nearly tempted to cancel and just spend the money on ISA's

speedy steve

have to agree with the generally negative tone regarding return on pension investments

Im 40 now and still a bit from claiming but have been donating significant amounts since my late teens, I really feel like I should have taken the cash at the time, the final payout ( which no one really knows a figure for ) at retirement ( likely to be 80+ in another 20 years ) will pretty much be worthless based on inflation....

Take the money now, invest in an ISA is at least predictable and fully controlable if you should need access to the money for some reason...

The comment re 40% tax payers and the companies free contributions are basically true however personally I would prefer to know where I stand rather than hoping for the best which is how I see a pension... IMHO of course..

stef_2010

iTrader: (3)

Question for everyone

Why pay for a pension when you can save it up yourself ?

Whats the benefit ?

Chip

Having a pension has worked wonders for me. I can draw on mine in 10 months time on reaching 50 and basically I dont have to work again if I dont want to. I'm very lucky though as our scheme rules allow me to draw on it at 50 as I was made redundant recently. Now things are quite different I believe. Get a hefty tax free lumper as well.

I've also invested in the stock market over the years and have been very lucky in that the shares are now worth a lot but more importantly are mostly now invested in high dividend shares which again willl give me a nice annual income.

So yes, pensions are really important but you can also make a lot more by doing things yourself and reaping all of the benefits though it is of course quite risky.

Chip

drb5

iTrader: (4)

I know of a few who paid into pensions for a LONG time, only for them to pop their clogs before getting ANY of it back.

Afraid i have no interest in a pension, but know i should put it into an ISA or similar at least.

TelBoy

Simply that in theory, a fund manager should be able to out-perform the returns on a cash-based investment. Plus for many people, an ISA doesn't provide a high enough ceiling, it's only £10,200pa as far as i know at the moment.

Some years are better than others, and some investment sectors will do better than others. In 2008 my pension grew by about 24%, something that no ISA could hope to match. But you obviously have the risk that in a bad year, or in the wrong sector, you could end up worse off.

Lastly, access to an ISA is easy, any many people can't resist dipping into it. A formal pension plan encourages a structured savings strategy, especially if it's deducted at source.

Carlh

Banks will just gamble the lot away <again> anyway.

Reading some financial garbage today, it looks like the money system is going to do a complete collapse as far as the euro is concerned and everyone will revert back to their national currencies, though that will mean the big banks are going to go pop.

Money reduces value with inflation, pointless keeping it under your bed.

Buy a property instead - til you're old enough that you cant take care of yourself, sell your property, live off the money (basically give it to the government to look after you). If you've got life insurance, your kids/wife will be ok when you pop your clogs.

Simples.

hodgy0_2

Tax Relief

njkmrs

OP you may want to look at a Stakeholder pension .This is like a personal one ,but your employer can contribute into it for you .If you move companies you take your pension with you to the new place .

As said tax relief is a big positive for having a pension .

albob

if it is a pension where your employer also contributes - it is a no-brainer.....
mine = i put in 10%, they put in 10%, so better than saving (downside - its taxable when i come to draw it )

chris-boris

iTrader: (7)

You are right, it's a no brainer in the situation you describe. You get tax relief on the contributions you make (or pay deferred until you retire) and your employer contribute a set percentage on your behalf. The employer contribution is effectively additional pay.

You get the option to take a full pension of a reduced pension and TAX FREE lump sum upon retirement in the majority of pension schemes these days (the exceptions being some public sector schemes that offer a guaranteed lump sum and full pension)

njkmrs

Oh and I have just checked my rate of return ,which is done on a 12 month rolling year and it is + 15.23% .
Doesnt seem to bad .

stilover

Considering the average pension has only grown 2% pa for the last few years, I'd say 15.23% is bl00dy fantastic.

Considering stopping mine. From starting it years ago, I'd have made more return on my contributions by investing myself in bonds, property etc.

All this "You have to start a Pension or you're Doomed" is utter Bollox.

I cut back on my monthly contributions as the payments were getting silly. I think if I'd kept up the % rises each year like they wanted me to, I'd be sticking over a third of my Salary into it every month.

TelBoy

We shall see. Plenty of people who will be able to test your theory, so we'll re-visit in about 20 years, see how it's looking.

StanS

iTrader: (3)

I paid average £110 per month extra for 12 years (until 2006) to top up my pension. That gave me £3k lump sum + an annuity which gives me £35 per month fixed - ie not index linked !!!!
Struggling to spend it - not !!
Am I glad I did that - no.
You need to put in as much as you can afford - difficult.

Be careful who you sign up with and ask for projected amount of pension.

urban

iTrader: (1)

I don't really have any advice as such, but those contributions by your employer are very poor.

Approx £350 a month goes into my scheme, and as said £50 per month won't get you much.

EddScott

£3K lump sum works out at a pension pot of £12K. You can hardly expect any investment to keep you in retirement having only put in £12K.


Average pension growth is 2% - I'd be eager to see the source of this information.

What complete tosh.


The growth of your pension is dictated by where the money is invested. Telboy says "In 2008 my pension grew by about 24%, something that no ISA could hope to match." again, this is not true. These days the funds you invest in via your ISA are available for most modern pension.

Some of the older pension with restricted funds - mainly the insurers own pretty lacklustre funds - may well provide poor returns as the fund management is secondary to getting people signed up.


You really need to pay in at least 10% pa of your salary. Increasing this in the last 10 years or so of employment as by that time you'd hope to have your mortgage paid off by 50 and the last 10 years you pump as much money into the PP as possible. Good investment management and a good relationship with an adviser of some kind (good luck with the banks ) and the commitment to build something that is going to support you in retirement.

If thats not you, then ISAs as a form of retirement planning might be the better option. Although with ISAs you might be tempted to dip in from time to time and erode the savings. These days the ISA may also be a form of investment to help pay off a mortgage. In this case, a PP may well also be required.

You have to realise that if you retire at 60 you might be looking at 25 years without employment income coming in. 25 years and say you can exist on £20,000 a year so your looking at £500,000. The point is you can't saving half heartedly for a quarter of your life when you will be out of work.

Oh, and to suggest the money is gone or wasted if you die is horrifically stupid - it goes to your family.

To claim that property is the only real source of retirement is complete tosh - if we did an honest poll, how many of us could really say we could only 3 or 4 properties (other than our own) completely mortgage free by the time we age 65 and provide us with half a million pounds in retirement?

ISAs, Bonds and Personal Pensions are all investments with different tax wrappers around them. The funds you invest in are all very similar. You could lose just as much money in ISAs as you could in pensions.

TelBoy

Fair shout. I was actually only thinking of cash ISAs. I've never really considered "investment" ISAs as to me they just do the same thing as my pension plan, i don't see the benefits apart from diversity.

StanS

iTrader: (3)

My point exactly - fortunately - as I stated, it was a "top-up" rather than the main pension !
What I was disappointed about was the fact that I was not told what I might expect from my additional contributions.

I would certainly not have done it if I had known what it was going to yield.

EddScott

If using the same funds then the performance would not be that much difference - there would be differing costs which would alter the final outcome of each investment over the same period.

You do have more control over ISAs as to when to take your money but this can be a double edged sword if you're not a natural investor and pinch a few grand here and there. My ISA is earmarked for the mortgage at the moment because we are on interest only at .99 above base so not in our interest right now to change mortgage arrangements - although I'm not great at saving I'm giving it a decent go

My apologies, I missed the "top up" comment.

Without knowing your other arrangements, its hard to say what was right or wrong but you could argue that if your main pension was of a sufficient size to keep you comfortable in retirement, your £12k might have been better invested elsewhere. Depends on the advice given at the time.