Private pensions

[greencreeper]

My company doesn't have a pension scheme. I've been thinking about starting one for a while now. I do have a few quid in a scheme from when I worked for my Uni. I just don't understand all the options and the pros and cons. I thought maybe I should see an advisor but how to choose one :erm: I've had a look and it would just be a totally random thing. I don't understand what the different advisors do and the products they sell - the differences. I also feel a bit of a tit with my not having millions to invest in some dodgy off-shore deal. If I get old, I don't want to be choosing between eating and keeping warm.

Any advisors in Leeds/West Yorkshire that are trustworthy, or are they all sharks like estate agents and job agencies?

[Graham M]

Can you not go to your bank for advice on this?

[greencreeper]

Can you not go to your bank for advice on this?
Not sure. I would have thought they'd sell me the product(s) in their best interests rather than mine.

[driver_problems]

My company doesn't have a pension scheme. I've been thinking about starting one for a while now. I do have a few quid in a scheme from when I worked for my Uni. I just don't understand all the options and the pros and cons. I thought maybe I should see an advisor but how to choose one :erm: I've had a look and it would just be a totally random thing. I don't understand what the different advisors do and the products they sell - the differences. I also feel a bit of a tit with my not having millions to invest in some dodgy off-shore deal. If I get old, I don't want to be choosing between eating and keeping warm.

Any advisors in Leeds/West Yorkshire that are trustworthy, or are they all sharks like estate agents and job agencies?

one thing to bear in mind when they say you have to pay 'such and such' an amount each month is that that amount will go up considerably each and every year. Thats a thing that no-one will point out to you in clear and coherent language

[homealone]

approach your local citizens advice bureau for independent financial advisers
also

http://www.moneysavingexpert.com/

---------- Post added at 23:38 ---------- Previous post was at 23:26 ----------

Bear in mind that a pension is just a savings scheme, the benefit you get at the end depends on the terms of the scheme.

that is why being swapped from a 'final salary' to a 'money purchase' scheme is not fair - the first has a 'defined benefit', the latter, does not...

- I would want the same guarantee in a private scheme, myself, :dozey:

[pedantic]

My company doesn't have a pension scheme. I've been thinking about starting one for a while now. I do have a few quid in a scheme from when I worked for my Uni. I just don't understand all the options and the pros and cons. I thought maybe I should see an advisor but how to choose one :erm: I've had a look and it would just be a totally random thing. I don't understand what the different advisors do and the products they sell - the differences. I also feel a bit of a tit with my not having millions to invest in some dodgy off-shore deal. If I get old, I don't want to be choosing between eating and keeping warm.

Any advisors in Leeds/West Yorkshire that are trustworthy, or are they all sharks like estate agents and job agencies?

Isa's are the way to go imho, your bank will be able to advise you, go and have a chat with your banks advisor. There are some good pensions out there, but the thing I don't like about them is if you do need cash you can't withdraw from them. You can have a mini cash isa, which you can invest £3,000 per year, or a maxi isa, which (the last time I checked) you can invest £7,000 per year. Also, you could look into a stocks and shares isa. I currently have one (as well as a cash isa) where I invest £600 per year. Again, it's up to you how much you can invest, but the limits are the same as a cash isa. Bond's also have good returns, but once again (depending on the type of bond) you have to invest a lump sum, and you can't touch it until the end of the set period (no good if you need to lay your hands on some cash). Isa's are attractive because you don't pay tax on your interest.

[orangebird]

Don't do it. Unless you live to 109 or something daft, you'll never get back what you put in. You're better off with a very good savings account, or a biscuit tin under your bed IMO.

[etccarmageddon]

little mate this private pension thing is a CON. firstly those who dont put money away get more help from the state when they retire, secondly when they CON you into putting away money cos it's tax free they dont mention that you are TAXED when you draw your pension. stick it in an ISA.

[driver_problems]

I got talked into setting one up about 15 years back and only ever contributed a few hundred quid into it for reasons that are too boring to go into. I asked if they would hand over what I had already paid in - they said they would not or could not. I could only transfer it to another 'fund' apparently. The upshot of it all was a couple of years back I recieved a "lapse notice" which meant that my 'fund' had been administered into oblivion and was no more. :(

[skyblueheroes]

one thing to bear in mind when they say you have to pay 'such and such' an amount each month is that that amount will go up considerably each and every year. Thats a thing that no-one will point out to you in clear and coherent language

Not strictly true.

You can choose whether to increase with RPI or not. Course if you don't then the true value of your contributions are less each year.

I used to work for a Pension company and have my FPC1,2 and 3 and I won't buy a pension. The true annuity rates are shocking and the charges imposed (if not a Stakeholder) are horrendous. Where I used to work, if someone stopped paying into their pension after 5 or so years, they wouldn't have any fund value left at retirement due to charges !

Anyway, I agree with above, max into an ISA if you can.

[homealone]

little mate this private pension thing is a CON. firstly those who dont put money away get more help from the state when they retire, secondly when they CON you into putting away money cos it's tax free they dont mention that you are TAXED when you draw your pension. stick it in an ISA.

Swings & roundabouts, really, as pension contributions are made before tax, while ISA contributions are made out of already taxed income.

For someone on higher rate tax, paying into a pension, now, whose eventual payout will be below the higher tax threshold, that could make a difference.

Crucially, though, any savings scheme, no matter how it is dressed up, depends on the performance of the investment - if the stock market crashes the day before you are due to buy an annuity, etc, then bang goes your savings.....

[Wicked_and_Crazy]

Don't do it. Unless you live to 109 or something daft, you'll never get back what you put in. You're better off with a very good savings account, or a biscuit tin under your bed IMO.

Thats why your not a financial advisor!

What other savings facility allows you to take 25% of your fund as cash and TAX FREE!!! and your contributions come from your pre taxed pay. Therefore you win both ways with 25% of your fund.

[etccarmageddon]

unlike an ISA you can not get your funds out prior to retirement.

[orangebird]

Thats why your not a financial advisor!

Are you?

What other savings facility allows you to take 25% of your fund as cash and TAX FREE!!!

The biscuit tin under my bed.

and your contributions come from your pre taxed pay. Therefore you win both ways with 25% of your fund.

That'd be the same system then, that if I die, my husband only receives (on average) 1/3 of what I was entitled to as a reversionary rate - WTF??? Where does the rest of tyhe money I put away for 40 years go? I used to work in Pensions for Lloyds TSB. Bloody rip offs, the lot of them.

[homealone]

Can you not go to your bank for advice on this?

I wouldn't, bank advisors are restricted to only giving advice on the products that they sell, while independent advisors can look at the whole market. Pensions are very nice earners for bank based financial advisors, as their commission on the sale is calculated on the notional term of the agreement, so they will probably be fairly anxious to make sure you get what is best - for them ;).

As I said, the CAB will have a list of reputable independent advisors.

[etccarmageddon]

...financial advisor!...another word for financial advisor is SALESPERSON!

[pedantic]

When I first went to see my banks financial advisor, I already had a company pension, and took it with me to my appointment with him. He looked at it, and advised me to keep with that one, as they couldn't match it. And recently, I had another appointment, to see if I could improve my financial situation. I already have a mini cash isa, by means of a paying in book. He advised me to upgrade it, to what he called, a direct isa. Basically the same, except everything is done via phone, and internet (perfect for me). This gives me a further 1.4% on what I was already getting. They could have just left me getting the lower rate, and I would have been none the wiser. It's true, that a bank's advisor, will only recommend their own products, but I have to say, I was very impressed with their honesty with both the recent and initial advice I was given. :)

[etccarmageddon]

which bank was that?

[pedantic]

which bank was that?

Halifax or HBOS as it is now.

[skyblueheroes]

Most bank advisers are a waste of time. Avoid like the plague.

[driver_problems]

Most bank advisers are a waste of time. Avoid like the plague.

they tend to live in a non-real world with no practical experience about real things. I went to see a so-called commercial business specialist the other day and the thing that seemed to be number one priority was selling me a rubbishy £7/month earnings protection insurance which, for me, is essentially a waste of time

[Angua]

If you go for a "proper" independant finacial adviser their advice will be checked by a 3rd party to make sure they have sold you the correct package.


BTW why is a "stakeholder" pension better?

[etccarmageddon]

I think the theory behind stakeholder pension is that the charges are capped so they are better value.

---------- Post added at 14:45 ---------- Previous post was at 14:43 ----------

http://www.thepensionservice.gov.uk/planningahead/stakeholder.asp

[Chrysalis]

Pensions are a huge con, a few slightly off topic things I noticed.

(a) The apperent state pension crisis is spin , it is funded by NI contributions which are currently in the black with some few billions spare each year, the NI balance is currently almost 30 billion built up over the years, my source is a document released by the government.

(b) if men retired at 70 like been proposed then they will have only 5 years from when they retire to death if they live to the average life expectancy.

[homealone]

Pensions are a huge con, a few slightly off topic things I noticed.

(a) The apperent state pension crisis is spin , it is funded by NI contributions which are currently in the black with some few billions spare each year, the NI balance is currently almost 30 billion built up over the years, my source is a document released by the government.

(b) if men retired at 70 like been proposed then they will have only 5 years from when they retire to death if they live to the average life expectancy.

Dunno why you think pensions are a 'con', a personal pension is a savings scheme that effectively allows a standard rate tax payer to be credited with £100, for every £78 they invest. OK having to use 75% of the 'pot' to buy an annuity is restrictive, but no other way of saving attracts what amounts to a government subsidy equal to your tax rate. Any savings scheme linked to unit trusts etc is liable to lose money, not just pension funds. A gamble, maybe, but not a con?

The other points are interesting, I'm quite confident I will manage to retire at 65, though - not long to go, now ;)

[etccarmageddon]

it's a con because a)the government want you to do this so they dont have to pay you the minimum income guarantee b)there is no advice given re the fact it's taxable - ie. calling it 'tax free' savings is bollards as it's taxed when you take it.

---------- Post added at 15:34 ---------- Previous post was at 15:32 ----------

http://www.ethicalinvestors.co.uk/pensionssite/mig.htm

[homealone]

it's a con because a)the government want you to do this so they dont have to pay you the minimum income guarantee b)there is no advice given re the fact it's taxable - ie. calling it 'tax free' savings is bollards as it's taxed when you take it.

---------- Post added at 15:34 ---------- Previous post was at 15:32 ----------

http://www.ethicalinvestors.co.uk/pensionssite/mig.htm

thanks for the link :)

a) Is a fair point, but as I understand it, mainly applies to people who are expecting a fairly small pension, where the MIG will be relevant. I certainly wouldn't not take out a pension that could potentially earn me, say, 10 grand a year, because I might miss out on 20 quid a week?

b) I have to say I have not noticed pensions advertised as 'tax free', but I would rather get some tax credited to my savings, now, than worry about paying it in the future - allowances should still apply, income from a pension may be below the threshold 'then' ...

to declare my position I am in an 'average salary' company pension & also pay into an ISA, so the above doesn't 100% apply, to me, thus my opinion is a little theoretical...

[Chrysalis]

Without a doubt private schemes from banks and insurers are a con, you can pay into them for 30+ years with no garauntuee of the company not going bust or been able to honour the payments on retirement. Assuming you manage to live to retirement age then its a question of can you get over 5 years out of the pension.

company pensions are a big improvement but still have the risk of the company going bust and having the problem of retirement aged been raised.

state pensions are not a con as such but not much of a pension if the expectancy for recieving it is only 5 years. (for young adults now what they can expect)

for older people its not so bad since they are retiring at 65 an extra 5 years.

[homealone]

Without a doubt private schemes from banks and insurers are a con, you can pay into them for 30+ years with no garauntuee of the company not going bust or been able to honour the payments on retirement.<snip>

all investments linked to unit trusts have the same risk and so long as that risk is properly explained, then, I believe it is a gamble, not a 'con'. This includes endowment mortgages, income protection schemes, etc etc - the financial services industry would be in a right old mess if the concept that stocks can go down, as well as up, stopped everyone investing ;)

[etccarmageddon]

all investments linked to unit trusts have the same risk and so long as that risk is properly explained, then, I believe it is a gamble, not a 'con'. This includes endowment mortgages, income protection schemes, etc etc - the financial services industry would be in a right old mess if the concept that stocks can go down, as well as up, stopped everyone investing ;)I think Crysalis is refering to policies which are linked to the life company rather than units - ie. the 'with profits' policies which are sold historically with most private pensions. unlike unit linked policies these can be brought down by mismanagement of the life company (see equitable life and all the others which offered guaranteed anuity rates which they couldn't keep to).

unit linked policies are a lower risk in that they are only subject to the movements of the stock market.

with profits can be subject to stock market movement AND 'adjustments' which the life company can and do impose without any notice.

---------- Post added at 18:35 ---------- Previous post was at 18:33 ----------

endowments - they're similar to with profits pensons - remember how these have also under peformed against the promises to pay off mortgages. fair enough this is due to stock market failure BUT these policies were mis-sold and guess who pays the compo for the miss selling! in the end the customer does.

[homealone]

I think Crysalis is refering to policies which are linked to the life company rather than units - ie. the 'with profits' policies which are sold historically with most private pensions. unlike unit linked policies these can be brought down by mismanagement of the life company (see equitable life and all the others which offered guaranteed anuity rates which they couldn't keep to).

unit linked policies are a lower risk in that they are only subject to the movements of the stock market.

with profits can be subject to stock market movement AND 'adjustments' which the life company can and do impose without any notice.

---------- Post added at 18:35 ---------- Previous post was at 18:33 ----------

endowments - they're similar to with profits pensons - remember how these have also under peformed against the promises to pay off mortgages. fair enough this is due to stock market failure BUT these policies were mis-sold and guess who pays the compo for the miss selling! in the end the customer does.

Ah right, thanks, I missed that - although didn't new regulations come in after the Equitable Life fiasco? The point was well made, though, apologies to Chrysalis for any misunderstanding. :)

Spot on about the endowments, although low interest rates haven't helped, they certainly misled a lot of people as to the 'potential' returns & as you say, the customer pays in the end. Glad mine is straight repayment ;)

[greencreeper]

Crikey - right bunch of hedonists! :D Some interesting thoughts.

I do have an ISA with a local building society. I put a few quid in when I have it spare, though I do tend to draw money out occasionally, so all-in-all, I guess I don't actually save that much :erm: I've thought about premium bonds as no risk opportunity - only need buy £100 and win £50 a year to beat the interest rate of most savings accounts.

Doing the math...

£12000 - reasonable yearly income
20 - number of years I can reasonably expect to survive if I retire at 60
£240000 - amount needed
30 - approximate number of years working life left before I reach 60
£8000 - amount I would have to save per year
£670 - monthly amount I have to save. Not achieveable

That's why I was thinking "pension" - would provide an income, the sum of which would be more than that invested.

[Wicked_and_Crazy]

Are you?

No, but i work for a financial services company and as a result am forced to pass a number of qualifications. So yes i do know what im talking about



The biscuit tin under my bed.

What a stupid comment!! Put the money under your bed and it devalues over time. Not only does it devalue but you cant claim a tax rebate on your loss.



That'd be the same system then, that if I die, my husband only receives (on average) 1/3 of what I was entitled to as a reversionary rate - WTF??? Where does the rest of tyhe money I put away for 40 years go? I used to work in Pensions for Lloyds TSB. Bloody rip offs, the lot of them.

if you wanted to provide for your husband in the event of your death you would have bought life insurance and not a savings policy. A pension is only a savings policy with tax advantages. When you retire all you have is a fund of money, you then choose how you want to re-invest that fund to provide you with an income.

We can all say WHATS THE POINT we might die before we retire. If i could be bothered i'd look at the mortality tables and see what percentage of people reach state retirement age, but as you've only replied with drivel i cant be bothered. Suffice it to say that more than 50% reach retirement age, so how do you want to live when you retire?

I agree that theres a school of thought that says the state wont let me go hungry. However my school of thought is that when i retire i dont want to be penny pinching, i want to live the same lifestyle as i live now and enjoy myself.

You pays yours money and takes your choice ;)

---------- Post added at 12:46 ---------- Previous post was at 12:44 ----------

Crikey - right bunch of hedonists! :D Some interesting thoughts.

I do have an ISA with a local building society. I put a few quid in when I have it spare, though I do tend to draw money out occasionally, so all-in-all, I guess I don't actually save that much :erm: I've thought about premium bonds as no risk opportunity - only need buy £100 and win £50 a year to beat the interest rate of most savings accounts.

Doing the math...

£12000 - reasonable yearly income
20 - number of years I can reasonably expect to survive if I retire at 60
£240000 - amount needed
30 - approximate number of years working life left before I reach 60
£8000 - amount I would have to save per year
£670 - monthly amount I have to save. Not achieveable

That's why I was thinking "pension" - would provide an income, the sum of which would be more than that invested.

inflation inflation inflation

although low at the moment the combined effect of inflation over the next 30 years will probably mean that the income you will want will be more than £12000

---------- Post added at 12:50 ---------- Previous post was at 12:46 ----------

If you go for a "proper" independant finacial adviser their advice will be checked by a 3rd party to make sure they have sold you the correct package.


And they're regulated by the FSA


---------- Post added at 12:52 ---------- Previous post was at 12:50 ----------

Dunno why you think pensions are a 'con', a personal pension is a savings scheme that effectively allows a standard rate tax payer to be credited with £100, for every £78 they invest. OK having to use 75% of the 'pot' to buy an annuity is restrictive,

No longer have to buy an annuity. Mind you some pensions might have it written into the contract

[orangebird]

<snip>

I consider myself well and truly bitch-slapped. :rolleyes:

[Maggy]

Where ever you put your money the chancellor can find it...and tax it. :(

Except in a biscuit tin under your bed.

[etccarmageddon]

biccy tin savings would not be counted when you're means tested for the min pension guarantee etc.

[Chrysalis]

life insurance I believe the payments are massively lower and you can cash in on it in a few ways.

[Wicked_and_Crazy]

life insurance I believe the payments are massively lower and you can cash in on it in a few ways.

Life insurance has no value. You can stop paying life insurance at anytime without penalty because the policy has no value.

Are you thinking of an endowment or whole of life policy which is a savings policy with a life insurance element added to it.

[homealone]

life insurance I believe the payments are massively lower and you can cash in on it in a few ways.

noooo, you should never combine Life Insurance with a saving scheme, much better (in my opinion) to have straight 'die to win' life insurance, and a seperate savings scheme, such as an ISA. Unit linked life insurance has lower payout if you die - and the savings element will not fully compensate for that.

[Chrysalis]

I dont know that much about life insurance but the one my sister has signed up to will payout even if no death when she hits 55. It will payout earlier in the event of death.

Whilst a pension scheme she could pay into it for 30 odd years (she is 25 now) and if she died at 55 their would be no payout whatsoever just 100% profit for the pension company. I am comparing it that way, I wasnt saying their wasnt better options.

[etccarmageddon]

that'll be an investment linked life policy.

[cookie_365]

I'm doing my investing in traditional style - I'm flirting with a rich older man ;)

[Wicked_and_Crazy]

I'm doing my investing in traditional style - I'm flirting with a rich older man ;)

are there many about :D

[cookie_365]

are there many about :D

Not nearly enough to keep me in the manner to which I'm accustomed :)

[Wicked_and_Crazy]

Not nearly enough to keep me in the manner to which I'm accustomed :)

not enough money or not enough older than you ;)

[greencreeper]

Well, you all seen to understand the lingo far better than I do :spin:

Never given any thought to life assurance - no one to benefit from it. I do like the sugar daddy idea though :D