Retirement.....

What's to stop the government stop contributing and/or to dip into the accumulating pot, like local councils have done?

With my limited knowledge (read a couple of basic books on investing, trying to learn more), you would probably get a better return if you managed a low risk portfolio yourself which has minimal charges and placed £X per month into it.
 
Keeping your money in a savings account is a bad idea. Inflation will eat lots out of it in the long term. I am sure there are funds out there which are good, but many have proved not to be.

I have started putting £100 per month in a FTSE tracker wrapped in an ISA - which has a low annual charge. Will keep money going for the next 40 years probably (I am 21 now). As I learn more I am hoping to diversify into individual shares (opposed to an index) and bonds, but I need to learn lots more until I feel safe doing that, so maybe looking at a few years away as I read more. 

Wheels seems to know a lot about investing, plus PartyBoy and few others.

Rosc0PColtrane

Much like it's cheaper to fix your car yourself. Or do your own plumbing. But how many of us have the skill to manage a porfolio? Basic investors should join recognised schemes as it gives them more clout being part of a bigger picture. With charges from 1% (significantly cheaper than car dealer labour charges as a %age of cost!!!), it's not worth dabbling if you're not confident in the market place, or have the time/understanding to keep on top of it.

No, this is a poor analogy.  If you hire a plumber or mechanic and have no idea what is a good price, what is needed or what to expect then you will be ripped off just the same as many peoples pensions do. Having some knowedge is vital.  You do not need to know details, just that if the windscreen wipers don't work it's unlikely to require the engine being replaced.  It's not a simple question of someone's time, it's about control.

Note also the real charges on many private pensions are much more that 1%, where do you think all these fat city bonuses come from?  Even at 1%, how many pensions perform well enough to justify this cost compared to base or index trackers?  The answer is about 1/1000 over the life of a pension, if that.

As for the time or knowedge, this is your money and your retirement.  For many people it's there entire life savings.  Worth spending a bit of time on don't you think?

peagreen


What's to stop the government stop contributing and/or to dip into the accumulating pot, like local councils have done?

There is no accumulating pot.  The money will extracted from taxpayers as required.

monitor


I can't see the state pension existing for mid to high earners.

With respect to final pensions, don't know, I'll find out in a few decades.

Agreed, state pension is almost certainly going to be means tested. I love living in Britain but my gripe is with the state of things like the pension. I really wouldn't fancy living on £90 a week in my 70s when I've worked all my life.

It's all about finding the median between spending your means and saving for your future! Who knows, if you save for the future you may never get to spend it :-(

Rosc0PColtrane

Pensions are the most tax efficient way of saving. The government gives you tax relief on your contributions. So if you were to put £100 a month into a pension, the government would put £25 in, if you're a standard rate tax payer. Higher rate tax payers can then claim up the 40% income tax bracket on their self assesment.  You could look at it as an instant return on your investment if you like. So for the time the money is invested, you have between 25% and 40% more working for you.

Agggggggh!!!!!!!

The government does NOT put £25 in.  It simply doesn't take the £25 it would normally take off you.

In either case, it was your money in the first place.  With a pension, you get to keep it for a while longer.

I personally intend to work until i physically (or mentally) cannot work anymore...
I do not have a pension, i do not ever plan on having one.

My general plan is to collect as much money from my working life as possible and invest it into propert in some way. Be that in my own house or as several other rental properties.
Eventually when i do decide to stop working i will simply sell what i have and/or downsize my current abode to a bungalow that i can grow old and die in.

I do not believe in letting another party play with my money in anyway. They are obviously employed to do so and as such draw a wage from doing so, therefore turn extra profit from my savings.

Ive also heard of many many many people that have been shafted by savings/investment/pension companys.

Retirement will exist,wether or not pensions will cover the cost of retiring i very much doubt tbh.
Answer is to save or invest yourself by gaining a little knowledge of the system.
Goverment pensions will only be available if "means tested" in a few years imo. but i think companies will still have a pension scheme(possibly untill your 70) as it wil lure in potential workforce imo of corse.

Wheels

Rosc0PColtrane

Pensions are the most tax efficient way of saving. The government gives you tax relief on your contributions. So if you were to put £100 a month into a pension, the government would put £25 in, if you're a standard rate tax payer. Higher rate tax payers can then claim up the 40% income tax bracket on their self assesment.  You could look at it as an instant return on your investment if you like. So for the time the money is invested, you have between 25% and 40% more working for you.

Agggggggh!!!!!!!

The government does NOT put £25 in.  It simply doesn't take the £25 it would normally take off you.

In either case, it was your money in the first place.  With a pension, you get to keep it for a while longer.

I had this ridiculous explanation from someone in the bank a while ago. She was adamant that i would get £25 extra off them.

Wheels


Run your own pension and invest it yourself.  It doesn't take much knowedge to do a decent job of it.  Much, much cheaper than letting someone else do it.

Right, I thought you were saying investment pension schemes were a bad idea.

Unfortunately I'm pretty clueless about financial stuff, although I'm happy to do basic car maintenance, DIY and plumbing!

I've had a private pension since starting my YTS in 1989-I also have one in Aus.  The back up plan is my wife is 9yrs younger and is a nurse so she can look after me and keep on earning when I'm retired!

Wheels

Rosc0PColtrane

Pensions are the most tax efficient way of saving. The government gives you tax relief on your contributions. So if you were to put £100 a month into a pension, the government would put £25 in, if you're a standard rate tax payer. Higher rate tax payers can then claim up the 40% income tax bracket on their self assesment.  You could look at it as an instant return on your investment if you like. So for the time the money is invested, you have between 25% and 40% more working for you.

Agggggggh!!!!!!!

The government does NOT put £25 in.  It simply doesn't take the £25 it would normally take off you.

In either case, it was your money in the first place.  With a pension, you get to keep it for a while longer.

No, for most individuals, payments are made net of tax. Yes the £25 is in lieu of income tax, but it's not like you'd be able to claim it back otherwise. It's money you owed the state, so not yours in the first place.

Plus you're better off having it earn you money, than doled out to some work shy scally? I don't see why you felt a need to put a negative spin on a positive aspect of pensions. What other means for average people are there to get that £25 back? Anyway you look at it, you'll get bum raped for tax by the govt, there really is little else legally most people can do.

Also, with higher rate payers, if they're able to reduce income to standard tax rates, the income tax they'll pay on their pension will be less than they claimed from the govt to invest.

Seriously, you're splitting hairs here. The main point is do nothing and you'll get nothing

You can invest yourself, have lower fees to pay, and avoid tax by placing bonds and shares in an ISA.

Red Man

Wheels

Rosc0PColtrane

Pensions are the most tax efficient way of saving. The government gives you tax relief on your contributions. So if you were to put £100 a month into a pension, the government would put £25 in, if you're a standard rate tax payer. Higher rate tax payers can then claim up the 40% income tax bracket on their self assesment.  You could look at it as an instant return on your investment if you like. So for the time the money is invested, you have between 25% and 40% more working for you.

Agggggggh!!!!!!!

The government does NOT put £25 in.  It simply doesn't take the £25 it would normally take off you.

In either case, it was your money in the first place.  With a pension, you get to keep it for a while longer.

I had this ridiculous explanation from someone in the bank a while ago. She was adamant that i would get £25 extra off them.

Of course it's extra. You'd not see the money otherwise would you? You'd have paid it in income tax as dictated by the law. It's not yours in the first place. Why does it seem like you felt they were pulling a fast one on you?

What about when you sell property? You'll end up with a nasty huge capital gains tax bill on the growth in value when you realise the assets. Diversification is a great idea, don't put all your eggs in one basket

Of course people earn money managing your portfolio!!! They're trained to do so and do it as a full time job. It's like a Haynes Manual enthusiast repairing a car. You may get there in a ham fisted fashion of sorts, but damned sure you'd pay a top mechanic to do the tougher jobs.

What clout in the market place do you think your £100 a month has? Surely it's easy to see that by amalgamating funds, the larger bases of capital give fund managers access a wider variety of stocks, enabling a more diverse and safer fund selection. Are you really going to stay on top of nearly 200 different fund facets to compete with what's on offer to pension fund managers? Or is the 1% charge looking more reasonable now? It's an expertise to trust in. We're not talking derivatives and short and long trading, its traditional funds and fund of funds stuff. An excellent way of getting (in)direct share ownership.

Surely you must realise that banks make money even on your basic current account? They're a business, not a public service, same as any financial service provider. They don't do it for a laugh!!! Everyone is employed to earn money, it's a bit naieve to think otherwise mate.

The shaftings happened 20 years or more ago. Pension reform in the late 1990's put that to bed.  Here's the gist of the Pension Protection Regulations that prevent you getting 'shafted' http://www.pensionprote...g.uk/Pages/homepage.aspx

The Stakeholder scheme was introduced turn of the century. It's a suite of products which offer better terms for less complicated investors. The points include: lower costs, more simple products and easy understanding.

I seriously think peoples concerns are because of a lack of understanding. Most objections are based on outmoded experiences. Pensions are very slick now. In fact, penison companies don't make money for the first 7 years of investment.

I'm not having a pop at you mate, sorry if I seem a little harsh or agitated. What annoys me is people's lack of knowledge which I can see getting them into immense trouble in later life. Is it really worth being that sceptical?

My belief is that financial instruments should be taught as a GCSE subject in school. Much more practical than a lot of other subjects!!

Take it easy mate, any questions, more than happy to answer.

Cheshire Cat


You can invest yourself, have lower fees to pay, and avoid tax by placing bonds and shares in an ISA.

A cash ISA will never return enough money. A stocks and shares ISA carries fees and the share's are not tax free, the dividend will still carry a 10% tax credit on the share dividends in the fund. The company who's fund it is will generate a corporation tax bill on any increase in share value.

Stocks and Share's ISA's are tax efficient in that you don't get charged either income tax or capital gains tax on any increase in value of your holding in the fund.

Self investing ISA's I admit I know little about. Though the 10% tax credit on dividends is still applicable. Being limited to £10,200 a year is also a consideration. There's implicit charges in the buy and sell spead of shares too. Bond value largely depends on interest rates and inflation, as well as the stockmarket values. That notwithstanding, share performance over the long term is likely to be better than bonds, which are lower risk.

Pension tax relief pi55es over ISA's.

Varg

Wheels


Run your own pension and invest it yourself.  It doesn't take much knowedge to do a decent job of it.  Much, much cheaper than letting someone else do it.

Right, I thought you were saying investment pension schemes were a bad idea.

Unfortunately I'm pretty clueless about financial stuff, although I'm happy to do basic car maintenance, DIY and plumbing!

So what is your plan for retirement? What would you like to do? How will you pay for it??

If you have no provision, a Stakeholder Pension is a great idea. The paperwork and process surrounding it is so heavily regulated now, it would all be clearly spelt out, including your cancellation rights. As soon as I can afford to, I'm upping my pension contributions.

I expect nothing by the time I reach retirement age from the government.

For myself I am making other arrangments, stockpiling of various assets to be offloaded at a later date.

In general I think as bad as pensions are now, they will get worse and people will get them later in future.

Rosc0PColtrane


So what is your plan for retirement? What would you like to do? How will you pay for it??

I have a pension.
It's a private scheme my last employer set up for me and I pay into it.
When I say clueless I mean that's about as much as I can manage.
I'm not about to start managing my own investments because I'd probably make a mess of it.

I have numerous (academic and trade) skills I will utilise and don't wish to retire, its bad for your health lol. Will be investing any money I have myself.

A sobering thought the more you earn and thus contribute the less you'll get back in the future imo as has been stated it'll go the means tested route at some point. Don't ever work always claim/commit crime etc. etc. sponge and you'll get a pension, reduced bills, no tax and free care if/when you need it, what a fcuked up system lol.

I've watched my dad loathe his retirement and wish he could still work so I stick to my original post in that I want work until I die,that is my plan for retirement and the prospect of doing this does not upset me in any way.