Retirement.....

I absolutely agree that retirement is bad for the health.
I've seen my in-laws deteriorate into pensioner-style behaviour at just over 60 after early retirement.

However, it doesn't have to be work, but if you can keep busy, exercisng the mind, pushing yourself, etc. I think you would be okay.

Rosc0PColtrane


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

It is yours in the first place, the state then takes it.  It's not about splitting hairs, you earned the money not the govt.  It's also an important fact that everyone should remember.  A pension is one way of defering that tax, you have to pay tax at some point for most of the money.  Pensions are mostly a good thing, but there are many aspects that are problematic which should not be brushed over.

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.

Interesting comparison.  Do you have any evidence that professional funds management is better than those who self-invest?  More important, does the performance justify the fees charged.  I'd also add most funds charge more than 1% and there are entry charges of upto 5%.  On the other hand you can also get down to 0.15%, why would you pay more than that?  It's been proven time and again that the level of fees has no bearing on the performance of any given fund.

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.

Stakeholders are a reasonable device, your quite right on that and it's true about a lack of understanding.  I question how a pension company doesn't make money on the first 7 years though.  The cost of setting up a stakeholder is minimal, or is the cost structure still based on when you got those fat buy in fees

My dad retired at 60 (great pension, savings and a large lump sum payment so very financially secure) he wnet down hill fast over 2 years and had to get a part time job, since retired from that at 70 but spends loads of time tending a large allotment and doing all sorts of manual jobs, hell I had him up 15' standing on a 2" piece of framework helping me with a cut roof lol.

Rosc0PColtrane

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.

Where did you get this idea that funds pay tax rise on the capital value in an ISA?  Rather defeats the purpose I would think, don't you?

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.

It's a brave man that says bonds are lower risk in a country that is printing money lol.

Dav


My dad retired at 60 (great pension, savings and a large lump sum payment so very financially secure) he wnet down hill fast over 2 years and had to get a part time job, since retired from that at 70 but spends loads of time tending a large allotment and doing all sorts of manual jobs, hell I had him up 15' standing on a 2" piece of framework helping me with a cut roof lol.

It's not entirely clear but I think your saying the issue was not, as per the thread discussion, his finances, but having sweet FA to do once he'd finished work. I've seen this loads of times. The issue is usually that they are what they do - so a clerk, a cobbler, whatever. Once said Joe stops doing this he can and does last 2-3 years max.

Assuming I don't cripple myself working out I fully intend, once I jack actually working at all in I'll still get my arse over to the gym. Guys especially need something to make themselves feel useful or busy away from work. Women shop (I Know I'm generalising) and man do... in our case curls and squat!!

Wheels

Rosc0PColtrane


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

It is yours in the first place, the state then takes it.  It's not about splitting hairs, you earned the money not the govt.  It's also an important fact that everyone should remember.  A pension is one way of defering that tax, you have to pay tax at some point for most of the money.  Pensions are mostly a good thing, but there are many aspects that are problematic which should not be brushed over.

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.

Interesting comparison.  Do you have any evidence that professional funds management is better than those who self-invest?  More important, does the performance justify the fees charged.  I'd also add most funds charge more than 1% and there are entry charges of upto 5%.  On the other hand you can also get down to 0.15%, why would you pay more than that?  It's been proven time and again that the level of fees has no bearing on the performance of any given fund.

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.

Stakeholders are a reasonable device, your quite right on that and it's true about a lack of understanding.  I question how a pension company doesn't make money on the first 7 years though.  The cost of setting up a stakeholder is minimal, or is the cost structure still based on when you got those fat buy in fees

That's a fair perspective on tax, though it's largely unavoidable. So deferment probably is the best term to use in that respect. Though it's better off working for you in the interim than for the govt! Something I learned when taking my qualifications, the govt tax you every which way they can. It's an unavoidable inevitability. Pensions and to a lesser degree ISA's are a small respite and should be grabbed with both hands.

Interesting comment about self investment. I don't have a definite answer. Though to set up a SIPs still requires a level of advice. My comment was more aimed at direct investment v's managed funds. I think there's too many variables on a case for case basis (which could largely be true of fund managers, though their level of qualification is greater) of peoples general knowledge and ability. The average person, something I've regularly referred to, would not be suited to such a method, hence advocating Stakeholder schemes. Your agreement about the average persons understanding would seem to agree with that?

Yes the level of fees do not give an indication of quality, but that's not the point. The point is, a fund manager who lives and breathes investing will know more and have more time to manage a portfolio than average joe who works full time. For the majority of people, the simple solution is the best. Not perfect, I'd agree with you there, but makes the most of what's on offer.

Max Fees Stakeholders are allowed to charge is 2% Our provider charges 1% and has won awards seven consecutive years.

As for the seven years break even thing, our 'retail' advisors are no longer licenced to sell pensions and this is the cited reason. I assume that there must be a break even point where the monthly contribution could be profitable from the word go, and if the average policy size of the retail workforce was below this?? It's a lot of speculation and detail which digresses from my intention here of presenting pensions in a positive light and will turn off most readers!!

Fat buy in fees?? Hahaha I'm salaried, I don't charge for time and don't directly make money from policies sold. I'm just trying to keep this in perspective of the general level of the audience. Much like training, there is no magic pill, there is no short cut. It's not a big scam, this is what we have to try and make our later years financially viable.

Wheels

Rosc0PColtrane

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.

Where did you get this idea that funds pay tax rise on the capital value in an ISA?  Rather defeats the purpose I would think, don't you?

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.

It's a brave man that says bonds are lower risk in a country that is printing money lol.

Investment will pay corporation tax as the fund itself is not within the ISA wrapper. The ISA wrapper applies to the individual, not the company who owns the fund. Tax Efficient is an industry standard word for Stocks and Shares ISA's. The dividends are paid with a 10% tax credit, which is unclaimable. The individual has no liability to income tax as this is deemed settled by the company by way of corporation tax. Read CeFA 2, Investments & Risks, it's in there.

Regardless of quantitive easying. Bonds are lower on the risk/reward scale than equities. Nothing about being brave, it's just how it is.

Mobster

Dav


My dad retired at 60 (great pension, savings and a large lump sum payment so very financially secure) he wnet down hill fast over 2 years and had to get a part time job, since retired from that at 70 but spends loads of time tending a large allotment and doing all sorts of manual jobs, hell I had him up 15' standing on a 2" piece of framework helping me with a cut roof lol.

It's not entirely clear but I think your saying the issue was not, as per the thread discussion, his finances, but having sweet FA to do once he'd finished work. I've seen this loads of times. The issue is usually that they are what they do - so a clerk, a cobbler, whatever. Once said Joe stops doing this he can and does last 2-3 years max.

Assuming I don't cripple myself working out I fully intend, once I jack actually working at all in I'll still get my arse over to the gym. Guys especially need something to make themselves feel useful or busy away from work. Women shop (I Know I'm generalising) and man do... in our case curls and squat!!

It's imperitive to keep active, the above is a common story. Other than getting a job, staying active is tough when you have no money....

My Sig Sauer P226 retirement plan.

Wheels

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?

Agree with your plumber best price statement, but the point is, you know it's better that a plumber does the job right?

Sorry, missed this earlier!!

Agreed, there are higher charges on private pensions. Many are obsolete, with Stakeholder schemes becomeing more prevalent.

I'm a little rusty on index trackers. I remember there's a few different types that mostly aim to replicate the diversity of shares within an index. I'll have to dig my book out. There was something I can vaguely remember reading about which meant tracker performance could potentially be limited in their very nature. Though I'm clutching at straws. It was a fair amount of time ago I studied that material. Though their passive management does keep costs down.

The time thing I think we're a bit mixed up on. I meant the time and knowledge to understand and self manage a fund.

I agree, a bit of time and knowledge should be taken to see what appears to be good within the market place.

Varg

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.

Company schemes like that are a good idea, just pay what you can afford!!!

tuc biscuit


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.

Can I ask what makes you think they are so bad? And why they will get worse? Or do you mean the state pension. A lot of people fail to differentiate between state and private schemes.

On a totally seperate issue, whoever decided to not link retirement age and life expectancy is a total nugget.
 
People do not realise that that pensions pay out so little per week because people live so fecking long.

banksy1987


On a totally seperate issue, whoever decided to not link retirement age and life expectancy is a total nugget.
 
People do not realise that that pensions pay out so little per week because people live so fecking long.

To a degree you can. You choose when you take the proceeds of a private pension, between 55 and 75. Must be talen by 75.

The State Pension was conversely true, with women claiming at 60 and men at 65. Though that will equalise shortly.

Difficult question to answer do you not think? "So what age do you think you will die??? We'll if we start the pension 15 years before that, how does that sound??"

Varg


I absolutely agree that retirement is bad for the health.
I've seen my in-laws deteriorate into pensioner-style behaviour at just over 60 after early retirement.

However, it doesn't have to be work, but if you can keep busy, exercisng the mind, pushing yourself, etc. I think you would be okay.

Agree, I've seen the same with some of my older relatives

If i took out a private pension that was aimed to start at 65 and i died at 64, where does the money go?

If it was deffered to my wife and she died at the same time, what happens then?

Serious questions as i do not know the answer.

I'm not 100% sure but I believe the monies left over in the pension fund (annuity) will become part of the estate and if not set up in trust will then become part of the benefactors inheritance - thus open to capital gains tax.

Rosc0PColtrane

Regardless of quantitive easying. Bonds are lower on the risk/reward scale than equities. Nothing about being brave, it's just how it is.

You've been lied too.  Bonds are not less risky than shares, they are simply less volatile.  Many people confuse the two.  Risk in the context of a pension is a difficult topic because you need to judge it over the duration,which could be 50 years.  The risk of holding bonds over that timeframe is higher than for shares.

You cannot disregard printing money when you hold bonds, it represents a HUGE risk to bond holders.

i have no clue when comes to pensions either , i am offered one through my work, i work under RBS would it be a good idea to take theirs so they take money auto from my salary or would it be wise to look elsewhere?

Frost


i have no clue when comes to pensions either , i am offered one through my work, i work under RBS would it be a good idea to take theirs so they take money auto from my salary or would it be wise to look elsewhere?

Do they make a contrabution, or do you fund it entirely?