Pensions

[Pat "5mph"]

I'm looking forward to the challenge of becoming Morisson's best-ever octogenarian shelf-stacker.

I would chat a shift away with you, pushing the cage, but I estimate I'll be well dead by pension age

 

[400bhp]

Ha - I know 400bhp - I can't help myself.

Plus, I still know bugger all about Life Insurance after 9 months, so feel I have to justify myself somehow

9 months - phew, time flies.

 

[Spartak]

If you are contributing 5% & your company is doubling that therefore 10% then thats a good monthly investment. Therefore 15% of your monthly salary !
However check out annuity returns, as I believe you need a fund at retirement of £100,000 to gain a decent return.

Disclaimer - this is only my personnal view

 

[redcard]

If you are contributing 5% & your company is doubling that therefore 10% then thats a good monthly investment. Therefore 15% of your monthly salary !
However check out annuity returns, as I believe you need a fund at retirement of £100,000 to gain a decent return.

Disclaimer - this is only my personnal view

They only double up to 5% max, unfortunately. So effectively I only get double if my contribution stays at 2.5%. If I contribute 10%, they'll still only contribute 5%.

 

[Spartak]

They only double up to 5% max, unfortunately. So effectively I only get double if my contribution stays at 2.5%. If I contribute 10%, they'll still only contribute 5%.

Thats a shame

But still means for your 2.5% contribution you are getting 7.5 % paid into your 'pot' each month

 

[redcard]

Thats a shame

But still means for your 2.5% contribution you are getting 7.5 % paid into your 'pot' each month

Plus I only get the 5% after 5 years, starts at 1% then rises each year. So need to wait five years before I get the full benefit. Still, free money I suppose.

 

[marzjennings]

My company will pay in double my contribution. Apart from the obvious 'investments can go down as well as up' is there any reason not to have one?
.

How else would you plan to save for retirement if not saving through a pension plan? I put 10% away into mine and even if the interest rates suck over the next 20 years, I'll have a nice lump sum when I retire.

 

[jamin100]

I'm in a somewhat different camp
I've seen people screwed out if their pensions so don't trust the pension system at all.

I've gone down the property route. Got 3 properties so far and hope to have 5 before I retire (30-40 years to go )

If I die before retirement then my kids will have something substantial left behind for them, rather than a pot of money that they may or may not get

 

[Globalti]

Hope your properties are insured then....

 

[srw]

The problem is that Equities historically have returned around 5% adjusted for inflation. However for a Pension the provider has to invest a large percentage in much safer options (bond markets etc) which return a lot less.

Not in a DC scheme they don't. You're confusing DB (where accounting rules and funding rules heavily constrain investment) with DC (where you can easily write the rules so that you can invest in what you fancy).

Yes, the last 10 years have shown weak returns on equities - and the last 5 years have been particularly poor. But that's a historical aberration, and the last year or so has seen very good returns.

And the last 5 years have been very good for bond markets. Falling interest rates have translated directly into increased market value of bonds, and there have been many fewer credit failures than might have been expected in a depression.

 

[srw]

It's in addition to the annual increase.

An annual increase is a good deal at the moment. Additional pension contributions as well make it a good deal on the face of it.

 

[400bhp]

Hope your properties are insured then....

and subject to inheritance tax....

 

[srw]

I've gone down the property route. Got 3 properties so far and hope to have 5 before I retire (30-40 years to go )

In which case your judgement has been coloured by the excessive house price rises of the 1980s and 1990s. I'd be amazed if those sort of outcomes were reproduced - we need so many more houses that there will be over-supply, and concentrating in a handful of assets is always a dubious idea.

If you want to invest in UK residential property you could do worse than take out a pension plan - in the absence of government intervention to build the houses we desperately need (and to kick-start the economy) several of the big pension providers are beginning to look at funding house-building. Long-term, well diversified, a good hedge against inflation - it's a perfect match for pension liabilities.

 

[yello]

I'm in a somewhat different camp
I've seen people screwed out if their pensions so don't trust the pension system at all.

It is a valid position and, as you say, a different camp. One which I must admit to having a good deal of sympathy with. I hate the world of finance. I hate that we have these schemes and plans that line the pockets of others under the pretence of a provision for the general public. Personally, I don't like to see corporate entities (with the understandable profit motivation) providing essential public service.

However, it is a different argument (one I feel is lost btw, and equally one I've no wish to pursue either!) Besides, the OP's question is a specific one rather than an ideological one. Suffice to say that I am somewhat of a hypocrite. I may not like the rules but I know what they are (to an extent) and I do play by them.

 

[Rob500]

I've been working 26 years since I left school and have been in the pension scheme since day 1. For the last 5 or 6 years I've also been trying to build up a lump sum via isa saving and plan to continue to do so. I say give yourself at least a sporting chance of a bit of comfort during your older years.