Pension Advice.

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Whitebootman

Whitebootman

Player Valuation: £35m
A friend at work asked me for advice on pensions. He is 19 years old and expects to move around the job market. My knowledge of current pension options is limited, I've been in the same plan for 25 years.

What advice would you give to the lad ?
 

Whitebootman said:
A friend at work asked me for advice on pensions. He is 19 years old and expects to move around the job market. My knowledge of current pension options is limited, I've been in the same plan for 25 years.

What advice would you give to the lad ?
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get him to go to a financel advisor its a minefield with all the new rules
 
To aim to have a SIPPS pension.

Money purchase schemes end with you having to purchase an annuity, which is basically an insurance company gambling on how long you'll live.

A self invested or SIPPS pension means that the fund is yours to invest & when you take it you can choose how you want to pay yourself! For example, you may think that during the first 10 years of your retirement you're going to be still very active & will therefore need more money in those years than the latter years of your existence & you can choose to pay yourself accordingly.
 
For me the prospect of retirement looks a lot different than it did 30/40 years ago so of course retirement will be different in the future. The lesson is be prepared, and be prepared to change your plan as the years pass by. It's even more important to plan ahead considering the increasing cost of providing state pensions and the unpredictable nature of company / private pension schemes.

What would you advise Bruce ?
 

To get professional advice :)

In my opinion though I just see a whole lot of change on the horizon. We're living longer and longer, and are generally both healthier for longer AND working in less physical ways than in the past, so I can see people working a lot longer by the time I'll reach the current retirement age in 30 odd years. Pensions already account for 50% of the welfare budget, so I'd be amazed if my generation got any kind of state pension when/if we retire.

So for me personally I'm tending to try and look after things for myself by having an investment property and some other bits and bobs that I'll try and invest in over the years.
 
i dont believe the state can continue to support the pension in its present format. people will be advised to format their own retirement schemes, the country is being debilated by a burgeoning welfare expense. some people seem to think welfare is a career, whilst they take the money they cannot contribute to the pension pot, there is no way to sustain pensions financial.
 
I agree with all of that Bruce. I'll take my pension in 2018 and should have an additional income from property rental, I should be fine. It's the next generation I really worry about.
 
Foot Long Hot Dog said:
To aim to have a SIPPS pension.

Money purchase schemes end with you having to purchase an annuity, which is basically an insurance company gambling on how long you'll live.

A self invested or SIPPS pension means that the fund is yours to invest & when you take it you can choose how you want to pay yourself! For example, you may think that during the first 10 years of your retirement you're going to be still very active & will therefore need more money in those years than the latter years of your existence & you can choose to pay yourself accordingly.
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I'd say a SIPP should be the aim in a few years, if you chuck a reasonably small amount in a SIPP the charges will destroy the fund value fairly quickly. Stakeholder or Personal Pensions generally have lower charges but less fund choice, and you cant invest in other investment products like you can via a SIPP. I've dealt with some big pension funds lately and the annuity you get even for big funds is fairly terrible, unless you're in ill health and qualify for an enhanced annuity, still not that great though.
 
Bruce Wayne said:
To get professional advice :)

In my opinion though I just see a whole lot of change on the horizon. We're living longer and longer, and are generally both healthier for longer AND working in less physical ways than in the past, so I can see people working a lot longer by the time I'll reach the current retirement age in 30 odd years. Pensions already account for 50% of the welfare budget, so I'd be amazed if my generation got any kind of state pension when/if we retire.

So for me personally I'm tending to try and look after things for myself by having an investment property and some other bits and bobs that I'll try and invest in over the years.
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Agree word for word.

The current generation of pensioners are being funded by the current working generations contributions, and that model is unsustainable in the long term. The retirment age should have moved up in line with the increase in life expectancy well over a decade ago. However, people retiring later just means less employment opportunities for younger people and this means more people on welfare at an earlier age. We need to slow the birth rate in this country right down while we try to sort out the funding shortfalls in the state pension scheme and the NHS - everything that is funded via NI contributions. To correct those shortfalls, more people need to be paying in, and part of that solution is keeping people in work for longer.
 

Tree13 said:
Agree word for word.

The current generation of pensioners are being funded by the current working generations contributions, and that model is unsustainable in the long term. The retirment age should have moved up in line with the increase in life expectancy well over a decade ago. However, people retiring later just means less employment opportunities for younger people and this means more people on welfare at an earlier age. We need to slow the birth rate in this country right down while we try to sort out the funding shortfalls in the state pension scheme and the NHS - everything that is funded via NI contributions. To correct those shortfalls, more people need to be paying in, and part of that solution is keeping people in work for longer.
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This could be interesting. To slow down the birth rate we need to reduce the reward for having children and look at a way of rewarding those who chose not to have children or who have no more than two children.

* Tin hat on.
 
Bruce Wayne said:
Do you fellas think that pensions (and indeed retirement) as we know them will still exist in 30/40 years?
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The state pension will not exist or be worth anything, and pension reforms will mean that private pensions will be unrecognisable - the 25% tax-free lump sum option will probably go, for starters.

Annuity rates have dropped drastically in recent years primarily because of QE (wealth transfer from pensioners to bankers) which puts more people off pensions than ever before, but I think a time will come when the boot is on the other foot.

Having said all that, I still think it's important to make contributions to a pension scheme, especially if:

- your employer will match your contributions
- you are a higher rate tax payer


I also think it's essential that if you want your pension to do well you need to take it upon yourself to do some self-management and exercise regular asset rotation - eg, I have been moving out of equities over the last 6 months and going 75% cash and 25% into beaten-down commodities. I expect to rotate back the other way when we are in the next bear market (I can easily see the FTSE losing 40-50%). Pensions are ideal for contrarian investment strategies because of the investment timeframe.
 

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