Pension Advice.

[Woolly Blue]

You need to consider the tax here and employer contributions here.

Indeed if interest rates were ever to return to normal levels (which they will.. eventually) it will leave a lot of property investors deep in the sh1t.

Sawdust mate.
Can't lose, I just need a bigger lock-up now.

*taps nose

Is true Bruce. That being said, the more you put in, the more will come out the other end. Usually.

Curries are the exception to this rule, in that you generally get out more than you put in.

People will just eventually realise that money purchase pension pots that have to be drawn down via an annuity are a total waste of time & cash.

People will get smarter with their money & move in to SIPPS. You can even leverage borrowing against your SIPPS pot to gain commercial funding for property purchases. There's going to be an explosion in this field as the penny slowly drops that you can put up to £50k tax free into your SIPPS per annum & then personally invest that cash into appreciating assets that also give a sensible annual ROI back (tax free) into your pot.

Ah feck. To be serious for a mo. SIPP's are great. I have them, but if they go more mainstream than they currently are, I can almost guarantee another mis-selling scandal in the future. They're not for the faint hearted and having total control over your own pension pot isn't something I'd recommend for people who don't fully understand ( as much as anyone can ) what they're doing.

 

[Sideliner]

start young - save monthly by investing in unit trusts and read as much as possible about the stock market -
once you have saved up 10k start investing in blue chips directly on the stock market -
invest in companies you understand and don't speculate -
buy solid shares and put them in the bottom drawer and forget about them -
reinvest dividends and you will be amazed - no fees no expenses and growth over time which will beat inflation -
property is a good investment but requires admin and maintennance

 

[evilwebby]

No expert here, but aren't very few pensions now in any way guaranteed, so what you put in is no indication of what you'll get out?

Yes indeed, like any investment, their value is going to depend on a number of things:

how well the investment does - you have to understand that most pensions are equity-linked, and in 2000 we saw the most over-valued stock market in history by a very long way. All disparities eventually revert to the mean, which meant a couple of decades of significant underperformance. IMO we are still going through that period of underperformance.

On top of that, the whole pension industry has to pay itself, which means taking a slice of your already-underperforming pension.

The risk-free rate - which given current monetary policy is nearly zero.

Demographics - Annuity rates have to still be overall profitable for the pension company, and like it or not, people are living longer and this means companies are expecting to pay out more over the lifetime of an annuity.

The only pension schemes that are guaranteed nowadays are final salary schemes, but these are all closed to new entrants precisely because they cannot be guaranteed for anything approaching a significant number of participants.

 

[Whitebootman]

Thanks for your input guys. Some good points to take in to the lad on Monday morning, in particular to get professional advice.

This is why G.O.T is great.

 

[Jamo Martinez]

Don't understand much of what's been said but my gut tells me that most private pension schemes are, in some ways, private pension scams.

 

[Eggs]

...tell him to buy a house whilst the market is low and rent. The rent will cover the mortgage and he will have a nice nest egg of a pension when he sells at a more buoyant time.

 

[degsy]

start young - save monthly by investing in unit trusts and read as much as possible about the stock market -
once you have saved up 10k start investing in blue chips directly on the stock market -
invest in companies you understand and don't speculate -
buy solid shares and put them in the bottom drawer and forget about them -
reinvest dividends and you will be amazed - no fees no expenses and growth over time which will beat inflation -
property is a good investment but requires admin and maintennance

I'd have to go with the above, start off with as much as you can manage with from your 19 yr olds wages ( 10% ? ) sit back and let Mr compound interest work his magic for 40 yrs

 

[TX Bill]

Interesting topic as this is what I do for a living here in the USA.

However, I am not familiar with UK laws and retirement plans and will therefore refrain from commenting other than telling anyone getting into the work force:

"Start saving now and don't ever stop. The hardest part about saving funds is starting. Live within your means."

 

[evilwebby]

"Start saving now and don't ever stop. The hardest part about saving funds is starting. Live within your means."

Sound advice that.
Are you familiar with the book "The richest man in Bablon" ?

 

[degsy]

When I was about 18 ( 1968 ) an arl arse ( he was nearly 30 ) told me to, as soon as I could, start buying terraced houses and renting them to students * goes off to town and blows wages * boy is my face red....I was told and didn't listen. ffwd 20yrs and another arl arse said to me Re pension schemes....remember behind every scheme is a schemer. So the truth probably lies in the middle somewhere

 

[Reidy's Bottle Of Grecian]

I had a pension that I only paid into for 4 years and was only worth a tenner a week, the pension company offered me what's called an 'Enhanced Transfer Value' to transfer it to another pension i.e. off their books.
They had to appoint an independent financial advisor to advise me, all advice said to not do it but £10 a week was worth pish when I retire and they were offering close to 9k to do it, which could be added to the pension or taken as a lump sum now (less tax & n.i.) or on retirement (without being taxable).

9k was of more use to me than the guaranteed tenner a week so I took the lump sum, and thge pension it transferred to appears to be worth double what the old one was already. Not much I know but the 6.5k eased the burden a bit.

 

[TX Bill]

Sound advice that.
Are you familiar with the book "The richest man in Bablon" ?

I am not. What's the skinny on it?