Pensions

[evilwebby]

Not the most exciting of topics..
but go on, what do you think about..

State public pensions
Private pensions
Alternatives?

I've personally always paid into a private work pension for 20 years, and I'm fairly happy with the amount I've saved in it.

I maintain they're worth it just because of the huge tax advantages, and if you have employer matched contributions then you're getting a big amount of cash into your pot for very little decrease in monthly take-home.

But then you read reports saying that a £300,000 pot will be needed to meet expectations (http://www.thisismoney.co.uk/money/...300-000-needed-retire-maintain-lifestyle.html) and most people will never get anywhere near this.

 

[evilwebby]

Point 1 about the state pension:

http://www.thisismoney.co.uk/money/...300-000-needed-retire-maintain-lifestyle.html

"A person on the UK average salary now needs to build up a pension pot of over £300,000 to be able to maintain their current lifestyle in retirement, new analysis has shown.
...
The state pension, at £691 a month, would therefore need to be topped up by £809 per month from private and workplace pensions to hit such a goal. "

So if £300,000 private pot is required for a £809/month annuity, by extension the state pension of £691/month means that every pensioner receiving this amount has effectively been gifted the equivalent of a £256k pension pot courtesy of the future taxpayer.. This is clearly an unfunded liability. The system is not sustainable and will break sooner or later.

 

[.....!]

Raise the retirement age to death. Work til your fingers are bone.

 

[Pootsy]

I have my own personal Pension Pot and my work pension. Both work with different methods to gain % increases. ie Personal Pot is geared more towards Stocks and Shares.

I've also got a 'savings pot' for each of my two children which I hope to make into a pension for them rather than paying for University. Hopefully I will be in a position by then to do this myself as my mortgage should be clear by then.

 

[evilwebby]

There is a "7%" rule of thumb that the industry all financial experts have happily adopted in assuming future investment growth. Unfortunately this is just not reality any more. I think that if they were forced to adopt 3 or 4% then that would go a long way to readjusting expectations about how much you need to put aside.

 

[Bungle]

I never cease to be amazed at how crap annuity rates are, I've dealt with some fairly big pots of pension money recently and it buys you very little.

The best advice I can offer is to state that you drink and smoke heavily and have done for 10+ years and are also obese, that way you'll get a reasonable rate on an Impaired Life Annuity in comparison to your bog standard Lifetime Annuity, the more medical conditions you can rack up the better.

 

[Alanbileysfeathercut]

Alternatives
Try the social
what about the unemployed not the unemployable
Or people on minimum wage who can't be expected to put money aside every month
I know companies have to give you a pension by law but what is it 1%
IMO if you can afford a private pension good luck
If you have a company pension (a good one that is )you probably don't realise how lucky you are

 

[McBain]

Its basically a more expensive and luxurious pencil.

 

[The binman chronicles]

If you have a company pension (a good one that is )you probably don't realise how lucky you are

I do, but it makes you also worry about what ifs, with more people not staying in the same job for life you can't guarantee you are going to keep investing that amount.

I never cease to be amazed at how crap annuity rates are, I've dealt with some fairly big pots of pension money recently and it buys you very little.

Can't everyone just skip buying an annuity nowadays and just drawdown from the pot?

 

[tommytowne]

Point 1 about the state pension:

http://www.thisismoney.co.uk/money/...300-000-needed-retire-maintain-lifestyle.html

"A person on the UK average salary now needs to build up a pension pot of over £300,000 to be able to maintain their current lifestyle in retirement, new analysis has shown.
...
The state pension, at £691 a month, would therefore need to be topped up by £809 per month from private and workplace pensions to hit such a goal. "


So if £300,000 private pot is required for a £809/month annuity, by extension the state pension of £691/month means that every pensioner receiving this amount has effectively been gifted the equivalent of a £256k pension pot courtesy of the future taxpayer.. This is clearly an unfunded liability. The system is not sustainable and will break sooner or later.

I learnt at an early age that the state pension was essentially funded by tax and NI contributions by those working at the time you started drawing your pension.

 

[Eggs]

..i’m fortunate enough to have been able to retire on a very pleasant Civil Service private pension and a even more pleasant lump sum just before my 60th birthday. I suppose i’m one of the last of the ‘final salary pension’ brigade but I worked hard for 41 years to reap the benefit.

Mrs Eggs was also a Civil Servant but stopped working when she was 58. We deferred/froze her pension rather than take it early so we start receiving that as well as another lump sum in October this year.

Haven’t really thought about the State Pension, have no idea how much it is but will get that when i’m 66. The resident pension expert is @roydo, he gave me great advice a few years back.

Pensions are great, much better than working.

 

[McBain]

Pensioners should stop moaning and get real jobs.

 

[Methuselah]

I do, but it makes you also worry about what ifs, with more people not staying in the same job for life you can't guarantee you are going to keep investing that amount.



Can't everyone just skip buying an annuity nowadays and just drawdown from the pot?

Not sure of current rules but with current annuity rates so poor, it would pay to transfer the fund to 'Income Drawdown'. You draw down what you need and the balance of the fund continues to appreciate. This, of course, depends upon having a sound investment strategy and its worth paying a few bob to get someone good to do it.

 

[Alanbileysfeathercut]

I do, but it makes you also worry about what ifs, with more people not staying in the same job for life you can't guarantee you are going to keep investing that amount.



Can't everyone just skip buying an annuity nowadays and just drawdown from the pot?

Think you can once you've reached 55
Not sure of the ins and outs but 25% to start then draw downs
Only know this cos a lot of workmates are around that age but unfortunately you have to see a FA

 

[peteblue]

I cashed in all my private pensions and took my final salary pensions early and now also receive a state pension. Having already paid off mortgages, spread large sums of money around the kids for houses etc, and owing nothing to anyone, I now have as much disposable income as I had when I was working....obv minus company/personal/prerformance bonuses and LTIP’s etc, so life is tough for us pensioners......I’ll be crying in my beer at the pub tonight......