Pensions and retirement

Philly112

Distinguished Member
Who has one, who doesn't, who considers them a must (and who doesn't!). What do you expect to receive in retirement?

Phil
 

Abbeygoo

Distinguished Member
I am fortunate to have one provided as part of my salary package. My employer provides a non contributory final salary pension scheme which is the best in the business.

Real reason for posting is that, as a Financial Adviser, I have discussed pensions with Limited Company directors, high net worth individuals, the self employed sole traders and various others over the years - most people don't really want to have a pension.

What I can say though is that everyone of those people will eventually need one. How you choose to do it is up to you. There a plenty of alternatives to a traditional pension policy, be that an ISA, property, individual share holdings but sadly sometimes people's apathy leads to a lack of retirement planning full stop.

What's the alternative? Sadly, the state can not be relied on to provide an income during retirement that will match everyone's expectations.
 

Philly112

Distinguished Member
Thanks for that Abeygoo.

The reason I posted is that I have a few friends who say that they do not have a pension as they believe property is a better investment.
Fair enough.

But when you ask them - they are not investing in any property other than their own house. And none of them live in mansions!!
So what are they thinking - they can sell their house and live in a smaller house, and live off the difference :confused:

A big disaster waiting to happen I reckon.

I believe there are millions in the UK with this philosophy.

Phil
 

Abbeygoo

Distinguished Member
I think you're right about people saying that. I think this is flawed.

Saying that you'll sell your house at retirement and move into something smaller is easy to say and harder to actually do. Plus, this is happening anyway so is not exactly making plans for retirement.

Getting to retirement and then downsizing your property is certainly a way to help towards retirement but it shouldn't be the only thing. I've always believed a combination of plans is the most prudent way to structure your retirement as you are then not dependant on one particular plan.

Assuming you want to move and generate a modest amount (in today's terms) say £150,000 - how long is that going to last you?

I believe you should plan to have your property paid off by retirement (if not earlier!) to give you this option but also ensure that alternative investments are made too. Pension plans, ISAs, shares, investment properties are all there to be made use of and each has its own advantages.

Have a look at the options and make a decision based on what you can afford now, what you want from your plans at the end and take into account other factors such as the available tax benefits / risk factors / costs of running each plan etc before you make a decision.

Relying on your own property solely is not wise in my opinion. What will property prices be like in 30/40 years' time - what if you can not sell the house? Or sell it quickly in any rate?

As with anything, I suppose, the more diversified your retirement plans are, the more likely they are to provide the income you need at the time you will most need it.
 

RMCF

Distinguished Member
I'm in a company pension scheme - been so for about 9 years now.

As for whether I think its a good idea or not - well only time will tell. I don't pay much attention to it to be honest - I just hope that it is being managed wisely!!

I do think that we should all be saving for our retirement, be it a pension, property etc. But I fear that if you do this then the Gov will somehow get their grubby paws on it.

I hear of people who are in sheltered housing/nursing homes who have to sell their properties to pay for it. Perhaps it is better to save nothing and be a scrounger, as the Gov seems to look after them ok these days. If you come to your 60s with money in the bank, you'll probably qualify for nothing. Whereas if you claim benefits all your working days and contribute very little to the system, you'll probably continue getting plenty of benefits until you die.
 

BrianC

Active Member
I'm relying on my company pension, I've been paying into one since I'm twenty. Current conservative forecasts from the pension fund put it at enough to retire on with a good degree of comfort in my early fifties, a few years after I have paid off my mortgage.

Planning on freezing the wife's pension when we retire and then start claiming it once she hits 65 (along with the state pension) to give us a boost. It won't be anywhere near as big as mine but it'll be enough to offset the fact that I'm not planning on having my pension payout increase with inflation. I don't have a single male relative over sixty so I don't expect to last much into my sixties.

I'm also planning on downsizing the house when we retire (hope to have enough to fund a decent sized boat), but its far from the central plank in our retirement plan. You'd be crazy to rely on just one thing for your retirement be it pension or house sale, you need to have multiple income streams planned.
 

RMCF

Distinguished Member
I know so many people that haven't even thought about pensions.

I think there are millions who are living for the 'here and now'.
 

booyaka

Moderator
I am fortunate to have one provided as part of my salary package. My employer provides a non contributory final salary pension scheme which is the best in the business.

Real reason for posting is that, as a Financial Adviser, I have discussed pensions with Limited Company directors, high net worth individuals, the self employed sole traders and various others over the years - most people don't really want to have a pension.

What I can say though is that everyone of those people will eventually need one. How you choose to do it is up to you. There a plenty of alternatives to a traditional pension policy, be that an ISA, property, individual share holdings but sadly sometimes people's apathy leads to a lack of retirement planning full stop.

What's the alternative? Sadly, the state can not be relied on to provide an income during retirement that will match everyone's expectations.

Got to agree with Abbeygoo - as an IFA, i can honestly say that i could count on one hand the number of people that have approached me and "asked" to start a pension. 99/100 i am having to "tell" them to start a pension.

I have a personal pension myself and company i work for pay into it also. I am 30 years from retirement and have a very high attitude to risk at this time with my pension fund. Will continue to payinto a pension as the tax relief aspect is healthy and also the fact of not wanting to work to 65/68/70 etc and then rely on the state at that age.
 

overkill

Distinguished Member
I have small CS pension due, and like a fool I listened to the 'experts' in the 80's and took out a private pension. Which is of course now utterly worthless.....like all the rest of the crap ideas of that era.

Other than that, as I work PT, I haven't had a pension on the go for years.

Looks like I'll be one of those still working when I'm in a zimmer then. :rolleyes:
 

Woodywizz

Distinguished Member
As I have the same employer as Abbeygoo then I have a tremendous non-contrib. final salary scheme.

As a Private Bank manager, I am amazed at the amount of clients who have made little or no pension provision. Many of my clients earn circa £200-£300k per annum, with many of them making a paltry contribution of £200-£300 per month - they will be in for one hell of a shock when they wish to retire and their disposable income is cut by up to 3/4.

Further, many many clients will cite that private pensions are not worthwile and that they would rather invest in property. Whilst I believe that property is a good investment generally, there are not many people who have the necessary cash deposit (generally between 10-20%) which will enable them to buy a property on a buy-to-let basis - which is what you would need to do if your income was not of sufficient amount to buy on a second or third residential basis. From meeting hundreds of clients over the years, I am of the opinion that many people suffer from the 'man down the pub' syndrome. People generally know of someone whom has made a killing in the property market and they are now convinced that property is the way forward with regard to retirement planning. Whether they are able to afford this route, and whether they do anything about it is another matter. Many of these property idealists have this pipedream and sadly that is all it will remain - people are too concerned with living for now as opposed to doing some longer term financial planning, which will reduce their current level of free income, but will produce a higher standard of living during retirement.
 

johntheexpat

Distinguished Member
Got to agree with Abbeygoo - as an IFA, i can honestly say that i could count on one hand the number of people that have approached me and "asked" to start a pension. 99/100 i am having to "tell" them to start a pension.

I have a personal pension myself and company i work for pay into it also. I am 30 years from retirement and have a very high attitude to risk at this time with my pension fund. Will continue to payinto a pension as the tax relief aspect is healthy and also the fact of not wanting to work to 65/68/70 etc and then rely on the state at that age.

From your tag line I hope you, as an IFA, advise people not to play poker with you as it can be very bad for their finances?
(And well done)
 

booyaka

Moderator
From your tag line I hope you, as an IFA, advise people not to play poker with you as it can be very bad for their finances?
(And well done)

i advise clients to give me their money and i will play poker with it - great returns overnight for them but also some losses!!!:rotfl: :rotfl:

P.S OBVIOUSLY I AM JOKING!!!!
 

Woodywizz

Distinguished Member
i advise clients to give me their money and i will play poker with it - great returns overnight for them but also some losses!!!:rotfl: :rotfl:

P.S OBVIOUSLY I AM JOKING!!!!

...and I bet the initial fees and the ongoing management fees you charge are outrageous :D
 
D

Deleted member 27989

Guest
I'm a higher rate tax payer, and contribute voluntarily about £1000 per month gross into a pension plan....This effectively costs me only just over £500 with thanks to tax efficient breaks....I think this is an absolute no brainer and people should rely on just the value of their house....I for one would like to HAVE to sell my house in order to be able to retire....

I think anyone where their employer is not providing decent contributions should make private contributions of at least 10% of their income....
 

Solomon Grundy

Distinguished Member
I won't save into a pension plan in spite of the tax relief. The annuity rates you get when you retire are terrible and if anything happens to you the insurance company either walks off with the pot or pays you less so that your wife can have a smaller income if you die first. Either way they keep the lump sum once you are both gone. It isn't worth it even though you can take a small percentage as tax free cash.

I am saving and investing my own cash in a combination of property, guaranteed return and medium risk investments. This way I can get decent growth and control what happens to the entire lump sum when I retire.

However you choose to do it, it is absolutely imperative that you make your own provisions for when you give up work because you'll be buggered if you don't.
 

stealther

Active Member
28 this year with no savings, no porperty, and no pension. At the moment could not afford to put anything a side.

My grand parents retired about 12 years a go with sizeable savings neither thought they would live so long so had 3 holidays abroad each year etc now they have nothing left but are to stubborn to take money from my parents or to use equity release!

I dont want to end up in their position when/if I retire. I am hoping to be in a better position in a few months time but I have not got a clue what to do.

Should I try and get on the property ladder, start pension fund, savings, investments? :confused:
 

Accylad

Distinguished Member
Having worked for a local council for 30 odd years I was able to retire at 51 on a final salary based pension/lump sum :smashin:

If you are not paying into a pension - START NOW - you get to sit at your PC replying to AV Forums questions all day :rotfl:
 

Abbeygoo

Distinguished Member
28 this year with no savings, no porperty, and no pension. At the moment could not afford to put anything a side.

My grand parents retired about 12 years a go with sizeable savings neither thought they would live so long so had 3 holidays abroad each year etc now they have nothing left but are to stubborn to take money from my parents or to use equity release!

I dont want to end up in their position when/if I retire. I am hoping to be in a better position in a few months time but I have not got a clue what to do.

Should I try and get on the property ladder, start pension fund, savings, investments? :confused:

I would consult a Financial Adviser before you do anything else.

Prepare by digging out all / any policies you do have, write down an income / expenditure analysis and then go from there.

The rules governing stakeholder pensions have been relaxed over the years and you will be surprised at how little the minimum monthly premiums are. The charges are also based on a percentage of the value of your fund so are less restrictive than in days gone by. It is a fact that the earlier you start saving, the less you have to save, so go and get some advice from a qualified adviser who can show you your options.
 

sjj84

Active Member
I started my pension fund last year at the age of 22, out of all my friends I am the only one to have done so. Not 100% sure it's the best way to do things, some of my dad's pension funds have decreased in value to some extent. At the moment it seems property would be a better investment for retirement, by that I mean a second property not your sole one. I've just started a mortgage, clearly I won't be living in my first property forever, but I'd like to be mortgage free by 50-55 at the latest.
 

Accylad

Distinguished Member
I started my pension fund last year at the age of 22, out of all my friends I am the only one to have done so. Not 100% sure it's the best way to do things, some of my dad's pension funds have decreased in value to some extent. At the moment it seems property would be a better investment for retirement, by that I mean a second property not your sole one. I've just started a mortgage, clearly I won't be living in my first property forever, but I'd like to be mortgage free by 50-55 at the latest.

You are quite right to start a pension, the earlier the better, I have been moaning on about it with my three kids (now all in their mid 20's) for years.

As I said above it meant I could retire at 51 with my mortgage paid off, no other debts and still young enough to enjoy life.

It has to be said that when the council started taking my pension contribution out of my salary when I was only 18 I was not best pleased
 

Abbeygoo

Distinguished Member
I started my pension fund last year at the age of 22, out of all my friends I am the only one to have done so. Not 100% sure it's the best way to do things, some of my dad's pension funds have decreased in value to some extent. At the moment it seems property would be a better investment for retirement, by that I mean a second property not your sole one. I've just started a mortgage, clearly I won't be living in my first property forever, but I'd like to be mortgage free by 50-55 at the latest.

Most people are attracted to the property route because of the ability to let out the property and use this income to pay the mortgage. There are a few pitfalls such as having a sufficient deposit, making sure the property is not stood idle etc. but this can be fruitful.

A decent alternative can be to have all the advantages of a pension in the way of tax relief and look for a provider who can let you invest into a property fund. These funds can be attractive for a lot of investors who would rather link their growth to property than shares / bonds.
 
D

Deleted member 27989

Guest
I won't save into a pension plan in spite of the tax relief. The annuity rates you get when you retire are terrible and if anything happens to you the insurance company either walks off with the pot or pays you less so that your wife can have a smaller income if you die first. Either way they keep the lump sum once you are both gone. It isn't worth it even though you can take a small percentage as tax free cash.
Considering it is nearly double money then even at a not so good annuity rate it is still quids in....The other arguments against it aren't really valid/countered by the 'free' money argument and depend on who your plan is with....

I am saving and investing my own cash in a combination of property, guaranteed return and medium risk investments. This way I can get decent growth and control what happens to the entire lump sum when I retire.
Do you realise you can do this with a pension plan scheme as well, AND benefit from the tax breaks...The only thing is you need to have sufficient funds in there as you are not allowed a 'mortgage' within your pension fund...And as I understand you can't live in the property yourself....Anyway I would suggest a combination of both to be honest if one can afford that....

However you choose to do it, it is absolutely imperative that you make your own provisions for when you give up work because you'll be buggered if you don't.
Fully agree with that...

Most people are attracted to the property route because of the ability to let out the property and use this income to pay the mortgage. There are a few pitfalls such as having a sufficient deposit, making sure the property is not stood idle etc. but this can be fruitful.
Not to forget the tax to be paid on the income and capital gains doing it is the straight forward way...

A decent alternative can be to have all the advantages of a pension in the way of tax relief and look for a provider who can let you invest into a property fund. These funds can be attractive for a lot of investors who would rather link their growth to property than shares / bonds.
I agree, when one is starting with a plan at a young age do perhaps some riskier things or mix it with some property immediately for the longer term....Then change the portfolio to a more stable market when you are nearing the time when it matures....
 

Abbeygoo

Distinguished Member
Not to forget the tax to be paid on the income and capital gains doing it is the straight forward way...


I agree, when one is starting with a plan at a young age do perhaps some riskier things or mix it with some property immediately for the longer term....Then change the portfolio to a more stable market when you are nearing the time when it matures....

Tax efficiency makes pensions a big winner over property. On purchasing you have to pay stamp duty (usually), during the term you pay tax on the rental income and then on disposal you pay capital gains tax on the profit made, less allowances.

I would certainly recommend that a longer term pension plan have a good mix of equities, property and bonds and then move towards a more stable environment in the last five years.
 

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