Stupid question alert!!

crazygal wrote: »

He said the pension doesn't go to me if anything happened to him either and the cash would.

Really? The pension will go to whoever he has nominated as his beneficiary. (To be exact, the trustees of the pension scheme will pay out the fund value tax free at their discretion, but in practice, they will almost certainly follow his expression of wish.) In the absence of an expression of wish they would almost certainly pay it to the wife, unless there was another dependent with a compelling claim. Who has he nominated to receive his pension benefits if not you?

crazygal wrote: »

... The value of the fund is approx £50,000 at the moment and going forward it says he will get a pension of around £3000 per annum when he retires

On what basis? That's to say: (i) Does it assume he'll keep contributing, or is it based only on the amount already there? (ii) Is the £3k p.a. index-linked i.e. is it suggesting that he'll get enough to be worth the same as 3k p.a. is today?

crazygal wrote: »

which is obviously not a great deal. He asked me why should he bother with a pension and why doesn't he just save the money in an ISA instead until he retires.

Depending on your answers to the questions above it looks a splendid deal to me. £50k, which because of the tax relief cost him a good bit less than £50k, will in due course yield 6% p.a. index-linked for the rest of his days. Where else does he imagine he can get a deal that good?

crazygal wrote: »

He said the pension doesn't go to me if anything happened to him either and the cash would.

Use your feminine wiles to find a palatable way of telling him he's talking tripe. Is he really planning to buy a single-life annuity? Spank his bottom!

crazygal wrote: »

What reason can i give him that a pension is a good idea versus saving the cash in an ISA/bank account?

(a) If his retirement is further off than a few years then saving in cash alone is a huge gamble. One burst of inflation and it could lose a lot of value. Even at the moment he'll not find a Cash ISA that isn't losing value compared to inflation. You need to diversify - some cash, some shares, some this, some that. Cash only would probably be a mistake.

(b) Does he really wish to deny himself the wonderful tax deal on pensions? It sounds to me as if he's been listening to mutton-headed, know-nothing friends.

he value of the fund is approx £50,000 at the moment and going forward it says he will get a pension of around £3000 per annum when he retires which is obviously not a great deal.

This suggests a failure in the understanding of the income projection assumptions. £50,000 at 65 can produce £3k. So, clearly its not going to still be £50k in 20 or so years time.

The income projections understate the likely outcome. They use the worst combination of assumptions (that most people do not use - but there maybe someone that does) to generate an example figure. They also use growth rates that are significantly lower than long term averages and they then deduct 2.5% p.a. to give the figure in todays spending power.

. He asked me why should he bother with a pension and why doesn't he just save the money in an ISA instead until he retires.

If the same assumptions were put into the ISA, it would actually show the money going down and probably having near zero income in retirement.

He said the pension doesn't go to me if anything happened to him either

Does your husband not love you? He decides who it goes to by nominating the beneficiary. If its not you, who has he nominated?

What reason can i give him that a pension is a good idea versus saving the cash in an ISA/bank account?

Best reason is his complete lack of understanding. You should never make really important decisions on the basis of rubbish information and bad understanding.

I do personally feel that the current assumptions on pensions have gone too far. Yes, the old 80s and early 90s projections were too high but now they have gone too far the other way and you often see ridiculous outcomes and your husband is not the first person to misunderstand these and come to the wrong conclusion.