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  • FIRST POST
    • MSE Guy
    • By MSE Guy 9th Oct 12, 8:34 PM
    • 1,628Posts
    • 1,255Thanks
    MSE Guy
    Pension need to knows Official MSE Guide Discussion
    • #1
    • 9th Oct 12, 8:34 PM
    Pension need to knows Official MSE Guide Discussion 9th Oct 12 at 8:34 PM


    This discussion's specifically to discuss the new MSE Pension Need to Knows Guide.

    Click Reply below to discuss it
    Last edited by MSE Andrea; 22-10-2012 at 10:24 AM.
Page 7
    • B_Lofthouse
    • By B_Lofthouse 14th Jun 16, 2:58 PM
    • 2 Posts
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    B_Lofthouse
    I suspect that, like me this week, many others will have found, when receiving their annual pension statement with charges fully disclosed for the first time, they amount to rather more than had been imagined. An annual fee of 0.80% sounds quite small but I have found that in my case this equates to a deduction of about 11.25% of the premium I pay every month. Given the recent poor investment performance of the fund, I may as well be throwing money away. I do feel that the basis of charges and their actual percentages in relation to monthly contributions needs to be made much clearer.
    • bigadaj
    • By bigadaj 14th Jun 16, 3:30 PM
    • 10,693 Posts
    • 6,984 Thanks
    bigadaj
    I suspect that, like me this week, many others will have found, when receiving their annual pension statement with charges fully disclosed for the first time, they amount to rather more than had been imagined. An annual fee of 0.80% sounds quite small but I have found that in my case this equates to a deduction of about 11.25% of the premium I pay every month. Given the recent poor investment performance of the fund, I may as well be throwing money away. I do feel that the basis of charges and their actual percentages in relation to monthly contributions needs to be made much clearer.
    Originally posted by B_Lofthouse
    Charges are fairly clear, projections now show reduction in growth due to charges, your contributions are irrelevant if you are being charged a percentage fee based on your fund value as most pensions do.

    You can stop contributing, take out another plan, transfer your current plan if you find something that is cheaper with the range of investment options tart you require. This wouldn't be wise if it means missing out on an employer contribution but is an option.
    • dunstonh
    • By dunstonh 19th Jan 17, 2:55 PM
    • 89,561 Posts
    • 56,019 Thanks
    dunstonh
    I'm make, 38, income of around £40,000 a year. I would anticipate retiring around 70, and would like an income of around £20,000 a year.
    Is that with our without state pension?
    Is that household income or just yourself?
    Is that net or gross?
    What level of investment risk do you like to take?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • zhivago
    • By zhivago 14th Feb 17, 3:17 PM
    • 12 Posts
    • 10 Thanks
    zhivago
    Is it right that an employer can wind up an occupational pension scheme than set up a stakeholder pension plan that does not include any employer contribution?
    • xylophone
    • By xylophone 14th Feb 17, 3:28 PM
    • 23,426 Posts
    • 13,622 Thanks
    xylophone
    Is it right that an employer can wind up an occupational pension scheme than set up a stakeholder pension plan that does not include any employer contribution?
    An occupational pension scheme can be closed/wound up.

    However, I imagine that the auto enrolment rules would cut in regarding future pension provision?

    https://www.gov.uk/workplace-pensions/joining-a-workplace-pension
    • riverside campus
    • By riverside campus 13th Apr 17, 6:41 AM
    • 1 Posts
    • 0 Thanks
    riverside campus
    Re invest cash free lump sum
    :money:I am now 65 and can draw £50k tax free from my Money Purchase pot and put the rest in drawdown arrangement. Currently the pension charges for fund manager, financial. adviser, etc. etc. total apx. 2.6% Am I missing something? If I leave £50 k in the pot, I lose 2.6%. If I take £50k out and put it in cash ISAS, I earn 1 to 1.5 % tax free. it looks like a no brainer to me or do the Pension guys know yet another way to stop me using your own money?
    • Malthusian
    • By Malthusian 13th Apr 17, 9:09 AM
    • 3,294 Posts
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    Malthusian
    Am I missing something?
    Originally posted by riverside campus
    Quite a few things:

    Cash ISAs will guarantee you a nil return after taking inflation into account. Investing the money sensibly within the pension will give you a chance of growing your money in real terms.

    ISAs are less tax efficient than pensions. If you aren't going to spend the money why take it out?

    You can only put £20,000 in an ISA so the rest is going to be even more taxable than the cash ISA.

    If the charges total 2.6%pa then somewhere down the line you are paying more than you need to. How does that break down by fund managers, adviser etc?

    I could go on but those are the essential points you need to consider further.
    • dunstonh
    • By dunstonh 13th Apr 17, 9:22 AM
    • 89,561 Posts
    • 56,019 Thanks
    dunstonh
    If I take £50k out and put it in cash ISAS, I earn 1 to 1.5 % tax free.
    Why would you want to take it out of the tax free pension earning more than the cash ISA?

    Investments have explicit charges. They are disclosed. Savings have implicit charges. They are not disclosed. However, the charges on savings are actually about the same as the pension.

    Putting it another way, after charges on the pension you are probably averaging around 5% p.a. So, would you rather 5% after charges or 1.5% in the Cash ISA?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • bigadaj
    • By bigadaj 13th Apr 17, 1:44 PM
    • 10,693 Posts
    • 6,984 Thanks
    bigadaj
    I am now 65 and can draw £50k tax free from my Money Purchase pot and put the rest in drawdown arrangement. Currently the pension charges for fund manager, financial. adviser, etc. etc. total apx. 2.6% Am I missing something? If I leave £50 k in the pot, I lose 2.6%. If I take £50k out and put it in cash ISAS, I earn 1 to 1.5 % tax free. it looks like a no brainer to me or do the Pension guys know yet another way to stop me using your own money?
    Originally posted by riverside campus


    Probably quite a lot (missing something that is).


    Whilst you might be de risking at your age an equity heavy internationally diversified portfolio would have returned maybe 25-30% last year.


    A total fee of 2.6% looks expensive and should be at least 1% lower, however putting this into any cash investment now will almost certainly be losing money in real terms, your choice really.
    • stoozie1
    • By stoozie1 3rd Jun 17, 10:49 AM
    • 367 Posts
    • 211 Thanks
    stoozie1
    These pensions, sometimes referred to as defined benefit schemes or Career Average Revalued Earnings (CARE) schemes, are largely funded by employers, though staff sometimes have to pay into them. With one, you get a percentage of your final salary before retirement, or when leaving that firm, as an annual income.

    What that percentage is depends on how long you worked for that particular firm. There is normally an 'accrual rate' set by your employer as a fraction of your final salary.

    Say the rate is 1/60th, you get 1/60th of your final salary as a retirement income for each year you worked for that firm. So if you worked for 30 years, you'd get 30/60ths, or half your final salary with that firm.
    by MSEpensionsguide

    Hi MSE,

    Could you please have a look at this aspect of the guide highlighted above, as the final statement is not true of a CARE scheme, you get a revaluation of each year, NOT (for example) 30/60ths or half your final salary.

    I feel this is misleading.
    • AnneMoss4
    • By AnneMoss4 12th Jul 17, 12:49 PM
    • 1 Posts
    • 0 Thanks
    AnneMoss4
    Self employment, tax and pension
    I'm wondering if it's worth getting a pension if you are self-employed and don't earn enough to pay tax?
    • molerat
    • By molerat 12th Jul 17, 9:16 PM
    • 17,330 Posts
    • 11,517 Thanks
    molerat
    I'm wondering if it's worth getting a pension if you are self-employed and don't earn enough to pay tax?
    Originally posted by AnneMoss4
    What has being self employed and not paying tax got to do with how you are going to survive when you retire ? Put money into a pension and the tax man will top it up with an extra 20%.
    www.helpforheroes.org.uk/donations.html
    • OldBeanz
    • By OldBeanz 13th Jul 17, 8:47 AM
    • 693 Posts
    • 534 Thanks
    OldBeanz
    I'm wondering if it's worth getting a pension if you are self-employed and don't earn enough to pay tax?
    Originally posted by AnneMoss4
    Open a stakeholder, PP or SIPP and the Government adds 25% to the pension. Pay in £8 - they make it into £10. If you can match that without risk then let us know As long as you draw the money out gradually you do not need to pay tax on it either.
    • dekkard
    • By dekkard 15th Jul 17, 3:36 PM
    • 87 Posts
    • 20 Thanks
    dekkard
    Paying into old company pensions
    At the risk of asking a silly/newbie question, is there any reason not to continue paying into company pension plans after leaving the company?
    • bigadaj
    • By bigadaj 15th Jul 17, 6:09 PM
    • 10,693 Posts
    • 6,984 Thanks
    bigadaj
    At the risk of asking a silly/newbie question, is there any reason not to continue paying into company pension plans after leaving the company?
    Originally posted by dekkard
    The main reason would be because most companies and schemes don't allow it. Options are to leave the pension with the old company, transfer it into your new employers scheme if they allow it, or into your own personal pension or sipp.
    • jonon
    • By jonon 11th Aug 17, 9:20 AM
    • 15 Posts
    • 0 Thanks
    jonon
    self employed
    Question about self-employed pension contributions , self assessment etc.

    Are pension contributions seen as an expense? So on a £20,000 pre tax income, and £1000 contribution will mean you’re taxed on £19,000?
    • dunstonh
    • By dunstonh 11th Aug 17, 9:33 AM
    • 89,561 Posts
    • 56,019 Thanks
    dunstonh
    Are pension contributions seen as an expense?
    Not for self employed.

    ? So on a £20,000 pre tax income, and £1000 contribution will mean you’re taxed on £19,000?
    No. Contributions are net of basic rate tax relief for self employed.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • jonon
    • By jonon 11th Aug 17, 9:40 AM
    • 15 Posts
    • 0 Thanks
    jonon
    Not for self employed.


    No. Contributions are net of basic rate tax relief for self employed.
    Originally posted by dunstonh
    Hi Sorry for my basic questions.

    So if you make a contribution, say £1000 do the government add 20% into the pot?

    Then when you come to file your tax return the full £20,000 pre tax earnings is taken forward?
    • dunstonh
    • By dunstonh 11th Aug 17, 9:43 AM
    • 89,561 Posts
    • 56,019 Thanks
    dunstonh
    Hi Sorry for my basic questions.

    So if you make a contribution, say £1000 do the government add 20% into the pot?
    Originally posted by jonon
    No.

    If you make a contribution of £1,000, you write the cheque for £800 and the tax relief is added by the provider to make it up to £1,000. Pension contributions are referred to as gross. The 20% comes off the gross contribution.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • jonon
    • By jonon 11th Aug 17, 9:44 AM
    • 15 Posts
    • 0 Thanks
    jonon
    So if you contribute £800 the government add 25%?
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