Pensions 'v' other savings

dunstonh

At least the isa income is and will be cash free, unlike pensions.

Who says they will be?

The tax free status of a cash isa can be removed in any budget between now and then.

KG

Thanks for everyone's advice, but do you know what? I still can't get excited about pensions. I still feel that there is a chunk of the puzzle that is somehow missing and that makes it difficult to trust that my money will be safe.

Don't get me wrong. In understand the concept. I understand the potential issues, both now and in the future.

Maybe it's not a problem with the message that governement / financial advisers are putting out, but the way it is being put across. I still don't have a pension even after being bombarded with the idea that I will die cold, lonely and starving in a hovel having eaten my own eyeballs if i don't get one.

If I (and millions of others) haven't reacted by now to this scaremongering from some parts (yes - I stand by that as i really don't think it will get to the point of having to eat my own eyeballs, everyone had their own ideas bout what 'comfortable' is.) then surely you have to ask if that's the best approach to encourage people to think more seriously about their future.

Believe it or not, I am fairly intelligent. I know what needs to be done. What I need from the governement / financial advisers isn't a patronising 'oh my god how foolish are you?' response when i say I haven't got a pension.

What I need is an explaination of how pensions work, why I am not going to end up like the thousands of people who have paid into pensions for years and lost out, and what other options there are for saving. I also need recognition from whoever is advising me that my concern of paying into a pension and dying at the age of 40 and not reaping the benefit may only be a minor concern to them, but it is a genuine feeling that effects my decisions about pensions and needs to be addressed by giving me information not disregarding my concern.

What I, and I think many others, would like is not to be told 'you should have a pension' but to be given a little more information about the pros and cons of all of the options - no matter which the adviser thinks is best for me. If I am given the information myself I can evaluate it against my own priorities and maybe say 'yeh - I see that now, a pension is my best choice'.

If I am given the tools to come to that decision myself then I am much more confident and have a greater understanding of what I have bought into, which is much better than having a nagging feeling in the back of my head that i shouldn't have trusted a particular person or piece of advice.

I want to make sure I have a secure future, but i don't want to rush into making a bad choice because the government is panicking that I don't have a pension yet. I want the information to make a good choice.

So thanks to all of you who have provided some really useful information. It has given me something to think about.

For those of you who have tried to use patronising scare tactics - you may want to consider that you could be contributing to people's apathy and aversion to pensions, not making things better. At the end of the day, you don't know better than me, you just have more information.

KG

dunstonh

What I need is an explaination of how pensions work

What type of pension do you want an explanation on?

It would be easier to see what options are available to you and explain those. Otherwise you will get explanations on PPPs, SHPs, EPPs,SIPPS, SASS, FURBs, COMPS, Defined contribution, Defined Benefit, contracted in, contracted out.... etc etc etc

Your posts already indicate that you are mixing up things that have happened with some of those which havent happened on others.

ie:

I am not going to end up like the thousands of people who have paid into pensions for years and lost out

It would be much easier to look at what is available to you and then compare those options. That may not be something that can be done on a website because its too personal to post.

also need recognition from whoever is advising me that my concern of paying into a pension and dying at the age of 40 and not reaping the benefit may only be a minor concern to them, but it is a genuine feeling that effects my decisions about pensions and needs to be addressed by giving me information not disregarding my concern.

Why would you worry? you would be dead. You cant reap the benefit of it but at least your beneficiaries would. Depending on the type of scheme, it would be paid as a lump sum or an income to them.

Indeed, it is often remarked that the way to get the most out of a pension is to die the day before retirement.

For those of you who have tried to use patronising scare tactics - you may want to consider that you could be contributing to people's apathy and aversion to pensions, not making things better.

What you consider scaremongering, others consider a likely outcome. In reality, its likely to be somewhere inbetween as there is no way to tell what is going to happen in the next 30 years.

With just a couple of posts, its impossible to really sense what you think or know. We have to look at what you type and try and comment based on that. We also have to be wary that these comments are being read by other people who may or may not know what you do. They are also available to be read by the authorities who may decide to take action against those posting.

Forgive me here but I still don't get the sense that you are looking at it the right way round. You are appear to be fixated on pensions and not the real issue of providing an income in retirement. Personally, I'm not sure you know what you want in retirement or know what you are going to get. However, as i said, a few posts doesnt mean we know you and you could know exactly what you are going to get and what you want but just havent posted it. Lets work backwards and let those of us here help you investigate your options.


Do you want an income in retirement? If so, how much (use todays terms)
Does your employer offer any pension scheme?
Are you married? Does your partner have any schemes available?
how much can you save towards retirement planning?
when do you want to retire?
If you were to do nothing, what income what you have?

They are just a couple of the simple things that need to be considered. Apart from finding out if your employer offers anything, there is no talk of pension.

Milarky

... And just to 'complicate' things further, the House of Lords has just passed an amendment to the Pensions Bill that would scrap the current rule making it compulsory to use a pension 'fund' to buy an annuity before age 75. [This is going to get reversed back in the Commons soon!] No one - not even HMG - has a clear idea about pensions which sort of makes the application of 'common sense' a bit imprecise.

There might be a modification of the current rule on anniuties at the end the the day - or there might not. The talk is about limiting the amount of compulsory annuity purchase to equal the means-tested figure oft quoted of £105pw. Whatever...

So we can't really plan on the basis of what we arleady know of the rules - as retirement for most people having this debate among themselves is too far off...

I'm interested however in the 'budgeting' approach to this... which really asks how you should divide your savings rather than how you should divide your income between consuption and savings. I wonder where others would put the balance [in percentage terms, for instance] between pensions savings and non-pensions saving - 60% [pension] v 40% [non-pension] or sonething like that?

KG

Good point Milarky. I would be interested to know how other people split their savings too.

DD - I think you have missed the point on a couple of counts.

• I want the information on what's available so that i can make my own decision, I don't want to be given a prescription by someone else. I want to know what PPPs, SHPs, EPPs,SIPPS, SASS, FURBs, COMPS, Defined contribution, Defined Benefit, contracted in, contracted out, etc, etc, etc, pensions are so I can understand why I should choose a particular product myself. I haven't found this information anywhere that isn't trying to sell me something yet.

What you consider scaremongering, others consider a likely outcome.   In reality, its likely to be somewhere inbetween as there is no way to tell what is going to happen in the next 30 years.  

• My point was - I hear what you're saying, but i have heard it all before. It doesn't make what you are saying any less valid, but it does make me (and I suspect several thousand other people) switch off when they hear stuff like this. If we want people to take pensions more seriously we need to find another approach rather than trying to scare them into action. Scaremongering is still scaremongering regardless of whether the fear is imagined or very real. So, feel free to keep in typing / saying this stuff, but bear in mind that people like me will just glaze over and presume you have nothing new to say.

Forgive me here but I still don't get the sense that you are looking at it the right way round.    You are appear to be fixated on pensions and not the real issue of providing an income in retirement.     Personally, I'm not sure you know what you want in retirement or know what you are going to get.  

• I think you will find that the original post was looking at pensions v other options. Therefore I really don't understand how I am fixated on pensions. In fact, if anything, I want to know more about the other options available. I do know what I want in retirement. I also know it differs greatly from what many people think they want in retirement, which is why i am asking for the information so I can make the decision myself.

So - can anyone talk 'products' to me without assuming that I am clueless or that they know the right solution?

KG

paul666

I haven't found this information anywhere that isn't trying to sell me something yet.

you should try the fsa consumer website. There is a huge amount of information on pensions in there.

It doesn't make what you are saying any less valid, but it does make me (and I suspect several thousand other people) switch off when they hear stuff like this. If we want people to take pensions more seriously we need to find another approach rather than trying to scare them into action. Scaremongering is still scaremongering regardless of whether the fear is imagined or very real. So, feel free to keep in typing / saying this stuff, but bear in mind that people like me will just glaze over and presume you have nothing new to say.

Jeeze, one second you want to know all about it, then a second later you don't want anyone to explain!

You either take responsibility for your future,



or you don't.

Unbelievable_2

However, the ability to save outside a pension potentially after 2006 means that doing so in that way will be largely 'reversible' in terms of swtiching into a pension later on.

I was keeping up quite nicely at one point - but I'm not sure what you mean by this?

paul666

Of course, this way you don't get the compounding effect on the tax relief as you would of if you invested it all in the pension in the first place

No. It doesn't matter whether the tax relief is done on the contributions as they go in or on the ISA fund as it enters the PP. The answer is the same. You loose nothing by stuffing money in an ISA for later bulk contribution - as long as you're earning enough to get it into the PP before you want to retire and as long as the rules don't change (yeah right...)

dunstonh

It is very useful for company directors though who are getting the push and the pay off can be a lump sum contribution to their lifetime limit in one go rather than been held back by the salary cap.

KG

Jeeze, one second you want to know all about it, then a second later you don't want anyone to explain!

You either take responsibility for your future,


or you don't.

I think my point was it's pretty safe to assume i have heard this before.  This is the message we are all being bombarded with.

Therefore there is little point reitterating the point.  What I want is facts (thanks to everyone for the facts BTW) not a lecture. Facts I am interested in. Lectures I turn off from.

KG