Pensions 'v' other savings

margaretclare

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

Hi

I think DD's post on the 17th was as clear as you can get it.  You say you don't want people 'selling you things' - well, if you ask for details of different products that's what you're going to get.  General information and basic principles you see as 'lecturing'.  Details of products you see as 'selling you things'.

You say you, and others, are 'turned off by the idea of pensions'.  And you also say that none of us can tell what will happen in 35 years' time.  Well, that's certainly true.  But one thing you can be pretty sure of, is that if you're still alive in 35 years' time and at some point want/are forced to stop working, you're going to want an income to live on.  I would have thought that it makes sense to save out of what you're earning now, in order to have a fairly comfortable life in the future.

Me, I think the idea of a stakeholder pension is pretty good - with low charges and an additional amount from the taxman which immediately increases your contribution e.g. £78 increases to £100.  Even better if you have an employer who's willing to match you pound for pound.  For other savings, I think Martin's idea of a 'money fountain' is pretty good i.e. ISA plus other savings at high interest.  You need money for long-term, for the future e.g. retirement, you need it for medium-term e.g. deposit for a house, and you need it for short-term e.g. save for your next holiday.  May be simplistic, but that's how it all makes sense to me!

Margaret

KG

Thanks Margaret. That last paragraph was really helpful - that's what I need.

However, your first two paragraphs make me feel like I still need to emphasise the following:

1) I know that if I live to the average age and want to have a few years of not working before I die I need to make provision for an income. I don't need to have that empahsised again. I well and truely got that point many years ago.

2) Maybe 'turned off by the idea of pensions' is wrong. I am turned off by the lectures (point 1 being emphasised over and over again like I am a child is quite patronising) . I am also turned off by how difficult it is to get a simple answer to my question without people who are associated with certain products 'selling' them.

3) I want information on the actual products from people like you guys - people who know a bit about a product but aren't in for a wedge of cash if I decide that's the best route for me. I don't count this as 'selling' because you don't gain anything from it. That way I know you're unbiased.

Your unbiased info is much appreciated Margaret. And thanks too to Paul666 for info on the FSA website - I will look that up.

(Apologies for not thanking you in my last post Paul 666 - you see I found the 'you either take reponsibility for your future or you don't' comment quite patronising (see point 1) which me see red and ignore your really helpful information. That's what I am saying you see - you gave me some really good information, but because I felt like I was being lectured I 'turned off' to your whole message originally. Just trying to explain this because this is the attitude I get bombarded with when i try and find out about pensions (not just from you Paul666 - I'm not meaning to pick on you.). It's not helpful because I am trying to take repsonsibility for my future. Many other people are too. We're just not looking to be patronised or belittled in the process. We're looking for information and facts. That's all.)

KG

paul666

KG - sorry I was a little 'terse' earlier ::). I was almost dreading to come back and see what kind of response I got. It's kind of you not to be too angry with me

We're looking for information and facts.
Unfortunately, retirement planning is a vast subject and the legislation is changing all the time. It's difficult to give good advice that all would agree with.

As an IFA who identifies himself as such, I have a huge admiration for DD on this board. He takes the time to type well written, considered posts and asks for very little in return.

As a favour, check out this bbc news report. It's from Malcolm McLean that I've seen a few times on working lunch or heard on radio 4's money box. A very wise, reasonable man in my opinion.

These are his 10 golden rules...
http://news.bbc.co.uk/1/hi/business/3736826.stm

Regards
-Paul.

margaretclare

Thanks Margaret.  That last paragraph was really helpful - that's what I need.  

However, your first two paragraphs make me feel like I still need to emphasise the following:

1) I know that if I live to the average age and want to have a few years of not working before I die I need to make provision for an income.  I don't need to have that empahsised again.  I well and truely got that point many years ago.

2) Maybe 'turned off by the idea of pensions' is wrong.  I am turned off by the lectures (point 1 being emphasised over and over again like I am a child is quite patronising) .  I am also turned off by how difficult it is to get a simple answer to my question without people who are associated with certain products 'selling' them.

3) I want information on the actual products from people like you guys - people who know a bit about a product but aren't in for a wedge of cash if I decide that's the best route for me.  I don't count this as 'selling' because you don't gain anything from it.  That way I know you're unbiased.

Your unbiased info is much appreciated Margaret.

I apologise, KG, and I didn't mean to sound patronising. Maybe I should explain - I'm totally unbiased because I'm not a 'professional', I have nothing whatsoever to gain from plugging this or that product. It's just that I've lived quite a long time, made some wrong decisions which I regret, made some good decisions (like opting to pay the full NI contribution all those years ago, when many other working married women chose the other option). If I give advice it's only because I've gained that lifetime of experience. But this again can be resented by some people, who interpret what I say as 'we had it hard in my younger day, you don't know you're born now...' Nothing of that is intended, I can assure you!

Although I paid into the NHS pension and therefore gained from that, and paid full NI conts so gained from that, I could have saved a lot of the money that I wasted over the years. And that, I think, is where the threefold approach comes in useful - long-term, medium-term and short-term. Martin's site is extremely useful, and I wish this kind of info and advice had been available to us decades ago.

Best wishes

Margaret

dunstonh

1) I know that if I live to the average age and want to have a few years of not working before I die I need to make provision for an income.  I don't need to have that empahsised again.  I well and truely got that point many years ago.
2) Maybe 'turned off by the idea of pensions' is wrong.  I am turned off by the lectures (point 1 being emphasised over and over again like I am a child is quite patronising)

I'm sorry that you feel that you have been patronised to.  However, the points raised were valid and we are not in a position to know what you do and dont know so have to assume that you dont until you say otherwise.  Especially as you said your knowledge wasnt that good.

Thanks Margaret.  That last paragraph was really helpful - that's what I need.

Doesnt mean it is right for you.  You could be earning over 30k a year and have a final salary scheme available.   You cant do the same as Margaret in that case.  

That is the reason the FSA doesnt allow advisors to give advice without knowing the circumstances.   You are seeing it as being difficult.   It isn't.   It is acting within the rules.  

I am also turned off by how difficult it is to get a simple answer to my question without people who are associated with certain products 'selling' them.

Would you prefer that i answered "take out a stakeholder as it is very good" and then find out 10  years down the road that you actually had a final salary occupational scheme available?  Ok, you would be happy now that you had a simple answer but not in 10 years when you found out how much you lost out.  I would be fined, be responsible for compensation and possibly be put out of business.  

3) I want information on the actual products from people like you guys - people who know a bit about a product but aren't in for a wedge of cash if I decide that's the best route for me.  I don't count this as 'selling' because you don't gain anything from it.  That way I know you're unbiased.

What you want is an awful lot of work.  The available product list and information on all those would be quite extensive.   If a client was asking the same, I would probably charge £250 for it.

By narrowing down the options a bit, we can elminate the vast majority of the available product areas and then concentrate on what would be more appropriate for you. It may be that only one, two or three options are valid for you.

Then you can get your simple generic answers.

margaretclare

Hi DD

I should have made clear - I was in an employer's scheme i.e. the NHS. But I still should have made other arrangements for the years when I didn't work for the NHS, and I should have saved more. That's where life experience comes in.

I think one of the most pernicious soundbites that any Government ever came out with was 'we'll take care of you from cradle to grave'. Some people actually believed that!!! I've heard older people now, bemoaning the inadequacy of their income, and actually quoting it!

Margaret

Robert_Sterling_3

Who says they will be?
The tax free status of a cash isa can be removed in any budget between now and then.  

I thought the Tax Free Status was "guaranteed" for ten years from when ISAs started.

dunstonh

I thought the Tax Free Status was "guaranteed" for ten years from when ISAs started.

When launched 6/4/99 it was for an initial 10 years but reviewable after 7 years to decide on what changes may be requireed at the end of the scheme.

Only two years later it received it's first emendments and here we are in year 6 and there has been the removal of the tax credit on dividends on PEPS and Equity ISAs and the contribution limits are changing in 2006.

I wouldnt call it a guarantee but more of an assurance that a product called ISA will exist for new business for 10 years.

An Equity ISA was more or less a PEP with a few tweaks. It was abolished, with the TESSA, to get rid of the Conservative savings schemes and introduce the Labour schemes. A change of Govt next time round and who knows what happens.

I dont think anyone is expecting the tax free status of Cash ISAs to be removed in the short to medium term but who knows. ???

KG

Cheers all for the helpful advice.  

DD - I know what you mean.  It is a lot of information I'm asking for.  Which is why I am asking lots of you rather than just relying on one person.  I know that many of the products out there won't be right for me, but I have beter peace of mind knowing exactly why they're not right for me.

You're right - 'a stakeholder pension is good' is no more useful to me than 'a stakeholder pension is bad'.  What I am keen to know is 'I chose a stakeholder pension because...' and 'I carried on with my NI contributions but wish I hadn't because...'.

Then I can use other people's experiences, as well as the sales pitches from professionals and my knowledge of how my own situation is different / similar to what you guys have experienced to make the best decision.

Cheers all for all the info so far. It's worth the work if I get it right.

KG

margaretclare

What I am keen to know is 'I chose a stakeholder pension because...' and 'I carried on with my NI contributions but wish I hadn't because. KG

Hi KG

I think you're right to ask around as much as possible, not only among the professionals but among those with past experiences.

However, opinions will still vary. For example, all the years I was a working married woman I was told by many people what an idiot I was not to opt for the reduced NI contribution when I could have the money in my hand 'now'. And also, I could have reduced my hours in the NHS so as not to be in their pension scheme (at that time open only to full-timers). I deliberately chose not to do either. The received wisdom was: leave all that to your husband, and 'depend' on him for pension provision. That was official Government doctrine as well! Now, all those women who gave me that advice are retiring into poverty. I always believed that it was better to make my own choices, own decisions, and rely mainly on my own efforts.

I started a stakeholder just a couple of years ago, to mature in August 2007, so it won't have as long to run as professionals like DD would advocate. But it will give me a little bit extra at a time when I might need it.

If you're a young man with a family, think of life assurance first. My first husband 'didn't believe' in it - so his death coincidental with my redundancy (in the NHS - yes, really!) left me in a parlous state financially. Working and saving has really been the only answer for me. Then think about the long-term, the medium-term and the short-term, as I wrote earlier.

If you can join an employer's pension scheme where they match you pound for pound, great. And also take advantage of the taxman giving you £22 for every £78 you put in.

Best wishes

Margaret