'Is your company offering money for a pension? TAKE IT TAKE IT TAKE IT!' discussion

DaftMule

What you said in your blog makes a lot of sense re tax. Pensions are not a solid-as-a-rock investment 100% of the time though unless you know what you are doing and that is where people come unstuck.

Unless your pension is invested in a lifestyle fund of some sort you are still subject to the whims of the stock market at the maturity date. 40 years of saving into a pension could be for nothing (relatively speaking) unless your money is being moved into bonds in the years approaching your retirement. Not sure if it is standard practice for all pensions to be invested by default into lifestyle funds? I hope it is as most people wouldn't have a clue what their pension is invested in.

Of course, if you choose a more risky avenue for your pension investment and know the consequences then that is your gamble.

graduate

BoingBoing wrote: »

Why save in a pension if you've worked all your life, paid your NI contrubutions, and deserve a decent (haha) state pension?

I recently had some free financial advise from an IFA and one of the things that we discussed was pensions. One of the things that she said was that by the time I reach retirement there is unlikely to be a state pension (I'm 23). Is she right?

nevster11

When I was in my 20s I used to think of pensions and retirement as being boring and that they didnt apply to me because I was too young. That was before someone explained it properly: Its not just retirement from work where you're going to sit around and do nothing, its the longest HOLIDAY of your life and you need to save as much spending money for it as you can. If your employer and the government (through tax concessions) are willing to chip in too then why not take advantage? Get Saving!!

claralou

Apologies for cross-posting... I have posted a similar question elsewhere but not had a reply yet and Martin's blog touches on the same issues so thought I'd post here too.

If the risk is in the investment, as Martin explains, can you review what you have invested in and change decisions you made years ago when you first signed up to a pension?? I ticked some boxes when I first set mine up but didn't really have a clue what I was doing. Have just noticed my pension has lost value over the last year. Not sure if this is just inevitable with all this credit crunch business or if I should interpret it as a wake-up call to review the investment choices I made, if this is even possible...

DaftMule

claralou wrote: »

Apologies for cross-posting... I have posted a similar question elsewhere but not had a reply yet and Martin's blog touches on the same issues so thought I'd post here too.

If the risk is in the investment, as Martin explains, can you review what you have invested in and change decisions you made years ago when you first signed up to a pension?? I ticked some boxes when I first set mine up but didn't really have a clue what I was doing. Have just noticed my pension has lost value over the last year. Not sure if this is just inevitable with all this credit crunch business or if I should interpret it as a wake-up call to review the investment choices I made, if this is even possible...

You'd need to contact the pension provider for the answer to that, but my company pension certainly lets me tweak the portfolio it is invested in (not that I bother). There may be a limit to the number of times you can change your portfolio and don't forget that certain funds will carry different AMC's (Annual Management Charges) so chopping and changing could end up costing you a bit in AMC's.

If you are with a reputable provider, I'd hope the default fund your pension is invested in will be a good one with a lifestyle element attached. Quite often it is hard to beat the performance of these default funds unless you really know your eggs in terms of the investment markets.

Stuart007_2

If i'm honest i dont understand ANY of this. This always happens with pension discussions, people who know what they are talking about discuss what they already know and confuse the rest of us.

IS IT ANY WONDER WE DONT GET PENSIONS?

All i know is i have had had 3 private and 3 company pensions ( 1 still running). None of them can be merged to save me paper or to consolidate my money.
My company pays £250 per month into my pension and i would not have the foggiest if its worth the paper its written on.

Simple things make money. Simplify the pensions and people will use them

colneygirl

May be worth noting that Employee National Insurance contributions on Band Earnings are reduced by 1.6% if you are a member of a Contracted-Out pension scheme.

These are schemes where you are Contracted-Out of the State Second Pension and would therefore receive less State Pension in respect of that period.

Obviously if you qualify for the former Married Womens' stamp (E Rate) or are over State Pension Age (C Rate) you do not currently pay National Insurance contributions, so this would not apply.

vivatifosi

Stuart007 wrote: »

If i'm honest i dont understand ANY of this. This always happens with pension discussions, people who know what they are talking about discuss what they already know and confuse the rest of us.

IS IT ANY WONDER WE DONT GET PENSIONS?

..........

Simple things make money. Simplify the pensions and people will use them

Stuart you are absolutely right. Even as a trustee there's tons of stuff about pensions I don't understand. There is a need for way more knowledge for the average person on the street. As understanding and managing your pension is a useful skill for life, I can't see why it isn't available as an adult learning course, alongside computer skills and advanced driving.

Meanwhile if you don't understand your own scheme, go badger your scheme administrator or trustees until you do. While they can't and shouldn't advise you on suitability of pension or help in the same way as an independent financial advisor, they should have scheme documents so that members can gain some understanding of what they are investing in and how it works. In our scheme our door (or more realistically due to geographical spread e-mail in box) is always open to people with questions whether from pensioners, deferred or active members.

vschap

Could someone help me (I'm sure there would be others like me) with some basic pensions' understanding?

I am 30 and just joined a company which has a Company Pension Scheme. Now, I am not sure:

1. What happens if I leave the company?
2. Is there any circumstance (apart from reaching retirement age) when I can withdraw money from this pension account? And is it taxable at that time?
3. What happens if I stop working for some reason? Do I get some pension funds back?
4. What happens if I leave the COUNTRY & get settled elsewhere?

Thx in advance!

VS

Freddie_Snowbits

When on my apprenticeship in 1978, our boss advised us about the Company Shop, Sports Club, Thrusday night and the Pension Fund. he advised that we should not put a penny into the pot, as by the time we reitre, there would be nothing left! i still believe he was right, although it could be said that HMG stole most of my pot though.

Alas to say, Sports Club investment of 5p per week from September 1978 until January 1980 produced in 1999 £1950 as the field etc was sold to a supermarket. Now the latter is sound investment indeed. As for Thursday night, it was compulsory to drink a session beer and then have PE on Friday morning. Ah happy days were them!