Pensions - Are They Really Worth Having?

littld

macca64 wrote:

Surely if you expect it fall, surely you should stop contributing to it?? Or switch your investments to a different asset class??

I'd doubt that future performance will be less than 2% before charges, if you invest in the right areas, but that's just my opinion. Don't forget the dividend yield on the FTSE 100 is approx 3%+

The thing is if I stop paying in, my employer will stop as well. So even though I expect the value to fall, I get something because my employer pays in.

Where did you get the 3% from? Over the past 7 years I'd estimate the fund has fallen about 1% each year.

dunstonh

I'm another who has paid into a pension each month for several years and the value is less than I put in.

While I appreciate that many feel the stockmarket will rise (becuase it always has before), there are no guarrantees.

Past performance is not a guide to future returns.

I fully expect the value of my pension fund to fall over the lifetime as the stockmarket fails to perform and the fund manager takes his cut every year.

I remain to be convinced that I will really benefit from any of these savings.

If future performance is less than 2% p.a. and the annual management charge is 1% p.a. and we have inflation then it's not looking good, is it?

The stockmarket is still considered the only way to achieve the best potential for long term growth based on the risk taken. Your failing is not understanding how investing works (which is nothing to be ashamed of - most dont). This stockmarket crash is perfect for those with long term regular savings goals. Whether it be unit linked endowments, pensions or ISAs. That is, as long as they were invested in the stockmarket.

Yeh, so much for 7% per annum... :rolleyes:

Hold on a minute. We have had a short term stockmarket crash. Obviously anyone who has been paying in for just 5-10 years is going to see a drop if they had invested in those areas. However, thats not a bad thing. Its a good thing if you still have 10+ years to go. I didnt realise that you were that naive with investments deemy. Although your cash ISA comments should have given me a clue.

Its the way the stockmarket goes. You wait until you get this years statement and see how much its gone up by.

If you dont want the volatility of the stockmarket, then dont invest in it. However, it has absolutely nothing to do with the pension.

netlang

A while back I decided to take control of some investments I did some research into 6 companies and put £500 of shares into each company. Also, as a little game I put £500 into 6 different phantom shares that I did not do any research on whatsoever (just liked the sound of the name).

As of this morning the real shares are showing -19.32 %
As of this morning the phantom shares are showing 67.46 %

What I am trying to show here is that I received professional advice on what and where to invest and it has not done very well. I took matters into my own hands and carefully researched and invested and did even worse. I picked some companies I liked the sound of but knew nothing about and they have done very well. So does this mean If I was wealthy and had loads of money to invest without any worries I would be even wealthier. Or maybe I am just unlucky.

littld

dunstonh wrote:

The stockmarket is still considered the only way to achieve the best potential for long term growth based on the risk taken. Your failing is not understanding how investing works (which is nothing to be ashamed of - most dont). This stockmarket crash is perfect for those with long term regular savings goals. Whether it be unit linked endowments, pensions or ISAs. That is, as long as they were invested in the stockmarket.



Hold on a minute. We have had a short term stockmarket crash. Obviously anyone who has been paying in for just 5-10 years is going to see a drop if they had invested in those areas. However, thats not a bad thing. Its a good thing if you still have 10+ years to go. I didnt realise that you were that naive with investments deemy. Although your cash ISA comments should have given me a clue.

Its the way the stockmarket goes. You wait until you get this years statement and see how much its gone up by.

If you dont want the volatility of the stockmarket, then dont invest in it. However, it has absolutely nothing to do with the pension.

Thanks for the comments. You're right - the issue is probably more with underperforming stock rather than the pension itself.

I will try and see if I can switch the investment to cash instead. If that's an option, at least I might get interest that way.

I suppose the assumption you're making is that the stockmarket will recover at some point. With the world events as they are, I don't think it will.

crazymum_2

Could anyone please help. For the last 15 years I have not worked as I have been at home looking after our 6 children. In this time my husband has paid into a personal pension plan. Now I have started working as a childminder and have a small income from this. I would like to pay most of this (if I am allowed) into a pension plan for myself. The amount would be about £200 per month. I have no idea where to start looking for a pension plan and I am aware there are limits on how much I am allowed to pay into a plan.
Any help would be much appreciated.

macca64

littld wrote:

The thing is if I stop paying in, my employer will stop as well. So even though I expect the value to fall, I get something because my employer pays in.

Where did you get the 3% from? Over the past 7 years I'd estimate the fund has fallen about 1% each year.

The 3% is the current FTSE 100 dividend yield, but this does not include capital gains/losses.

Ok so your employer pays in, so have you made money just on your contributions? Eg. You put in £100, employer puts in £100, fund value £180, so you have made £80?? If so I understand why you contribute.

macca64

crazymum wrote:

Could anyone please help. For the last 15 years I have not worked as I have been at home looking after our 6 children. In this time my husband has paid into a personal pension plan. Now I have started working as a childminder and have a small income from this. I would like to pay most of this (if I am allowed) into a pension plan for myself. The amount would be about £200 per month. I have no idea where to start looking for a pension plan and I am aware there are limits on how much I am allowed to pay into a plan.
Any help would be much appreciated.

You could try a stakeholder pension, can pay in £3,600 a year regards of income.

dunstonh

I suppose the assumption you're making is that the stockmarket will recover at some point. With the world events as they are, I don't think it will.

It already has as far as I am concerned. My fund values are well up on what they were before the stockmarket crash. The FTSE value may not be back up there but with dividends/income paid back in, that has pushed the fund values back up. Plus, I dont expose my self heavily to the UK alone.

I will try and see if I can switch the investment to cash instead. If that's an option, at least I might get interest that way

You can but thats just daft. Its going from one extreme to another.

It comes back down to where you invest and investing in just one place is not a good thing. However, far too many people invest just in one fund.

Gordon Brown has stiffled the stockmarket and his policies have helped fuel the underperformance of the UK stockmarket compared with others. I've mentioned this before and it was nice to hear it mentioned on TV last night. With him likely to continue with his destruction of the UK financially, then investing in the UK stockmarket alone would not seem to be a sensible idea.

So, dont stick it all in the uk stockmarket, and dont stick it all into cash.

Also, as for advisors giving fund recommendations, it should be noted that only IFAs can give fund recommendations. Tied agents are not allowed to. That means if you bought your pension from a tied advisor (such as Pru, Pearl, most of the banks and other home service saleforces) then you are responsible for picking the funds. What usually happens in these cases is you end up in the bog standard managed fund or with profits fund. These also tend to be rather poor funds. Either see an IFA or be confident to select a porfolio of funds yourself, if you feel you have the knowledge. However, dont just sit back complaining about performance when you are invested in just one fund. Do something about it. Its only you that is going that will lose out if you dont.

al_yrpal

littld wrote:

I'm another who has paid into a pension each month for several years and the value is less than I put in.

While I appreciate that many feel the stockmarket will rise (becuase it always has before), there are no guarrantees.

Past performance is not a guide to future returns.

I fully expect the value of my pension fund to fall over the lifetime as the stockmarket fails to perform and the fund manager takes his cut every year.

I remain to be convinced that I will really benefit from any of these savings.

If future performance is less than 2% p.a. and the annual management charge is 1% p.a. and we have inflation then it's not looking good, is it?

What a negative view - you have been reading the newspapers! That is because you are a 'lazy' investor (an investor is what you are if you have a pension). You cannot expect any investment to make money if you just leave it (that is what saving does, but at an abysmal rate of appreciation). The only way to make money grow is to work it, and that means moving it from where it's losing from time to time to where things are growing . From bitter experience I know that too many people (including me at one time) are either too busy, or too lazy to work with their money - that doesn't work. If your'e too busy consult a good IFA, if your'e too lazy get off yer butt!

EdInvestor

It comes back down to where you invest and investing in just one place is not a good thing. However, far too many people invest just in one fund.

This is a hangover from the old days when people were advised to invest in the With- profits or balanced managed fund which covered all the bases - local stocks, overseas stocks, property, bonds, cash. Now the fashion has changed and we are told it is better to invest in the same stuff but separately :rolleyes:

With him likely to continue with his destruction of the UK financially, then investing in the UK stockmarket alone would not seem to be a sensible idea.

Eh? Gordon Brown has destroyed the UK financially? Could have fooled me ( have you checked how much your house is worth lately)?

The stockmarket started to recover in April 2003 when the war with Iraq started and has been doing very well ever since.By contrast the US market is flat.