controversial dig at savers

Aegis

john_s wrote: »

Out of interest, how come defined contribution pension schemes only let you buy an annuity with the lump sum? Or are there schemes that allow you to use the lump sum for other investments/purposes? Or have I misunderstood defined contribution schemes?

The lump sum is tax free and yours to do what you wish with. The remainder is used to provide an income, either through unsecured drawdown or purchase of income-producing assets, often in the form of an annuity. You're certainly not obliged to buy the annuity...

Any

I partialy agree and partialy disagree with the OP...

Yes, savings is not the most reliable source of income... That said, many people who are now retired have been in past screwed up on their pensions by our dear government or have seen it happen and as such don't really trust pensions any more...

Also many older people who were sensible enough to save up were only working class who knows nothing about investments.. were not educated enough to understand.

As fo using FA - have you recently seen TV and how many FAs and fund managers screwed up? How FAs were not advising you as what is best for you, but for the highest commission they were offered??

I personally have a pension - but am also planning on saving cash. Hopefully I won't starve to death once I retire.

However, I also agree with some of the previous posts.... We are not earning that little interest because "interest rates changes with time...", but because there are greedy people out there who spend loads of money they never had and now are in trouble and so our dearest government has decided to screw the sensible and help the greedy!!!

That is MHO anyway..

ryandj

People seem to think that it is their right to have a high interest rate savings account. What everyone seems to forget is that savings accounts are run by banks as a business, not out of the kindness of their hearts to reward people for saving their money. As such, they can, and do, pay whatever rate of interest they want to on the money. So we had a few years with high(ish) interest rates, good for the savers, but now its gone lower they (me included) just have to accept it.

john_s_2

Deleted post, sorry, hadn't read one I was replying to properly :-)

LesU

ryandj wrote: »

People seem to think that it is their right to have a high interest rate savings account. What everyone seems to forget is that savings accounts are run by banks as a business, not out of the kindness of their hearts to reward people for saving their money. As such, they can, and do, pay whatever rate of interest they want to on the money. So we had a few years with high(ish) interest rates, good for the savers, but now its gone lower they (me included) just have to accept it.

No, I don't expect high rates as a right. What I do object to is ridiculously low rates because the banks haven't been run as a business. If they were ordinary companies they would now all be out of business. So what we have are so called 'businesses' that can be run in a reckless way, because they can never go under. If they get into trouble then everybody else has to bail them out. Are the whizzkids with their super lifestyles really going to suffer, like they are making millions of other people suffer?
Give it a few years and they will all be back, new jobs, new companies and the same gungho approach to running things. Let's face it, they have got away with it again.

Entertainer

Don't forget, low interest rates means low inflation, so if inflation falls to 1% this year and you get 3% on your savings you are still getting a 2% real return. And we are at the low point in the interest rate cycle with the recession. In recent years, real returns have only been around 3-4% at best.

It is in everybody's interest to keep the recession as short as possible even if you think that you are immune from it's effects, for example, a retired person, who is not affected by the labour market. Ultimately, everyone will pay for this recession through higher taxes and lower government spending later, to the tune of hundreds of billions of pounds. This government in particular has proven its liking for stealth taxes such as big hikes in council tax which almost everyone pays.

Entertainer

ryandj wrote: »

People seem to think that it is their right to have a high interest rate savings account. What everyone seems to forget is that savings accounts are run by banks as a business, not out of the kindness of their hearts to reward people for saving their money. As such, they can, and do, pay whatever rate of interest they want to on the money. So we had a few years with high(ish) interest rates, good for the savers, but now its gone lower they (me included) just have to accept it.

No, the government sets interest rates through it's state organ the MPC by varying the minimum lending rate. There is not a free market in interest rates.

home_alone

Looking back over this thread it leaves me no wiser what to do with my money, apart from buying a really good burglar alarm, because with everything that is now happening the only things likely to increase are crime and unemployment, oh and MPs pensions.

gary

azureblue_2

So do we think darling Darling will help hard-pressed savers by reducing/scrapping tax on interest come Budget Day?

Any

I doubt it Azureblue... This government is far too greedy and thanks to the fact that reducing VAT already cost them so much money (while the normal folk hardly noticed the difference..) they cannot really afford it..