Are you also saving for retirement?

Dithering_Dad

Yep, I have a Company/Personal Pension and/or ISA savings

Cannon_Fodder wrote: »

DD, short answer - "the unknown".

There are concerns of fairly recent pensions activities;

"Threat of fresh pension scandal - People who switched to group schemes may have been mis-sold"
http://www.timesonline.co.uk/tol/money/pensions/article1942066.ece

"Pension sales: a future scandal?"
http://www.guardian.co.uk/business/2007/nov/18/businesscomment.businessandmedia1


PLUS, concerns over the Govt's own NEW scheme...

"Pension scheme 'scandal in the making' "
http://www.ft.com/cms/s/0/a7b5a888-35bc-11dd-998d-0000779fd2ac.html?nclick_check=1


Now I fully acknowledge my limited experience with pensions, and am not rubbishing the whole industry, indeed I am using my employer's own scheme to take advantage of their contribution, as you did.

But equally, just like anything in the future, NO-ONE can KNOW what sort of scandal, small print, or sheer incompetence will result in a financial loss for an individual 10, 20, 30 years from now.

...or, what get-out clauses, loop-holes, or sheer incompetence will result in failure to obtain redress. We cannot foresee the future.

Whilst there are headlines out there, like the above, there will inevitably be concerns. Whilst unproven for the time being, it may appear negative to dwell on them, and many don't know how to avoid the risk anyway, however slight, so I would say "spread the risk";

- take advantage of any employer contributions
- put a proportion into Pension
- but, ALSO, put a proportion into ISA
- if you change employers, my personal opinion is that you should leave chunks of pension "dormant" with each ex-employer - if for some unforeseen reason the last employer's pension doesn't do as well as hoped, better if you haven't got all your eggs in it...


Looking again at DDs comments, which I know he knows his stuff on, I would also observe that he's been DIY on Pensions for some time. Other people don't have the time or mathematical/financial acumen to take on DIY for something as complex as Pensions. Anyone with an employer who will do it for them, will barely think about it - indeed its a struggle to encourage youngsters to start as early as possible, let alone understand the details.

So, while agreeing with the idea of pensions, I regret that the Govt have failed to make them foolproof, such that they even need any compensation schemes.

Great post CF. I especially agree with the 'eggs in baskets' post, diversification is key to protecting yourself, both within your pension plan itself and with your other retirement savings.

As usual though, the fear of something is usually much worse than the actuality. Millions of people have pensions and have had no problems whatsoever, a few unfortunately have had problems. However, this is the case with any financial product, including cash savings. Had the UK somehow dodged the global banking problem, would they have so readily guaranteed people's savings in the Iceland banks?

My approach is to weigh up the odds. I'd rather have a 1% chance of losing my retirement money than have a 99% chance of retiring into the poverty supplied by the state pension. (99% because one might receive an inheritance or lottery win to fund retirement!)

Everyone is different and everyone had different fears. Some fear that their hard-earned savings could be lost to fund managers, fraudulent investment groups and government tax raids. My fear is being elderly and in poverty.

I've been poor in the past but I've always had my health and I've simply worked all hours and done all sorts of jobs to turn things around. This is simply something you cannot do when you're old and infirm. I'd rather have a less extravagant lifestyle now and make sure that I'm comfortable in my old age, than live a hedonistic life and spend my 'golden years' worrying whether I dare put the gas fire on for more than half an hour.

EDIT: Just had a thought about the "if you change employers, my personal opinion is that you should leave chunks of pension "dormant" with each ex-employer - if for some unforeseen reason the last employer's pension doesn't do as well as hoped, better if you haven't got all your eggs in it..." idea. I did this with a couple of my pensions, for exactly this reason and then I found out that both of my employers invested in the same single Legal and General fund (a lifestyle 60% UK, 40% overseas). Having all that money in a single fund with a single investment company could have been a disaster!

Pobby

Yep, I have a Company/Personal Pension and/or ISA savings

So agree DD. Would much rather be a bit frugal now and have a fairly decent retirement later. Looking around me others choose to party now and to heck with it. Their choice.

Mse has been brilliant for me. We did a financial spring clean, savings to the tune of well over £300 per month out goings. That`s a saving of £3,600 a year extra that can be put back for use later.

I wonder if other posters here have changed their way of thinking due to Mse. Certainly this is the case on the dfw board.

I do admit that I have a liking for cars. Was spoilt for years driving large, expensive company cars. In the past I have wasted a fair bit on motors. I was taken aback just recently. A relative took out £17k as a loan to buy a car less than 2 years ago. Circumstances have changed and they might have to sell. Going rate for said car is a little over £8k now. So I guess they will be left with nothing and still have some of the loan to pay off.

Anyway, I can by an 8 year old luxy poo car for very little now. Most of the depreciation gone and very little to spend out in buying it. Wish I had thought that way some years ago.

Snooze

Dithering_Dad wrote: »

Who are 'them'?

My pension is totally under my control. At the moment, most of it is in a cash deposit waiting for the market to fall a bit before I buy back in - well, except £5k that I have invested in some bank shares and a pub chain just for fun.

I had a colleague at work who was of the same opinion as you - he didn't trust pensions and so didn't join the company scheme, which we had to pay in 3% and they paid in 10%. We both started and left that company within pretty much the same time period (2.5 yrs). I left with 32.5% of my salary in a pension (including 40% tax rebate and investment growth) and he left with nothing. I now have £82k in my pension pot and to my knowledge, he still has nothing in his.

If I were you, I'd look at the legislation that has come in since Maxwell and Equitable Life.

If you are in a final salary scheme and your company goes bust, the Pensions Protection Fund will pay you upto 90% of the pension you would have received (up to a max of £25k per year). If you are already retired, the scheme will continue to pay your current pension. The pension protection fund also covers annuities.

If money has been put into stocks and shares, funds that invest in them, and pension funds, then this is classified as “risk based” investment and not savings. If the investment company goes bust, the first £30,000 will be refunded, plus 90% of the next £20,000 (a total of £48,000); while pension and life assurance funds get the first £2,000 refunded, plus 90% of everything else in them.

With all this, what is there to be afraid of?

Your confidence in "the system" is admirable and if it works for you then I am happy for you. For me though, I don't have that confidence and the more I hear Clown say "your savings* are safe, there is nothing to worry about" the more I would be concerned because let's face it, when the Government says there's nothing to worry about it means the exact opposite :rolleyes: . (*I personally class savings/pension pot as the same thing although I know in reality they're totally separate things).

The fact that you have "made" £82k from your company scheme doesn't interest me in the slightest. It could be £82m for all I care as it's just a figure on a sheet and means absolutely nothing until you have the hard cash sitting in your hand, which is when your pension company writes to you and says "Dear Mr. DD, we regret to inform you that you are due absolutely nothing because you didn't declare that cash-in-hand job that you did for a month back in 1949".

Granted, by keeping my stash under the mattress I will "lose" out on that £82k but it was never mine to begin with so why do I care? As long as I always have immediate access to the original funds that I put away then that's all I'm bothered about. You can stick your interest where the sun doesn't shine as I'm a firm believer you don't get owt for nowt without some hidden catch.

Rob

michaels

So presumably if pensions are a better bet than paying down a mortgage we should all be paying in to endowments rather than repayment mortgages?!

My real issue with the pensions industry is that the commison all accrues up front which I think has a very real impact on the quality of advice. It should instead accrue over the life of the pension.

chewmylegoff

Yep, I have a Company/Personal Pension and/or ISA savings

housesitter wrote: »

It'sa bit pathetic that people seem to generally take the extreme view point against comments others make, but c'est le vie. Whatever makes you happy.

well when the starting point is an extreme viewpoint, i.e. the impression that there is some kind of disproportionate "fat cat" charge levied by pension fund managers, when in fact they are just charging for their services which is completely reasonable - after all, they are actually managing your money - then it is only a like for like response. your initial comment was as pathetic as my response.

kennyboy66_2

Yep, I have a Company/Personal Pension and/or ISA savings

michaels wrote: »

So presumably if pensions are a better bet than paying down a mortgage we should all be paying in to endowments rather than repayment mortgages?!

.

No - because

1) There is no taxation benefit on contributions to an endowment.

2) Endowments are a awful savings product.

Mr_Matey

Yep, I have a Company/Personal Pension and/or ISA savings

In Australia when you start working and are over 18 your employer has to make a contribution of 9% of your salary into Super (pensions).

I believe that generally pensions are not worth it until you've paid off the mortgage on your house, which is usually the over 40s. Also it is not very tax efficient for low earners (in general younger people).

My current situation means it's worthwhile. I have a company pension scheme where I pay in a % and the company doubles it. So instead of paying 40-something percent in tax + NI, it gets doubled!

My fiancee has not joined her company plan as it's rubbish.

You need incentives to lock your money up for 40 years. As time to retirement decreases it becomes more and more attractive.

Dithering_Dad

Yep, I have a Company/Personal Pension and/or ISA savings

Snooze wrote: »

Your confidence in "the system" is admirable and if it works for you then I am happy for you. For me though, I don't have that confidence and the more I hear Clown say "your savings* are safe, there is nothing to worry about" the more I would be concerned because let's face it, when the Government says there's nothing to worry about it means the exact opposite :rolleyes: . (*I personally class savings/pension pot as the same thing although I know in reality they're totally separate things).

The fact that you have "made" £82k from your company scheme doesn't interest me in the slightest. It could be £82m for all I care as it's just a figure on a sheet and means absolutely nothing until you have the hard cash sitting in your hand, which is when your pension company writes to you and says "Dear Mr. DD, we regret to inform you that you are due absolutely nothing because you didn't declare that cash-in-hand job that you did for a month back in 1949".

Granted, by keeping my stash under the mattress I will "lose" out on that £82k but it was never mine to begin with so why do I care? As long as I always have immediate access to the original funds that I put away then that's all I'm bothered about. You can stick your interest where the sun doesn't shine as I'm a firm believer you don't get owt for nowt without some hidden catch.

Rob

We'll have to agree to disagree on this one, Rob .

Out of interest though, where do you put your excess money? If it really is 'under the matress', are you not open to burglary - an event that is more likely to occur than a run on a bank (or indeed a fire), plus you're only covered upto a certain amount on your home insurance for cash.

If you keep your savings in cash, are you not afraid they are being eroded by inflation, especially at the moment with interest rates so much lower than the underlying inflation rate?

chewmylegoff

Yep, I have a Company/Personal Pension and/or ISA savings

Mr_Matey wrote: »

In Australia when you start working and are over 18 your employer has to make a contribution of 9% of your salary into Super (pensions).

this may be what your mean, but your language is ambiguous:

the australian rules are that 9% of your salary has to be deducted at source by your employer and paid into a superannuation fund. this is essentially a compulsory 9% employee's contribution into a money purchase pension scheme. the employer does not have to make any contribution at all, as far as i know.

AFAIK australia does not really have the employers pension culture that we do - i think you only really get employers contributions if you work for the govt. may be wrong, but this is my understanding.

Generali

Yep, I have a Company/Personal Pension and/or ISA savings

chewmylegoff wrote: »

this may be what your mean, but your language is ambiguous:

the australian rules are that 9% of your salary has to be deducted at source by your employer and paid into a superannuation fund. this is essentially a compulsory 9% employee's contribution into a money purchase pension scheme. the employer does not have to make any contribution at all, as far as i know.

AFAIK australia does not really have the employers pension culture that we do - i think you only really get employers contributions if you work for the govt. may be wrong, but this is my understanding.

whoever you work for (Govt or private employer) the employer has to put in 9% of your salary into Super (pension). If you put more in you get tax breaks on that cash.