NEVER THOUGHT I'D REACH PENSION AGE - I'm confused and scared !

dunstonh

I'm not pitching up as a pensions expert as I'm not but I think that many people have this misconception. They mostly dont really have a handle on how much they have to put in to get out what,on the face of it,is a pretty dismal monthly pension.

The problem is caused on quite a few fronts. One of the biggest problems is that pensions historically had to be sold. People didnt buy them. So, you had insurance companies salesforces and agents always popping round trying to get you to top up. Whilst the sales methods are not desirable and the product pricing was poor by todays standards, they did at least get people to top their contributions up.

With new clients with existing pensions I find that they more often than not have a monthly payment that hasnt changed in over 10 or 15 or even 20 years. £50pm may have been a good payment in 1988 but its totally rubbish in 2009. Those that had sales reps in the 80s and 90s tend to have lots of little plans or top ups but since the insurance reps stopped calling they didnt increase them again.

The Govt wanted to lower costs with stakeholder and it achieved that aim. However, they also removed the ability for salesforces to be able to afford to sell the product and that is why pension sales fell significantly. The Govt thought people would buy a pension. There is some backtracking on that now with sales agents likely to make a return as a low level category of sales rep is likely to be coming back with the advice remit of "better than doing nothing" which is basically a simple flow chart process with no FOS protection and no worries about costs.

In addition,if they get too much monthly pension,it will get taxed or they will find themselves not eligible for certain benefits thus worsening their situation.

Not being funny but the benefits take a single person to £6900 a year including state pension. Many people's state pensions are over that amount so wouldnt qualify anyway. To use the excuse that you wouldnt get benefits means you would be aiming to be poor in retirement and I think many people assume that they are going to be looked after by the state and dont realise just how low the pension credits actually are.

EdInvestor

http://www.thepensionservice.gov.uk/pdf/np46/np46sept08.pdf

Official guide to state pensions for advisors..