Half of UK have no pension

zarazara

Barclays has stopped its final salary scheme, even for existing workers.

jamesd

Harry_Powell wrote: »

Brilliant, the young get stiffed again by the old. Given that people of my parent's generation have had windfalls from the sale of public companies, have benefitted from final salary pensions from these same (former public) companies before they were broken up, had windfalls from mutuals and building societies becoming Ltd companies (which then failed for the most part) have had decades of pension funds that weren't subject to tax raids from Gordon Brown, have had decent annuity rates, received a completely free university education, affordable housing, etc. etc. it's a little condescending for them to then look down from their mighty perch on the following generation and say how short-sighted we are not to make pension provision. :mad:

You might have liked this quote from an ITN news presenter this evening, in a story about the Barclays pension scheme, but not about that scheme specifically at this point in the story: "It's these over 50 baby-boomers who've grabbed the lion's share of the pension pot leaving precious little for anyone else."

We'll see more of the same over the next 20-50 years as the cost of paying the pensions bill goes up.

Pobby

As far as pension planing is concerned we have slipped up a bit. 2 full state plus some serps some private and 2 old company pensions will provide a fairly basic income. Where we have screwed up somewhat was basing a draw down over say 25 years using the calculator on the link. We have a small six figure sum to play with and I never would have guessed that interest rates would fall so low. That given, I always based my calculations on with drawing capital and interest at boe base rate of 5%.
http://www.superliminal.com/investing/retirement/

jamesd

Pobby, if you're using base rate of 5% in the calculator and are using savings accounts you're being extraordinarily optimistic, saying that you expect to get about 8% (5% plus 3% inflation) from savings accounts. You should really be using 2% at most.

But if you're relying on savings accounts you're already on a path that dooms you to steadily decreasing income and/or capital, beyond what's needed, so best to fix that. At a minimum put some of the money into annuities, perhaps £10,000 into one each year to smooth out annuity rates and their increases with age. You might also consider immediate vesting pensions for 3600 gross each a year if you're in good health, to get a tax boost. If not in good health, ask an IFA since you might get a better deal with a reduced health option.

If you're not doing it already you really should be putting some money into investments via stocks and shares ISAs each year. That could be bond funds or equity funds or perhaps other things. Bond funds are quite good because the interest from them is tax free in a S&S ISA.

If you just don't know where to look, try Hargreaves Lansdown and a pairing of Invesco Perpetual Monthly Income Plus (a mixed bond and equity fund) and Invesco Perpetual Income (equities but with a focus on higher dividends to provide income). Maybe 10% of the total contributions into Neptune Global Equity to get a bit more inflation-fighting long term growth, but with more up and down movement over the short term.

Set the percentage split you want and move money around each year to keep the split the same - it's a technique that's been proved to improve results by causing more buying of equities at cheap prices (when everyone is scared) and selling at boom times (when everyone is too optimistic).

You still might keep 30-50% in cash or cash-like funds but this should give you a better chance of handling inflation. Try not to worry too much about capital variations - the mix example I gave could see capital variations of up and down 30% year to year.

butterfly72

jamesd wrote: »

If you just don't know where to look, try Hargreaves Lansdown and a pairing of Invesco Perpetual Monthly Income Plus (a mixed bond and equity fund) and Invesco Perpetual Income (equities but with a focus on higher dividends to provide income).

I'm in the process of thinking about using my S&S ISA to supplement my pension. I was looking at the Invesco Perpetual Income and the High Income. There are slight differences in the companies and sectors but they look fairly similar to me! (or am I missing something?:o) How come the price is so different and how do you choose between them?

Also, could you please explain a little further why bonds are a good idea? I've read on a thread somewhere on MSE that now is not the time to buy bonds. Whats the difference between strategic and corporate bonds?

Sorry, a lot of questions there!!! Just trying to get my head round it all.

Thanks

dunstonh

How come the price is so different

Price is no indication of performance of the fund (or share). The price is different to due the value of the assets and the length of time and size of the fund.

how do you choose between them?

Risk is difference and parts of the portfolio are focused on different areas. There is a big overlap though. You could say it is a variation of a theme.

, could you please explain a little further why bonds are a good idea?

Lower risk and provide diversification from equities and property.

I've read on a thread somewhere on MSE that now is not the time to buy bonds.

For many bonds, you probably havent had a better time in the last 20 years to buy them. Whilst for other bonds they could be really poor for the next 20 years.

Whats the difference between strategic and corporate bonds?

Nothing. Strategic indicates a strategy when buying. May be a management flair that could pay off well but also go wrong more than a general fund. Corporate bonds are a type of fixed interest security. So, you can have a general corporate bond fund or a strategic corporate bond fund.

butterfly72

dunstonh wrote: »

Risk is difference and parts of the portfolio are focused on different areas. There is a big overlap though. You could say it is a variation of a theme.


For many bonds, you probably havent had a better time in the last 20 years to buy them. Whilst for other bonds they could be really poor for the next 20 years.

Re the income funds:. Where on the HL site does it indicate the difference in risk for these two funds?

And the bonds: .. so how does one go about finding out which are the good ones!!!? What are the indicators of a good fund?

(sorry don't how to do that quote unquote quote thing!)

dunstonh

Re the income funds:. Where on the HL site does it indicate the difference in risk for these two funds?

I dont know. I dont use the HL site but use independent research. HLs research site has a reputation for bias (in promoting the funds they want to sell or what is fashionable at the moment) and I cant rely on what they say. I will let someone else answer that question.

The difference isnt that great between these two funds. The net distributions are typically the biggest differences. I suspect that if the funds were smaller, they would have combined them. However, whilst you have two funds that are in strong demand in the market place you dont cut yourself down to one and reduce your inflows.

And the bonds: .. so how does one go about finding out which are the good ones!!!? What are the indicators of a good fund?

You are not going to like the answer but its knowledge, experience and opinion. If it was that easy to know what areas are going to be best, then we would all be investing in the same place with the same ratios.

EdInvestor

www.citywire.co.uk has a good section rating all funds including bond funds.There is no real difference in risk between IP Income and IP higher income.Last time I looked the formner paid a higher divi than the latter, but their investments are quite similar.

Ratings for global bond funds

butterfly72

dunstonh wrote: »

I
You are not going to like the answer but its knowledge, experience and opinion. .

I just knew you were going to say that!!:o