I retired at 50 do most folks want never want to retire ?

dunstonh

Doesn't anyone else think that the whole concept of pensions is a bit of a gamble these days?

In what way?

Look how many schemes have gone to the wall

A tiny minority

or vastly reduced the potential pay-outs

No reason for that on money purchase schemes unless you are a lazy investor staying in higher risk investments right up to the last minute or you have not selected a lifestyle risk reduction on your pension.

I have a frozen work pension and in all honesty I wouldn't bank on it being worth having by the time I reach 65

Do you know anything about it? It will have annual indexation that should more or less keep its value in real terms meaning it will be worth much the same as it is now.

I feel (slightly) safer having savings than money tied up in a pension.

savings that historically barely keep up with inflation meaning you get no real terms growth on your money. Although there is nothing to stop you holding cash in a pension if you dont have the risk profile. Of course, you will be replacing investment risk with shortfall risk.

DD2_2

Bogof_Babe wrote: »

Doesn't anyone else think that the whole concept of pensions is a bit of a gamble these days? Look how many schemes have gone to the wall, or vastly reduced the potential pay-outs. I have a frozen work pension and in all honesty I wouldn't bank on it being worth having by the time I reach 65 (they changed the women's age to 65 in line with the men about 20 years ago - they were ahead of their time!).

I feel (slightly) safer having savings than money tied up in a pension. Unless it's in the public sector of course.

How many 'have gone to the wall'? I can't think of any since The Mirror Group (Maxwell) and Equitable Life.

I know that many Final Salary schemes are running deficits and are closing to new members, but existing members are OK. If the pension fund gets into trouble then the pension protection fund kicks in. There are also arrangements for Money Purchase schemes.

If you have a 'frozen' work pension scheme, you simply have a pension scheme that you can no longer pay money into (I assume because you no longer work at that particular company), but the capital you have alread accrued in it will continue to grow. You might want to move it to a personal pension/stakeholder/SIPP so that you can continue to contribute to it and place the capital in better investments.

I think the main problem is expectation. People think that if they put away £10 pm for 20 years they will be able to retire in comfort. Unfortunately it doesn't work like that and people should be realistic about how much they will need to live off in retirement and how much they will need to put away to acheive it.

For many people, the state pension will be the backbone of their retirement fund. The basic state pension amounts to 95.25 per week (£4953 per year), with the state second pension paying on average £2000 per year. The total state pension will therefore be around £7000 per year. As you receive an age related tax free allowance of nearly £10k, you're wasting £3k of that tax free money by not having a personal or company pension.

Therefore, if you contributed to a personal pension, you would receive a 20% tax rebate on the way in, and tax free earnings on the way out (plus you can take 25% of the personal pension tax free). So for every £100 you invest, the government immediately add 20%, or £20. I challenge you to find an alternate investment that increases immediately by 20%.

TBH, it's a 'no brainer' to start a personal pension for everyone apart from those who are very low paid and would receive more via the Pensions Credit scheme.

p.s. As far as savings being safer than pensions... Some people were very worried when the banks (especially in Iceland) started to fold. Also cash savings are eroded by inflation, whereas shares tend to keep pace with inflation. Cash savings are means-tested for benefits whereas pensions savings are not (so if you lose your job you will be expected to live on your retirement savings until they get down below the means-tested thresholds, with a pension you could have £500k of pension savings and still receive income support, etc. Finally, pension savings are safe from bankruptcy proceedings, so if the worst happens and you go bankrupt, at least your retirement provision is safe.

marklv

Goos for you, but my house is a few steps away from the Thames and the flooding risk that entails!

Bogof_Babe wrote: »

£350 for house insurance? :eek: Somebody isn't using comparison sites! Just renewed ours (contents & building) for £118, and it's a 3-bed detached. (Admiral, in case anyone is looking).

If you are happy to buy almost everything you eat off the reduced counters, and clothing from charity shops, and never go out socially, you could probably just about manage the £10K. No holidays or car costs either though. A pretty miserable existence.

marklv

debtfreein4years wrote: »

im 23 and have been paying into my pension ever since i was 18. even when i had debt i payed a minimum of £10 a month but that was only a reduced payment for a year. ive paid in nearly £6K over the last 5 years and it was worth it as my pension is worth 15K at last statement. i dont know how much that buys me come future years, but ideally i would love to "retire" at 55. i would say put as much away in your pension as you can afford to but also start your pension as early as you can.

I don't think pensions should be a top priority at your age. By all means make your contributions, but unless you're earning big money already I would suggest focusing on saving up for a house deposit instead. If you already own a property you can consider yourself lucky.

terryw

DD2 wrote: »

<snip>

TBH, it's a 'no brainer' to start a personal pension for everyone apart from those who are very low paid and would receive more via the Pensions Credit scheme.
.

A very good post, and I agree with you. I do feel sorry for the millions who fit into this category and then find that the money put into a pension fund (either private or via the employer when in a low paid job) turns out to be a waste of money as they would have received virtually the same amount via pension credit..

Bogof_Babe

My frozen pension was a final salary one, and the company it was with has been taken over, then the taker-overs were taken over again, so I really have no idea where it is held now. The current owners of the company are overseas I believe (Heineken).

I thought pension providers were meant to send annual reports to their members, but I haven't heard anything for years. The reason I am a bit blase about it (sorry this machine won't type accents) is that for most of my working life it was a non-contributory perk, and only for the last ten years or so was I contributing. I am relying on my other capital assets and state pension to see me through old age. Anything I get from the work pension will be a bonus.

bendix

Bogof_Babe wrote: »

Doesn't anyone else think that the whole concept of pensions is a bit of a gamble these days? Look how many schemes have gone to the wall, or vastly reduced the potential pay-outs. I have a frozen work pension and in all honesty I wouldn't bank on it being worth having by the time I reach 65 (they changed the women's age to 65 in line with the men about 20 years ago - they were ahead of their time!).

I feel (slightly) safer having savings than money tied up in a pension. Unless it's in the public sector of course.

This sounds like a Daily Mail editorial. Completely uninformed, simplistic and with a complete lack of understanding of what a pension is and what can constitute one. And yet full of generalisations said forcefully enough to make them sound like fact.

Very very very dangerous.

Bogof_Babe

bendix wrote: »

This sounds like a Daily Mail editorial. Completely uninformed, simplistic and with a complete lack of understanding of what a pension is and what can constitute one. And yet full of generalisations said forcefully enough to make them sound like fact.

Very very very dangerous.

Along with probably 90% of the population, I don't profess to be a financial expert. I wonder how many people on company operated pensions understand the finer points of it all.

Thank you for your valued opinion anyway.

EdInvestor

DD2 wrote: »

How many 'have gone to the wall'? I can't think of any since The Mirror Group (Maxwell) and Equitable Life.

There are around 150 pension schemes from bust employers already in the Pension Protection Fund or finishing assessment.

http://www.pensionprotectionfund.org.uk/index/transferred-schemes.htm


In addition there are quite a lot more which went bust before the PPF was set up over which the Govt is still haggling about compensation amounts.

It's much more common thatn you might think, as most schemes are fairly small and not newsy enough to make the national press when they go bust.

bendix

Bogof_Babe wrote: »

Along with probably 90% of the population, I don't profess to be a financial expert. I wonder how many people on company operated pensions understand the finer points of it all.

Thank you for your valued opinion anyway.

What is a company operated pension?