Soon every employee must pay into a pension - will you opt out? Poll discussion

wildthing01

thank for this shopaholic - i was going to say the same thing. public sector workers always seem to get a lot of aggro on these forums. yes, there are some perks to working in the public sector, the pension being one. however, there are equally many less positive things. there are some things that are good about working in the private sector (e.g. the chance to earn much higher salaries, bonus schemes etc), that we don't get. it's all swings and roundabouts. can we not just have a bit of respect for each other and not judge others' situations?

DavidLaGuardia

55% already in a scheme with their employer and that's ignoring Self Employed and Retired, I'm amazed at this statistic and don't believe it reflect the low take up or availability of work placed pensions

DavidLaGuardia

pwpevans wrote: »

I used to put into a pension when it was a final salary scheme, since the company scrapped it, it became less attractive, especially when the forecast statements came through showing how little I'll be getting (bearing in mind the cost of living increases).

So I've stopped putting in to one.

My main reasons:

They say it's tax efficient saving, but they tax you when you retire. So you're just delaying paying the tax.

If your employer puts into the pension as well you are losing out more than tax relief
If your are a 40% payer and likely to be a 20% tax payer in retirement it is definately worth it
If you are a 20% payer, you are getting 25% tax free, but if you can also utilise salary sacrifice the effect is greater and a no brainer.

pwpevans wrote: »

The sums don't add up in terms of input to what you get out. People are living too long after retirment and the amount you have to put in for any decent pay out is too high (unless you're earning silly money.)

Which rather empahsies the point that saving for retirment is needed.

pwpevans wrote: »

It's not guaranteed, based on the money markets never is, if there's a crash a few years before you retire you've possibly lost everything!!

Your can invest in safer options if you really want to, the pension maketh not the investment!
An obvious option is to phase out of the markets into safer investments in the years running up to retiremnt

pwpevans wrote: »

Your money is tied up, you cannot get it out before you retire, so if you've been told you've got a terminal illness or desperate for money for other reasons beforehand, tough.

I Sympahtthise here but its a trade off and pensions are also protected against creditors as well as your own access. You're quite frankly more likely to make it to retirment and need the money then.

pwpevans wrote: »

I'm not making this decision blind, I know I have to save for my future but believe property and precious metals is a better bet. Plus making sure you're not in debt when you retire.

You can purchase commodities and precious metals via a pension funds.
Also property, albeit commerical only is also possible.
That said I suspect you are relying greatly on recent movements that might not always be the case. Commodities are amongst the most volatile of investments

pwpevans wrote: »

If you're in a final salary scheme you're lucky and probably wont have it long, the company will soon scrap it or go bust.

I am envious of those who work for council or nationalised insitutions who get decent pensions... I do think it's slightly unfair in all honesty as it's the private sector who through taxes funds them. It makes me think if the likes of the Post Office can't afford it's scheme and news today that the Wedgewood Museum might have to close because Administrators need £13 million for the pension scheme of the bust Wedgewood company... isn't these public sector final salary schemes adding to this country's debt?

I agree whole heartedly with that one!

armoured-smiler

Well the government has clearly shownb me that I should not put in a pension as I will have to support the people who do not do anything. SO I shall not join this new scheme and will even try to join the huge ranks (when I retire) and ask for my pension credits etc; as I have at least paid my NI etc; which is more than most these spongers that don't.

dots_thots

Cross-posted...

dots_thots wrote: »

I think it's a terrible idea for the following reasons...

1. Does anyone believe that with Britain's fiscal situation they'll even be a retirement age? They're already talking about pushing it back to 68. That is already a de facto broken promise and obligation default. I am 32 - what will it be in 35 years time? I'm being forced to save for a retirement that will never come.
   
   
2. Even if the pension pot is there, will I be able to get it? There are no guarantees it won't be raided like pension funds have been already. There's even talk of coercing pension funds to prop up failed banks!
   
   
3. Pensions are a huge PONZI scheme, paying out old people with new money. The government spent the pension money since all funds are essentially fungible.
   
   
4. Pensions effectively defer income-tax and allow you to earn your tax-free bracket from those funds later. But income tax started at 1% and is now 20% (and has been much higher) so anyone sold on the idea back then has been sold down the river. Does anyone seriously believe income tax will stay at 20% with our debt problems? There is something to be said for the old saying "a bird in the hand..." - and I get to use the money if I need it.
   
   
5. Anyone who's been investing in a pension over the last 10 years has seen a real decline even before the crash of 08. Even while nominal values have been rising, real purchasing power has declined. Any counter-argument that the stock market is cyclical is immaterial because you can't sell and switch into another asset class whenever you feel. You are locked in until retirement forces you to sell. Anyone simply saving under Sir Isaac Newton's classical gold standard would have beat these people hand's down.
   
   
6. I don't trust sterling, and I get stiffed for capital gains tax to avoid it and I get legal tender laws to force me to comply. Now, on top of that I'll be forced into schemes I do not trust. At the very least I should be able to invest in whatever I choose to, no special dispensation for UK related companies etc.
   
   
7. It's one thing to take taxes from people, but what gives the parliament the right to decide how I should spend my money. They are forcing me to pay commissions (because my pension fund is run by somebody and will use a broker to execute trades) to private companies against my will. Is that even lawful?
   
   
8. There is the law of unintended consequences. Legislating like this gives people a false sense of security and they will stop taking an interest in self-reliance, much like how the FSA and other regulatory agencies contributed to stopping people from doing real due diligence when investing. If a rating agency rates debt as AAA, "well, it must be safe because they are regulated by FSA/SEC etc." This will have the same effect. Boy, will they get a surprise later in life.

This scheme sounds like it's straight from the belly of Goldman Sachs or JP Morgan. Brokers get commissions regardless of performance. We used to be able to save for retirement, but debauchment of the currency by the government and the "criminal" BofE has forced savers to become speculators. As the baby-boomer generation pull their money from the stock market to move to bonds and pay for their retirement, what happens to my captive pension as stocks slide?

Is that the idea, to shore up the shortfall of money for wall street and the London financial district, to plug the gap?

Paul_Herring

Does anyone believe that with Britain's fiscal situation they'll even be a retirement age? They're already talking about pushing it back to 68. That is already a de facto broken promise and obligation default. I am 32 - what will it be in 35 years time? I'm being forced to save for a retirement that will never come.

The current 'retirement age' (the earliest you can use a pension fund to pay ofr a pension) is 55. 68 is the age at which you'll get the state pension. Your personal pension provisions are (largely) unconnected to your state pension.

Pensions are a huge PONZI scheme, paying out old people with new money.

The state pension is, personal pensions are not.

Anyone who's been investing in a pension over the last 10 years has seen a real decline even before the crash of 08

That brush is rather broad. I've not seen a 'real decline' in my pension funds. If you're just looking at the raw FTSE without taking into account dividends but taking into account inflation, (to take the simplest example) your calculations are wrong.

It's one thing to take taxes from people, but what gives the parliament the right to decide how I should spend my money.

It's perfectly possible to save for a retirement income without explicitly putting it in something marketed as a pension fund in a pension wrapper. You choose to put it in there (or in something else) but the condition on putting in in there (rather than something else) is that the government has a say in how you can use it. That's the quid-pro-quo for the tax treatment the government is giving you by using that wrapper.

Sounds to me like you're getting confused between:
1) the state pension
2) personal pension provision of any kind
3) pension wrappers in general
4) the upcoming 2012 implementation of (3)

and getting yourself mightily confused.

dots_thots

Paul_Herring wrote: »

The state pension is, personal pensions are not.

Well, it depends on how you look at it. Government is the ultimate arbiter and can change the rules on a whim. We've had windfall and income tax brackets of ludicrous percentages to pay for other shortfalls. I seriously don't believe the money will be there when I retire, private or otherwise.

Paul_Herring wrote: »

That brush is rather broad. I've not seen a 'real decline' in my pension funds. If you're just looking at the raw FTSE without taking into account dividends but taking into account inflation, (to take the simplest example) your calculations are wrong.

If you look at nominal returns I agree, but nominal returns are just that, nominal. If you look at performance of the FTSE using the way inflation used to be calculated, before substitution, hedonic adjustments etc. it has performed terribly since about 2001.

Paul_Herring wrote: »

It's perfectly possible to save for a retirement income without explicitly putting it in something marketed as a pension fund in a pension wrapper. You choose to put it in there (or in something else) but the condition on putting in in there (rather than something else) is that the government has a say in how you can use it. That's the quid-pro-quo for the tax treatment the government is giving you by using that wrapper.

I agree but there is a huge difference between saving and gambling. Just having a private pension wrapper I can trade inside of, doesn't guarantee any money will be available when I retire. See my other post about the two-sided nature of this proposal...

http://forums.moneysavingexpert.com/showpost.html?p=31639759&postcount=67

I accept what you are saying about the difference between private and state pensions but ultimately they are denominated in (eventually) and taxed upon pounds sterling returns, and our fraudulent money system means the government is picking the pockets of our private pensions also.

I reiterate... since the last vestiges of an honest money system were destroyed in 1971, we've been forced to speculate instead of save. Why am I being forced to speculate for retirement. Also, I'm highly suspicious of what you call the "quid-pro-quo for the tax treatment", because at one time income tax was 1% and now it's over 20%, having lso been much higher. Anyone investing under old 1% income tax conditions could hardly call it quid-pro-quo now, because their ultimate tax treatment shafted them.

Britain's fiscal situation means that taxes surely have to rise, or wholesale debauchment of the currency will take place. I for one, would rather pay income-tax now and sort myself out.

What kind of bothers me is how most people, including yourself apparently, just accepts the tax situation so serenly, rather than being angry about it. If we abolished the BofE, our taxes would be greatly reduced. Taxes are the only (well, used to be) thing that effectively breaches Habeus corpus. I shouldn't be grateful to the government for getting an exemption as your quid-pro-quo comment suggests, instead we should be annoyed at the situation.

dots_thots

After doing some more digging it does look like I may be able to opt-out although I can't get a definitive answer. Can anyone confirm this for definite?

If this is the case, I've got my knickers in a twist over nothing!!! I just don't like be coerced, it's all about choice.

Paul_Herring

I agree but there is a huge difference between saving and gambling. Just having a private pension wrapper I can trade inside of, doesn't guarantee any money will be available when I retire

The wrapper is just that. Anything you buy within that wrapper, you can buy outside of it. In an ISA, for example. Or in no wrapper at all.

After doing some more digging it does look like I may be able to opt-out although I can't get a definitive answer. Can anyone confirm this for definite?

If you're referring to the 2012 scheme - you are by default opted in and must opt out yourself. It's not compulsory; it's just relying on inertia (and the employer and government [strike]bribes[/strike] contributions) for people to stay in.

ipod_killed_the_musicshop

I may well opt out, if I have to work till age X for it to be worth it.