stakeholder - should i quit?

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
7 replies 760 views
wizzbit_02wizzbit_02 Forumite
3 Posts
Well, here goes.....

About a year ago i had one of those annual interviews with the bank. They brought up about pensions.

you may think its the wrong attitude but my first question was:-

'why should i? im already paying NI, im not paying it twice.'

there reply was

'this you will get on top besides what will you do when the money runs out and state pensions are no more?'

so then i thought well if i get both i will.


so my question is will i get 'both' or was i mis-sold it?

if so im thinking maybe i should start an iso instead where I control it.
(thinking of the risk factor involved with stakeholder pensions).
If so what is the chances of me getting what i paid in back?

Would i then get a state pension if i already had money saved up in the ISO account?

im only paying in £20/Month but it adds up when im only on £200/week.

It really gets me down when im starting to wonder Am i paying for my own pension twice??

What are your thought?
(im 28 if that helps)

Any help appreciated :rotfl:

cheers

m

Replies

  • EdInvestorEdInvestor
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    Hello M

    I'd start by getting a forecast for what you'll be getting from your state pensions via NI. Apply here online

    Your state pension will be payable regardless of what you have saved up separately.It's the benefits on top ( like pension credit) that can be affected if you have "too much" saved up or your additional pension income is too high.

    If you are in line to get the full benefit of the two state pensions ( basiuc plus S2P then there shouldn't be a problem, as you would already have too much to get pension credit.

    But it is an issue for people in your salary group anad you're wise to bring it up.

    'this you will get on top

    The advisor should be able to show that this will be the case.
    what will you do when the money runs out and state pensions are no more?'

    This is just irresponsible rubbish.
    Trying to keep it simple...;)
  • dunstonhdunstonh Forumite
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    so my question is will i get 'both' or was i mis-sold it?

    A personal pension is a personal arrangement. You have control of it and its your money. That state pension is in the hands of the Govt. Just because you have paid NI, it doesnt mean you will get some or all of the pension. Whilst a basic pension will almost certainly still exist in the future. The second state pension has a far less certain future and has already been reduced 3 times since it was introduced in 1978.

    Any provision you make for yourself is a good thing and indeed, you wont get much choice about the issue in coming years when the Govt will force those that havent with pension compulsion.
    if so im thinking maybe i should start an iso instead where I control it.

    There is no difference in the control of investments within an ISA or a pension. You can invest in virtually the same range of investments.
    (thinking of the risk factor involved with stakeholder pensions).

    A pension is just a tax wrapper in the same way as the ISA. There is no risk in a pension. The risk is within the investments you hold in the pension and if you have exactly the same investments in an ISA the risk would be the same.
    If so what is the chances of me getting what i paid in back?

    Not a chance in hell.
    Would i then get a state pension if i already had money saved up in the ISO account?

    State pension has nothing to do with your personal savings whether you use savings accounts, pensions, ISAs, investment bonds or whatever.
    im only paying in £20/Month but it adds up when im only on £200/week.

    You should be paying £20 a week and your current contribution is pitiful and almost not worth the effort. It wouldnt make any difference if it was an ISA either.
    Any help appreciated :rotfl:

    I think it is time you started taking this seriously. You are going to get a basic state pension at age 68 (not 65). That basic state pension is currently £4381. Could you live on that?

    You may be entitled to a second state pension but may not be (for example, self employed dont get it). Plus it may not be there in the future so its never a good idea to rely on this chunk.

    There is a minimum income guarantee, currently called a pension credit, but that is seen as a short term solution and it isnt something the country can afford long term. Indeed, pension compulsion is seen as one way of removing/reducing this benefit. Plus the current level for a single person is just under £10k a year anyway. Not ideal.

    Ideally, you need to be getting your contribution towards £20 a week and start realising that if you dont save for yourself, no-one else is going to do it and whilst there are some safety nets, they are only there to keep you just above the basic minimum living standards. Your current planning places you at that level.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • EdInvestorEdInvestor
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    Amazing the scare tactics that get used :( There is no additional pension compulsion (apart from NI) planned.THe state second pension is being *increased* for the lower paid, not reduced.
    Plus the current level for a single person is just under £10k a year anyway. Not ideal.

    For heaven's sake this is what the OP is earning.S/he understands the issues very well - will she be cut out of benefits because she has saved too much - ie paying twice for the pension.
    Trying to keep it simple...;)
  • dunstonhdunstonh Forumite
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    There is no additional pension compulsion (apart from NI) planned.THe state second pension is being *increased* for the lower paid, not reduced.

    So, what do you call the National Pension Savings Scheme?

    What about the Govt stated intentions to remove the second state pension in favour of a single state pension at some point?
    For heaven's sake this is what the OP is earning.S/he understands the issues very well - will she be cut out of benefits because she has saved too much - ie paying twice for the pension.

    The OP hasnt got a clue and you can easily tell that from the post. So how can you can say S/he understands the issues very well?

    Yes, the amount is a little less than currently being earned but will that guarantee be there in the future? It was never intended as a long term solution. Is the guarantee going to be increased annually with the cost of living?

    Ed, I really do not know why you want to encourage people to fail in their planning. What is it that is so appealing about earning £9600 a year in your retirement? What is about planning to live a life on benefits that is desirable as I cannot see the attraction?

    £20 p.w. for 40 years at 5% would result in a lump sum of £131,913. That would produce over £6500 a year income on top of state pension/benefits.

    £20pm for 40 years gives £30,441. That isnt worth the effort and you may as well give up now.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • EdInvestorEdInvestor
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    The above post thanked in error :o
    dunstonh wrote:
    So, what do you call the National Pension Savings Scheme?

    A non-compulsory pension scheme from which people can opt out.
    What about the Govt stated intentions to remove the second state pension in favour of a single state pension at some point?

    This is not the Givernment stated intention at this point. And if they do merge the two pensions it will benefit a lower-paid person like the OP.
    The OP hasnt got a clue and you can easily tell that from the post. So how can you can say S/he understands the issues very well?

    I'm afraid I completely disagree.
    Ed, I really do not know why you want to encourage people to fail in their planning.

    I don't. Before even thinking about a pension, the OP should be saving up in a cash ISA so s/he has an emergency fund which could also be used a part of a deposit on a home if the opportunity later arises to buy one.

    I happen to think that having a cash cushion and investing in a home is a much better idea for people of limited means than locking their small savings away in a pension where they cannot access them, where the returns are likely to be poor due to high charges, and where the small amount of extra money could deprive them of benefits.

    As you are aware,because we have discussed it ad nauseum on numerous threads, the tax wrapper of choice for the basic rate taxpayer with no access to a company pension with free money, is the ISA, not the pension.
    Trying to keep it simple...;)
  • dunstonhdunstonh Forumite
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    A non-compulsory pension scheme from which people can opt out.

    You are automatically opted in and you "manually" have to opt out. Thats how it begins... who knows after that. 40 years is a long time.
    This is not the Givernment stated intention at this point. And if they do merge the two pensions it will benefit a lower-paid person like the OP.

    In reality the Govt has changed its mind continously on this issue and we dont know what the current administration has in mind. They have stated that a move to a single state pension was/is an intention. It will benefit the self employed more than the lower paid.

    The issue is one of do you want to rely on state benefits in your retirement? Benefits which may or may not exist and may or may not be the same as the current levels (in real terms). At the age of 28, you have the choice and chance to make that decision.
    I'm afraid I completely disagree.

    The OP thought that making personal contributions stopped the state pension. That doesnt show a good understanding of retirement planning.
    I happen to think that having a cash cushion and investing in a home is a much better idea for people of limited means than locking their small savings away in a pension where they cannot access them, where the returns are likely to be poor due to high charges, and where the small amount of extra money could deprive them of benefits.

    I wouldnt disagree on most of those points. However, your reasoning that pensions have higher charges is incorrect and performance is relative to where you invest and that has nothing to do with "pension" vs "ISA" as the same investment areas exist. Having the money in ISAs would also impact on pension credit, so that isnt an ideal option either.
    As you are aware,because we have discussed it ad nauseum on numerous threads, the tax wrapper of choice for the basic rate taxpayer with no access to a company pension with free money, is the ISA, not the pension.

    This thread, didnt need to be turned into another ISA vs pension thread at this stage. The OP doesnt understand what he/she is paying into and why and the consequences of the amount being paid. Until that is understood there is little point even going down the tax wrapper route.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Hey guys,

    Thank-You for the coments/Help.

    It puts mind mind at rest alot, but also has made me realise how important it can be.

    i know a bit about it just needed a bit of confirmation.

    yes i'll stick with it and with a bit of luck increase it a bit when i can (it already increases 5%(The Standard) anyway. Of Course along with what the government contributes too.

    Yes i realise the amount isnt much but got to be better than nothing.

    its certainly not possible at the moment to increase it but as time goes on and changes are made hopfully something can be done.

    So Many Thanks From This end.

    :0)

    Cheers

    Mark
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