MSE News: Thousands forgoing pay rises due to pension apathy

Loughton_Monkey

rickbonar wrote: »

And what did they call the antics of bankers like Fred Goodwin and all the MPs expenses including Mr Cameron and Mr Brown?
/QUOTE]

I could think of a lot of words or expressions to describe all of these miscreants. But there's one thing they have in common. To a man, they fully appreciate the true value of pensions!

hugheskevi

One thing I left out with the pensions question .. Some people don't make it to retirement. So dependents may not get any money where as if it was saved in an account there would be.

If a person dies prior to commencing their pension benefits, the pension pot would go to the estate (or their named beneficiary) so it wouldn't be lost.

Even if they die shortly after commencing benefits they can purchase guarantees to ensure that they receive, for example, at least 5 years worth of payments and income for a survivor (or a DB scheme would automatically have survivor benefits for a partner/dependent).

The pension scheme point was made because I do remember Robert Maxwell and I believe there are rumours of other companies like Equitable life that didn't pay what they promised lurking in the background.

There are lots of companies which don't pay what was promised - those are DB schemes where the scheme is underfunded and the sponsor becomes insolvent.

In this case benefits are reduced to 90% of headline rate and some indexation may be lost as they go into the pension protection fund.

The PPF has only existed for a bit over 5 years, prior to this the loses could be much more severe, but the Government eventually put in place the Financial Assistance Scheme which helped out people in schemes which wound-up underfunded between 1997 and 2005. It was during this period when most of the horror stories of people losing 60%+ of their pension happened.

Also I don't know what the PPF compensation or guarantee is,

You can read about it here . In short, it gurantees a minimum amount in the event there isn't enough money in a DB scheme, which is 90% of headline rate, and some indexation rights may be lost.

Pensions have admittedly had some bad things happen in the past, and it remains the case that they are much better for some (eg those with employer contribution, higher rate taxpayers, those receiving means-tested tax credits, etc) than for others.

However, lots has changed, and the system in the 1990s is in no way comparable to the protection regime in place today.

dunstonh

The pension scheme point was made because I do remember Robert Maxwell and I believe there are rumours of other companies like Equitable life that didn't pay what they promised lurking in the background.

Maxwell was a particular type of pension and the events of that decades ago led to tightening up to prevent it happening again. Eq Life is not actually as bad as the media make out. Eq life offered guarantees that were too good to be true and it ended up being the case that they couldnt honour those guarantees. Again, this is going back many years and that too led to changes. If you want to be cynical on this one then its possible. Most Eq Life pensions were bought by high net worth professionals (solicitors, accountants etc). If it had been say Pearl (who typically dealt at the bottom end of the market) you wouldnt see the same level of coverage.

One thing I left out with the pensions question .. Some people don't make it to retirement. So dependents may not get any money where as if it was saved in an account there would be.

Ironically, to get the most out of a pension you are better off to die the day before you retire. The dependents get the full value of the money purchase pension tax free and outside of the estate (so not included for IHT). The money is not lost. Defined benefit schemes have dependents pensions and usually an amount is paid out as death in service.

All this is in the back of peoples mind and the FSCS have limits of £50,000 per savings institution. - of course this remains to be tested.

It has been tested and it works. Investments have it as do pensions. Although modern unit linked investments dont require it really for solvency reasons.

So, you see, the issues you are highlighting are either events that occurred decades ago and led to further protections or legislations or are not applicable.

Today, the pension is little more than a tax wrapper in the same way an ISA is.

rickbonar

Loughton_Monkey wrote: »

rickbonar wrote: »

And what did they call the antics of bankers like Fred Goodwin and all the MPs expenses including Mr Cameron and Mr Brown?

I could think of a lot of words or expressions to describe all of these miscreants. But there's one thing they have in common. To a man, they fully appreciate the true value of pensions!

yes Fred Goodwin had a good grasp of pensions (his own) £650k per year for life for steering his bank into losses of billions.

I think he should have had a pension paid solely in RBS shares.


As for the others various politicians that were just out for easy money once in parliament it opens doors to directorships and so on. And complaints how underpaid they were and alleged fraud look up Margaret Moran for example. Please don't forget about this.

What I was getting at was the concept of fraud and legality, comparing how someone simply doing all they can to live reasonably is deemed fraud, as opposed to uneccessary & outright abuse of public money isn't , the seriousness was juxtaposed & inverted IMHO.

Loughton_Monkey

I still think there could be some serious issues with Freddie's pay-off - if only somene had the guts and knowledge to delve deep enough. My understanding would be that Pension Funds are subject to Trustee regulations and surely the trustees had a duty to act within the law. Surely, most pension schemes only allow immediate early retirement on an enhaced pension, on the grounds of ill health? This was not the case here. OK, so maybe the company got an actuary to value the full cost of paying him such a grotesque figure immediately, and they bunged in the appropriate amount?

If so, was this valuation accuarate? Did it go down as a legitimate business expense for tax purposes? Is it legal for an employer, effectively, to pay "compensation for loss of office" - whether contractual or not - in the form of a pension? Or is this somehow evading tax? In Freddie's case, at the very least it nicely defers the tax for him.

Perhaps Fred would have preferred the full lump sum, so that he could buy a private jet to help him commute between holiday homes.

I'm beginning to feel a bit sorry for him now. So can I suggest that we set up a trust fund for Fred Goodwin? I would propose that all of us over-60's should club together our heating allowances (while they last). If only 4,000 of us were to do that, we could raise £1 million which I would propose we pay to Fred as a sort of "bonus".

Any 'Gift-aid' freaks out there who can advise how we might make this £1.25m?

rickbonar

I believe Sir Fred has put his money offshore hasn't he?:money:
That's what they call a money saving expert.:rotfl:

rickbonar

Anybody see the bbc question time show tonight?

Had the 5 propective labour leadership candidates.

I'm going to remind of you Mr Ed Balls and the his dubious expenses claims with his wife Yvette Cooper.

The audience appeared to be stacked with plants and stooges (nothing new) and not one person asked a question in relation to their expense mortgage claim used to buy & sell homes.
Just look it up on the google!

(why is her married name different??)

I think he's really a Fred Goodwin wannabee at heart.

It's funny how they define fraud don't you think?

seven-day-weekend

My son is hopefully about to start a new job where they have a company Pension scheme (his last employer did not have one).

I have advised him, even though his contract is only for 16 hours per week, to join it and explained that it is like having a pay rise as his employer contributes to it.

No way would I ever think it a good idea to not try to provide for yourself. Who knows what beenefits will be around when he retires at age 68, in thirty-eight years' time?

speedybee

Turning down a non contributory pension scheme should be treated as 'deprevation on income' when claiming state benefits. ie if you cant be bothered to join a scheme (especialy when you had to pay in nothing) and then apply for state funded benefits, you should be treated as if you did have this money. If you give away other forms of assetts then the means test will treat you like you still have them, so why not pensions!

GillsMan7

dunstonh wrote: »

I do believe it.

I know my first post on this thread was blunt but I have been doing this for a long time now and I have heard all the excuses non-joiners give and its rare anyone has a valid thought through reason that makes sense. Half the time they are just trying to kid themselves.

This post and your earlier one where you called people who don't pay into a pension stupid is ignorant in the extreme, and indicative of the evangelical views of both pension-believers and pension-non-believers.

People who pay into pensions believe that THEIR way is right and ONLY their way is right. Similarly, people who don't pay, believe their way is the only way.

Believe it or not, there is more than one way to skin a cat. And without having a crystal ball, I'm perfectly content taking my money into my own hands to provide for my future after I finish work. I'm using my money wisely now in a way that I believe will set me up nicely in the future. I own two properties already and aim to own another two properties by the time I'm forty. The rent I receive more than covers the mortgage and other outgoings. The mortgages will all be paid off by the time I'm 65 and, not taking inflation into account, I would anticipate a rental income of £2,500 per month before tax (which, if I transfer to my Ltd company would prove less than paying tax as a personal income). I could quite happily live on those amounts.

Yes there are pitfalls, but there are pitfalls with pensions as well - namely that if I need access to money I've invested quickly, I have options at the moment, which isn't the case when it's shrouded in a pension.

I just like being in control of my own destiny.

I'm not saying that my way is the only right thing to do. Nor am I saying with absolute certainty, that my way is even the best choice for me (I don't have a crystal ball, sadly). But I am more in control of my own money which I work hard for. And I don't have such an ignorant view as you appear to do, so I'm definitely happy about that.