Advice for first time pension planner

Linton

mickflynn39 wrote: »

I'm quoting the average of all pension funds. .....

You appear to have misread what is a brief journalists summary of what may be an accurate report. What your reference seems to be talking about is the return on the total wealth held in pensions. The word "fund" in the reference simply means the wealth.

This is very different to the return you can expect from a modern Pension Equity Investment Fund. This is a commercially available investment product much like a unit trust. See - different use of the word "fund". With such a Fund you can invest in areas which have provided a 10% annual return over the past 10 years.

Much of the wealth currently in pensions will be held in legacy defined benefit schemes which will be very cautiously managed. Much of that which isnt in such schemes could well be in old with-profits deals which were common 20+ years ago.

For your reference I have never worked in the finance industry. Through the sensible use of the finance industry's offerings and disciplined saving I have been able to retire at 56 without any need to reduce my standard of living confident that I can match reasonable inflation were I survive to the age of 100+.

jem16

mickflynn39 wrote: »

Is the information on the pensionsonline.co.uk website incorrect? A simple yes or no will do.

As this was aimed at me I'll answer it.

If you want a simple yes or no, it has to be no. This is purely based on what you are using to article to represent.

However for a more pertinent answer read the replies from dunstonh and linton.

bilbo51

dunstonh wrote: »

Look, its clear that you feel its better to live in poverty in retirement than take action to provide for yourself in retirement. However, it isn't fair on others who do want to look after themselves.

To be fair he is unemployed living on less than £8,000 pa rental income and makes his living from gambling with this cash. He's probably doing the best he can in the circumstances.

dunstonh

bilbo51 wrote: »

To be fair he is unemployed living on less than £8,000 pa rental income and makes his living from gambling with this cash. He's probably doing the best he can in the circumstances.

That is fair enough. He will actually get a payrise in retirement

However, to put others off from planning for retirement who would suffer financially by doing nothing isn't fair on them.

mickflynn39

All 54,000 of them? Including cash deposit, gilts and fixed interest?

Throughout all of my posts I've always made it clear that I was talking about the average of all UK pension funds over the long term. I can't believe that you have only just realised this. You have damaged your credibility even further by demonstrating that you are just interested in getting your pro personal pension plan propoganda across rather than trying understand what has been posted.

bilbo51

mickflynn39 wrote: »

90% of people retiring in the last 5 years have retired on the equivalent of an inflation linked pension of only £1-2k..

That's an interesting statement - do you have a source for it?

dunstonh

Throughout all of my posts I've always made it clear that I was talking about the average of all UK pension funds over the long term.

That is not clear at all. However, if you want to stick with that then fine. It undermines your position further.

It seems he is saying that a balanced managed fund will provide a real long term return of over 7% after charges have been deducted and that management charges are going to be around 1%. This is based on evidence from the previous 10 years.

I used the real world evidence to show that your past performance figures did not match reality. I have made no comment on what people WILL get going forward. The 1% figure has been the benchmark in the UK since 2001. It is easy to get less than this and you can pay more if you want more advanced/specialist investments.

By implication he is saying that most of the other funds are rubbish.

Where does it suggest that? I purposely used the most common fund types and used just the average to ensure a mid table position rather. I could have used top performers in that sector or gone with Asian markets or emerging markets if I wanted to use the best "past" performers.

Well if you are naive enough to believe that this past performance is going to carry on then good luck to you.

Past performance tells you nothing. However, I would prefer to use figures of 5-7% before charges than your figure of 0.3%.

The one statistic that shows this is not the real world is that 90% of people retiring in the last 5 years have retired on the equivalent of an inflation linked pension of only £1-2k. Hardly evidence of real returns of over 7% over the long term.

1 - no one has said anything about 7% real returns over the long term
2 - personal pensions have only existed for little over 20 years. Someone getting £1000-2000 a year is doing so because they paid peanuts into it.
3 - your figure is made up as I do not believe for one minute that 90% of those retiring now have a pension income of £1000-£2000 a year.

dunstohn explains this away by putting all the blame on the pensioners for not putting enough money away. How very simplistic.

Funny that. Thinking that any savings/investment going is only as good as what you put into it!

It's nothing to do with the fact that the majority of these people were expecting a pension 15 times the one they ended up with due to being shown unrealistic projections of the size of their funds by finance professionals eager to get their hands on commission.

The projections illustrations in the 80s reflected 80s figures. The 90s saw them come right down and the 2000s saw the introduction of inflation into them. However, the fact is that too many people that started paying £30pm in 1988 when they were earning £8000 a year average wage are still paying £30pm today when the equivalent wage is more like £24000.

To think that £30 is still going to provide you with the same level of benefits as £30 would have done in 1988 is wrong.

So if you want to believe in fantasyland then believe all the proclamations of dunstonh. If you want a reality check then check out what I've posted and check what your own personal pension plan is doing at the moment. You will probably be in for a nasty surprise.

Please do as anyone who has taken out a regular contribution pension in the last 10 years and used the default fund will probably find that they are around the mid rate projection figure. Some may be more, some may be less. That will largely depend on the level or investment risk you have taken. Hence why there are usually three different example rates and why they all have the warning underneath that they are just examples and not guaranteed. You could get back more or less than that.

mickflynn39

That's an interesting statement - do you have a source for it?

Yes I do (sort of). I can't remember where I saw this but it was from a reputable source (not dunstohn). In I previous post a put in a link to the Daily Express (you must read these posts more closely) which showed that the average size of personal pension pot in the UK is £25,000. So if you assume an annuity rate of 3.5% (I'm being generous) you would end up with an inflation linked pension of £875 ( just so you understand that's 3.5% of 25,000). As the Daily Express seems to be held in low esteem around here here is another link from the FT. Hopefully that will meet with the very high standards around here. http://www.ft.com/cms/s/2/eed5a56c-5c8b-11e0-ab7c-00144feab49a,s01=1.html#axzz1IYl67dhf So if you still believe the ramblings of dunstonh then I'm very sorry but there is nothing more I can do for you.

dunstonh

In a previous post a put in a link to the Daily Express (you must read these posts more closely) which showed that the average size of personal pension pot in the UK is £25,000. So if you assume an annuity rate of 3.5% (I'm being generous) you would end up with an inflation linked pension of £875 ( just so you understand that's 3.5% of 25,000).

Again you have taken figures and misunderstood and misrepresented them.

1 - if we accept the average fund value is £25k then your argument fails as you are looking at the average value from people aged 1-75 and assuming that they are all retiring today.

2 - a £25k pension fund for a 25 year old is very very good. A 25k pension fund for a 65 year old is bad.

3 - Many people nowadays have multiple pension funds and pension schemes. You seem to have ignored that.

4 -personal pensions only came into existence in 1988. If you started one that year you would have needed an average contribution of just £106pm to get a pot of £25k. That is very low and that is why you only have a fund of £25k.

bilbo51

mickflynn39 wrote: »

Yes I do (sort of). I can't remember where I saw this but it was from a reputable source (not dunstohn). In a previous post a put in a link to the Daily Express

OK.

mickflynn39 wrote: »

(you must read these posts more closely) which showed that the average size of personal pension pot in the UK is £25,000. So if you assume an annuity rate of 3.5% (I'm being generous) you would end up with an inflation linked pension of £875 ( just so you understand that's 3.5% of 25,000).

You have posted very many times on this thread, so forgive me if I don't have the time to search for that link.

mickflynn39 wrote: »

As the Daily Express seems to be held in low esteem around here

It's not the most credible reference I've ever been given, I must admit.

mickflynn39 wrote: »

here is another link from the FT. Hopefully that will meet with the very high standards around here. http://www.ft.com/cms/s/2/eed5a56c-5c8b-11e0-ab7c-00144feab49a,s01=1.html#axzz1IYl67dhf

So what it says on that link (which is an article about ISAs btw), is that the average pension pot [in the UK] is £25,000, but it doesn't say that the average pension pot of people retiring is £25,000. My guess is that the figure for people nearer to retirement would be somewhat higher. [I would quote the article here but it's FT copyright so I won't.]

Perhaps I should add that I have four pension pots at the moment. So how much do you think I have saved up (on average)?

mickflynn39 wrote: »

So if you still believe the ramblings of dunstonh

What makes you think I do?

mickflynn39 wrote: »

then I'm very sorry but there is nothing more I can do for you.

I didn't ask you to do anything for me in the first place mate.