MSE News: Guest Comment: The route to retirement riches

edited 13 May 2011 at 9:14AM in Pensions, Annuities & Retirement Planning
25 replies 3.2K views
2

Replies

  • gadgetmindgadgetmind Forumite
    11.1K Posts
    Tenth Anniversary 10,000 Posts Combo Breaker
    ✭✭✭✭✭
    There do seem to be those who aren't prepared to stop at ignorance regards funding their retirement. These people seem to be actively proud of the fact that they have their heads in the sand and condemn themselves to decades of misery with what often comes across as a fiercely anti-establishment stoicism.

    Yes, the guys in pinstripes might run off with huge chunks of your savings, and yes the whole financial system might collapse. But the former is less rare than it used to be, and can be kept under control if you keep your wits about you, and the latter is a "black swan" that it best ignored in much the same way as are asteroid strikes. The most likely outcome is that the world limps along, you live well into your dotage, you get to keep the vast majority of your pot away from HMG and greedy advisers, and it does grow long-term.

    Yes, saving for retirement does have its risks, but is the absolute certainly or not doing so really more attractive?
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Le73Uq86Uv wrote: »
    What is the point of saving for a pension?

    You are not in control of it, it could go bust, It could be used by your employer leaving no money in the pot for you or the goverment change the rules when you are in your late 50's and you get less than what you thought you would for 30 years.

    Put it under the matress is my advice.


    Great advice there, ever hear of inflation?

    Imagine spending 1.40 on a 4 pints of milk 20 years ago, you would have had a heart attack, now its standard.

    Please think before posting as people read these and listen to them, at least make a recommendation for a FSCS secure cash based ISA account!
  • edited 15 May 2011 at 9:13PM
    Le73Uq86UvLe73Uq86Uv Forumite
    336 Posts
    edited 15 May 2011 at 9:13PM
    The point I was making is if you sign up to a deal when you are 20 years old the goverment or anyone else should not be able to change the conditions unless you agree when you are not far off the pension age.

    Yes I wanted people to listen but those who think they can just change it at will giving no thought to the individual but only to profits and the state of the country.

    Just look at the state pension and how they are changing it making retirement longer away when the individual may have made plans to retire at 65 30 years ago. OK make changes for new entrants to schemes but dont change them for others who have made plans for 30 years with no chance/time of making new plans.
    Signature removed club member No1.

    It had no link, It was not to long and I have no idea why.
  • gadgetmindgadgetmind Forumite
    11.1K Posts
    Tenth Anniversary 10,000 Posts Combo Breaker
    ✭✭✭✭✭
    Yes, there are constant changes, far too many. Planning for retirement in the UK is like trying to walk in a straight line during a Japanese earthquake.

    How much can we save per year? All change! Anti-forestalling, loads of different caps,retrospective limits, earthquake!
    How will our pension pots be taxed. All change! 10% tax on dividends can't be reclaimed, 5bn pounds per annum ripped from our pensions and !!!!ed down the toilet that is government coffers.
    What will all the many hundreds of thousands we pay in NI per worth when we hit retirement age? All change! Who knows? we don't, HMG don't, no-one does, TBH, planning is impossible,
    When might we be able to retire? All change! Private pensions move from 50 to 55, state from 60/65 to 66, or is it 68, or is it 70? Who knows? We don't HMG don't.

    All we can do as individuals is max out pensions and ISAs, bang what else we can into dividend paying investments outside of these wrappers and hope for the best. Or we can choose to !!!! it against the wall and/or stick it under the mattress. I know which I prefer.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • edited 16 May 2011 at 9:17AM
    dunstonhdunstonh Forumite
    106.8K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    ✭✭✭✭✭✭
    edited 16 May 2011 at 9:17AM
    You are not in control of it, it could go bust, It could be used by your employer leaving no money in the pot for you or the goverment change the rules when you are in your late 50's and you get less than what you thought you would for 30 years.

    1 - you are in control of your pension. You have virtually identical investment options to an ISA.
    2 - Please name a money purchase fund that has gone bust (you wont be able to). Even defined benefit schemes give 90% protection now.
    3 - Govt can change the rules but it wouldnt leave you less in your pension. Indeed, most of the rule changes over the last decade have seen greater flexbility and options brought in. the Govt does play around with pension legislation too much but it is mostly tweaks rather than whole sale changes. Personal pensions were introduced in 1988 and for the vast majority, the same rules on pre-retirement exist today as they did then.
    The point I was making is if you sign up to a deal when you are 20 years old the goverment or anyone else should not be able to change the conditions unless you agree when you are not far off the pension age.

    In most cases they havent changed existing pension plans. In some cases, you could avoid changes by applying for transitional relief (large investors with £1.5 million or thereabouts). But for most, there hasnt been any major changes other than the minimum commencement age, which didnt effect most people).
    Just look at the state pension and how they are changing it making retirement longer away when the individual may have made plans to retire at 65 30 years ago.

    What the Govt does to state pension is irrelevant to personal pensions. However, anyone planning things 30 years ago and not keeping up to date is daft. For example, personal pensions didnt exist 30 years ago. Nor did ISAs (or PEPS before that). The investment products of that era are woefully obsolete compared to today.

    Fact of life is that things change. You adapt or you lose out.
    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.
  • bigbloke45bigbloke45 Forumite
    2.3K Posts
    Part of the Furniture 1,000 Posts Name Dropper
    ✭✭✭✭
    Dear old Bob. Poacher turned gamekeeper?

    Corporate Development Director at Britannic Retirement Solutions
    Corporate Development Director at Britannic Retriement Solutions
    Sales & Marketing Director at Target Group
  • Marine_lifeMarine_life Forumite
    1.1K Posts
    Hung up my suit!
    ✭✭✭
    FATBALLZ wrote: »
    I think we can safely dismiss this 'guest' as a fool. I wonder which countries he has been to that have unlimited amounts of land.

    Probably more accurately the statement should be that the UK is expecting continuous population growth until 2050 which will keep the demand pressure on land (compare that with a number of other European countries - Germany, Italy etc - where population is actually projected to fall)
    Money won't buy you happiness....but I have never been in a situation where more money made things worse!
  • edited 16 May 2011 at 12:22PM
    MilarkyMilarky Forumite
    6.3K Posts
    Part of the Furniture 1,000 Posts Photogenic
    ✭✭✭✭
    edited 16 May 2011 at 12:22PM
    dunstonh wrote: »
    In most cases they havent changed existing pension plans. In some cases, you could avoid changes by applying for transitional relief (large investors with £1.5 million or thereabouts). But for most, there hasnt been any major changes other than the minimum commencement age, which didnt effect most people).
    Ah but if if didn't affect a lot of people why was it changed? (To stop a rush to the door I would guess was the government's assumption)

    No one has mentioned auto enrolment for 'Personal Accounts' (!!! 'NEST's) yet. That's 'soft compulsion' of the too-little-too-late-but-got-to-be-seen-to-do-something variety of state interference. The benefits have been made so anaemic from the get-go that it won't matter if you're in one or you're not. What does that say about the rest of the legislative framework?

    They called them 'Personal Accounts', no doubt, to give a nicer ISA feeling instead using of that dreaded 'P' word. Then thought (perhaps) if they called it something more snappy, like 'NEST' (in the tradition 'Neddy' or 'Aunty' or 'Ernie' - but 'Numptie' would be a more appropriate backronym) for 'National' [good!] 'Employment' [hmmm?] 'Savings' [Yeah, right!] 'Trust' [Oh? so that's all right, then..]

    I'll repeat myself and state that I believe the government missed an opportunity to help people genuinely save by not using the Australian/NZ model of a tax privileged lump sum for this one particular product. Annuities are only 'popular' to the extent they are mandated. Government often flunks decisions like these in favour of vested interests and status quo.

    I've also asked this before: where else are annuities* mandated as they are in the UK? Germany? France? Sweden? Russia? the USA?

    *including complex drawdown only suitable for 'a few' anyway.
    .....under construction....
  • gadgetmindgadgetmind Forumite
    11.1K Posts
    Tenth Anniversary 10,000 Posts Combo Breaker
    ✭✭✭✭✭
    I know a few people who had worked hard on their pensions so they could retire in their early 50s. All were mightily cheesed off by the changes and particularly the one was born just over a week too late and had to work for another five years.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • dunstonhdunstonh Forumite
    106.8K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    ✭✭✭✭✭✭
    Ah but if if didn't affect a lot of people why was it changed? (To stop a rush to the door I would guess was the government's assumption)

    The lifetime allowance, when that was introduced, was believed to affect only around 50,000 people. All of which targeted high earners using pensions to reduce tax. You can apply that to most of the recent changes.
    I know a few people who had worked hard on their pensions so they could retire in their early 50s. All were mightily cheesed off by the changes and particularly the one was born just over a week too late and had to work for another five years.

    They may well have been but they are in a minority (not saying its right that it happened but just positioning it). The average age of retirement is 62 (I believe the trend is seeing it head to 63 if its not already there with more recent data).

    Apart from the fact I am not keen why they retrospectively change rules, you can see the reason why they did it. If people are living longer and the taxpayer is paying incentives to those planning for retirement, then I suppose moving the age on 5 years is fair enough.
    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.
This discussion has been closed.
Latest MSE News and Guides

Top savings accounts

Up to 1.7% fixed or 0.6% easy access

MSE Guides

24 craft beers for £26 delivered

Flavourly newbies only (norm £70ish)

MSE Deals