don't understand pensions one bit!

margaretclare

I agree with the previous poster.

Amanda, what you get here is people's personal opinions. Some have the strongly-held view that 'pensions are a waste of time for the average Joe'. This may be based on the belief that you can always claim means-tested benefits. This option may, or may not, be possible in 20 years time, but in any case, as dunstonh says, it's still living in poverty and poverty is not nice.

Dunstonh believes that pensions planning should be done between the two of you. Well, yes, there is an argument for saying that, but I personally also believe - very strongly - that a woman should have her own money.

You're in your 40s but you're planning a career after this, and you're going to have another quarter-century when your pension pot(s) can grow. When you go back to work, if you have the opportunity to join an employer's scheme then grab that opportunity with both hands.

HTH

seven-day-weekend

^^^
What Margaretclare said.

dunstonh

s you know i have always been wary of the value of pensions. No living in poverty is not a better option and i dont think that is a justified comment. Like most things if you realy look into all the ifs, wots, and buts there is a very diffrent answer to the one the commercial world wants you to see. As i said i'm totally for the idea of pensions but at the end of the day someones gotta pay for them and someone wants to make money off them. So there will always be a conflict of interest.

The pension products of 2011 are very different to those of 1988. The days of product providers being in control are going and have already largely gone. You are right, someone does have to pay for them and everything we buy has someone making money from them. The only way to avoid that is move to Russia but then communism has failed. Capitalism has many faults but its what we have.

The choice is to plan for retirement or don't plan. If you plan well you will be ok. If you dont plan and end up relying on the state you will have 20-30 years of poverty.

Dunstonh believes that pensions planning should be done between the two of you. Well, yes, there is an argument for saying that, but I personally also believe - very strongly - that a woman should have her own money.

I agree that the woman should have some control over her money. However, the OP has said at the moment she cant afford to do it. So, the husband should consider whether its sensible for him to fund the provision. After all, he is going to benefit from it as well and the wife could lose out significantly if retirement planning is all in his name and he dies first.

jamesd

margaretclare wrote: »

Dunstonh believes that pensions planning should be done between the two of you. Well, yes, there is an argument for saying that, but I personally also believe - very strongly - that a woman should have her own money.

The reason dunstonh writes that is that each person gets a personal income tax free allowance that'll be around £10,000 a year. That makes it more efficient to try to spread the money between the spouses so that they make full use of their available tax free income. Usually it means a mostly working spouse funding payments into the pension pot of a more often not working spouse. This doesn't apply to the minimum contribution to final salary schemes but it's applicable for additional contributions about the scheme's minimum. Once paid in to the pension pot it belongs to that spouse. Or a different pot could be set up just to hold those contributions so it's clear where each part of the value comes from.

I strongly agree with the each person having their own pot of money idea and am also keen on exploiting all of the possible tax gains.

The_Economist wrote: »

Would it be fair to say that most pensions for average joe are a waste of time.

No, it wouldn't be fair to say, it would be very misleading.

It would be even more misleading in the case of a couple where one person has significant pension income, as in this case, so there's no possibility of low income means tested benefits being paid.

The_Economist wrote: »

Look at the history of them over the last 10 years or so.

It's been a profitable ten years for those with bully1234's type of pension. Someone who paid £100 a month into a FTSE All Share Index tracker fund for each month from Feb 2001 to Feb 2011 would have £14,227 today from contributions of £12,100. That's 17.5% more than the after tax relief money paid in. Since tax relief added 25% to the contributions (more for the early years) the person has really gained more than this.

Dunstonh isn't quite right about living in poverty but it's close: means tested benefits are only intended to provide basic living levels, not comfortable ones. Not that it matters in this case because the couple won't be eligible for means tested benefits due to the husband's likely pension income.

margaretclare

After all, he is going to benefit from it as well and the wife could lose out significantly if retirement planning is all in his name and he dies first.

Yes, I have actually seen this type of scenario happening in real life, and it causes great distress, hardship and heartache. It used to be common thinking in my generation and those earlier, that the husband took care of everything. We are seeing now a generation - or more than one generation - of women on their own living in poverty because they left all the pension provision to their husbands.

OP, you don't understand pensions one little bit, you say. Very little to understand. During a working lifetime you need to build up a pension 'pot' which will generate enough money to live on during the 2 or 3 decades after your working lifetime when you won't be able to work. There's the basic state pension, but that should be regarded as the basic. Most employers of any size have a pension scheme which you can join and pay into from your earnings. If you're lucky the employer will pay in as well as you, making a total which can grow. Then there are the private pension schemes. So it can be a 3-way process.

I remember all too clearly women I worked with who did not even pay full NI contributions thinking they didn't need their own pension - fortunately, this is no longer an option. They also refused to pay into the employer's scheme when they could have done. Reason: they 'left all that kind of thing to their husband, after all they'd have his pension, wouldn't they'. I know very many women who are now bitterly regretting those wrong choices.

bully1234

Thank you everyone for all your responses.

I do agree that I need to start paying into a pension again. I currently earn partime £7000 and could probably contribute £20 a month but that's about it.

As you know I have two pension pots, one that is ceased over £12k with previous employer and one with Prudential £11k in that one! The ceased pension scheme is just sitting there so do I just transfer it into the live prudential plan for now and start adding £20 a month
into it until I can afford more???

Amanda

dunstonh

I do agree that I need to start paying into a pension again. I currently earn partime £7000 and could probably contribute £20 a month but that's about it.

Dont bother with £20. You will only get around £30pm back in real terms in retirement.

Sit down with your husband and work out your retirement provision whilst both alive and if one of you dies.

The ceased pension scheme is just sitting there so do I just transfer it into the live prudential plan for now and start adding £20 a month
into it until I can afford more???

The Pru one is not live. It ceased to be available when they closed their salesforce around 10 years ago. It is still subject to investment returns but you wont be able to add £20pm to it.

Loughton_Monkey

The_Economist wrote: »

Would it be fair to say that most pensions for average joe are a waste of time. Look at the history of them over the last 10 years or so. Things 'aint getting better if you are public sector or private sector. I 100% agree with the idea of having a pension but the cons out weigh the pros in a lot of cases. Particuly on private pensions.

A very curious viewpoint.

I have heard criticism [wrongly] of them as a waste of money. But as a waste of "time" demonstrates the 'thinking' behind your ideas.

What are your ideas about saving/investing for retirement generally [outside the pension wrapper]? Using 'savings' for retirements is as useful as a chocolate teapot at today's interest rates. 'Investing' for retirement is another matter. Anyone who is going to do this might just as well do it within a pensions wrapper surely? Why would you consider that option a 'waste of time' despite the tax relief?

bendix

The_Economist wrote: »

Hi dunstonh,
as you know i have always been wary of the value of pensions. No living in poverty is not a better option and i dont think that is a justified comment. Like most things if you realy look into all the ifs, wots, and buts there is a very diffrent answer to the one the commercial world wants you to see. As i said i'm totally for the idea of pensions but at the end of the day someones gotta pay for them and someone wants to make money off them. So there will always be a conflict of interest.

The idea of debating a subject is to put forward ideas and arguments BACKED UP BY EVIDENCE, and then hear and decide if you are persuaded by counterarguments.

It's impossible to debate your post because it's just vague generalisations, with no substance. Come back and put in evidence and we'll take it on.

The Economist is the best written, best argued magazine around in my opinion; with the greatest of respect, you're nowhere close to it.

The_Economist

bendix wrote: »

The idea of debating a subject is to put forward ideas and arguments BACKED UP BY EVIDENCE, and then hear and decide if you are persuaded by counterarguments.

It's impossible to debate your post because it's just vague generalisations, with no substance. Come back and put in evidence and we'll take on.

http://www.moneysavingexpert.com/news/banking/2011/02/eu-rule-could-cut-male-retirement-income?utm_source=forum&utm_medium=sidebar&utm_campaign=box

https://forums.moneysavingexpert.com/discussion/2881124

http://www.pensioncalculator.org/3340/news/pensions-loophole-alarms-regulator/

http://www.dailymail.co.uk/news/article-1350932/Equitable-Life-victims-just-QUARTER-loss.html