Its not worth haveing have a pension

hugheskevi

What I really don't understand (although I've got an idea what you will say) is why people who invest in pensions can't have all of 'their' money when they want?

To add to Dunstonh's comments, there is also the problem of how long you are going to live.

At age 65, you can expect to live to about 88. But many will die earlier than that, and many later. So if you just had a big pile of cash to see you through the rest of your retirement, you would probably decide to be prudent, and assume you are going to live to something like 95 to ensure your money doesn't run out, ie, on average, most people wouldn't actually consume all of their pension savings.

Or else plan to live to 88 and fall back on the State if necessary. Or as most would probably do, not plan at all and fall back on the State well before 88.

You could of course choose to annuitise it, but that brings its own problems. Once it is not compulsory (or effectively compulsory for most, as now) those who expect to live longest would buy annuities (adverse selection) so insurers would price them accordingly. As such, they would be a more expensive option that they are now.

When you run analysis on various strategies for funding retirement, no strategy can protect you against living longer than anticipated as well as the mortality cross-subsidy present in annuities.

As such, annuities and/or defined benefit pension income are likely to have a key role to play in most retirement portfolios, at least by the age of 75-80 when mortality drag really starts to kick-in.

Baggiebird1nil

I have been watching my pension fund over the past 7 weeks and to my horror it has lost over £1500! Since 8th June until today it has lost £473.90! I pay in £150 per month and my employer matches it. That's £300 per month going down the swanny! I might just as well put my hand out of the window on payday and chuck it out. So as I was 55 on Sunday I have decided that I will take my pension now, put the money in an ISA and worry about old age when it arrives. Can't see the point in putting money into something that is losing month after month.

mramra

Baggiebird1nil wrote: »

I have been watching my pension fund over the past 7 weeks and to my horror it has lost over £1500! Since 8th June until today it has lost £473.90! I pay in £150 per month and my employer matches it. That's £300 per month going down the swanny! I might just as well put my hand out of the window on payday and chuck it out. So as I was 55 on Sunday I have decided that I will take my pension now, put the money in an ISA and worry about old age when it arrives. Can't see the point in putting money into something that is losing month after month.

It may be wise to consider investment performance over a slightly longer timescale than 7 weeks.

thenudeone

Baggiebird1nil wrote: »

I have been watching my pension fund over the past 7 weeks and to my horror it has lost over £1500!

What you mean is that the investments that you chose to invest in have lost £1500. They would have lost the same proportion if you had invested in those investments through an ISA, a unit trust, or even individual shares (although you wouldn't have had as much invested because you wouldn't have received the tax benefits).

A pension is just a tax wrapper on investments.

If you don't want to put the money in your pension fund into more risky investments such as shares and funds, it's perfectly possible to invest pension money in government bonds or even a deposit account; just find a low-cost SIPP where they allow whatever investments you want.

Loughton_Monkey

Baggiebird1nil wrote: »

I have been watching my pension fund over the past 7 weeks and to my horror it has lost over £1500! Since 8th June until today it has lost £473.90! I pay in £150 per month and my employer matches it. That's £300 per month going down the swanny! I might just as well put my hand out of the window on payday and chuck it out. So as I was 55 on Sunday I have decided that I will take my pension now, put the money in an ISA and worry about old age when it arrives. Can't see the point in putting money into something that is losing month after month.

Your total lack of understanding is an excellent object lesson for anyone else who is equally confused.

You can spend your entire (poor) retirement, sitting at home, scratching your head, working out all the reasons why you are poor. Including ".... and then I had the opportunity to buy more units, 8% cheaper, and when they bounced back, I would have made a mint... but then I decided to pull out of the whole thing.... doh....."

atush

Baggiebird1nil wrote: »

I have been watching my pension fund over the past 7 weeks and to my horror it has lost over £1500! Since 8th June until today it has lost £473.90! I pay in £150 per month and my employer matches it. That's £300 per month going down the swanny! I might just as well put my hand out of the window on payday and chuck it out. So as I was 55 on Sunday I have decided that I will take my pension now, put the money in an ISA and worry about old age when it arrives. Can't see the point in putting money into something that is losing month after month.

This is amazing- taking a pension early because it lost money over a few weeks. What happened to your pension last year? Mine went up a huge amt (even stripping out contributions).

Go ahead, take your pension early like the OP did. Put it in an isa where it may lose the same or more. Then be penalised on having it when you get made redundant (like the OP).

dunstonh

I have been watching my pension fund over the past 7 weeks and to my horror it has lost over £1500!

Why is that a horror? my portfolio is down over £30,000 and it doesnt bother me at all.

Can't see the point in putting money into something that is losing month after month.

That is because you dont understand what you are doing. If you put the effort into understanding how investments work then you will not have the same concern.

As stated above, its not the pension that has lost money. It is the investments you have chosen that have. If you cant handle volatility of that level then change them to something with less growth potential but less volatility.

AND, just because its lost around 7% in the recent period, you are still gaining 250% overnight by being in the pension scheme. Its strange how you see short term volailtity of around 7% as losing money when you are gaining 250% in the first 24 hours after making a contribution.

jamesd

Baggiebird1nil wrote: »

I have been watching my pension fund over the past 7 weeks and to my horror it has lost over £1500!

You've lost the normal random daily variation that I see in mine. Ignore short term variations like this, they are a routine part of investing life and it means that you're getting the new units at a lower price for a while. Take a look at what happened to the value between March 2009 and now to get a more realistic picture of how it's been doing. It's probably up by 20-30% over that time and a blip like this just doesn't matter long term.

Or to put it a little more frankly, you're making the classic mistake of people who don't know what they are doing and selling after a small drop in value. It'll cost you a lot of money by the time you retire if you do it. Don't screw up by doing it.

Rob_192

Baggiebird1nil wrote: »

I have been watching my pension fund over the past 7 weeks and to my horror it has lost over £1500! Since 8th June until today it has lost £473.90! I pay in £150 per month and my employer matches it. That's £300 per month going down the swanny! I might just as well put my hand out of the window on payday and chuck it out. So as I was 55 on Sunday I have decided that I will take my pension now, put the money in an ISA and worry about old age when it arrives. Can't see the point in putting money into something that is losing month after month.

Well I can't understand what you're on about, I've just checked mine and it's gone up £3,000 ovenight, at this rate I'll be able to retire by the end of the year!

Deary me, there's no helping some people!

Academic

Baggiebird1nil wrote: »

I know absolutely nothing about pensions

Baggiebird's knowledge base doesn't seem to have improved since her last visit to the Pensions forum in November 2010.....