MSE News: Pension age rise bought forward

dunstonh

I agree that private pensions are a total scam. You will find plenty of people on this forum who will extol the praises of private pensions, but that is usually because they are financial advisers who have a lot to gain.

Why do financial advisers have a lot to gain? There is no difference to an adviser on whether the pension tax wrapper is used or ISA or unwrapped.

Why? Because there is no scheme out there that can guarantee you a given payout at a given age, based on your contributions.

So, on that basis, everything on the planet is a scam. Not just pensions.

It's all based on stock market gambling

Since when?

and as I'm sure you are aware, the stock market has performed like a dead duck since around 10 years ago - practically zero growth.

What about dividends and the fact that most people pay monthly and average out the ups and downs. Growth is around 5%-7% p.a. from 10 years ago.

The growth rates of the 80s and 90s were a blip; if you look at the historic performance of the markets in the last 100 years it isn't good. Of course you never get illustrations that show this, the advisers know how to lie with statistics.

Evidence?

We need a state pension of £250 a week for each adult with 30 years of contributions - simple as that.

Who is going to pay for it?

If it means paying 20-22% in NI contributions then so be it - rather that than waste money gambling on the markets.

Why should people be forced to rely on the state?

gadgetmind

Gracchus_Babeuf wrote: »

I agree that private pensions are a total scam. You will find plenty of people on this forum who will extol the praises of private pensions, but that is usually because they are financial advisers who have a lot to gain.

No, it's usually because they have a brain and are therefore capable of looking to the future and making long-term plans.

Gracchus_Babeuf

The_Angry_Jock wrote: »

And what about people who don't have 30 years of contributions?

Good question. Personally I would favour reducing the minimum period of contributions to 20 years.

gadgetmind

Gracchus_Babeuf wrote: »

Look at the Dragons on BBC2 - all the moronic ideas that people come up with simply baffle me.

Sorry, you're using the example of people who take part in what is effectively a TV game show to backup your argument?

Gracchus_Babeuf

dunstonh wrote: »

Why should people be forced to rely on the state?

Because it seems only the state can provide a guaranteed income. Please show me a private pension scheme that offers a guaranteed set income based on contributions. I am waiting.

gadgetmind

Gracchus_Babeuf wrote: »

Good question. Personally I would favour reducing the minimum period of contributions to 20 years.

Why stop there, why not give everyone a massive pension at age 16 and no-one need ever work again!

Pincher

jamesd wrote: »

Pension tax relief is for providing long term pension income, not buying a yacht. You can't do that with a pension and only a £200,000 pension pot.

Bureaucrat thinking: Pincher may live a long lingering poverty stricken life, as opposed to one glorious twilight adventure and return to Odin in a sea battle worthy of songs.

jamesd wrote: »

Or you could use credit to buy the yacht and use the income from investments to repay the loan. If you die your pension pot is outside your estate and the yacht loan amount outstanding is an unsecured loan that your estate may not be able to pay.

Interesting point. Not viable when one actually retires, with reduced income stream, but possible to borrow while in work.
Like a pension mortgage, they want you to pay it off when you retire, but obviously this tactic requires the loan to continue into the retirement.


So the idea is to buy life insurance to re-assure the lender that they will be covered if I die. I expect the insurer will refuse to pay out if death is by machine gun battle with Somali pirates. Obviously I will sign an agreement not to deliberately engage pirates of any sort in battle, unless they pick a fight.

jamesd wrote: »

Assuming that you have £7,000 from the state pensions and buy a level annuity of £13,000 at a state pension age of 67 you would reach the £20,000 threshold for flexible drawdown and could take the rest of your pot as one lump taxed as normal income. Unfortunately that would use all of your £200,000 fund to buy the annuity so you would have no money left over to buy the yacht.

You could instead buy a smaller yacht for the £50,000 lump sum and take a reduced income. Say a change from a new 2011 12m Jeanneau Sun Odyssey 409 to a used 12m 1988 Jeanneau Sun Legend 41 or used 2003 10m Jeanneau Sun Odyssey 32.

My rant was about the lingering doling out of gruel in small portions of people's own money. £200,000 in a pension pot is what a conscienctious saver can reasonably expect to accrue by retirement. I'm saying if they saved all their life, and want to use the money for whatever they want, whether it's a new kitchen or just enough food so they don't starve, they should be able to. I'm talking all of the £200,000, not 25%.

The yacht is just an example of discretionary spending.
It could very easily be university fees for the grand children,
which still wouldn't be allowed. You can leave the money to them IN A PENSION, where nobody can touch it for another 50 years (18+50=68), but you can't send them to university with. In some cultures, children support you, so it's a far higher return on your money than any investment fund. Obviously, there's a risk the grandchildren never call you ever again, but that's investment for you.


Bureaucrat thinking: We don't want Pincher to become a burden on the state.


Pincher thinking: I'm not putting money into a piggy bank I can't open when I want to.


Let me just point out that somebody who saved for 40 years conscientiously is precisely the kind of bureaucratic drone who would never blow the money in one go. The lager lout who watches Sky Sports and spends £100s on mobile calls doesn't end up with £200,000 pension pots. By the age of 68, they have been a burden on the state for 68 years already.


Fortunately, Equitble Life happened at the beginning of my pension saga, so my losses were not too bad. I have put my money to good use elsewhere, and £200,000 I can't get back is not an issue I need to worry about. If I wanted a yacht, I could have it now. Have to cut back elsewhere, but it's all at my own discretion, not because some bureaucrat lets me.

gadgetmind

Gracchus_Babeuf wrote: »

Because it seems only the state can provide a guaranteed income.

Only if the state lives beyond its means and racks up unsustainable deficits. Surely it's better that we pay for our pensions now rather than expecting our children to pay massively higher taxes in the future to support us?

Gracchus_Babeuf

gadgetmind wrote: »

Why stop there, why not give everyone a massive pension at age 16 and no-one need ever work again!

No - because the pension age wouldn't change - or are you too dimwitted to understand that. It seems you are.

Gracchus_Babeuf

gadgetmind wrote: »

Only if the state lives beyond its means and racks up unsustainable deficits. Surely it's better that we pay for our pensions now rather than expecting our children to pay massively higher taxes in the future to support us?

Utter rubbish. It's not the state but taxpayers who would pay for this through higher contributions. The current system generates a pittance of a state pension, paid when many people have already passed away, and anything extra you have to invest on the very risky stock markets.