Something that doesn't seem to get mentioned

pqrdef

lazer wrote: »

This is going to seem controversial, but honestly I believe that if you are in a relatively low paying job, don't bother with the pension as nothing you save can be worth it, as it will just reduce your entitlement to means tested retirement benefits, which will always exist in some shape or form

Trouble is, the better-off want the privileges of the poor, as well as those of the better off. People should have to make their mind up, by registering what class they want to be.

If you register as middle class, then you agree to support the poor and never be a burden on the state yourself and not complain about it. But you're allowed to wear a top hat, and the plebs will call you Sir or Ma'am and touch their forelocks and do as they're told.

Conrad

teddy_ruckspin wrote: »

Silly attitude, and very misguided.

It's bad enough getting old, but being old and POOR must be diabolical.

He said " there are other more sustainable and reliable investments out there than pensions and i would rather spend my time and money persuing those".


Many people have always paddled thier own canoes and done very nicely thankyou, know 'money manager' required.

Conrad

drc wrote: »

Pensions are a big ponzi scheme and the only generation to really benefit are the boomers who were able to have it all

Why do so many of you guys filter out facts to suit your narrow world view? Utterly bonkers really.

Learn to be a fox and recognise the world is grey not black and white.

RenovationMan

pqrdef wrote: »

This is the great lie. Your investments (including cash) will only turn out to be worth whatever they turn out to be worth. This could be nothing or a lot or anything in between, depending entirely on what the economy can afford at the time. Since you don't even know the future real value of cash, let alone anything else, you've got no idea what your pension pot is worth.

The exception is RPI-linked investments. But they're generally based on the principle that the government, or whoever, will be able to pay the returns out of future current revenues, so they're essentially pay-as-you-go.

This is the great truth.

Personal pensions are based on the actual savings you have made, they will be worth whatever they turn out to be worth. The value at retirement is based on the savings that you actually, physically have in your pension pot.

Many (but not all) public sector pensions and state pensions are not fully funded, but rely on the contributions of others who are still working. If the number of pensioners increases relative to the number of workers, then contributions need to be increased and the people at the bottom of the ponzi pyramid have to pay more for less, while the people at the top of the pyramid get more for less.

pqrdef

RenovationMan wrote: »

The value at retirement is based on the savings that you actually, physically have in your pension pot.

What you actually physically have in your pension pot is a bunch of IOUs. Some of those have a blank space for the amount, and it remains to be seen whether any of them are worth the paper they're written on.

RenovationMan wrote: »

Many (but not all) public sector pensions and state pensions are not fully funded

The concept only applies to defined-benefit schemes, and those schemes are always either overfunded or underfunded, because the "value" of the fund fluctuates with the markets in a way that bears no relation to the liabilities. When markets were up, they were overfunded and employers were taking contribution holidays (though employees weren't).

The bind we're in is that some fear defined-benefit schemes may be too expensive while others fear defined-contribution schemes may not be worth having. This is because the whole concept of mass-market funded pensions is a crock.

A minority can insulate themselves from the world, but for the large majority, the lifestyle they can have in retirement can only be a function of what the economy can afford at the time. Whatever they may have paid into their works funds or ISAs or SIPPs or NI stamps, the money they will actually get to live on will have to come out of current GDP at the time. And one way or another they won't be allowed to take more than their share of it, because the working generation won't deprive itself in order to support luxury living for the retired waving their IOUs.

An IOU is only worth what the other guy will give you for it. It'll help if you're young and fit and you've got the Army on your side. Oh no, that'll be him, not you.

PasturesNew

I think it was EdInvestor here on MSE who summed it up as: If you are a lower rate tax payer and your employer doesn't provide a pension .... there's actually no point bothering to get one yourself.

I've not got one.

RenovationMan

pqrdef wrote: »

What you actually physically have in your pension pot is a bunch of IOUs. Some of those have a blank space for the amount, and it remains to be seen whether any of them are worth the paper they're written on.

Out of interest, is this what you beileve about any store of wealth? I.e. savings accounts, property equity, Precious metals, etc?

pqrdef wrote: »

The concept only applies to defined-benefit schemes, and those schemes are always either overfunded or underfunded, because the "value" of the fund fluctuates with the markets in a way that bears no relation to the liabilities. When markets were up, they were overfunded and employers were taking contribution holidays (though employees weren't).

The bind we're in is that some fear defined-benefit schemes may be too expensive while others fear defined-contribution schemes may not be worth having. This is because the whole concept of mass-market funded pensions is a crock.

A minority can insulate themselves from the world, but for the large majority, the lifestyle they can have in retirement can only be a function of what the economy can afford at the time. Whatever they may have paid into their works funds or ISAs or SIPPs or NI stamps, the money they will actually get to live on will have to come out of current GDP at the time. And one way or another they won't be allowed to take more than their share of it, because the working generation won't deprive itself in order to support luxury living for the retired waving their IOUs.

An IOU is only worth what the other guy will give you for it. It'll help if you're young and fit and you've got the Army on your side. Oh no, that'll be him, not you.

I'm afraid you're getting yourself confused. There are two types of defined benefit scheme (also known as final salary schemes):

1. Schemes that are funded by the employee and employer and are held in a combined pension fund. These may be over or underfunded but they do hold physical wealth.

2. Government schemes that are not funded by the employer and have no money held anywhere. The pensions are paid via taxation.

Batchy

Since this is the moneysavingexpert forum, your missing the point with pensions. Its not only a tax wrapper its also protected.

Imagine a couple of scenarios

You have a mortgage ... nice house... lose your job, have to sell house ... negative equity... 50k... ISA 50k... In bankruptcy and other forms of insolvency, this ISA could be used to pay shortfall. If it was say 65k (grossed up for tax) in a pension it would be untouched. Debt would be written off. (i believe)

When you have a child and said child is struggling, would you give said child 50k, to help them out of their debt situation, or sit back and say, im sorry, my only wealth is in a pension. You need to sort this one out, with an IVA. Lot less "life style" pressure as there isnt going to be a lot you can do.

Need a new car, buy one if you can afford it, Or shall we use the ISA? Can't use the pension, as you cant get it out, less spouse pressure.

No one can sue you for your pension, civil case... Apart from your wife/husband in divorce. Its protected... Its not wealth its your future.

Your ISA... its your wealth ... so something goes wrong, people can sue you for it, and you can afford it, its included in all means tested efforts too, pension fund is not, since you cannot touch it.

Benefits, 22k or more in savings... don't qualify for benefits. or the like...

I think there is so much more to think about with pensions than... is an ISA going to get me more cash in retirement ... by a few quid.

You just simply can't spend in a pension and the 40% - now 42% tax break on money going into the pension is a great benefit. Especially compounded. Who knows what the pensioners personal allowances will be in the future. Save as much as you can afford. If you can... looking to the future negatively is just not going to work. To do nothing, and to compare yourself to the ones who have saved and then to turn to the government cap in hand, you are waiting for a kick in the guts.

RenovationMan

PasturesNew wrote: »

I think it was EdInvestor here on MSE who summed it up as: If you are a lower rate tax payer and your employer doesn't provide a pension .... there's actually no point bothering to get one yourself.

I've not got one.

Let's hope that the short-lived pensions credit that was brought in by Labour will still be around when you retire. I personally think that the moves towards everyone having a full state pension will mean that pensions credit will be removed.

So fare we have seen the number of contribution years slashed from 44 to 30 to qualify for a state pension, meaning that more Mums can claim full state pension.

The government is currently looking at having a universal pension that pays a fixed amount regardless of how many years of NI contributed. They are unlikely to set a universal pension at the level when everyone receiving it is eligible for a 'topup' payment and other benefits.

The ridiculous position where people who put a bit by for their retirement were penalised and ended up with less than their spendthrift peers will end. It was an anomaly brought in by Labour and has only been on statute for a relatively short amount of time.

EDInvestor was basing her pensions advise on her own prejudices and anomalous rules that would never last until most people she was advising retired. Much of her advice has been discredited.

For people on low income, a pension is the BEST way to maximise their contributions. They will receive a 20% gain in their contributions immediately and they should pay no tax when in receipt of their pension as their pensions would usually be less than their tax free allowance.

Pension contributions are also exempt for children's tax credits and working tax credits calculations. In effect this means that contributing to a pension reduces your income which in turn increases your tax credits.

Its a no brainer.

pqrdef

RenovationMan wrote: »

Out of interest, is this what you beileve about any store of wealth? I.e. savings accounts, property equity, Precious metals, etc?

Yes. I've got those, but I don't believe they secure my future against political risks. When the public mood turns against a selected victim group, anything can happen. And when money gets tight, public moods can turn ugly.