Something that doesn't seem to get mentioned

Cleaver

AD9898 wrote: »

Seriously, does anyone think pensions will be any use to anyone in 20+ years time ? Better to learn how to be completely self sufficient and to get yourself a shotgun and learn how to use it.

I agree. This is why every single month I take the £300 or so that would go to my pension and I put it towards buying guns. I currently have a loft and a garage full of shotguns, handguns and AK-47s.

If the world doesn't end in twenty years then I have a Plan B, which is to shoot people who did save and then steal their pension.

MacMickster

RenovationMan wrote: »

I think you need to start posting pensions related stuff on the pensions board Graham, they have been discussing the pensions crisis for years.

With your decision to use your pension as a 'top-up' to the state ones, you should make sure that your pension projection does not take you above the age related personal allowance. This is the tax free allowance that we get when we turn 65 (this might change) and allows us a tax free income of around £10k.

Your first step should be to get a state pension forecast from the government (google 'state pension forecast') as you might be entitled to SP2 as well as the basic state pension. When you get your figure (I think mine was £8k or something) then substract it from your age related allowance (£10k) and the remainder is the figure you should be aiming for in a traditinoal pension (£2k per annum in my case). One you have reached this amount in your pension plan, then I'd suggest you start filling ISAs.

If you use this strategy then all of your retirement income will be completely tax free.

To be honest, I think that any investment strategy based upon what you think that the state pension will be, what you think tax free allowances will be and presumably what you think state pension age will be (or even that there will still be a state pension), maybe 40 to 50 years down the line, just to try and avoid paying a bit of tax is completely ludicrous.

I strongly suspect that as the state pension age increases, ever higher numbers of people will be forced to leave the labour market due to their inability to keep working rather than their reaching state pension age, and their income until reaching state pension age will be subsistence level disability benefits topped up by any personal pension.

RenovationMan

AD9898 wrote: »

Seriously, does anyone think pensions will be any use to anyone in 20+ years time ? Better to learn how to be completely self sufficient and to get yourself a shotgun and learn how to use it.

LOL, brilliant AD. I love it when you do these fishing trips.

wannabehermit

pqrdef wrote: »

This has got to be a joke?

What's changed is that lifestyle expectations have risen faster than incomes. People now regard as essential many things that people didn't used to buy.

Taking my parents and myself as examples...

My dad - van driver, my mum - stayed at home, never worked.

DH - HGV driver, me - currently at home, trying to find work, applying for several jobs daily, only 2 interviews so far.

My parents - big house (bought for £37K) in a very nice area, one of the most expensive areas of the city.

Us - renting in a crap area of the city, if we want to buy we need to find £150K for a small house, a house like the one my parents had, about £300K

My parents - Lots of days out throughout all the holidays, all paid for by themselves.

Us - A few days out throughout the holidays, mostly paid for with clubcard vouchers

My parents - savings and investments all over the place, times nicely to have a payout every 5 years or so, plus my dad has about 4 pensions and he has paid very well into a pension for my mum. There are also several life insurance policies (3 that I know of)

Us - nothing. No disposable income to save or invest.

My parents - have helped me out immensely financially

Us - will never be in a position to help our children out in the way that my parents have.

In conclusion - my parents could afford to have 1 person on a normal, basic, unskilled job while the other stayed at home, they could buy a very nice house, have a good quality of life outside of work and save for the future. DH has a skilled job but I still need to go out to work, and still we won't be able to afford to save for a deposit on a house let alone save for our retirement. *I could substitute my parents for DHs parents or for my next door neighbours.

Another example is DHs wages. SInce leaving school he has had 3 jobs made redundant from the 1st 2 after about 6-7 years working for them, both companies folded so no payout), all same/similar skill level, the last and current job identical (except he now get a week less holiday, works 6hrs extra during the week plus works Saturdays)...

Job 1 - age 18 - 25 - take home pay approx £2,000 - £2,500 per month.

Job 2 - age 25 - 31 - take home pay approx £1,300 per month

Job 3 - age 32 - current - take home pay approx £950 per month.

15 years ago he was saving for a deposit, then paying approx £400 per month mortgage while doing the house up and saving further for a larger house. Now on less than half his income is having to pay £750 a month rent with nothing left over to save for a deposit.

So yes, ime disposable incomes are much lower now than they were 10-20 years ago. The above are facts not just me being whingy at not having a house & savings.

RenovationMan

Going4TheDream wrote: »

No definitely not, I worked with a guy who refused to join what was the best benefit of the job - an excellent final salary pension - he said why should I - the government will keep me in my old age! this was a guy who had worked at the company for about 22 years and was on a relatively good salary so could have retired with a great pension.

That guy was an idiot, pure and simple. Typically, final salaries have larger employer contributions than Money Purchase pensions, so that bloke would have been turning down an average of 20% of his gross salary every year for 22 years. He could have retired on decent income for very little outlay and instead prefers to live in poverty on the state stipend.

He had control of his own retirement income in his hands and instead he put it into the hands of politicians and civil servants. What a wally.

chewmylegoff

RenovationMan wrote: »

I think you need to start posting pensions related stuff on the pensions board Graham, they have been discussing the pensions crisis for years.

With your decision to use your pension as a 'top-up' to the state ones, you should make sure that your pension projection does not take you above the age related personal allowance. This is the tax free allowance that we get when we turn 65 (this might change) and allows us a tax free income of around £10k.

Your first step should be to get a state pension forecast from the government (google 'state pension forecast') as you might be entitled to SP2 as well as the basic state pension. When you get your figure (I think mine was £8k or something) then substract it from your age related allowance (£10k) and the remainder is the figure you should be aiming for in a traditinoal pension (£2k per annum in my case). One you have reached this amount in your pension plan, then I'd suggest you start filling ISAs.

If you use this strategy then all of your retirement income will be completely tax free.

except your objective should be to get as much money after tax as possible, rather than to pay no tax at all.

(i) the above ignores the 25% tax free lump sum you can draw from a pension, when considering pension vs isa.

(ii) if you are a higher rate tax payer, then you get 40% tax relief when paying into a pension now, but would likely only be paying 20% tax as a pensioner. if instead you pay into an ISA now, you pay 40% tax now before you pay it into the ISA, in order to avoid 20% tax later.

(iii) if you are receiving employer contributions into your pension which depend upon the amount that you pay in, then you would be foolish to pass these up in order to try to manage the amount of tax you would pay in 30 odd years time when the tax system and state pension may both be completely different.

JonnyBravo

RenovationMan wrote: »

LOL, brilliant AD. I love it when you do these fishing trips.

hmmm I'm not sure he's fishing anymore.
I think the lack of interaction, the specialist youtube links and the price of oil have finally sent him amcluescent.
He's now a proper fully graduated tin foil hatter aint you ad?

RenovationMan

MacMickster wrote: »

To be honest, I think that any investment strategy based upon what you think that the state pension will be, what you think tax free allowances will be and presumably what you think state pension age will be (or even that there will still be a state pension), maybe 40 to 50 years down the line, just to try and avoid paying a bit of tax is completely ludicrous.

Interesting. What advice would you give to Graham?

chewmylegoff

Graham_Devon wrote: »

Bizzarely enough, just read that the government have delayed extending the pension age. Costing taxpayers an extra £1bn, because some women born in the 1950's would have to wait an extra 2 years for their pensions.

Of course, everyone under that age will have to wait regardless. But wasn't fair on these ladies.

well they wouldn't want to upset their core voters would they!

IveSeenTheLight

Thrugelmir wrote: »

Wasn't that long ago! When people walked to save money........

exactly my point.