Should I make pension contributions to my private pension?

dunstonh

Can only add to the comments above. That is a poorly written article that is blaming the pension when in reality it is the individual not controlling their investments themselves or paying for an IFA to do it for them and then making obsolete assumptions about charges.

alex_p

Thanks for the responses and discussion.

I think I won't contribute personally and just let the company contribute as I am concerned about this money going to waste since the growth of that money is out of my control. For me it makes sense to build up ISA as well as invest in property. Then a state pension + a limited private pension + interest + rental income should be more than sufficient during retirement.

somethingcorporate

Spreading risk does seem sensible but unless you are well disciplined you may be tempted to raid savings for the "pressures" of the day and the house market is pretty shaky at the moment, putting a significant amount of your capital into the housing market is a few eggs in a single basket.

dunstonh

I am concerned about this money going to waste since the growth of that money is out of my control.

Everything is out of your control really.

For me it makes sense to build up ISA

I assume you mean S&S ISA at your age and not cash ISA. For most people a mixture of S&S ISA and pension is best.

as well as invest in property.

That requires a good deposit, a high enough safety fund (to cover dead periods and when the mortgage is higher than the rent and repairs, refurbs etc) as well as it being higher risk than using an ISA or pension. Certainly an option if you know what you are doing but not one of the feint hearted. 10-15 years ago, anyone could make money on property. Going forward will require knowledge and skill.

It is estimated that if you intend to rely on property for retirement, you will need around 6-8 properties.

JoeCrystal

alex_p wrote: »

Wow you contribute £300 per month? That's a lot!

It is a lot. Roughly 25% of my salary actually but currently affordable due to bonuses at work and working tax credits. But I still believe it will be worth a price when it come to retirement.

Cheers

Joe

gadgetmind

alex_p wrote: »

the growth of that money is out of my control.

A single roll of a dice is out of your control, but you can be pretty confident of the result of a few thousand rolls.

A balanced investment in equities and bonds will outpace inflation, usually comfortably, over the long term. Sudden drops in value can be scary, but it's just the same as a sudden drop in house prices. As long as you remain a net buyer of equities, bonds, or houses, then lower prices are a GOOD thing.

If you intend to cash it all in, then as you near retirement, you slowly move to less volatile investments. Of course, with houses you can decide to keep on taking rental income, but equities and bonds also generate income, rather tasty income, and you don't now have to buy an annuity so can keep on benefiting from this.

You're right to be cautious and to ask questions, but make sure you're cautious about real risks rather than being scared of the bogey man.

gadgetmind

JoeCrystal wrote: »

Roughly 25% of my salary

That's about right TBH! Three pounds for the current me, one pound for the future me, which tax relief and long-term growth will turn into two pounds for future me.

Yes, it seems like a lot, but unless you have a final salary pension backed by HMG, that's the deal.

atush

alex_p wrote: »

Thanks for the responses and discussion.

I think I won't contribute personally and just let the company contribute as I am concerned about this money going to waste since the growth of that money is out of my control. For me it makes sense to build up ISA as well as invest in property. Then a state pension + a limited private pension + interest + rental income should be more than sufficient during retirement.

This makes absolutely no sense. I think you had your mind made up before you came here.

If the market falls, your ISAs will fall. And fall faster than the same would in a pension, as you don't have the tax relief on top.:eek: You have just as much control over your pension as you do your ISA as you can choose what it is invested in.

You can lead a horse to water, but if his mind is made up he'll never be thristy again you can't make him drink.

worried_jim

I save £300 per month in a company scheme. I pay 5% and the company adds 13%. I have always had a pension from the age of 21 and I am 37 now. I know lots of people who are of a similar age who have never saved a penny- each to their own. Pensions and attitudes to them are a very personal thing, as long as you are aware of the risks and the benefits then make your own mind up. I am comfortable with my choices but I realise that they may not be the same for everyone.

gadgetmind

worried_jim wrote: »

I save £300 per month in a company scheme. I pay 5% and the company adds 13%.

Woo hoo, that's a cracking deal, and I'm sure you're going to have a happy retirement!

My employer has a good scheme (not as good as that but by no means stingy) and loads of people eschew it because their mates told them that pensions are rubbish.

Idiots!