Pension or property

craiglanks

I currently have a pension with the London fire brigade, but after recent cuts and changes to the pension, am seriosuly debating about putting this money into paying off my mortgage early and then investing in further properties to rent. Any thoughts?

taking_stock

if you're thinking of opting out of the fire service pension scheme, you're opting to lose between 12 and 40 % of your salary (depending on your age). to put it simply, everyone will tell you that's not a good idea.
on the other hand, feel free to save us all a load in tax! ;-)

brasso

craiglanks wrote: »

I currently have a pension with the London fire brigade, but after recent cuts and changes to the pension, am seriosuly debating about putting this money into paying off my mortgage early and then investing in further properties to rent. Any thoughts?

I don't know the details obviously but if it's a pension fund, I can't see how you can withdraw it to buy properties? Unless you have a special arrangement (or more likely, I've misunderstood the question), it is not legally possible to do this with a conventional pension pot. Even after retirement age you can only 'draw down' relatively small percentages each year.

dunstonh

am seriosuly debating about putting this money into paying off my mortgage early and then investing in further properties to rent. Any thoughts?

A truly awful idea that will cost you hundreds of thousands of pounds potentially.

How have you managed to calculate your proposed option as being better?

atush

If you do this, it will be the worst mistake of yourlife. To buy that pension (or any assets you would have to pay 5 quid for every quid you are currently contributing or more.

Yes, changes are coming, and yes the new pension is less generous than the one before but it has to be as it was too expensive as being a firefighter is still risky but less than before. and Firemen and all workers are living longer so pensions have to change plain and simple.

CannySaver_2

Hi

I would echo the other's thoughts.

There is not a person I know who woudn't bbe grateful for membership of such an attractive pension (although not all would do such a dangerous job as you do to get it!).

I am sure the scheme is defined benefit / final salary, which means you bear no investment risk and have a pension in retirement which rises in line with inflation (yes, I know it's now CPI and not RPI but still).

Yes, the pension is probably going to change but these two facts alone make it worth keeping.

If I had the choice of guaranteed benefits, no investment risk and a payrise each year versus the hassle of commercial property, the fluctuations in value and the fact it will return me a lower income each year I know which I would choose.

If you are in any doubt request a cash equivalent transfer value from the scheme and a projection to retirement. The go and look at a commercial property the CETV could buy, take a look at the rent you'd get and compare it to the pension you will be entitled to; that will answer your question and convince you to stay in the scheme.

The Canny Saver