Is there a point in Pensions

srcandas

Tom

The info offered here is all sound sensible stuff but of course nothing is black and white.

Just to balance the books if you do not get on the housing ladder sooner (possible in the next 4 years) than later you may find house prices move away from you. It may not happen but it might.

In my life I have made more from owning a house, plus the pleasure of doing so, than any pension scheme I could have paid into.

It would be nice of course to enjoy life (hols, hobbies, nice car), own a house, and save for retirement but £21k only stretches so far. Good luck.

:beer:

jem16

srcandas wrote: »

In my life I have made more from owning a house, plus the pleasure of doing so, than any pension scheme I could have paid into.

Unfortunately to gain from this you have to sell the house which you may not wish to do.

srcandas

jem16 wrote: »

Unfortunately to gain from this you have to sell the house which you may not wish to do.

• But at least it is an option. Try selling a pension!
• And if the alternative is paying rent for 35 years with nothing at the end?
• And you can always borrow money against a house but not a pension.

Sorry Jem not being stroppy but life is for living. You cannot buy back the years. Not suggesting all or nothing but it is about finding a balance :beer:

Nearly_Old

Tom_Brine wrote: »

It may have been a bad move but all I ever hear about pensions is that you don't get out of them as much as you pay in.

That depends on how you define "how much as you pay in"? I've just been through the process of buying an annuity instead of drawdown and one sticking point was that I wasn't (at first) happy in just handing over all the money. Then I looked back and saw that only about 10% had been my (employee) contribution with the rest being the employer's contribution plus investment returns. So I got back far more than "I" paid in.

I started in a DB scheme and when I left I just left that where it was and with my next 2 employers I built up DC pension funds so my overall pension comes in different bits and pieces.

jem16

srcandas wrote: »

• But at least it is an option. Try selling a pension!
• And if the alternative is paying rent for 35 years with nothing at the end?
• And you can always borrow money against a house but not a pension.

Sorry Jem not being stroppy but life is for living. You cannot buy back the years. Not suggesting all or nothing but it is about finding a balance :beer:

I believe you should have both a pension and a bought house. I would much rather be in a position where i might want to stay in the family house rather than have to sell it to fund my retirement and end up somewhere I don't want to be.

srcandas

jem16 wrote: »

I believe you should have both a pension and a bought house.

Exactly. But Jem you paint a very gloomy picture and I think that was what I was trying to balance. No one has ambition to down grade to a slum but many older people want to move to a better environment and quite often this gives an opportunity to extract capital while even moving to a better home. But also what about all those extra years they also enjoyed their own home?

In my case I accumulated capital in my house.

When I started my company (38) this gave me the security I needed.

Later (48) when interest rates and house prices went low I pulled out cash and bought in Spain. Like many in my fifties I can more easily generate excess cash now than ever I could in my twenties so debt cleared. And now I have two properties to enjoy.

Had I gone the pension route I would have been tied until 55 and then limited with options (both pension-wise and credit-wise). I might have missed starting my company (or certainly would have had to secure an external credit line) and I might have missed my second home opportunity in Spain. Lucky for me I went the property route first. W'ont work for everyone but will for many.

There are horses for courses but making people believe the pension route must start at, in this case 28 years old, and if you don't you will be destined to poverty in old age is overdone.

There are many ways to skin a cat :beer:

thenudeone

Tom_Brine wrote: »

You get
1/80 x Career average salary x service in years = yearly payment
and a lump sum of 3 x yearly payment on retirement
I pay 6.25% of my monthly pay into the scheme

I'd swap my pension arrangements for yours tomorrow. Where do I sign?

Basically your employer is taking all the risks in giving you a relatively secure and stable income in retirement. I could pay double or three times what you pay and I'd still have no guarantee of any sort that it would give me any particular level of income at all in retirement.

Unless you want to have a very poor retirement indeed, you have to make some sacrifices now, whether that is in savings, shares, property, or in a pension. Each has their advantages and disadvantages but if you don't do anything then a poor retirement is an absolute certainty.

hcb42

Tom_Brine wrote: »

I had only been paying into it for 7 months so didn't see the point of keeping it. It may have been a bad move but all I ever hear about pensions is that you don't get out of them as much as you pay in. That youll be working untill your 70 etc, theres not much positive praise of them about and it worries me.

The pension I am with is run by Exeter University and seems like a good thing if you were to be here for a long time.

You get

1/80 x Career average salary x service in years = yearly payment

and a lump sum of 3 x yearly payment on retirement

I pay 6.25% of my monthly pay into the scheme

It says the university pays 19% contriubution for me?

So you chuck a way a 20 percent pay rise, madness.

My contribution n last ten yrs private sector has been zero, and I have a relatively senior post, and therefore paying my fair share of tax

Second thoughts, you are right, don't take them up on it

Tom_Brine

Thanks guys I have decided I am going to stay with the pension scheme the university offers as I can still save for a deposit whilst paying into it. Better to entertain multiple possibilities than throw all of your eggs into one basket.

atush

Good choice.

Always a bad choice to cash in a pension as you did before, but at least you have now learned.