MSE News: Automatic pension enrolment - what it means for you

Linton

tenbags wrote: »

Well nothing unless you can afford to, many people nowadays are living on the breadline, and this is just another stealth tax on individuals to be invested in some public schoolboys future?....Why shouldn't people use money now and worry about this later? instead of relying on some Pension scheme to flit your hard earned money away while taking huge profits now and spending them now on property/pensions for their retirement?

it looks great on paper but can they guarantee the money will have a guaranteed return?

So you are guaranteeing that you live on the breadline through the long years of old age as well. Sounds a great plan - something to look forward to.

I invested heavily in pensions and ISAs and retired at 56 on the same standard of living as when I was working. It's perfectly possible if you put your mind and money to work.

tenbags

Linton wrote: »

So you are guaranteeing that you live on the breadline through the long years of old age as well. Sounds a great plan - something to look forward to.

I invested heavily in pensions and ISAs and retired at 56 on the same standard of living as when I was working. It's perfectly possible if you put your mind and money to work.

Well done I'm happy for you, Im talking about the people who have had redundancies or lost their job, or are on a low wage now after being on a higher salary before...still have kids to support, bills to pay and houses to keep hold of.... or people who had a pension fund ransacked by thatcher and then by gordon brown... so sorry if I don't agree with investing in a government backed scheme again, and would rather invest it wisely.

is your pension scheme a government backed scheme or private pension? As thats the point to invest in other ways or be forced into a government scheme which will make it look like everyone will have a rosy future at retirement.

people should be able to CHOOSE how they live and how they save for the future, not be forced into extra monthly payments for the shortfall in past pension schemes or NI payments.

Also how will this effect companies wanting to set up in the UK? Or SME's already here who will eventually have to balance this sort of stealth tax with staff cuts?

mapes12

With the Auto Enrollment schemes, the examples I've seen it looks like the Employee contribution attracts tax relief at 25%. With Stakeholder plans it's 20%? Or have I missed something?

Tom_Brine

Pincher wrote: »

You should do a thread, and update it once a year, to report on your property empire. When you retire, let's see how you have done. we need somebody to start one based on the Auto-Enrolment path. Could do it using the same thread..........
I can't wait, is there a time machine so I can the see result now?

Haha indeed it would be good to see if the plan works, but what time travel technology to use? Personally ive always been a fan of the terminator theory, only flesh can travel and it is a one way ticket, there is no going back.

I don't think two properties is an empire. Just my humble idea of what I think I can achieve in my lifetime which will see me through the twilight years. Im not saying pensions are bad, I always sign up to them when available, just I dont think they are as amazing as most people like to paint them. "Free money from your employer", is one always thrown about, but it is no good if you don't get to use it. It is fictional untill you reach retirement and there are no guarantees of that.

Based on earning £20k for the new enrolment scheme

If, over those 40 years, there was an average 3% a year return on the funds in which the contributions were invested, then the retiree would end up with a pot of £88,488.
According to the Money Advice Service, at the current historically low annuity rates this would provide a man in good health with an inflation linked annual pension of as much as £2,714 a year, or £226 a month.


£226 a month!!!!! for an investment of £96.24 for 40 years. How long will you be retired for? 15-20 years. Lets say 20 years, you take from the pension £54,240.


You have paid in over 40 years £46,195.20. A quick check of the savings calculator shows that if you pay £96.24 for 40 years with 3% interest.......


After saving £96.24 a month for 40 years and 0 months, you will have £77,124.07 in savings.


It seems you will have a lot larger pot to take from. and if split equally it gives you £321 a month, plus interest on the lump sum sat in your account.


I may be missing something and if I am please someone tell me.

jamesd

mapes12 wrote: »

With the Auto Enrollment schemes, the examples I've seen it looks like the Employee contribution attracts tax relief at 25%. With Stakeholder plans it's 20%? Or have I missed something?

The basic rate 20% income tax relief means that 25% is added to the money in a non-salary sacrifice personal pension. Pay £800 net in and add 25% to get to £1,000. There's no difference in this whether it's a stakeholder or other personal pension, regardless of whether it is being used for auto-enrollment or not.

Linton

tenbags wrote: »

Well done I'm happy for you, Im talking about the people who have had redundancies or lost their job, or are on a low wage now after being on a higher salary before...still have kids to support, bills to pay and houses to keep hold of.... or people who had a pension fund ransacked by thatcher and then by gordon brown... so sorry if I don't agree with investing in a government backed scheme again, and would rather invest it wisely.

is your pension scheme a government backed scheme or private pension? As thats the point to invest in other ways or be forced into a government scheme which will make it look like everyone will have a rosy future at retirement.

people should be able to CHOOSE how they live and how they save for the future, not be forced into extra monthly payments for the shortfall in past pension schemes or NI payments.

Also how will this effect companies wanting to set up in the UK? Or SME's already here who will eventually have to balance this sort of stealth tax with staff cuts?

So much mis-information. Neither Thatcher nor Gordon Brown "ransacked" pensions. I cant remember MT doing anything in particular, GB removed a relatively small tax concession on some future income. This had no effect on the current pots.

What "government scheme" have you been invested in from which you have lost out? I cant offhand think of any government schemes, other than public sector pensions. And those are a great deal for anyone lucky enough to have one.

You wont be forced to go into a government scheme. Your employer may well have a private sector scheme and you can choose to opt out. However if you do so you probably lose the contribution from the employer.

So it comes down to priorities. Do you really want to sacrifice any chance of something better than a very basic standard of living in retirement to finance the present? Will your future self think you made the right choice? If not - tough, it'll be too late to do a anything about it.

Shelle

I already have a pension scheme with my employer, but wonder whether I would be better off with the NEST scheme!!

My employer only contributes 1% no matter how much I myself contribute. I have not had a payrise for 4 years (and a possible 5th year coming up). Looking at the figures for the NEST scheme it seems that although the employer only contributes 1% to start off with, it will increase by 2018 to 3%. Thus it seems that I would be better off with the NEST scheme!

I have always had a pension scheme (current one is second pension after being made redundant after 13 years and is now frozen) but I do sometimes wonder whether I am better off in a private pension outside the company??

tenbags

Linton wrote: »

So much mis-information. Neither Thatcher nor Gordon Brown "ransacked" pensions. I cant remember MT doing anything in particular, GB removed a relatively small tax concession on some future income. This had no effect on the current pots.

What "government scheme" have you been invested in from which you have lost out? I cant offhand think of any government schemes, other than public sector pensions. And those are a great deal for anyone lucky enough to have one.

1980 Social Security Act - Link between state pension increases and average earnings broken by Margaret Thatcher's Conservative government. If the link with earnings had not been broken, a basic state pension for a single pensioner would worth about £30 a week more.

1997 Gordon Brown removed tax credits for pension funds on company dividends.

so although I have been paying NI all my life, its means I will get next to nothing, as a state pension!

When Gordon Brown decided he wanted a piece of the pension pot my company moved to a private scheme paying less and then again reduced my prospective payments. The scheme gradually reduced in front of my eyes.

the company went bankrupt and took my pension with it, i got half of what the government promised.

I think we are agreeing I have a great ISA and private pension now. So I think you misunderstand i just don't trust the government in running any of this.

dunstonh

I already have a pension scheme with my employer, but wonder whether I would be better off with the NEST scheme!!

You dont get a choice. Your employer makes the choice. NEST is for those employers who dont run a scheme of their own and choose not to use a conventional provider.

Shelle

I understand that, but is seems strange that they would offer a NEST scheme to those that didnt want a pension in the first place, better than they offer to those that bothered to open a pension scheme