Understanding pensions

yrb6924

I've always paid into pensions all my working life and as I'm about to change jobs again, suspect I'll have yet another company pension to manage soon. As a result I really want to understand what pensions are all about so I can make my own decisions about the others that I have. Does anyone know of a good place or idiots guide to pensions?

Also, I've heard a lot of people saying that pensions just aren't worth the effort anymore and that I'd be better off putting money into property instead. Is there any truth in this?

Lastly, I've also heard that I might be able to release up to 25% of a pension, is this true and how could I go about doing this?

Thanks for any suggestions in advance...

hugheskevi

I really want to understand what pensions are all about so I can make my own decisions about the others that I have. Does anyone know of a good place or idiots guide to pensions?

You can try this, from the Pension Policy Institute.

Also, I've heard a lot of people saying that pensions just aren't worth the effort anymore and that I'd be better off putting money into property instead. Is there any truth in this?

No.

Pensions are an investment, so is property. Both have different characteristics, risk profiles, etc, which may or may not be suitable as part of your retirement planning. The suitability will depend on an individual's characteristics.

Property is most appropriate if you can build up a decent portfolio of properties to spread risk across, and if you have some sort of relevant expertise (be it managing properties, building, etc).

Lastly, I've also heard that I might be able to release up to 25% of a pension, is this true and how could I go about doing this?

Unless you are aged over 50 (55 for many schemes) or in ill-health then you cannot access it.

yrb6924

Thank you hugheskevi, your information is very useful.

dunstonh

Also, I've heard a lot of people saying that pensions just aren't worth the effort anymore and that I'd be better off putting money into property instead. Is there any truth in this?

Property !!!!!! became very popular during the credit boom because prices were fuelled by easy credit. A blindfolded chimp could make a profit on property during that period. Now it is considered something that only an experienced landlord should do or someone with the abilty to buy run down, do up and move on or rent out.

Typically you need to plan to have at least 6 properties to be sufficient in retirement.

A pension is just a container for invesmtents. You can choose what conventional invesmtents you hold in the pension (about 30,000 available). Anyone saying pensions are not worth the effort doesnt know what they are on about. The pension wrapper has its pros and cons (like most wrappers) but it is just a container for investments of your choice. Are they really saying that the 30,000 odd invesmtents available are all unsuitable?

Lastly, I've also heard that I might be able to release up to 25% of a pension, is this true and how could I go about doing this?

by commencing the pension benefits.

dtsazza

yrb6924 wrote: »

Also, I've heard a lot of people saying that pensions just aren't worth the effort anymore and that I'd be better off putting money into property instead. Is there any truth in this?

As dunstonh says, pensions are just a type of tax wrapper (get tax rebate going in and pay no capital gains tax, in exchange for not being able to access the money until 55 and paying income tax when drawing it).

If someone says "pensions aren't worth it" they're typically (incorrectly) generalising from individual data points. That is, what they really mean is "my pension didn't do well so I assume that it's not possible for any pensions to have done well."

Which is a ridiculous generalisation, as you can hold just about anything in a pension. It makes as much sense to me as someone saying "I bought an apple from Tesco and it was off, so all foods from all supermarkets must be off."