Are pensions even worth it?

DiggerUK

Hi again borderline, as I warned, any criticisms that do anything other than praise the pensions industry, can get the posters portrayed as uneducated malcontents.

The truth is that putting by for retirement is extremely difficult at the best of times, for those on low wages it is damn near impossible.

The other truth that does not get accepted by the usual suspects here, is that a lot of pension fund charges look after the interests of those who run the pensions a lot better than those who want to be financially secure in retirement.

Please post more about your circumstances, there are posters here who will try to help you, not rubbish you.
..._

grey_gym_sock

the main point of this board is practical advice, not whether the pensions industry are good chaps or shameless leeches.

when you have employer contributions on offer, a pension will be the best way to save for retirement. because you start by doubling your money, when the employer contributions are added. even if pension charges are a bit higher than alternatives (e.g. S&S ISAs) - and it depends, but they can be a bit higher - that won't make much difference, because the pension is so far ahead to start with.

if you don't (yet) have employer contributions on offer, i generally wouldn't suggest using a pension (though some ppl would).

it is difficult to save much on a low wage. however, the comments to the effect that, if you don't save much, you won't have much in retirement, are accurate. that applies whether you use a pension or any other method.

atush

DiggerUK wrote: »

borderline, as you can see you have been given quite a frosty reception. That's quite normal around here if you are critical of, or question the value of a private pension.
Don't be put off requesting a solution to your problem. Some more details would be handy.
Putting by for retirement is daunting, but not rocket science either.
..._

What a load of rubbish. WE aren't frosty, we are incredulous that someone who most likely paid in less than 1.5K expects more than 150 quid a year.

atush

EdGasket wrote: »

For some months my pension was invested in a 'Cash' fund because I was worried about stockmarket declines but it's value in the cash fund still declined. On investigation I discovered that the amount the fund managers were taking in fees far exceeded the paltry interest their 'expertise' was earning me. Lesson learned: Pensions are basically a gravy train for IFA's, fund managers, and all the other hanger-ons. Not really worth it except for higher-rate taxpayers.

Pension funds are not meant to be invested in CASH, esp in low interest rate periods of time. they are for temporary use only. If you lost money, it is because your funds were not invested.

atush

So here is why pensions aren't rubbish. Say you pay in 80, and your employer does matching, then add tax relief.


So each 80 becomes 100, and then you have 200 in a pension fund that cost YOU only 80. Invest that in something (other than cash) and over periods of 10 years or more it will be worth much more than 200.


Invest it in cash like Ed, and these days it will go down as if the wrapper has charges of 1%, but your cash is earning 0% your fund will go down and not up.

dunstonh

Pointless really as many times people have been ripped off, promised a certain amount and then not got anything like.

What are these promises? In 20 years, I havent seen any promises on amounts other than GARs and GMP. Both of which get honoured with only one exception and that was equitable Life which failed.

You can get the state pension, then if you dont have many savings you can get pension credit top up.

If you fancy living at or below the breadline for 20 odd years then that is a choice. However, that doesnt make investment tax wrappers pointless. Remember that pension credit is being mostly abolished with the introduction of the single state pension

lisyloo

any criticisms that do anything other than praise the pensions industry

Not true.
I have plenty of criticisms of pensions.
Their inflexible, subject to future rules that we don't know, have been misold.
The difference is that those are arguments that I can back up with proper debate.
Just blaming the entire industry or a "wrapper" does not make any sense.

Don't just slag off everyone that doesn't agree with you.

borderline

DiggerUK wrote: »

Hi again borderline, as I warned, any criticisms that do anything other than praise the pensions industry, can get the posters portrayed as uneducated malcontents.

The truth is that putting by for retirement is extremely difficult at the best of times, for those on low wages it is damn near impossible.

The other truth that does not get accepted by the usual suspects here, is that a lot of pension fund charges look after the interests of those who run the pensions a lot better than those who want to be financially secure in retirement.

Please post more about your circumstances, there are posters here who will try to help you, not rubbish you.
..._

Hi,

As you noted, the main issue here are low wages. How can anyone on low wages, living in London can put money aside?
I need all of my income to pay rent, bills and eat.. I don’t have any money left to save
This is the truth for everyone like me. I’m trying to find a better paid job but it’s not that easy.

taktikback

but your point was "are pensions worth it" , yet the issue you are discussing is that you don't have enough money to save, (whether that be in a pension or a piggy bank)

That doesn't make you a bad person, nor does it make pensions "not worthwhile"...it just makes it a rather pointless debate...

atush

And like I said, there have to be ways to economize, so post an SOA in the budget board and do a spending diary. It might flag up aeas where you can cut back to afford to pay into your employers pension.


Read a really good article the other day, called Boiling Frog pensions (which some companies in America are starting) and is part of economic behavior research. Frogs wont jump out of a pot that starts off cold and warms up to boiling gradually, but will out of a boiling pot. It says to start auto enrollment off the back of a pay rise, so there is no drop in take home pay to the individual. Then future increases are timed with pay rises and don't take up the whole pay rise.


This way people are more likely to stay in a pension and save more int he long run.