Are pensions even worth it?

bigadaj

Reg prentice I understand what you are saying but saving tax is saving tax, whether you've paid it or not at that point.

The employer should have to make a contribution according to the new pensions regs coming in depending on the size of the firm, I wouldn't have thought they could offer salary instead but not sure.

If you have salary sacrifice then you appear not to understand the full benefit, as a standard rate taxpayer you save 33% or a higher rate payer 42%, this assumes your employer doesn't share the savings on employers NI, which many do, and could add anything up to an additional 14%.

kidmugsy

regprentice wrote: »

I know one person who wrote to their pension company to collect their pension... During this WEEK she lost ONE THIRD of her pension value because she crystalised her closure at the wrong time... hardly her fault and she would not have been financially aware enough to do anything about that.

Aye, it's an absolute !!!!!! being treated like an adult.

Thrugelmir

regprentice wrote: »

The main issue around pensions is simply their inherent volatility.

A pension is a wrapper nothing more. ISA's , fine art, gold, property all suffer from market volatility.

I started my first pension plan at 18. The grand sum of £10 per month. Was around 10% of my take home pay. Throughout my working life I have followed a similar philosophy. No idea what my pension one day will be worth. However it will be adequate for a comfortable standard of living. Nor do I have concerns as to when I may finish working. Security and flexibility now, were worth the price I paid for the things that I went without over the years. Now that I look back.

dunstonh

The main issue around pensions is simply their inherent volatility.

Pensions dont have any volatility. They are just a container for your chosen investments. The volatility comes with the assets you choose and that can range from zero volatility upwards.

I know one person who wrote to their pension company to collect their pension. They were given the monthly payments under their proposed pension in writing at this point. They forgot to send the original copy of their birth certificate so their original form was returned unprocessed so they sent the form back with their birth certificate and the pension transaction was completed around a week later. During this WEEK she lost ONE THIRD of her pension value because she crystalised her closure at the wrong time.

The only way to lose 33% in a week is to be invested inappropriately in the lead up to retirement and suffer a major crash in their chosen assets. That has nothing to do with it being a pension. The same would have happened if the same investments were held in an ISA or unwrapped. It is just bad investing by that person and extremely bad luck as there have only been about 4 weeks in the last two decades were that sort of loss was possible in mainstream investing.

This was during the 2008 collapse, but thats hardly her fault and she would not have been financially aware enough to do anything about that.

So, why did she not employ someone who was? If you DIY and dont know what you are doing in any walk of life you are likely to end up with worse results.