Is my pension contribution "worth it"

agarnett

gadgetmind wrote: »

... well. ... if this isn't representative, someone is doing something wrong.

All UK businesses could be doing this, and should be doing this.

But that's the point, isn't it? Your business, the one that gave you your rather special pension choices and the time to play with them, was the result of a one-off alignment of the planets, not some amazing adherence to well understood British corporate values.

The OP (remember him?) has thus far been dealt a pretty crappy hand like the majority of workers in the UK. So yes, I don't think our pension experiences started three and four decades ago are in any way representative of what will happen to hard earned money put into pensions plans in 2015 and beyond. Plus yours sounds like it is based on more or less staying with the same outfit and riding its own peculiar highs and lows.

How typical is that kind of career path nowadays?

Mine is perhaps more typical of the past four decades, but I wouldn't claim it is as bad as what youngsters have to look forward to. I had initial stability of employer and prospects and consequent steady merit-based progression, but then takeovers and redundancies that not everyone can survive and consequently a more and more bitty pensions experience, constant changes of scheme managers, and no-one looking after any of them. That last part is what is typical today - and added to that is ever more frequent rule-changing by the government.

And yes, lots of businesses are permitted to do lots of things wrong, especially when it comes to protecting pensions.

Pension schemes are for insiders. Few workers can survive as insiders throughout their careers. You have to start smart as gadget says, but then be also very quick on your feet to manage to remain close to the action, else very quick on your feet to make sure you truly control your own pension savings from the outset in case you need to bail out and find another job. That's what they kind of do at gadget's firm I think. However, if there are trustees linked to a Group Personal Pension Plan for example, then you are not quite as in control as you think, especially if a takeover occurs. Pensions restructuring is often high on the agenda of those planning takeovers, and high on the agendas of those in the pensions industry who advise those planning takeovers.

No-one can be trusted to manage anything to do with your pension anymore, especially employers who say they have it under control for you.

So in 2015, if you are offered an opportunity to contribute to a pension scheme, it is no longer a gift horse. Always look it in the mouth. Always it will be a pig in a poke. Always therefore it is a question of whether the price of the pork, the likely eventual cut of it, and the way it is salted and by whom, and how it will be kept, and whether the final shape and indeed the final label of the slice you thought had your name on it - all of those things - will indeed be worth the amount of real money it is suggested you start to shell out right now from your monthly salary.

Just remember that the risk is that you end up with just a pig's ear for a pension in thirty or forty years (pension providers always seem to end up with more pigs' ears per tonne in the funds under their management than is generally palatable by little old us). Remember too that there may be little satisfaction in your old age in working out who exactly managed to eat all the pies, or who hacked off the hams and swapped it for caviar for private party consumption, even if you can unearth most of the clues later on the internet :snow_laug

mgdavid

agarnett wrote: »

But that's the point, isn't it? Your business, the one that gave you your rather special pension choices and the time to play with them, was the result of a one-off alignment of the planets, not some amazing adherence to well understood British corporate values.

The OP (remember him?) has thus far been dealt a pretty crappy hand like the majority of workers in the UK. So yes, I don't think our pension experiences started three and four decades ago are in any way representative of what will happen to hard earned money put into pensions plans in 2015 and beyond. Plus yours sounds like it is based on more or less staying with the same outfit and riding its own peculiar highs and lows.

How typical is that kind of career path nowadays?

Mine is perhaps more typical of the past four decades, but I wouldn't claim it is as bad as what youngsters have to look forward to. I had initial stability of employer and prospects and consequent steady merit-based progression, but then takeovers and redundancies that not everyone can survive and consequently a more and more bitty pensions experience, constant changes of scheme managers, and no-one looking after any of them. That last part is what is typical today - and added to that is ever more frequent rule-changing by the government.

And yes, lots of businesses are permitted to do lots of things wrong, especially when it comes to protecting pensions.

Pension schemes are for insiders. Few workers can survive as insiders throughout their careers. You have to start smart as gadget says, but then be also very quick on your feet to manage to remain close to the action, else very quick on your feet to make sure you truly control your own pension savings from the outset in case you need to bail out and find another job. That's what they kind of do at gadget's firm I think. However, if there are trustees linked to a Group Personal Pension Plan for example, then you are not quite as in control as you think, especially if a takeover occurs. Pensions restructuring is often high on the agenda of those planning takeovers, and high on the agendas of those in the pensions industry who advise those planning takeovers.

No-one can be trusted to manage anything to do with your pension anymore, especially employers who say they have it under control for you.

So in 2015, if you are offered an opportunity to contribute to a pension scheme, it is no longer a gift horse. Always look it in the mouth. Always it will be a pig in a poke. Always therefore it is a question of whether the price of the pork, the likely eventual cut of it, and the way it is salted and by whom, and how it will be kept, and whether the final shape and indeed the final label of the slice you thought had your name on it - all of those things - will indeed be worth the amount of real money it is suggested you start to shell out right now from your monthly salary.

Just remember that the risk is that you end up with just a pig's ear for a pension in thirty or forty years (pension providers always seem to end up with more pigs' ears per tonne in the funds under their management than is generally palatable by little old us). Remember too that there may be little satisfaction in your old age in working out who exactly managed to eat all the pies, or who hacked off the hams and swapped it for caviar for private party consumption, even if you can unearth most of the clues later on the internet :snow_laug

Your analogies and metaphors are so mangled that I hardly understood a word of that - not the best way of getting your message across. But the one thing I can assure you is that you are wrong, very wrong, about the value of pension schemes in 2014 (corrected that for you, you were getting a bit carried away and ahead of yourself there). From the mid-nineties I was working for a large European corporate, when i retired a few months ago I was in a DC scheme that had replaced a DB scheme that closed in 2007. Under salary sacrifice the total contribution was 28.5% of salary - hardly a pig in a poke. This is not an unusual situation - the company employ around 50,000 heads across the divisions in the UK alone, all on similar schemes.

gadgetmind

agarnett wrote: »

I don't think our pension experiences started three and four decades ago are in any way representative of what will happen to hard earned money put into pensions plans in 2015 and beyond.

I think we're in for a period of low returns, but who knows? There have *always* been good arguments for why that exact moment was a bad one to start a long term investment.

Plus yours sounds like it is based on more or less staying with the same outfit and riding its own peculiar highs and lows.

I've been investing solidly since the late 80s. In a previous life, myself and business partner paid ourselves a nice dividend, which he spent on a Porsche while I put mine into pensions and PEPs.

Trust me, at every stage people (including, at times, my wife!) said that investing for the future was a bit mad, and at every stage they were wrong. Oh, of course, there were a few times when the majority said it was a great time to be investing, but they were wrong then too!

Pension schemes are for insiders. Few workers can survive as insiders throughout their careers.

I don't understand that. Everyone in our company is in the same pension scheme.

Pensions restructuring is often high on the agenda of those planning takeovers, and high on the agendas of those in the pensions industry who advise those planning takeovers.

How does a DC pension get restructured?

Just remember that the risk is that you end up with just a pig's ear for a pension in thirty or forty years (pension providers always seem to end up with more pigs' ears per tonne in the funds under their management than is generally palatable by little old us).

Yes, the continual M&S of pension companies does result in zombie funds, but only the least engaged wouldn't take steps to address this. If they don't, then they should take a large chunk of the blame.

atush

mgdavid wrote: »

Your analogies and metaphors are so mangled that I hardly understood a word of that - not the best way of getting your message across. But the one thing I can assure you is that you are wrong, very wrong, about the value of pension schemes in 2014 (corrected that for you, you were getting a bit carried away and ahead of yourself there). From the mid-nineties I was working for a large European corporate, when i retired a few months ago I was in a DC scheme that had replaced a DB scheme that closed in 2007. Under salary sacrifice the total contribution was 28.5% of salary - hardly a pig in a poke. This is not an unusual situation - the company employ around 50,000 heads across the divisions in the UK alone, all on similar schemes.

I agree, the above poster clearly has no idea about pensions. What they were, what they are now.

The idea that pensions are for insiders (as gadget points pout below) is quite frankly laughable. Especially in these days of auto enrollment.

jamesd

FatherAbraham wrote: »

But the Ermine debunked that article in May:

A tip to anyone trying a debunking: don't prove that the original piece is correct, as the Ermine did.

The Ermine then added a range of distractions and false claims, like inflation-adjusted investment growth not being big enough to matter just after showing it had increased the real value of the money by seven times.

wotsthat

jamesd wrote: »

A tip to anyone trying a debunking: don't prove that the original piece is correct, as the Ermine did.

The Ermine then added a range of distractions and false claims, like inflation-adjusted investment growth not being big enough to matter just after showing it had increased the real value of the money by seven times.

As soon as the internet declares something has been debunked you can be sure it hasn't.

I enjoy the writings of the Ermine but he undermined his own argument by plotting 10% compounded returns on the same graph as 5% compounded returns to prove....10% annual returns are better than 5%.

jamesd

FatherAbraham wrote: »

If house prices can rise by 20% in a year, then clearly they can fall by a similar order of magnitude. One should not laud the benefits of gearing without bemoaning the tremendous risk one runs of being stripped of one's life savings when prices fall.

Yes, they could. I was merely agreeing with the person who suggested that the house could be a better buy than investing, if certain events happened.

FatherAbraham wrote: »

Actually, rents look like good value these days -- relative to house prices, they're far more reasonable than a decade ago.

I think you're right about that.

In my case you certainly are because the rent for the place I'm currently living in hasn't increased for the last nine years so it's now around 76% of what it started at in real RPI terms. The benefits of being a tenant with perfect on-time payment record and minimal hassle for the landlord, helped I assume by low mortgage rates that make a steady income look good.

agarnett

gadgetmind wrote: »

Pension schemes are for insiders. Few workers can survive as insiders throughout their careers.

I don't understand that. Everyone in our company is in the same pension scheme.

Ah yes, the "We're all in it together confidence trick". But ...

• What usually happens to pension schemes when takeovers occur. Who gets the heads up?
• What happens when the lunatics at the provider choose to take over the asylum and bribe and "reattribute" ? Who do the trustees think about when deciding whether they will accept your bribe for you?
• What happens when the funds get merged unilaterally by providers or the risk ratings get quietly revised to 'adventurous' when they were sold as something else?
• What happens when DC Group Pension Schemes get wound up (yes they do - often after takeovers).
• What happens when the worker leaves and whilst he is working hard to bring in a monthly salary all of the above happens to his deferred arrangements, but he is naturally left out of the real loop and treated like the proverbial mushroom by past employers and trustees?
• What happens if the trustees and their advisers have fingers in the pies / fundamental conflicts of interest due to their roles as finance and HR directors and the like?
• What happens when the provider sells out to an organisation you only discover is the emerging leader in the zombie funds business ten years later?
• What happens when there is no effective pensions regulator?

I will tell you - for the most part you must suck it up or go grey trying to embarrass those responsible into correcting their wrongs.

And atush implies that auto-enrollment in some way makes it better?? Hides it better, perhaps.

Pensions restructuring is often high on the agenda of those planning takeovers, and high on the agendas of those in the pensions industry who advise those planning takeovers.

How does a DC pension get restructured?

Simples. Perm any three or more from the list above.

Just remember that the risk is that you end up with just a pig's ear for a pension in thirty or forty years (pension providers always seem to end up with more pigs' ears per tonne in the funds under their management than is generally palatable by little old us).

Yes, the continual M&S of pension companies does result in zombie funds, but only the least engaged wouldn't take steps to address this. If they don't, then they should take a large chunk of the blame.

Really? Now surely I must deduce that it is unlikely you are in touch with anyone other than the smarts of this world with time on their hands to even think about it?

However, at least I see that my mangled analogies and metaphors did not stop you replying! With an open mind, as general concepts they were no more difficult to fathom than the average pension plan!

The less smarts have as usual resorted to ridicule and assertion of superiority of half-learned mantras and the usual I'm alright Jack so you must be wrong type nonsense.

mgdavid wrote:

... From the mid-nineties I was working for a large European corporate, when i retired a few months ago I was in a DC scheme that had replaced a DB scheme that closed in 2007. Under salary sacrifice the total contribution was 28.5% of salary - hardly a pig in a poke.

Salary sacrifice wasn't a concept we heard much about in the mid-nineties, and even when it was introduced to you in 2007, how much of the 28.5% was your own contribution?

This is not an unusual situation - the company employ around 50,000 heads across the divisions in the UK alone, all on similar schemes.

There you go again. Of course it is unusual. How many companies employ 50,000 in the UK alone? A big bank or insurer? Or parasitic government preferred outsourcers like Capita and Serco, or oddballs like BAe that never quite get weaned off the taxpayer's titties? Look at this mess if you are a BAe employee looking for clues about your pension:

And when your DB scheme closed, was it wound up? If it existed as late as 2007 I think not. It will in fact still be the mainstay of your pension and if you were with them man and boy then that will again be a highly unusual situation.

So what please, really, is the point of misleading the OP or other young workers confused about pension messages with examples of your own fortune rooted in the good old days that he cannot even dream of matching because he can't fund it and no employer is ever likely to fund it unless he quickly becomes a grab-it-all, clamber over everyone else's heads FTSE100 executive and starts pulling his own pension strings at board level?

gadgetmind

agarnett wrote: »

What usually happens to pension schemes when takeovers occur. Who gets the heads up?

To answer all of your questions, my Friends Life group personal pension remains mine, invested how I choose, and free to move to an individual personal pension or SIPP if I so choose. The same applies to everyone in the company.

I must deduce that it is unlikely you are in touch with anyone other than the smarts of this world

This thread clearly demonstrates that your statement is untrue.

agarnett

gadgetmind wrote: »

To answer all of your questions, my Friends Life group personal pension remains mine, invested how I choose, and free to move to an individual personal pension or SIPP if I so choose. The same applies to everyone in the company.

Well I trust you have the eye on the ball if it is Friends Life you are trusting! Their funds have been through so many iterations it would make most ordinary people's eyes water!

And now AVIVA (the other reattribution/bribing crew) look like they are buying Friends Life!

I think you are applying rather too much rose-tint than is good for the common man, gadget. I have several pieces of pensions shrapnel at Friends Life most of which I cannot even view online.

I wish you all the best for you have reason to be Merry, but don't try to kid the rest of us, please.

I must deduce that it is unlikely you are in touch with anyone other than the smarts of this world

This thread clearly demonstrates that your statement is untrue.

I'll take that as a compliment from one such as your goodself, Sir and will take my leave (if I may?), for the little missus and the bairns are shivering at home until I bring them the piece of coal I promised them for Christmas :santa2: