Is my pension contribution "worth it"

Bootsox

gadgetmind wrote: »

...Of course, if anyone here wants to start employing engineers in the UK for 2x or 3x what my company is paying them, then please go ahead. You may find putting your money where your mouth is harder than you think, but feel entirely free to prove me wrong.

I don't really understand the point your trying to make but, to get the ball rolling, what line of business are you in?

greenglide

I get that with my company BUPA cover, which costs less than £400 a year.

BUPA cover for £400 per year?

My employer's scheme is way more than that. Even with an excess and a limited cover (so excludes everything likely to actually happen) it is still over twice that amount.

Are we being conned?

kidmugsy

jamesd wrote: »

The Affordable Care Act (Obamacare) appears to deal quite comprehensively

Your key word may be "appears". I don't follow the issue closely but it does seem to be pretty poor stuff for many people. Some will presumably gain, if they can fight there way through all the software horrors.

One thing I did learn from the debate about Obamacare is the dreadful weakness of the common American habit of tying your health insurance closely to your employer. Apparently that habit started as a way around wage controls i.e. if you were forbidden to pay your workers more, you'd give them free health insurance instead. Great oaks from little acorns grow.

atush

greenglide wrote: »

BUPA cover for £400 per year?

My employer's scheme is way more than that. Even with an excess and a limited cover (so excludes everything likely to actually happen) it is still over twice that amount.

Are we being conned?

Last time I used Bupa to go private, I had to wait a few weeks for an appt with the specialist. Dont know how you got in next day?

jamesd

kidmugsy wrote: »

Your key word may be "appears". I don't follow the issue closely but it does seem to be pretty poor stuff for many people. Some will presumably gain, if they can fight there way through all the software horrors.

I've probably been following it more closely, perhaps because I lived there for a decade. The software issues appear to be over, while the care appears to be cheaper and eliminating the nightmare of pre-existing conditions restrictions that did tremendous harm to those leaving an employer and trying to get their own individual cover. Comparisons show that the ACA is delivering lower premiums and for cover that's not different from the usual HMO fare from employer schemes.

kidmugsy wrote: »

One thing I did learn from the debate about Obamacare is the dreadful weakness of the common American habit of tying your health insurance closely to your employer. Apparently that habit started as a way around wage controls i.e. if you were forbidden to pay your workers more, you'd give them free health insurance instead. Great oaks from little acorns grow.

I don't know how it started but yes, its' a major problem to tie healthcare to a specific job, in part because of the pre-existing condition problem and in part because it worsens the consequence of something that's already tough, losing that job.

Much of the objection is just political noise-making by those who are opposed on principal and looking for any attacks they can make on it. I think it'll end up being very widely praised in a few years. Along with lots of criticisms of the flaws that are inevitable in all such cover!

jamesd

greenglide wrote: »

BUPA cover for £400 per year? ... My employer's scheme is way more than that. Even with an excess and a limited cover (so excludes everything likely to actually happen) it is still over twice that amount. ... Are we being conned?

There are different levels of care available with BUPA at different price points. Same for other providers. To give some examples here are options from one scheme for the employee only, other family members are extra, not necessarily BUPA:

• £390 level 1: no psychiatric treatment, no outpatient drugs&dressings, cap of about £1500 on many outpatient items. £150/night for NHS inpatient care. No chronic condition cover.
• £670 level 2: 28 nights psychiatric treatment cap, up to £350/year outpatient drugs&dressings. £200/night for NHS inpatient care. £1k/year for chronic condition cover.
• £1500 level 3: full psychiatric treatment, full outpatient drugs& dressings, no outpatient cap. £250/night for NHS inpatient care. Chronic condition cover up to £10k/year.

atush

Obamacare will turn out to be a good thing.

anyone here dissing it either watches fox news, or has never lived in the USA.

When I graduated Uni, I was dropped from my parents cover. I broke my ankle when I stepped into a hole and it cost a whole weeks salary to go to a walk in clinic. If I had gone to an emergency room, it would have cost me a months wages. I had a job, but there was no health insurance included.

Imagine something more serious?

N1AK

jamesd wrote: »

Except that the FTSE total return would have taken it to the equivalent of 9200 by May 2013. Higher now. Easy enough to make an index that pays about half of its returns in dividends look bad by ignoring them.

And thanks to gadgetmind for providing the total return index values that do an even better job of illustrating the point.

I had no intention of making it look bad, I think the FTSE 100 is a sound investment. I merely intended to counter the opinion that it only suffers from short periods of stagnation. I invest in the FTSE100 and intend to continue to do so.

It amuses me that so many people have jumped to defend an index by pointing out that its TR for the 15 year window was ~1.8%.

N1AK

atush wrote: »

Your example would be the same as a 10K 5 year bond at 5% returing only the 10K as you have decided to disregard the interest.

No. Because the bond would have beat the FTSE average in that period by more than 100% even accounting for dividends and came with considerably less risk.

You might be naive enough, or blinkered, to assume I was suggesting the FTSE 100 offered no return during that window. People with better reading skills would have noted I didn't, but merely highlighted a measure by which is has performed poorly. Even the TR which people are jumping on to defend it is poor.

The FTSE 100 has gone through a considerable length period of poor performance, which you are dogedly denying. I am not suggesting it is a poor index; merely that your analysis of it thus far has been.

FatherAbraham

jamesd wrote: »

Assume a 20% property price increase in a year on a property originally valued at £200,000 and that the pension contributions of say £2,000 in a year including 100% employer match would have delayed the purchase of that property until after the increase. Buying early has in effect made a gain of £40,000 on the £800 of net individual pension contribution value. Or more conveniently on the £2,000 gross that was the main alternative. What does it take before the £2,000 in the pension exceeds the corresponding £40,800 in the property? It's 20.4 times gain and over say 40 years it would take a real growth rate of 7.8% a year to recover. 6.2% over 50 years. The property value itself would not be unchanging over the years so in practice it would probably take a sustained return in the region of 12% plus inflation for the pension to get ahead of the property. That's well above the 5% or so plus inflation long term UK market return

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.

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

Warmest regards,
FA