why are pensions reccomended

Chrysalis

The way I see it.

your money is tied up until you old enough. So cannot be used to pay down debts, emergencies etc.
You get nothing if you die early.
You have it at a time of your life where you not as healthy and mobile as when younger.

I have money tied into a Scottish widow scheme which I felt I was conned into, I want it out but seems its impossible.

Is there no legal way for someone in their 30s to get their own cash out of a pension scheme? I don't pay into this scheme anymore.

worried_jim

Chrysalis wrote: »

The way I see it.
You have it at a time of your life where you not as healthy and mobile as when younger.

Which is why you need it.

hugheskevi

The way I see it.

• Money is inaccessible until age 50/55/SPA-10. This is a drawback, but one for which I am compensated by tax relief. It is at least safe from bankruptcy, doesn't count toward means-testing and enjoys tax-free growth (sort of - as the gains will incur income tax when withdrawn)
• If I die early my spouse receives the pension pot tax free.
• I receive it at a time of your life when my marginal tax rate will be lower than when I was younger.

The above all is with regard to personal pensions - employer contributions are even more advantageous. In short, I have personal pensions for tax avoidance.

Is there no legal way for someone in their 30s to get their own cash out of a pension scheme? I don't pay into this scheme anymore.

Subject to a few caveats about ill health and terminal illness, no.

WobblyDog

In my case:
- The tax (and if you have a salary sacrifice pension, also NI) benefits can be large.
- Employer contributions are free money.
- Once you're in your forties, having to wait until you're 55/57 to access the money no longer seems like a severe restriction. Pensions tend to be invested in asset classes that require a long-term approach anyway.
- Most pensions will pass on at least something to your dependents or relatives if you die before retirement.
- I plan to retire relatively early, while I'm still healthy and active.

dunstonh

your money is tied up until you old enough. So cannot be used to pay down debts, emergencies etc.

Which is all good news and exactly what it is for.

You get nothing if you die early.

Wouldnt matter if it was in a savings account, you still wouldnt get it as you are dead. However, your beneficiaries get the pension value.

You have it at a time of your life where you not as healthy and mobile as when younger.

And when you have no earned income to rely on. So, the need for other income is important. Plus, people in their 60s have much better health in general than those in their 40s thirty years ago.

I think you have missed the point. All the things you say indicate why a pension is needed.

Linton

Currently on average people are living for about 20 years after they start getting state pension. State pension will be around £7500/year. Can you live happily on £7500/year for 20 years? There is a greater than 90% chance that someone aged 30 will live til 65.

So if you want to live comfortably for the final 20-25% of your life you need to have a lot of money saved up to supplement state pension. You can save that money up in many ways. Pensions have tax advantages and employers will contribute towards them. This makes pensions the best way of saving for retirement. Note that if you die before taking your pension the money isnt lost - it goes to your dependents or nominated beneficiary.

You also need to live in the meantime of course. So no-one says put all your money into pensions. You need an appropriate balance of very long term savings in pensions and shorter term savings in bank accounts and ISAs. We often suggest 6 months living expenses in cash and anything else in investments.

Why on earth has someone in their 30's got debts other than mortgages or student loans? If you cant live easily on your earned income in your 30's how will you manage on much less in your 60s and 70s?

No, you cant get at the pension money until 55 (or later by the time you reach that age). Strongly suggest you start paying into a pension, an employers one if possible, start saving for an emergency pot, and review your spending habits to ensure that you are living now well within your means. Otherwise you are due for an unpleasant shock later in life.

agarnett

dunstonh wrote: »

Wouldnt matter if it was in a savings account, you still wouldnt get it as you are dead. However, your beneficiaries get the pension value.

Not really wishing to add my full-two-pennorth on this thread at the moment, but doesn't that bit, dunstonh, need serious qualification to avoid misleading many readers who already have a pension, part or all of which might be a deferred non-contributory DB pension that may today provide nothing to those left behind when the member dies, especially if there is no "spouse" or some such antiquated provision?

On a more general note in response to this thread question, I would say that you very much have to take a pinch of salt with the holier than thou advice of those whose lion's share, or seed money for pension savings were actually created more by luck than judgement when they were younger. It often seems that they are claiming to have been more disciplined and controlled than younger posters, when the reality is that built-in employee protections and benefits thirty years ago were the norm and even though those schemes have been subsequently decimated, the still glowing embers of any memberships of old schemes left untended and unwound-up for decades have up till now been so much more valuable than the parasite-ridden newer type plans. But recent moves may mean that even the glowing embers of the past are about to be p|ssed upon. That won't worry the market insiders and the clever d|cks ... they are always a step ahead of the game ... indeed they have often moved to a different game.

Who knows how the majority will have found the necessary finances to survive into a very long old age starting 30 or 40 or 50 years from now? It will as always be a mixture of some clever individually made fortunes, of some very traditional what I call "Mediterranean" individual pension plans (no pension at all but in fact a hard-earned family property portfolio supplemented by inheritance of bits of earlier family property), and more importantly of changes to society forced upon governments to deal with the needs of the many who are less clever. Such changes post WW2 mean that we baby-boomers never had it so good. There was massive respect for labour and unions did extremely important work in building pension plans with employers for all workers along the lines of those generously modeled by notable earlier very altruistic employers like the Rowntree family. Younger citizens' futures have once more become far more agricultural and dog eat dog, mostly because we baby-boomers have made such a selfish muck of things. Successive attempts by government to fix the terribly reversed trend, like stakeholder pensions and auto-enrollment cannot hold a candle to baby-boomer norms.

And don't be fooled into thinking that old type promises were naturally unsustainable. Every time you read about the scandalous City bonuses, condition yourself to remind yourself that that money should have been invested in protecting your future, not in promoting theirs to extreme excess. Yes I am thinking of you today, Mr Antony Jenkins, with your £5.5M 2014 pay package and 21% fall in pre-tax profits, and the thousands of preferred malleable minions immediately beneath you whose packages are cascaded from your excess.

If the many continue to agree with the few clever d|cks for too much longer, and simply covet the pension plans of the past or the pension plans of the clever few, and are taught to rue that they must have done something wrong if they haven't got one, then the result will be a revolution if wealth distribution becomes much wider.

bowlhead99

agarnett wrote: »

Not really wishing to add my full-two-pennorth on this thread at the moment, but doesn't that bit, dunstonh, need serious qualification to avoid misleading many readers who already have a pension, part or all of which might be a deferred non-contributory DB pension that may today provide nothing to those left behind when the member dies, especially if there is no "spouse" or some such antiquated provision?...

On a more general note in response to this thread question, I would say that you very much have to take a pinch of salt with the holier than thou advice of those whose lion's share, or seed money for pension savings were actually created more by luck than judgement when they were younger....

If the many continue to agree with the few clever d|cks for too much longer, and simply covet the pension plans of the past or the pension plans of the clever few, and are taught to rue that they must have done something wrong if they haven't got one, then the result will be a revolution if wealth distribution becomes much wider.

You seem to be saying that people should not get on their high horse and look down on people who have not managed to build up as much pension provision as they themselves did a generation or two earlier. I would agree with that - the economic environment is different and we don't need to be judgemental.

The amounts of money put aside by the typical person (whether solo or with the help of a generous employer) are maybe different these days from what others have achieved, particularly when those 'others' are the people who have the time or the inclination to post regularly on a specialist 'savings and investments' internet forum. There has been a change in demographics of the working population, and the types of jobs people have etc, and maybe the amount that people need to navigate through retirement is different - it has surely not become easier, given life expectancy has gone up.

But that said, nobody is trying to say that someone else is a worse human being than them, simply for being less financially fortunate or existing in a time of different types of pension schemes or house price conditions or whatever.

What we are saying is that someone who proudly admits to not having put much away for their old age perhaps doesn't understand the challenges they will face in old age nor the advantages (e.g. tax related) of making retirement provision through a pension scheme, whether self-funded or partially employer-funded.

Your comments that certain types of pensions might not be inheritable under certain conditions are probably true. That is not the case with all pensions, so you have to either generalise or post a lot of detail 'just in case'. My own posting style is usually to err on the side of completeness but it doesn't seem like the OP is looking for technicalities. If the OP went out and bought a pension off the shelf tomorrow it would be as inheritable as a bank account.

He is saying he was conned into something that he doesn't want because he now can't get the money. If he got the money to fritter away now he would have zero for later, and people are just trying to help him see sense about why he would want something for later and what the advantages are of using a pension wrapper for retirement goals. The question is after all 'why are pensions recommended?'. Well, the advantages seem clear and so there are are a variety of bullet points which people have offered. Even though a pension is not an investment option that fits every single circumstance that one could imagine.

agarnett

bowlhead99 wrote: »

If the OP went out and bought a pension off the shelf tomorrow it would be as inheritable as a bank account.

Now you've kind of made the same mistake! It is dangerous to say that. The very fact that we are talking "pension" and not "ISA" or "family property portfolio" means that at a stroke the government could change the rules massively just as they have done so many times in the past! And if my nationalisation suggestion ever saw the light of day, then who knows what the death benefit might turn out to be!

He is saying he was conned into something that he doesn't want because he now can't get the money. If he got the money to fritter away now he would have zero for later, and people are just trying to help him see sense about why he would want something for later and what the advantages are of using a pension wrapper for retirement goals. The question is after all 'why are pensions recommended?'. Well, the advantages seem clear and so there are are a variety of bullet points which people have offered. Even though a pension is not an investment option that fits every single circumstance that one could imagine.

Point taken, but it is all such a moving feast and there is no real goodness left in anything on the pensions table except government led promotion of some kind of primal fear that if you have not even accepted responsibility for your own retirement plan your very survival is threatened.

I can't explain why it suddenly comes to my mind right now, except that I may have seen too many movies, but I am minded of the scenes in that movie "Snowpiercer", where society is reduced to ordinary citizens slaving down the back to sustain a luxury existence for the unseen leaders up front and in producing and earning 'orrible protein blocks made of unspeakable stuff which enable them to survive at a subsistence level. No protein blocks mean no survival unless you eat your own arm or leg or someone elses!

Meanwhile up in first class, for the leading clever d|cks, it is business as usual - until those down the back have had their fill of it, and force their way forward past the preferred minions who do the bidding for the first class passengers :rotfl:

atush

Chrysalis wrote: »

The way I see it.

your money is tied up until you old enough. So cannot be used to pay down debts, emergencies etc.
You get nothing if you die early.
You have it at a time of your life where you not as healthy and mobile as when younger.

I have money tied into a Scottish widow scheme which I felt I was conned into, I want it out but seems its impossible.

Is there no legal way for someone in their 30s to get their own cash out of a pension scheme? I don't pay into this scheme anymore.

The way I see it.

Money is tied up so you dont spend it. Cant be taken off you by a court judgement or debt collectors. Can't be forced to spend it when and if you are out of work and on benefits. Pensions should never be your only money. You should always have cash for emergencies therefore no need to look at yoru pension as a pot of money you need.

You get nothing if you die early, but you dont get your house, your bank accts and your possessions either. You dont need them, you are dead? You cant take it with you? Your nearest and dearest get them. Same with a pension.

You have it at a time of life when you are older and dont want to work. That is what it is for.

TBH, you didn't come here to talk about why pensions are good, did you? You came yo ask if there was a legal way to get your hands on it. No.

If anyone says they can? They are a scammer who will run with your money. And then you will have zero?

atush

Now you've kind of made the same mistake! It is dangerous to say that. The very fact that we are talking "pension" and not "ISA" or "family property portfolio" means that at a stroke the government could change the rules massively just as they have done so many times in the past! And if my nationalisation suggestion ever saw the light of day, then who knows what the death benefit might turn out to be!

That is just silly. You have to think about things they way they are now. As a future govt could take your house, your car, your first born if they want to? Future legislative risk is there for every aspect of your life and every asset you hold.

Pensions, along with bank accts, Isas etc are a good thing to have for now and in retirement. No one is holier than thou here, but if people come as ask why a pension is a good idea, we will tell them.

Just like when people come where who are nearly 50 or over, having never saved a penny but are now out of debt and ask abt retirement we tell them what we think they might want to do or least look into.

We always say save in cash first.