When you die your insurer keeps your pension pot, so why have one?

MrChips

You're not going to take out the tax free 25%??

If you live to 75, which there is a high probability you will do unless you are a male chain smoker from Glasgow, you will have to do something with it whether that be buy an annuity or provide an alternatively secured pension.

MrChips

Conrad wrote: »

Do you pension people not recognise the folly of pensions where the pot is retained by the insurer upon death? What if you only live 1 year into retirement?

Any thoughts?

The last time I checked, there was a 49.9999% chance of living longer than average, but only a 0.5% to 1% chance in dying in the year after retirement (assuming retirement taken some time between 60 and 65). Is it really sensible to make retirement planning assuming the latter takes place rather than the former?

ds1980

Debt_Free_Chick wrote: »

And they forget to net off the interest paid on the borrowing, in order to arrive at the "true" capital growth (if any)

not if your not paying for it??!?!? someone else is therefore of course it doesn't come into the equation.

I still frown upon people whom begrudge btl's. I have a number all of which are rented out nicely thank you. All of which had only 5% put down on them thank you. All of which are are covered by the rents and all of which are on repayment mortgages. None have ever been remortaged and i have reduced the termage on most by up to 50% (still cover the rent) i pay surplus to the mortages each month from the extra rents i receive all of which have been paid for by not me but someone else. Yes i Have been lucky but if problems arise ie new boiler we are in a position now that rentals are good enough to have a surplus for all this also. All of which says when the mortages have been paid off all my contributions were really were the initial deposits that is it!!! i now there are a few other things like fees etc for mortgages but not a lot, so i put in £5k and someone else makes me £100k (purely example) with little or no work involved. I don't understand when people say that the game is hard i do it all myself and have never had any problems apart from some geezer who decided to kick one of my front doors in..........a polite word and shoeing later the door was paid for by himself hence no costs to me again. some people may find ringing a carpenter and asking him to come around a chore but not myself. Pensions as far as im concerned can take a running jump there for old timers and people with too much time on their hands. Id rather make my own money and actually see where it is going rather than having to worry about what the markets are doing. The markets have no bearing on me as mortages are fixed long term and we're secure enough not to have to sell. I will be on more money in my retirment than any pension will ever pay for and i have made little or no contribution to get that. whereas £xxxx a month out of your pay packet although doubled by most employers is £xxxx amount of money id rather have to go and eat in claridges the fat duck when i feel like it!

ps i drive a corsa not an x5!!!!

pps i have other investments also so spread my risks

ppps i never buy new builds!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

MrChips

Fair enough, but you are effectively self employed so are in charge of your own destiny in this way. For those whose only income comes from an employer, they have less choice about where their retirement income will come from.

Of course they do have the choice to join you in the buy to let game, but that is a different debate altogether!

ds1980

I wish i was self employed! I don't see it as btl anyway its investing just like anything else. It has its rewards it has its downside but id rather be in charge of it than someone else.

Now the sums don't add up although there are still some if you know where to look i choose to invest elsewhere. America is on the horizon soon me thinks!

purch

From Citywire/Reuters

Buy to Let may be the UK version of US sub prime with the Northern Rock debacle proving to be the needle that pops the bubble.

'The banks have been lending to amateur people who are investing on the basis that house prices will only ever rise," said Dominic White, an economist at ABN AMRO. 'Looking at the US experience, it's not hard to construct a scenario where we one day look back on buy-to-let in the same way we now view subprime: What were we thinking?'

MarkyMarkD

ds1980 wrote: »

I still frown upon people whom begrudge btl's. I have a number all of which are rented out nicely thank you. All of which had only 5% put down on them thank you.

Which lender is it that is giving you 95% LTV on your portfolio of rental properties? I understood that the best available was 85% LTV.

EdInvestor

Letting property is not the no brainer it was 10 years ago, when yields were always double digit and sometimes up to the 20% mark.Arguably since then we have had a one-off re-rating of asset prices including property due to the change to the low interest rate/ low inflation environment.Such a big jump in asset prices doesn't seem likely again.

Having said that, the fundamentals of the market in terms of supply and demand of tenants, given new household formation, immigration, shortage of property to buy and high costs of owner occupation look OK long term, providing a yield in the 7-8 per cent range can be obtained.

For a person who would save into a pension as an alternative, the fact that the tenant pays the mortgage gives a useful cushion as that savings money can be put by to pay back the loan if the property is to be kept, or made available if there is a short term need.

As a retirement investment, letting property provides a rising income capable of matching or beating inflation and the possibility of capital growth.It's an investment people find much easier to understand than most others.

Its disadvantages are lack of liquidity (though it's not as bad as a pension which is totally illiquid), fairly high transaction and running costs, and the risks of a lack of diversification for people who already own their own home.

Gradual accumulation of letting property was for centuries the mainstay of the rich classes in the UK - the Duke of Grosvenor being a prime example.The same principles that made it attractive then still apply today.It certainly can be justified as part of an investment portfolio.

ds1980

MarkyMarkD wrote: »

Which lender is it that is giving you 95% LTV on your portfolio of rental properties? I understood that the best available was 85% LTV.

ways and means my friend ways and means!

Conrad

MrChips wrote: »

The last time I checked, there was a 49.9999% chance of living longer than average, but only a 0.5% to 1% chance in dying in the year after retirement (assuming retirement taken some time between 60 and 65). Is it really sensible to make retirement planning assuming the latter takes place rather than the former?

Does'nt alter the fact you WILL DIE AND YOUR PENSION ENDS THERE, all your sacrifices gone in a puff o smoke whereas the sensible investor will leave a portfolio of property / unit trusts ect to thier family whcih can trickle down through generations.

Dunston - why do assume us property investors will sell? This shows a complete lack of understanding. Most of will never sell as we prefer to enjoy the income and avoid CGT. Again a properly managed property portfolio carries little risk and even if there is a void professional agents will have them out soon enough. Well worth the extra hassle as my kids get to keep the fruits of my labour.

PS - I do have a pension as does my wife, but we of course recognise they are merely icing on the cake and no replacement for the independance of ones own assets