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

Fen1

OK, this question is probably completely unanswerable and tenuously linked to this threat. An earlier writer said something about your beneficiaries getting your pension when you die before you retire. My grandfather died 2 weeks before he retired (he was a state teacher), but my grandmother was left penniless. This was back in the 1970's. WHen did the rules change?

dunstonh

My grandfather died 2 weeks before he retired (he was a state teacher), but my grandmother was left penniless. This was back in the 1970's. WHen did the rules change?

Personal pensions came in during 1988. Retirement annuity contracts before that tended to refund premiums plus interest. Some RACs still only do that and it can be beneficial to transfer those to personal pensions purely to gain the extra death benefits.

djbd1973

EdInvestor wrote: »

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.
....
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.

The supply and demand in my (very) local area is good due to the amount of people and immigrants that have moved and continue to come in. Being in tune with what is happening locally and being able to take advantage of it is more of an interest to me than leaving my money with a financial institute where decisions can be made that do not work in my favour. With a buy to let there is control of the situation but saying that I realise that there are pensions that you can do yourself. I wouldn't be confortable picking funds to invest in that my future would depend on but controlling and managing property is where I can comfortably see my money grow.

Its all back to who is in control for me.

dunstonh

One significant risk is if a major event happens in the area you have your property. Flooding would be a good example where you can lose your house for a year whilst it dries out and is repaired. In that time you have no rental income and a mortgage to pay. Have a few properties in the same street or affected by the same thing and it can bankrupt you.

I have nothing against professional landlords who know what they are doing but there is a severe underestimation of risk with a good many new mortgaged landlords.

If you ask them whether they would borrow money to invest in high yielding shares/funds they wouldnt dream of it. Yet they are doing the same with property.

If a property correction comes about and we see a drop of 20-30% and rental yields start looking attractive again for the risk taken then I will be right in there buying. At this time, there seems no reason to have a UK buy to let unless you are capable of buying cheap, doinging up and turning your profit there or you have a hot spot where demand and rental yields are viable.

EdInvestor

dunstonh wrote: »

If you ask them whether they would buy money to invest in high yielding shares/funds they wouldnt dream of it. Yet they are doing the same with property.

I guess you mean borrow money?But the downside risk is much smaller with a mortgage.Not comparable at all really. After all, a few years ago millions of people were borrowing money to buy property and investing their cash in the stockmarket hoping to pay it off via endowments and make some extra dosh.

Nobody thought that was too risky and while returns are lower than expected (forget the extra dosh) most people will not have that much of a loss.The potential gain with a geared btl is much higher and the risk lower because the tenant is paying the servicing cost..

dunstonh

The potential gain with a geared btl is much higher and the risk lower because the tenant is paying the servicing cost..

The dividend and/or income covers the "servicing cost". Whichever way you look at it, it is borrowing to invest.

purch

Whichever way you look at it, it is borrowing to invest.

Which is why...presumably..... the Treasury decided it wasn't a suitable Investment to be included in the Pension Tax Wrap

dunstonh

purch wrote: »

Which is why...presumably..... the Treasury decided it wasn't a suitable Investment to be included in the Pension Tax Wrap

I think that was a fear that it would further push house prices up if the Govt was paying upto 40% tax relief to allow you to purchase your house (or other houses). Plus, upon retirement, you would either have to buy your house back with other funds or move house and there would be a very strong risk that people wouldnt have saved up enough to do that forcing them to leave the family home.

ds1980

dunstonh wrote: »

One significant risk is if a major event happens in the area you have your property. Flooding would be a good example where you can lose your house for a year whilst it dries out and is repaired. In that time you have no rental income and a mortgage to pay. Have a few properties in the same street or affected by the same thing and it can bankrupt you.

I have nothing against professional landlords who know what they are doing but there is a severe underestimation of risk with a good many new mortgaged landlords.

If you ask them whether they would borrow money to invest in high yielding shares/funds they wouldnt dream of it. Yet they are doing the same with property.

If a property correction comes about and we see a drop of 20-30% and rental yields start looking attractive again for the risk taken then I will be right in there buying. At this time, there seems no reason to have a UK buy to let unless you are capable of buying cheap, doinging up and turning your profit there or you have a hot spot where demand and rental yields are viable.

I have houses in hull which was pretty much completely under water. All of the houses are covered by a thing called insurance. All your monies and more (if your a good liar) are paid for. landlords were charging 3 times usual rent in unaffected houses because people were being paid out by insurance companies whatever they asked for pretty much. The houses that werent affected suddenly earn you lots more tahn previous. So its all swings and roundabouts. I think what you meant was if there is a major event in your street such as a flood then youll be rolling in it. This is a first hand example.

dunstonh

All of the houses are covered by a thing called insurance.

So, the insurance is paying you an income to make up for the lost rent?

landlords were charging 3 times usual rent in unaffected houses

lucky for the ones unaffected. Not so lucky for those that were.