My view on Pensions

Thrugelmir

Rachel_Pierson wrote: »

From the Maxwell pension scandal over twenty years ago to BHS today, pension schemes can and do collapse. And when they do, it's those that have been paying in for 20-40 years that suffer.

How many pension schemes haven't collapsed?

If had bought shares directly in Companies such as Polly Peck, Northern Rock or Enron. You'd have suffered a 100% loss on your investment. The world is full of risks and sharks. Never ever be any different.

Rachel_Pierson

Linton wrote: »

Your bullet points can be shown to be misguided possibly based on a misunderstanding of how modern pensions operate in practice. You ignore the 25% tax free lump sum, you ignore the possibility that you may be a higher rate tax payer in employment than you will be retired. You ignore employer contributions. Why should your employer choose to give you a higher wage if you dont want the pension? They dont need an excuse not to. If DC pensions are Ponzi schemes so are S&S ISAs as they are from an investment point of view much the same.

However if you are convinced by your arguments and dont want to take advantage of the benefits of a pension that's fine by me. Perhaps if you may find it more helpful if you asked questions rather than ranted.

I didn't ignore employer contributions. I addressed them by stating that many employers use contributions as an excuse to pay less or not give pay rises. The reason they'd pay more in salary if you didn't cost them that amount in pension contributions is simple market forces. If you're good at what you do and it's cheaper to keep you at a higher salary than replace you (which pension contributions will factor into), then they'll pay more for your services. At least that's what I've found.

As for ISAs, I don't see anybody requiring me to obtain compulsory independent financial advice (permission?) to do whatever I want with an ISA. That's just one of the differences between them and pensions. There's also the fact that they are actually tax free at the point of drawing down, rather than just free at the point of saving.

Your comment on the 25% tax free lump sum is "interesting". It is tax free. But only if you let someone else tell you what to do with the other 75%. Which might not be what you wanted to do with it, or what would make you the most money or make the most sense to your personal circumstances at the time. If you're dying of cancer and have only two years to live, do you really want to take 25% tax free then be forced to buy an annuity with the rest? Or take the whole sum as cash (which may well be a very high tax bracket by taking it all in one year.) If that money were in an ISA instead, you could do what you liked with it, actually tax free. Not just nominally.

Rachel_Pierson

AnotherJoe wrote: »

Because if it was s compulsory people like you would rant that it must be a terrible idea since it had to be made compulsory. Can't win, see. Therefore you must be right.

I see you are now delving back to the 1940's in your rants (NI). Why not rant that income tax was meant to be temporary whilst you are on a roll ?

What on earth are you on about? Are you under the mistaken impression noone has paid NI since the last World War?

Rachel_Pierson

Thrugelmir wrote: »

How many pension schemes haven't collapsed?

If had bought shares directly in Companies such as Polly Peck, Northern Rock or Enron. You'd have suffered a 100% loss on your investment. The world is full of risks and sharks. Never ever be any different.

You're right. But at least they'd have been my losses to bear if I'd made poor investment decisions. And I don't know many (any?) people that are happy with their pension. Even where their scheme hasn't collapsed.

[Deleted User]

Thrugelmir wrote: »

How many pension schemes haven't collapsed?

If had bought shares directly in Companies such as Polly Peck, Northern Rock or Enron. You'd have suffered a 100% loss on your investment. The world is full of risks and sharks. Never ever be any different.

Depending on when you sold .....

AnotherJoe

Rachel_Pierson wrote: »

I can guarantee that every time I discuss pensions with a group, someone will ask that question. My answer is always the same - "the same as you, but I won't be propping up a Ponzi scheme for 40 years first". The fact, as I see it, is this: we're all going to have a crap retirement, unless we invest wisely ourselves outside of pension provision.

Well I'm going to have a better retirement since I'm not dumb enough to turn down around £10k a year from my employer and the government.

Name me one person that wasn't an MP that can live on their pension alone today?

Me later this year. Some of my friends. My mother. (She's not an MP AFAIK.) Neither for that matter am I or my friends..

Most people rely on a combination of other investments to supplement what amounts to a pretty meagre sum from their pension.

Hang on, first it was no one ("name just one person apart from an MP"), then it was "most people". Maybe "most" people don't put enough aside?

So, my question to you is, what are you going to do when your pension isn't enough to support your retuirement?

Irrelevant for me because it will be.

Same as me probably, except your investments may be worth less because you've had less funds available to invest whilst you were working.

No, my investments will be worth more due to the extra money I've been provided because I haven't been stupid enough to turn down free money.

Your rants about what's happened in the past have blinded you to the situation now. So much so that you manufacture ridiculous arguments such as "if they were so good everyone would get one" ignoring the bleedin obvious that most people choose today over tomorrow let alone 30 years time, and harking back to the past all the time.

Presumably you won't even take advantage of the free money available by contributing to a pension when you are retired, as it must be bad as otherwise everyone would do it.

peterg1965

RuleTheWorld wrote: »

Agree that it would seem a logical step for the state pension to become means tested at some point which would obviously be unfair on those who have saved all their life. Enough to put me off saving? No way!

.

Political suicide for the Government that tries to means test the State Pension, that isn't going to happen any time soon. The alternate course of action is to keep raising the pension age, which is precisely what recent Governments are doing to manage the burden.

Thrugelmir

Sleazy wrote: »

Depending on when you sold .....

Polly Peck was the stock market darling of the time. There was no reason to sell the share. Fraud takes many forms :eek:

Maxwell Publishing had over 160 subsidiary companies around the globe. Through which cash was churned to stay one ahead of the auditors. The organisation was insolvent well before it finally crashed. Things are never what what they might seem looking outside in.

MoneyLover_2

Rachel_Pierson wrote: »

BHS today, pension schemes can and do collapse.

If only there was some sort of lifeboat which paid you the majority of your pension when your scheme collapses...

Rachel_Pierson

AnotherJoe wrote: »

Incorrect. At BR tax when earning you get 25% tax free when you withdraw At HR tax you get more than half of it tax free.

So, you'll need to explain to me again how paying tax on 25% of it (or is 50% - probably is if you take it all in one year, eh?) constitutes being "tax free". That's like saying your post is "ranty red text free", because only half of it is ranty red text.

Plus, you do get free money. For example, if I pay £100 into my pension, my employer pays in maybe £55. This is aside and before tax. So, yes that is free money

No. The pension scheme gets free money. From me, and from my employer. I get less money each month I'm working. When I do eventually get some of it back, by contrast, it's taxed.

That financial advice cost refers to DB pensions not DC. Most pensions going forward will be DC

Until they change the rules in the future to suit themselves. Again. You think they won't because they've promised not to? That's what they did with the state pension. They made it means tested, when at the time pensioners were having NI deducted they were told it was a cast-iron guaranteed future pension. That turned out not to be the case.

Again, irrelevant when it's a DB pension you are very backward looking in all your rants.

Not really worth responding to, beyond saying "rants" is the codeword people generally use when they mean "uncomfortable arguments I can't actually find a flaw in but don't want to believe."

What you mean like it's all good idea to eat healthy food and exercise so the idea doesn't need to be sold and no one had to be encouraged to do it?

No. What I'm saying is don't sign me up for a gym membership, then make me have to argue with you to get my money back. For all you know I could be very fit indeed and not need your self-serving 'help' to 'improve my health' (whilst increasing your wealth.)

See above in red

See above in blue.