Is a Pension Worth Having?

lisyloo

I use salary sacrifice saving 12% NI plus my employer passes on their employer NI of 13.8% so for me I would say definitely yes.
No access until 55 is not really that much of a restriction as very few can afford to retire before 55.

jamesperrett

BookerTee - it appears that you have a particular set of circumstances that won't apply to most people - possibly a guaranteed annuity rate and self employed?

lisyloo

BookerTee wrote: »

You are focusing on headline tax but not looking at the 'total cost' to get your money back.

What costs are you referring to?

I save 20% income tax 12% NI and 13.8% NI total 45.8%
I expect 25% tax free then £11k per annum tax free.
I have a low cost SIPP.

Please elaborate.

LHW99

You can look at the restriction of no access until 55 as a negative - or a positive, as there is no way of frittering those savings away on other things instead of keeping it for when you can't work

lisyloo

Unless you know you aren’t going to live a long time or are very rich, ho2 can you afford to spend your retirement pot before 55?
We have parents who are 90 and still going. That’s a lot of years to fund.

lisyloo

Looks like you are looking at some high charging pensions.
Modern ones like Hargreaves landsdown for example don’t charge anything like the figures you quote. I appreciate that sometimes one has no choice if the employer picks the scheme in which case you have to weigh it up ( and consult with your employer).
If the employer offers contributions you wouldn’t otherwise get as income or passes on employers NI or saves you employees NI then the charges may pale into insignificance.
But no one is holding a gun to your head. If you want it outside a pension then do that. I’ll take the 45.8% thanks.

Nitram29

It is a double edged sword, the less regulation you have (which is part of what the original post advocates) the more of a shark tank it becomes. People should be free to get at their own money but that freedom allows companies and people to hide charges and be duped into making bad decisions, it just becomes very muddy to the average joe like me.

Obvious scams like parking spaces I think I can spot but ones that are weaved into something masquerading as a bona fide pension I would need to try to unpick. I guess this is the idea behind stakeholders, capped charges on a regulated simple pension but that drives lower returns.

Given all of this why is there not just a straightforward singular personal saving allowance / product.So much of it seems like moving money from left pocket to the right pocket then into the jacket pocket. At the end you get to count how much fell out, smartest investing advice seems more about minimising losses through charges/taxes than maximising gains.

I can only conclude if it was as easy as I would like it there would be no financial market and we would be living in peace and harmony just like John Lennon wanted.

BookerTee

lisyloo wrote: »

Looks like you are looking at some high charging pensions.
Modern ones like Hargreaves landsdown for example don’t charge anything like the figures you quote. I appreciate that sometimes one has no choice if the employer picks the scheme in which case you have to weigh it up ( and consult with your employer).
If the employer offers contributions you wouldn’t otherwise get as income or passes on employers NI or saves you employees NI then the charges may pale into insignificance.
But no one is holding a gun to your head. If you want it outside a pension then do that. I’ll take the 45.8% thanks.

You might have missed the phrase 'hidden' charges.

https://www.which.co.uk/news/2017/09/pension-funds-forced-to-disclose-hidden-costs/

Its depressing that you think you are gaining 45.8% with no downsides. See previous answers.

BookerTee

Nitram29 wrote: »

It is a double edged sword, the less regulation you have (which is part of what the original post advocates) the more of a shark tank it becomes. People should be free to get at their own money but that freedom allows companies and people to hide charges and be duped into making bad decisions, it just becomes very muddy to the average joe like me.

Obvious scams like parking spaces I think I can spot but ones that are weaved into something masquerading as a bona fide pension I would need to try to unpick. I guess this is the idea behind stakeholders, capped charges on a regulated simple pension but that drives lower returns.

Given all of this why is there not just a straightforward singular personal saving allowance / product.So much of it seems like moving money from left pocket to the right pocket then into the jacket pocket. At the end you get to count how much fell out, smartest investing advice seems more about minimising losses through charges/taxes than maximising gains.

I can only conclude if it was as easy as I would like it there would be no financial market and we would be living in peace and harmony just like John Lennon wanted.

So everyone has to be treated like a child because a few shouldnt be out on their own?

Maybe you should consider Warren Buffets bet.

https://www.forbes.com/sites/johnwasik/2017/09/25/how-you-can-win-warren-buffets-bet/#1cb4db6629dd

lisyloo

BookerTee wrote: »

Its depressing that you think you are gaining 45.8% with no downsides. See previous answers.

No I do not think there are NO downsides, I just dont think they are anywhere near negating the benefit of the 45.8% plus tax free lump sum.

I’m planning to retire at 58 which I consider brilliant when my state pension age is 67, but I can’t afford to retire before 55 so I don’t consider that a huge downside at all.

Being aware of the restrictions I also have funds available outside a pension as well should I need to access them which any sensible person would do. No one is suggesting 100% in a pension with no access. There has to be a sensible balance.