Is it ever too late to start a Pension

nrsql

The risk is that rules can change and you can't do anything to stop your money being drained.
Once it's accessible you have the possibility of drawing it out - unless the change is made to stop that. At least the risk is reduced.

Previously it was mainly isas, ns&i index linked certificates, property and other taxable things. Now the first contribution is to pensions - which I think I'm going to struggle to find a reason to access.

With hindsight maybe pensions would have been a good idea but weren't as accessible as they are now. I realised early on that the system wasn't sustainable but didn't factor in the grey voting power.

atush

But he didn't say that he hadn't been saving and investing for retirement, he said that he hadn't opened a pension. That's a plain different thing.

nrsql said

I didn't really start until I was old enough to access the money - too much risk before that.

So i asked what risk he was talking about

nrsql wrote: »

The risk is that rules can change and you can't do anything to stop your money being drained.
Once it's accessible you have the possibility of drawing it out - unless the change is made to stop that. At least the risk is reduced.

Previously it was mainly isas, ns&i index linked certificates, property and other taxable things. Now the first contribution is to pensions - which I think I'm going to struggle to find a reason to access.

With hindsight maybe pensions would have been a good idea but weren't as accessible as they are now. I realised early on that the system wasn't sustainable but didn't factor in the grey voting power.

Rules can be changed. But they usually arent retrospective.

But there wont be any 'draining'. that will have to do with where you choose to have your pension , and the funds you choose to invest in. These are the costs you pay, and the 'drain' on your pension. which is as big or small as you choose.

Isas and other investments can have the same 'drains' on returns as pensions.

nrsql

>> But they usually arent retrospective.
Sometimes they are - but it doesn't matter, you can't access the money so anything to diminish it will affect you and you can't do anything about it.

>> But there wont be any 'draining'. that will have to do with where you choose to have your pension , and the funds you choose to invest in.
Well - there was the dividend tax and the max lifetime allowance.
What would happen if they say imposed a 5% tax per year on pensions and allowed companies to impose larger fees (maybe introducing new types of pensions and locking in the old ones). Suddenly your pension fund doesn't look so attractive and you are stuck for many years.
You could say that's impossible but a government could decide that everyone should manage on a higher state pension and fund it by raiding personal funds justifying it by saying that no one needs personal pensions. All it would need would be a majority of voters to benefit from it.
Once you've lived through a few instances of a lot of people losing life savings and the government supporting it you start to get a different idea about risk.
The difference with ISAs is that you can withdraw the money so the effect of slow draining is neutralised - still a risk but it's greatly reduced.

nrsql

But the question was about whether it's still advisable to start a pension late in life - the risk involved with starting early in life is a bit of a red herring.

My opinion was and still is - yes, depending on your circumstances and is what I did.

crv1963

The fact still remains that we can only operate with the rules as they are. For many pensions are efficient. If we worried about rule changes then we'd do nothing.


The government is in effect pushing people to personal pensions with auto enrolment so is unlikely to do away with pensions, as people save into a pot for later life they can be less dependent on the state in later life.


My hunch is later life benefits will be reduced over time, with the mantra of "you should have saved more when you were working, you had all these options, we even forced your employer to put money into your savings".


The greater risk is that people don't explore their options soon enough in their working life (me included in this), and think that they are saving enough- that's the con. Having explored "My Number" I'm just thankful that I woke up before it's too late!

Alibert

The LTA is something that could easily change again , the amount in either direction , and the rules around crystallization

25% tax free is a valuable feature of pensions , ane perhaos evryone who is age 55 or more should consider taking it in case it goes.

atush

the max lifetime allowance.

Is not a 'drain' on pensions. It just limits how mich you can pay in, in future.

given autoenrollemtn and the rise inthe number of peiple who have private pensions

What would happen if they say imposed a 5% tax per year on pensions and allowed companies to impose larger fees (maybe introducing new types of pensions and locking in the old ones). Suddenly your pension fund doesn't look so attractive and you are stuck for many years.

Is a recipe for electoral suicide.

and

The fact still remains that we can only operate with the rules as they are. For many pensions are efficient. If we worried about rule changes then we'd do nothing.

Well said. The alternative is paranoia and panic

nrsql

>> Well said. The alternative is paranoia and panic
Another phrase is risk mitigation.

I'm in a position to be privy to what past governments have considered under the guise of blue sky thinking so am maybe have a higher (not better) estimation of the risk.
As you say the issue is electoral suicide - but that's at the moment!

atush

crazy talk IMHO.

Blue sky thinking. Me being scared that someone privy to seats of power gripped with paranoia.