Apparently pensions aren't worth it?

tacpot12

My experience is that personal pensions are somewhat complicated, but worthwhile. I paid average of 10% of my salary with my employer also contributing about 10% for 30 years and had enough to retire on when I was 55.

I also have two rental properties that yield just a little over 4% per year. The rental properties produce occasional bouts of stress due to tenants, but generally my experience with tenants have been good.

Drp8713

Anonymous101 wrote: »

Or ask your mates which is better pensions or BLT?

The answer depends on whether they are hungry or not, I guess.

pensionpawn

My 17 year old daughter works part time for a major supermarket whilst studying for her A levels. Her employer will match her contributions up to 7.5% so currently 15% of her salary (admittedly small, but with time on it's side) is being invested for around 43 years. It's a no brainer, especially when the government also top it up by 20%!

atush

luckyduck83 wrote: »

I run a ltd company and really need to knuckle-down and sort a pension. I'm 38 and, apart from owning (mortgaged) my own home, I have no plans for my retirement.

I was planning to put about £20k into a pension before my year-end (31 Dec) to get the ball rolliing but I've been talking to a lot of friends/family who pretty much all say don't bother with a pension. To have a meaningful annual payout you need a massive sum invested.

Most say to buy a second/third property.

I'd be interested to hear anyone's comments.

Your friends and family are numpties.

Property is taxed on income and growth. Pensions lower your tax and arent taxed on income or growth. Property is one asset class, illiquid and subject to high costs incl bad tennents/damage. pensions can include differen assets so are more diversified and more liquid

fiisch

Your friends and family might be right.... sort of!

It depends on your circumstances. I'm in a similar scenario in that I am a contractor via a limited company. I currently pay a lower rate of tax than if I were PAYE, so paying into a pension incurs reduced benefits as opposed to if I were PAYE. As I don't see myself contracting forever, and will likely move back into PAYE, I don't prioritise pension savings and instead put a chunk into S&S ISA. If I hit the pension savings too hard at this stage, I might hit the LTA.

However, that said, I'm not ignoring pension savings altogether, and have a modest pot saved from when I was PAYE previously (I'm 32 years old), plus I put a small amount aside (circa £300 / month) to get some tax relief.

So... if you see yourself moving into PAYE at some point in the future and will likely be a higher rate tax payer, it might be beneficial not to put too much into pensions at this stage, put some money aside, and then sacrifice a big chunk when you do go PAYE.

However, if that doesn't apply, then you can ignore this and I agree with what everyone else says!

In the current climate, I would absolutely 110% prioritise pension saving over any form of BTL etc...

kidmugsy

Malthusian wrote: »

I've never seen anyone claim that.

I have. I've seen more outrageous claims too. People here frequently underestimate how erratic the outcomes of equity investment have been in the past and then project their misunderstandings into the future. It's routine.

But that's still no excuse for other people gormlessly assuring each other that you can't go wrong with bricks and mortar.

There is more uncertainty in heaven and earth, Horatio, than is dreamt of in your philosophy.

atush

luckyduck83 wrote: »

This is definitely true. I've tried to start a pension a few times over the last couple of years and just find it a minefield and give up.

Interesting advice so far. I'll do some reading...

You didnt try very hard- you can open one up online very quickly

fred246

Say you are in your twenties and you want to invest £100 a month in a pension how would it actually work with an IFA. The first thought of an IFA is "where's my money coming from?" They aren't really interested in people with little money. Would they charge you upfront say £2K for starting it and then take a percentage? When I started a pension in the 90s the IFA took all my first years contributions. Didn't tell me of course. It was in the small print. An easy way of starting is to choose a Vanguard Lifestrategy fund and choose a platform and you're away. I love it when someone talks about a Lifestrategy fund on here because the IFAs hate them. It's the start of investing for yourself without them getting any payments.

Anonymous101

Drp8713 wrote: »

The answer depends on whether they are hungry or not, I guess.

:money: A BLT is never a bad investment!

pimento

I used to say that if I had my time again, I wouldn't pay into a pension. The first company I worked for had a pension scheme that when the company went into receivership turned out that they weren't paying into the fund and I lost nearly everything I'd paid in (this was back in the 1980s around the time that Robert Maxwell swindled his pension scheme).

When I joined my current company, they had a DB scheme but I only started paying into it when I was 37 (I'm now 58). My late husband was self employed and never had a pension and I feared my pension not being large enough to support us both but being too big to be able to claim any top-up benefits and I really resented the couple of hundred pounds a month I was paying in and thought I'd have been better off to have that money now in my hand and when I retired, I could claim benefits to keep us.

Fast forward to a few months ago. I've had a pleasant surprise on the pension front (see my other recent threads), I have a new husband who also has a pension and I'm about to retire early and I'll be able to eat Waitrose beans instead of Aldi beans.

I suppose my point is, I'd have p!$$ed that couple of hundred pounds up the wall if there had been the option but boy, am I glad that I didn't.