How often do you check the value of your pension? And is contributing to a pension simply gambling?

CharlieC2210

Albermarle said:

CharlieC2210 said:

dunstonh said:

CharlieC2210 said:

adindas said:

CharlieC2210 said:

Is it wise to stop looking at the value of your pension on a regular basis (several times a year, or more)?

Occasionally I have to log into my pension for something. The value of the pension is right there on the first page I come to. If it’s gone down, say a thousand pounds since I last looked, I get a shock. If it’s gone up I get a buzz.

A while back I was logging in a few times a week for a while, to check my messages (I was sorting something out with the company). Each time I logged in the value had gone down, often by several hundred pounds. In the space of a few weeks it had gone down over a thousand pounds. I reminded myself that these things do go up and down and it’s all about the long run. But it was still scary.

If the best advice is not to check the value on a regular basis, when is it wise to check? Once a year? When they send your annual statement?

What if it went down, and down, and down?

In what way is contributing to a pension like going to the casino. Do we need to accept that we’re gambling? That we might lose?

If it went down, and down, and down, to nothing would there be any compensation scheme to help us out? Or would it be tough luck; we took a punt; and we lost? Or at what point would it be wise to cash in, if it was going down, and down and down?

 

Pension is definitely not gambling. Getting top up for 25% for basic tax payer is definitely common sense, not gambling.

What might be gambling is the type of  investment you choose on your pension fund. Differentiate gambling with taking a calculated risk.

But the top up of 25% is temporary, yeah? You pay most of it back in tax when you start withdrawing, no?

A) if you retire prior to state pension, you can earn £12,570 tax free.    That means you can take over £16k from the pension each year without paying tax.
b) if you draw after the state pension, then most people will have a small amount of personal allowance left over.
c) As a basic rate taxpayer in retirement and working, you are still better of by 6.25% (ignoring personal allowance)
d) the investments within the pension are not subject to CGT, dividend tax or income tax.   And the pension is outside of your estate and not subject to IHT.

So, there is a bit more to it overall. 

Thanks. When you put it like that...   

I heard in another thread that my pension is outside of my estate. I got confused because there was talk of whether or not there was a named beneficiary. To clarify. Is my pension outside of my estate full stop, regardless of whether or not there is a named beneficiary?
Also, is my life insurance outside of my estate?

Who decides who these things go to, when I die?

Your pension is held in trust, so it does not legally belong directly to you, that is why it is not included in your estate when you die. So it should not be mentioned in your will,and it will not be included in any inheritance tax calculations ( unless the law changes at some point ).
You should have filled in an Expression of Wish form, naming your chosen beneficiary(s).
Normally the Trustees will follow your instructions, although they have the final decision.
If you do not name a beneficiary, or for example they have died, or you have got divorced but you never changed the Expression Of wish form, then the Trustees will look into family circumstances and ask questions before deciding what to do.

Thanks. Is this the same for life insurance policies? Are they not part of your estate either? And if so, is it down to the trustees of life insurance policy who have the final decision on who gets what, just like the pension provider? And should I have filled in an Expression of Wish form for my life insurance policy?

Hudsonbutler

Albermarle said:

Hudsonbutler said:

What will happen when the market capitulates in the next few months 🤔

You will be very rich, as you can apparently predict market movements. So you can sell everything to cash just before the crash, then buy them back when the market is  rock bottom and about to start going up again.

Oh it's definitely going down, it's unsustainable as it is. 
But the new era won't be fiat.

Pat38493

The fundamental difference seems to be that if you are gambling, the business goals of the gambling company are completely the opposite of yours - you want to win money, they want you to lose money so they can remain profitable.

With investments (including pensions), the goals of the companies you are investing in should be broadly aligned with yours - you want to make money - they want to make profits and therefore make money for you.  It's not in their interest to make your money shrink.

MallyGirl

CharlieC2210 said:

Albermarle said:

CharlieC2210 said:

Thanks. When you put it like that...   

I heard in another thread that my pension is outside of my estate. I got confused because there was talk of whether or not there was a named beneficiary. To clarify. Is my pension outside of my estate full stop, regardless of whether or not there is a named beneficiary?
Also, is my life insurance outside of my estate?

Who decides who these things go to, when I die?

Your pension is held in trust, so it does not legally belong directly to you, that is why it is not included in your estate when you die. So it should not be mentioned in your will,and it will not be included in any inheritance tax calculations ( unless the law changes at some point ).
You should have filled in an Expression of Wish form, naming your chosen beneficiary(s).
Normally the Trustees will follow your instructions, although they have the final decision.
If you do not name a beneficiary, or for example they have died, or you have got divorced but you never changed the Expression Of wish form, then the Trustees will look into family circumstances and ask questions before deciding what to do.

Thanks. Is this the same for life insurance policies? Are they not part of your estate either? And if so, is it down to the trustees of life insurance policy who have the final decision on who gets what, just like the pension provider? And should I have filled in an Expression of Wish form for my life insurance policy?

Life insurance payouts do form part of your estate unless you have them set up as part of some sort of trust. 

michaels

Pat38493 said:

The fundamental difference seems to be that if you are gambling, the business goals of the gambling company are completely the opposite of yours - you want to win money, they want you to lose money so they can remain profitable.

With investments (including pensions), the goals of the companies you are investing in should be broadly aligned with yours - you want to make money - they want to make profits and therefore make money for you.  It's not in their interest to make your money shrink.

If you gamble on exchanges like Betfair (or indeed currency trading platforms) the provider makes their money from a margin on transactions rather than from your betting strategy - pretty much like a sipp platform!

dunstonh

MallyGirl said:

CharlieC2210 said:

Albermarle said:

CharlieC2210 said:

Thanks. When you put it like that...   

I heard in another thread that my pension is outside of my estate. I got confused because there was talk of whether or not there was a named beneficiary. To clarify. Is my pension outside of my estate full stop, regardless of whether or not there is a named beneficiary?
Also, is my life insurance outside of my estate?

Who decides who these things go to, when I die?

Your pension is held in trust, so it does not legally belong directly to you, that is why it is not included in your estate when you die. So it should not be mentioned in your will,and it will not be included in any inheritance tax calculations ( unless the law changes at some point ).
You should have filled in an Expression of Wish form, naming your chosen beneficiary(s).
Normally the Trustees will follow your instructions, although they have the final decision.
If you do not name a beneficiary, or for example they have died, or you have got divorced but you never changed the Expression Of wish form, then the Trustees will look into family circumstances and ask questions before deciding what to do.

Thanks. Is this the same for life insurance policies? Are they not part of your estate either? And if so, is it down to the trustees of life insurance policy who have the final decision on who gets what, just like the pension provider? And should I have filled in an Expression of Wish form for my life insurance policy?

Life insurance payouts do form part of your estate unless you have them set up as part of some sort of trust. 

Or written on a life of another basis or joint owner basis (these would form part of the policy owners estate or the surviving owners estate rather than the deceased estate)

CharlieC2210

dunstonh said:

MallyGirl said:

CharlieC2210 said:

Albermarle said:

CharlieC2210 said:

Thanks. When you put it like that...   

I heard in another thread that my pension is outside of my estate. I got confused because there was talk of whether or not there was a named beneficiary. To clarify. Is my pension outside of my estate full stop, regardless of whether or not there is a named beneficiary?
Also, is my life insurance outside of my estate?

Who decides who these things go to, when I die?

Your pension is held in trust, so it does not legally belong directly to you, that is why it is not included in your estate when you die. So it should not be mentioned in your will,and it will not be included in any inheritance tax calculations ( unless the law changes at some point ).
You should have filled in an Expression of Wish form, naming your chosen beneficiary(s).
Normally the Trustees will follow your instructions, although they have the final decision.
If you do not name a beneficiary, or for example they have died, or you have got divorced but you never changed the Expression Of wish form, then the Trustees will look into family circumstances and ask questions before deciding what to do.

Thanks. Is this the same for life insurance policies? Are they not part of your estate either? And if so, is it down to the trustees of life insurance policy who have the final decision on who gets what, just like the pension provider? And should I have filled in an Expression of Wish form for my life insurance policy?

Life insurance payouts do form part of your estate unless you have them set up as part of some sort of trust. 

Or written on a life of another basis or joint owner basis (these would form part of the policy owners estate or the surviving owners estate rather than the deceased estate)

Thanks. Mine's is a simple life insurance policy. Policy owned by me. Life insured; mine. No trust set up. Will that be part of my estate? 

CharlieC2210

Although my pension will not be part of my estate, and I therefore shouldn't mention it in my Will (in terms of stating who it should go to), I'm assuming that I should mention it in my Will in terms of it's existence, yes? If I die, and the executor of my Will doesn't know I have a pension, it would be wise to let them know that I do have one, yes? The pension company won't know I'm dead, will they? 

kuratowski

CharlieC2210 said:

If I die, and the executor of my Will doesn't know I have a pension, it would be wise to let them know that I do have one, yes?

That's true, but that still doesn't mean you should mention your pension in your will.  Otherwise your will could quickly become out of date whenever you move accounts and/or jobs.  The same goes for any bank accounts you hold, or investment accounts, or properties. Typically, it's best not to name any of these in your will.

Instead, what I've done is create a spreadsheet listing out my assets, debts, pensions and life insurance.  I keep a printed out copy of this spreadsheet together with the copy of my will the solicitor sent me, and I've told my executors where it's stored.  I update it every 6-12 months as things move around, which is far more often than I update my will.

Just to mention another approach, Age UK also have a template on their website called the "lifebook", which you could use.

Albermarle

CharlieC2210 said:

Although my pension will not be part of my estate, and I therefore shouldn't mention it in my Will (in terms of stating who it should go to), I'm assuming that I should mention it in my Will in terms of it's existence, yes? If I die, and the executor of my Will doesn't know I have a pension, it would be wise to let them know that I do have one, yes? The pension company won't know I'm dead, will they? 

Normally you would not name all your specific assets in your will, apart from maybe your home, or some sentimental things.

You wouldn't normally say I leave my savings with this bank to this person, my savings in this building society to this person and my premium bonds to this person etc 

As the poster above says, you should detail your finances in a separate document, that you can easily update.