SIPPs

dunstonh

-The vast majority of people do not have any choice but to take risks with their retirement income because their savings have been severely depleted in the past few years due to the incompetence of the so called professionals

Rubbish. The vast marjority have had no problems with financial advice. Yes, there have been issues but these a minority of cases when you look at the vast number of financial transactions that take place.

-The vast majority of people do not want to hand over the entire capital they have accumulated in their working lives in return for an income which is almsot the same as they would get if they could put it into the bank

The annuity rate you get is set at the outset of the purchase. Interest rates will fluctuate. Currently a 65 year old non smoker can get over 6%. You cannot get that generally with bank accounts. Also, interest rates will fluctuate meaning sometimes you may get higher, sometimes you may not.

-The vast majority of prople coming up to retirment now remember the high inflation in the 1970s and are well aware that their annuity will halve in value over 20 years at the best and thus leave them in certain poverty when they are really old

In that time, they had savings rates that were below the increases in the cost of living. So it didnt matter if it was savings rates or annuity rates. The impact of the economy doesnt just affect annuities. If effects every financial service product.

-The vast majority of people know they don't understand financial products: they also know the people in the industry are likely to be cheating them. Some people have now figured out that they must learn: and these people have arrived here - or at other websites. Good for them.

You insult the vast majority of financial advisors who give good advice and service. There are always people in every industry that do not act in a correct manner but that doesnt make everyone bad.

As it happens, your posts are very much the sort of thing people do complain about from financial advisors. i.e. highlight all the positives and do not mention the negatives.

I will continue to mention any alternative methods of maximising their wealth that I find workable.

Problem is that you are not. Your discussions highlight potential but do not mention the risks.

Peoplke are quite capable of making up their own minds and of learning how to invest as long as they know how to find the information.

No they are not. At risk of making generalisation like yours, it appears many hook into the odd sentance or phrase without taking in all the key facts. Individuals do not know how to invest. How many times do we see comments in the investment section where people have all their money in one fund? Indeed, we have you in there saying people shouldnt do bonds, even when its best for them to do so. You say you want to save people money but in there you have commented that I shouldnt have done a product that was £28,000 cheaper over 10 years than the alternative because you think I (incorrectly) earn more on it.

Whilst we have so may tax wrappers and different investment areas with varying degrees of risk, there will not be a solution that is right for everyone.

Your posts are dangerous and your forum name may give people the wrong impression (as has also been mentione by posters before). You fail to mention risks. Indeed, it appears you are not aware of the risks and that makes you no better than those dodgy financial advisors with limited knowledge and yet think they know it all and sold products on the basis that they are good for everyone.

deemy2004

Yeh to maximise on getting a decent annuity rate you have to ensure your well on the road to getting lung cancer ... :rolleyes:


This IS the problem....

That financial 'salespersons' DO NOT COMPREHEND The fact that PEOPLE DO NOT WANT TO BE LOCKED INTO AN Anuity rate until they DIE !

Just can't get it ????

What we truly want is CONTROL over OUR MONEY !
As we do with non pension capital, the ability to pick and choose when to FIX and FOR HOW LONG or NOT to FIX and let it float... Which we do not have with annuities.

For instance last Sept 04 I was able to fix bonds in excess of 6% for several years ! 12 months earlier the highest bonds were paying just 4% !!!!

Can't IFA's comprehend that ??

People arn't thick ... not in the age of the internet... barely a few mouse clicks and they can compare rates between different rates... We want the same ability with pension funds to NOT be forced into an annuity to be able to fix the rates or let them float as we choose to do so we at least FEEL like we have some control over OUR money..... !!!

Paul_Herring

deemy2004 wrote:

That financial 'salespersons' DO NOT COMPREHEND The fact that PEOPLE DO NOT WANT TO BE LOCKED INTO AN Anuity rate until they DIE !

Just can't get it ????

What we truly want is CONTROL over OUR MONEY !
As we do with non pension capital, the ability to pick and choose when to FIX and FOR HOW LONG or NOT to FIX and let it float... Which we do not have with annuities.

So don't put your money in a wrapper that requires the wrapped funds to be spent in restrictive ways.

Pal

My point is that YOU (Deemy and Editor) might feel able to make that choice for yourselves, based on an assessment of the risk you are willing to take and the reward you want. But most other people are NOT able to make that choice.

My problem with your posts is NOT that you are completely obsessed with SIPPs and income drawdown to the point that you ignore ever other possible solution to people's problems. My problem with your posts is that you assume everyone else is in the same position you are.

To take an example:

A poster asks about pensions and annuities, you say "get a SIPP and do income drawdown."

How long should they drawdown for? How much? What should they invest in while drawing down? Property? Residential Property?! Equities? Bonds? Cash? How old are they? What state of health are they in? Do they have dependants? Debts to pay off? What income expectations and aspirations do they have? Do they want an investment portfolio or do they not want to worry about these things?

Most people do not have a clue about these things. As far as investments are concerned, they are "thick" to borrow Deemy's phrase!!

I am all in favour of people coming onto websites and being pointed at SIPPS and income drawdown as possible options, but they need consider them in context. Not have some anonomous "expert" bleating on that it is the best idea, without being willing to provide any context or take the flak if their advice turns out to be complete rubbish.

You seem only to think about these issues from your own point of view, without considering the position that other people are in. I can completely understand Deemy's view that SIPPS and income drawdown might be good value, that equities or higher risk investments and/or options/futures etc might be a good idea. But Deemy is (if I recall correctly) a young, financially astute man who still lives with his parents. He can afford to take higher risks than most!!! His home is not at stake!!

I have spoken to countless retirees who WANT to purchase annuities. They want to guarantee themselves an inflation linked incomes for the rest of their lives. They want to make sure their partner gets an income if they die first. They want a guarantee period so that their children get some value from the annuity if they die early. While they find it annoying, they understand that an annuity is an insurance policy. Some of the money may be wasted if they die young, but the advantage is that they could make a lot of money if they live longer than average. They want security. They also understand that income drawdown might make them (or their family) richer in the long term, but that it will reduce their incomes in the first few years of their retirement when they are hoping to be playing golf and going on cruises! You never seem to point these issues out.

I have received a few PMs now accusing you both of being trolls. You are both bright guys with a lot to offer to people who need help with their financial issues, but please, lets have a bit (lot) more balance.

P.s. I am not an IFA either, and do not and have never made money from specifically offering any financial products compared to others.

Pal

To quickly pick up a few of editors points:

The problem with people who work in the financial services industry is that they really fail to understand several important points:

-The vast majority of people do not have any choice but to take risks with their retirement income because their savings have been severely depleted in the past few years due to the incompetence of the so called professionals

So falling stock markets was the fault of IFAs or investment managers was it? Or are you thinking of something else? Equitable Life - an investment manager problem. Commission I touched on above. I am not particularly happy with it either.

-The vast majority of people do not want to hand over the entire capital they have accumulated in their working lives in return for an income which is almsot the same as they would get if they could put it into the bank

Don't put it in a pension then. Anyway, annuity's can be index linked, so will outperform cash over any length of time. In addition, the relatively small difference between cash returns and bond returns at the moment is a historical anomoly.

-The vast majority of prople coming up to retirment now remember the high inflation in the 1970s and are well aware that their annuity will halve in value over 20 years at the best and thus leave them in certain poverty when they are really old

Annuities can be index linked.

they also know the people in the industry are likely to be cheating them.

This is complete rubbish, and on the rare cases where it is found to be true, misselling compensation has become the norm.

Some people have now figured out that they must learn: and these people have arrived here - or at other websites. Good for them.

Indeed, so perhaps a little more balance is required to make sure your answers are appropriate to the reader and not just based on your own personal circumstances?

One great way to conserve your money is to reduce the charges you pay to invest. Now I am sorry to have to say this, as such a suggestion directly impacts on the jobs of some people in financial services who might get a bit annoyed about it.

Doesn't annoy me in the slightest as my income does not come from investment charges of any kind. As Dunston will attest, I have long been a critic of the active fund management industry and their charges is only one of the issues that I don't like (to summarise: charging high fees for random performance).

My problem is that I am not convinced by your assertion that SIPPS are somehow cheaper than any other kind of pension policy. And even if charges are an issue, your SIPP "recommendations" are still incredible dangerous as they lack context for the original poster or those who might be reading the thread looking for information. What is the point of mentioning SIPPS and drawdown without mentioning the underlying investments that the individual should use to maximise their retirement income? The two terms are essentially meaningless without further information on how the extra money is going to be made.

Pal

Please see the groveling apology in Editors post above, which I managed to completely mess up by hitting the wrong button.

My apologies to Editor and to anyone who wanted to read his comments - most have been quoted by Dunston and myself in our responses though.

EdInvestor

Hi Pal

You're forgiven, I know how easy it is to do.

Look, we're all in the information/education business here, aren't we?

The problem is that in days gone by when stockmarkets always went up and inflation too, when final salary pensions were the norm and With profits smoothed away all the troubles , and annuities paid 10% or even 15%, then everyone could do well and none of this argument would be necessary,right? :)

But times have changed, haven't they?This website exists because people have realised they have to get a grip on their money, true?

How can it be wrong for people to learn that there is an alternative to an annuity? How can it be wrong for them to learn that they can invest without paying tens of thousands of pounds in charges?

Is it a good idea that they are equipped with information before they see an IFA, so they can ask informed questions?I think it is. Don't you?

Or do you think they should walk in with no idea at all, so any unscrupulous salesman can see them coming a mile off? Surely public ignorance has got something to do with misselling.

BTW, re SIPPS and drawdown, perhaps I can just mention that this is the normal approach to pensions in the western world, outside state systems.Annuities are a strange British phenomen. Relic of feudalism I suspect

klondyke

klondyke wrote:

"However after age 75 you need to buy an annuity" ?

I understood that one of the possible benefits of A-Day, was that you no longer have to buy an annuity at 75, but have to have an Alternative Secured Pension involving some drawdown.

Is there any clear information yet as to how that works and what percentage is compulsory?

(Mr K, 71, has a pension pot around 90-100k. Has not taken out an annuity as we don't really need the income. (With hindsight and watching pot and annuity rates fall, maybe that was a wrong decision, but....). As things stand, if he pops his clogs before reaching 75, as the pot is written in trust, our children will get it free of IHT.

I gather that under new rules, they still haven't decided what, if any, IHT charge there would be on the pot value after age 75. I suppose we're best sitting on our hands for the moment or should he establish the mysterious ASP ASP (!) - any views from the experts?

Bump (when you've finished arguing!)

Or does this need a new thread? (Though I gathered that an Alternative Secured Pension was a sort of diluted SIPP!)

deemy2004

I put money in SIPPs cos thats where the employer shuv's his 7% of gross salary pensions contribution.......... :rolleyes:

Otherwise your right, I would not put a penny even in SIPPS.

P.S. I am far from obsessed with SIPPS that barely account for 10% of my portfolio.

Titan

deemy2004 wrote:

Offcourse the so called experts want people to be and behave like sheep makes them easier to fleece ....... .. Any product that takes them out of the loop such as SIPS will be jumped upon with vigor and venom for there is not one penny in it for them...

Passing a !!!!!! easy exam in a few months does not exactly equate to years of hands on experience ......

Not that SIPPs take professionals out of the play... there are very few people investing in SIPPs without an advisor, there are a large amount of them investing with advisor and investment manager at discrectionary basis (most expensive) so, to be honest, they have no REAL control of where the money goes and how it is invested.. incidentally these plans seems to greatly outperform against those managed by the beneficiary alone... Perhaps a bit of expertise is needed after all