Pension Myths and Misunderstandings

Cobbler_tone

https://forums.moneysavingexpert.com/discussion/comment/82181463#Comment_82181463

The amount of misinformation online about almost any topic is vast. Unfortunately, popularity and accuracy are not always the same thing. Forums are great for discussion and personal experiences, but they are a poor substitute for authoritative guidance. If people choose to treat a chat forum as Citizens Advice, that's a risk they're taking rather than a failing of the forum itself. And now someone can have a pop at Citizens Advice.

Grumpy_chap

Eactly. You die after 5 years, the capital is gone. Invest in a balanced portfolio and live off dividends and perhaps cash in some investments, there is still capital left in your estate to pass on.

The purpose of a pension is to provide for your old age not to provide a fund for your descendents.

Tenuous - when choosing an annuity, the single mainstream alternative option is to draw down an invested pot according to one's preferred timescales, so it's a straight choice between two valid alternatives.

It does not have to be a binary choice between annuity or drawdown. Indeed, if the total fund is large enough, then an annuity to provide a comfortable base level of retirement and a flexible draw down pot to supplement that is a pragmatic compromise taking the best of both worlds.

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/82181335#Comment_82181335

The problem is we are dealing with people. What many people would consider mythical is absolutely real for many others - religion is one example perhaps? People set great store in what others contend to be mythical, and no amount of coherent and logical argument will persuade them otherwise. People are not machines - which is fortunate for me, as were it so, my un-machine like Mrs would have dumped the pragmatic SOB long ago.

vacheron

The one that triggers me most (which I've heard from far too many people over the years):

"I don't need a pension. My house is my pension!"

….. you mean that 3-bed semi with an interest only mortgage that you're also living in? 🤷‍♂️

katejo

https://forums.moneysavingexpert.com/discussion/comment/82181882#Comment_82181882

Obviously not if the mortgage is interest only! I would never have considered that type of mortgage.

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82181882#Comment_82181882

🤣Or "I don't understand pensions, I understand property" when they clearly don't. Property investment is far more complicated than a simple pension eg buying Vanguard target retirement 2040 or similar.

Or "I don't trust pensions, my Grandad lost his"

booneruk

Personally I've got short shrift for the "Pensions are a con!" crowd. Err, no - future self will hate you for thinking that way. No one's conning you.

Brie

https://forums.moneysavingexpert.com/discussion/comment/82181933#Comment_82181933

Well some of them were little better than a con due to mis-selling! i.e. the badly sold personal pensions late 80s/early 90s.

I worked on a pension review and the stories I heard about how people were convinced to opt out of their work scheme in preference for a personal pension were shocking. The worst in my opinion was the one where someone said that their mate's cousin said he'd buy the drinks all night if everyone just signed a bit of paperwork. Thank goodness for better regulation!!!