Advice on Britannic Personal Pension Plan? Am I Stuck with Nothing?

ambro_3

resolved the problem

contacted britannic who will allow us to put the account in holiday, indefinetly.
meaning no money will be lost and the balance will be allowed 2 gain any interest & bonuses untill the i reach the retirement age.

thanks for all the help people!

EdInvestor

Hi ambro

You can't extract any money from a pension until you're at least 50, it's one of the disadvantages of pensions.

What you can do is move it to a better fund within Britannic, or a better fund at another company and see if you can get it to perform better, if appropriate. You started investing in this plan just as the stockmarket crashed, so you shouldn't expect too much of it, though it should have started to improve now.Has it?

But what these new forecasts are telling you is that you need to save more:50 quid a month won't cut it: low inflation and low interest rates mean that returns from the stockmarket are likely to be lower and annuity rates are lower as well.

If you are a basic rate taxpayer and don't have access to a pension with employer contributions, IMHO it is better to save for your retirement in ISAs rather than a pension - to my mind the restrictions outweigh the tax advantages (which are not that great, mostly the tax is deferred).Pensions are a better deal for higher rate taxpayers.

But which tax wrapper you choose isn't so much the point: more importantly, you need to put away more than you are now.

ambro_3

thanks for the info!

dunstonh

You can't extract any money from a pension until you're at least 50, it's one of the disadvantages of pensions.

Or advantages as it prevents people spending early money they shouldnt, as has been shown with the credit boom.

If you are a basic rate taxpayer and don't have access to a pension with employer contributions, IMHO it is better to save for your retirement in ISAs rather than a pension - to my mind the restrictions outweigh the tax advantages (which are not that great, mostly the tax is deferred).Pensions are a better deal for higher rate taxpayers.

This is eds opinion and may very well be correct but it also may be very incorrect so you shouldnt follow this as advice as your circumstances may be different. Childrens/working tax credits, for example, can be increased due to pension contributions but not ISA contributions.

But what these new forecasts are telling you is that you need to save more:50 quid a month won't cut it: low inflation and low interest rates mean that returns from the stockmarket are likely to be lower and annuity rates are lower as well.

£50 pm is almost so low that its not worth doing it. Unless you are 18 or have other income in retirement to fall back on, you can't really get away with £50.

You started investing in this plan just as the stockmarket crashed, so you shouldn't expect too much of it, though it should have started to improve now.Has it?

If this is the case (assuming stockmarket fund) and it almost certainly is, then this should not be viewed as a bad thing. A stockmarket crash in the early years of a regular savings plan that invests in the stockmarket is a very good thing. Yes, it does mean that the amounts you paid in before have gone down but it means everything you buy after is being bought much cheaper than before. Over time, as the market recovers and goes on upward, it will be those cheaper units that make the most money.

EdInvestor

DH

If you are a basic rate taxpayer and don't have access to a pension with employer contributions, IMHO it is better to save for your retirement in ISAs....

This is eds opinion

Just in case you don't know, "IMHO" is short for "In My Humble Opinion"... :rolleyes:

dunstonh

I was just clarifying it. Doesnt do any harm. Some people may think you know what you are talking about dig dig

DavidLaGuardia

EdInvestor wrote:

IMHO it is better to save for your retirement in ISAs rather than a pension - to my mind the restrictions outweigh the tax advantages (which are not that great, mostly the tax is deferred).Pensions are a better deal for higher rate taxpayers.

But which tax wrapper you choose isn't so much the point: more importantly, you need to put away more than you are now.

minor points: You may want to consider the fact that pensions are protected from creditors. ISAs may not go beyond 2010 we don't know yet.

A major point: If you compare saving into an ISA with a pension. Ignoring the fact that a pension is inaccesible which may be good or bad (since we are talking about retirement and don't want before anyway)
£1 goes into ISA it is worth £1 x growth
£1 net into pensions is worth £1.28 x growth
Take off the tax free element that is common to each
Pension = 0.96 x growth
ISA = 0.68 x growth
If we assume this part of the pension is fully taxed at 22%
Pension = 0.75 x growth
THAT'S MORE THAN 10% GREATER IF ALL IS TAXED
Compare stakeholder charges to average ISA charge and this 10% can get much bigger (ok that may not be relevant)
Additionally if the pension is drawn long before state pension occurs there may be a significant perioud of benefits drawn tax free (such as phased-drawdown where actual taxable income is maintainined below personal allowance).
ISAs are a good tool but pensions should in most cases be better.