Pensions -v- Other Investments

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Pensions -v- Other Investments

Post  therrawbuzzin on Tue Jul 12, 2016 4:04 am

Tiny, a few years back we had a discussion about long-term investments, and in that discussion, you were more pro-pension, and I was for other forms of saving.
Given that pension advisors are now being told to project growth models including one at -3%, and that the average pension pot, (£30,000) now buys an annuity of under £1000 per year, (approx. £19 per week), what do you think now?
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Re: Pensions -v- Other Investments

Post  Onyougo on Tue Jul 12, 2016 4:15 am

Sadly most pensions now are a waste of money , you'd be better off investing it in a ISA


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Re: Pensions -v- Other Investments

Post  TinyHandsOfConcrete on Tue Jul 12, 2016 6:34 am

regardless of the recommendations you've read and onyougo's advice here's how i see it. i was primarily talking about occupation pensions where the employer is chipping in some cash - here's how i see it.

forgetting about any employer contribution and assumming basic rate tax releif.

I put £200 of my net pay into a pension and thechancellor of the exchequer comes along and gives me £40 on the basis that I can't touch that money till I'm 55. basically they're giving me back the tax i paid on the £200.

I've already made a profit of 20% and it's only day one.

I agree not all pensions saving is great and charges and bad investment decisions can erode the value but where else can i make a 20% profit so quickly?

When i come to collect it i can get a quarter back tax free. ideally if i've self invested and made some good decisions I'll have exceeded inflation and charges.
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Re: Pensions -v- Other Investments

Post  TinyHandsOfConcrete on Tue Jul 12, 2016 6:07 pm

annuity process are also an issue, I don't have current facts but if £30k gets you a pension of £1,000 the answer may be not to buy an annuity and use drawdown instead.
that way you access the £30k in chunks, perhaps £1,500 per year with the remainder staying invested - going to last you 20 years minimum and should you die in the period the remainder (unlike an annuity) is a heritable asset
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Re: Pensions -v- Other Investments

Post  therrawbuzzin on Tue Jul 12, 2016 6:24 pm

Onyougo wrote:Sadly most pensions now are a waste of money , you'd be better off investing it in a ISA


I have a "Club Lloyds" current account which pays me 4% on £5k + my wife, my wife and I and I have three current accounts with Santander, which, for a small fee, pay 3% on up to £20k.
Since we don't pay income tax, these amounts are paid gross, and net of the fee, but including cashback payments, the Santander accounts net ~ £50 pcm each, which is very like that achievable with an annuity, but the capital remains ours.
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Re: Pensions -v- Other Investments

Post  therrawbuzzin on Tue Jul 12, 2016 6:32 pm

TinyHandsOfConcrete wrote:annuity process are also an issue, I don't have current facts but if £30k gets you a pension of £1,000 the answer may be not to buy an annuity and use drawdown instead.
that way you access the £30k in chunks, perhaps £1,500 per year with the remainder staying invested - going to last you 20 years minimum and should you die in the period the remainder (unlike an annuity) is a heritable asset
Even still, a maximum usable amount of £28.50 per week, on a capital sum of £30k when emergencies arise, is nothing like the reward which offsets the flexibility of savings.
Furthermore, negative Govt. bond yields and evermore QE (QQE) are going to make the situation far worse.
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Re: Pensions -v- Other Investments

Post  Onyougo on Tue Jul 12, 2016 10:11 pm

A lot of low paid workers are being forced to take a private pension through government intervention
Sadly it's a waste of money for some
Adding it to a already poor state pension will take them over the threshold for receiving any help towards Dental or Optitions , Council tax & rent rebates
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Re: Pensions -v- Other Investments

Post  tonyusa on Wed Jul 13, 2016 12:05 am

my employee matched everything up to 6% up until this year when they changed it ..... where now they give 3% on 4,3.5 on 5 and 4 on 6
meaning i now lose 33% of the employers contribution .. as i'm 54 this year so giving that i have about 12/13 years to go .... i earn around 50k now raising about 3.5% per year so costing me about 1k a year now...when i retire they will have done me out of about 13K
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