Pension pots
- 12 September 2011 19:54126198rather a worrying report.
http://www.express.co.uk/posts/view/270740/Pension-pots-slashed-by-75-per-cent - 12 September 2011 20:56126205More sensationalism at a time when there isn't much news around.I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
- 12 September 2011 21:24126207a degree of exaggeration in the story but still of concern to people expecting a comfortable retirement.
- Keith Sansum1
- Location: london
- Registered: 25 Aug 2010
- Posts: 23,942
13 September 2011 18:10126323yep its going to get harder
retire later
less time to enjoy retirementALL POSTS ARE MY OWN PERSONAL VIEWS - 15 September 2011 00:39126547Looks like capitalism as we know it today is on its way out.
What a rip-off it all was!Chanters, Drums and Drones Potty Time http://youtu.be/99fMqpjnXYA
Rule Britannia!
Kent First http://youtu.be/04F3mAP3fV4 Keep banging on http://youtu.be/qYCU_SKmkGQ - 19 September 2011 15:47127212OK, I did not read the full report, I don't have to because I know what they are saying just from the few words. Forget the politics of all this some pension facts:
1/ Defined benefit pensions have been under pressure for a long time from mortality rates and 15 years gilt yields falling. Add to that the cost of such schemes largely due more and more of a regulatory burden being thrust upon them and the imposition of taxes it is no wonder they are becoming rarer than rocking horse poo.
2/ All pensions, in a way, depend in investment performance except statutory schemes such as the Civil Service pension that is funded largely by our taxes. Those most openly affected by investment performance are Money Purchase Pensions and there are many types of these including personal pensions and stakeholders.
3/ The charges on pensions have been reduced over the years and long gone are the bad old days when people would lose the first two years of their pension in charges. Cheap pensions are available on very fair terms. Even a commission based adviser can set up a Stakeholder Pension with just a 1.5% annual management charge for the first 10 years while the pension is small reducing to a maximum 1% after 10 years when the pension is larger. Make no mistake that is cheap and fee based advisers can get them cheaper still.
Cheap is not always best though. You get what you pay for.
When my fund got to a reasonable size I changed from a cheap scheme to a more expensive one in order to expose myself to the very best investment managers. I would not dream of putting my pension money into a cheap stakeholder with a six figure sized fund (or even a high end 5 figure sum at that).
The press though will always look at the projections and the impact of charges if they want a story. They forget that to get good performance it has to be paid for and no-one any good is going to run your money without being paid properly for it. With stories such as the one above it is all about the cost relative to theoretical returns and not about the real life returns.
Remember as well. Retirement depends on building up a sum of money that you can use for that purpose. Pensions are just one of the tools available for doing so. They are a valuable tool though, simply because for £80 spent everyone gets £100 invested, even non-taxpayers. Higher and top rate taxpayers can get more tax relief on top.
A mix of savings and investment vehicles is the best approach to saving towards retirement but, sorry, I have to be paid to give more details than that, if only because regulatory restrictions kick in.
- 2 November 2012 12:21199081a further blow to future pensioners.
http://www.telegraph.co.uk/finance/personalfinance/9649614/Pension-pots-to-plunge-under-new-rules.html - 2 November 2012 13:22199096This report is utter and total bunkum.
This is about a cut in projection rates and is nothing to do with what real actual returns can and/or are expected.
Simply because projection rates are cut it does not mean that investments will follow. This is why three rates of return are quoted on illustrations. There has always been a wide gulf between projections and what really happens and it is not all 'one way traffic'.
I think the cut in projection rates is wrong headed as this will further undercut attempts to get people saving. The big problem we have is that people are just not investing enough into a pension (or in other ways). The naive think people might put more in if they are projected to get lower returns but it works the other way around when they ask 'why bother'. There is a balance to strike and this move takes that balance too far in the wrong direction. Too many people in ivory towers making rules.
A separate matter are the actual investment rates of return being achieved. Here clearly the markets and the economic climate comes into play. However, good asset allocations and fund selection backed by good advice can get people's money working for them.
One reason for a cut in projection rates may well be the government NEST scheme. This has a very limited investment strategy based on low risk. This may be right and proper for those getting close to retirement age but is wrong for those who are younger and is likely to lock them into very poor returns. - 2 November 2012 15:47199141This matter will for part of tomorrow's Money Box Live on Radio4 at noon or online here...
http://www.bbc.co.uk/iplayer/episode/b01nl8g3/Money_Box_Live_Energy_bills/
[that will be last weeks programme that is up, it should change tomorrow]
" Pension Projections Cut
If you are expecting your pension savings to grow at 7% or even 9% a year then you may be disappointed when you retire. The Financial Services Authority confirmed this week that it is reducing the projection rates that firms are allowed to use. Instead of 5%, 7%, or 9% a year which they currently show new rates of 2%, 5% or 8% will have to be used from April 2014 - and can be used from April 2013. That will mean projected values of pensions will be a lot lower. And to get to a certain sum will mean saving more. "Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing. - 2 November 2012 15:53199144All my saving and pension went long before I packed up work,I should have done what I was told to do at the time keep your cash under the bed at home.
- 2 November 2012 15:59199145Vic - you lacked good advice quite clearly.
We are heading for a demographic time bomb as people are just not investing for later life as they should. There is a generation coming who for the first time will be poorer than their parents at retirement. It is a terrible prospect and we need to be encouraging people to invest as soon as they start work and to regard it as important as paying for a car or a mortgage. After all one day they will be depending on it to feed, cloth and keep them warm. - 2 November 2012 16:04199147No that is what happen I was told it was the best advice at the time,anyway in the pass,we move on,I am going up next week to see the part of my family that done it right and still doing it.
I had my own house down at the bay but ended up losing the lot, but I was part to blame for that. - 2 November 2012 18:11199190I agree with Barry - and start a pension as early as possible; these days you can take your pension pot with you when you move jobs.
Roger - 2 November 2012 18:56199200I do not agree like most things today it is not a save way.Keep your own money,that way you will get it all back and no one to take it off you,just think again what happen to the banks.
- 2 November 2012 19:00199203Sorry Vic, that is the wrong way to think. When you have a pension with a company they pay into it too, so the value doubles up and of course if you start early enough, you will have 35 to 40 years to pay into it and build a comfortable pot.
Roger - 2 November 2012 20:10199218Quite right Roger.
Clearly you did not get good advice Vic. Possibly back in the old days when so called ;'free' advice was the most expensive kind of advice. - 2 November 2012 20:15199219Maybe we will see, but I might not be around to see,but you can turn round and say,Alot Vic said has turn out true.
- Jan Higgins
- Location: Dover
- Registered: 5 Jul 2010
- Posts: 13,888
2 November 2012 21:10199226If you do not want an ordinary pension plan you could put the money into something more tangible like an insured work of art much safer and more profitable than money under the bed.
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I try to be neutral and polite but it is hard and getting even more difficult at times.
------------------------------------------------------------------- - 2 November 2012 21:22199228Mrs Jan how right you are part of my own family done that,and today they are one of the mega rich that has been talked about on this forum today.We are off to see them soon and love going in that big old house where the Duke of Wellington stay when home from the wars.And the grounds that go with it.But the family have worked so hard and still do to get it 7 days aweek.It was the family home of one of Dovers MPs he was in service in Dover as a MP for about 14years and was very good.