Pensions - Do you have one?

[PeterNem]

My plan when I start work is to start contributing to a pension, but probably not much at first.

At the company I'm going to work for, if I contribute 1%, they'll contribute 3%. This figure alters depending on age. Although not much in %age terms, this should get me going a bit as it'll be on a salary of 32k

your age | if you pay at least | company pays
<25 | 1% | 3%
25-27 | 1% | 4%
28-31 |1.5%| 5%
32-33 |2% | 6%
34 |3% |8%
35-37 |4% |10%
38-39 |4.5% |11%
40-49 |5% |12%
50-60 |6% |14%
(% of Pensionable Salary)

When you join the Plan an individual Personal
Account is set up on your behalf. Contributions
from you and the Company are paid into your
Personal Account and invested within a choice of
funds.
Your Personal Account is kept legally separate
from the Company’s assets and is held under trust.

I'm assuming that means if the company comes into harship it can't rape and pillage it's employee's pension funds.

 

[Desmo]

Oh, I forgot to mention my backup plan. I'm going to retire at 65 and then drop down dead

 

[Jamie1984]

ive never considered joining the company pension scheme as i dont foresee me staying there much longer....but from what some have wrote here its a bit of a hope and prayer to put money into schemes which may not be around when im old enough to retire!

 

[Nismo]

Yup, have a local government jobbie as part of working for a College.

Will arrange my own through a company like CIS if work dosnt provide one.

 

[bottletop]

I personally don't regard pensions very highly....you pay in for 40 years and at the end you find out your savings have been inflated away by the government and the money's worth a pittance - look at the people retiring now who receive a couple of grand as a lump sum and a hundred quid a month after paying in all their lives. At the time they set their pensions up £1000 was enough to buy you a house, now it'll get you two weeks in spain.

The Telegraph has an article today about the public sector pensions deficit standing at around £1 trillion, or £40,000 per household. The chances of wringing an extra 40k out of every household are slim, so public sector workers will have to accept greatly reduced pensions when they retire...it may be index linked now but it may well not be by the time you want to collect on it!

All these pension systems work so long as there are more people joining at the bottom of the pyramid than there are at the top collecting. The fact that people are living longer at the top and fewer are joining the pension system at the bottom means long term pensions are in trouble....we have to accept that you can't pay 5% of your salary in for 30 years and expect 50% of your final salary back for the next 30.

 

[Sequoia]

I don't have a pension. I made up my mind a very long time ago that I wasn't going to rely on one. I made my own arrangements. So I have investments, not a pension.

The upside is that I outperformed the very best I could have dreamt of from a pension. The downside is that it was not easy, took decades of hard work, involved risks that often could have left me with nothing, and is usually rather less tax-efficient than pension plans. Also, if an employer scheme includes an employer contribution, that gives a large head-start on anything market investments will achieve.

That ain't gonna help you when the revolution comes, boy.

Depends where the property is. The UK is not, in my view, the best place to be buying right now.

... I would advise investing your money in property; it's unlikely that you will do worse than I did and very likely that you will make a lot more.

I agree but ..... it isn't something to do with your eyes closed, and then are some unexpected gotchas.

If you really want to make the best from property, you need to be prepared to do the legwork, not just hand it over to an agency who rake off a large percentage, without taking any of the risk or having to stump up any of the capital.

And if you really want to get the best deals, you also need to be prepared to do the development work, and not expect to just buy somewhere and move tenants in the next day. So, the real money comes from spotting the buys where the property looks unattractive, but you have the skill and knowledge (or are preapredto put in the time, effort and risk to gain it) from buying a property where you know that your efforts will increase the property value by considerably more than the work cost you to do. That implies buying property that carries a risk attached, and that implies things perhaps going badly wrong. The bigger the potential profit, the bigger the risk of getting caught out by unexpected major problems.

You CAN certainly make lots of money in property. I did. But it isn't as easy as some TV programs would have you believe. Nonetheless, and even bearing in mind that UK property isn't the licence to print money that it has been for most of the last 15 years, there's still good opportunities. Just don't expect it to be easy.

 

[greengiant]

Should I be worried about the fact that I'm:

(a) 28 years old,
(b) own no property, and
(c) have no pension?

 

[VIRII]

That's why most new schemes are unit trust funds. Basically, you and your company pays into a fund, but it's managed by a third party and your company has no access to the money once its in there. Even if both the company you work for and the third party managing the fund go belly-up, the money in the fund is safe.

It also makes consilidating multiple pensions much easier and you can choose what the money is invested in (stock market, property, etc.).

Whilst that is true the future for pensions is still bleak. The money in the fund (just like an endowment) may not reach the full value that it was supposed to and may not even make half of what it was supposed to.

Lots of large companies are closing final salary schemes now, clearly they don't feel that they are likely to be able to pay people out. People are also living longer meaning that they are removing more from the pension fund. Less people are putting into the fund as well. All in all I personally don't think that pensions will amount to much - just like my endowment which is about 100k short. Joy.

 

[VIRII]

Should I be worried about the fact that I'm:

(a) 28 years old,
(b) own no property, and
(c) have no pension?

No. If you owned a property the Govt would merely tax you out of it when you get ill. You'll probably be made redundant at least once in your life and should you face 12 months out of work you can probably say good bye to your house.
Should everything go well and you die a sudden death then your kids will have to flog the house anyway to pay the ridiculous death duties and they'll end with very little.
This Govt see private housing as an asset, an untaxed source of potential revenue. The fact that you've already paid tax on everything you've earnt and bought doesn't stop them taxing you for it all over again when you snuff it.

 

[Piggymon]

Oh, I forgot to mention my backup plan. I'm going to retire at 65 and then drop down dead

No you're bloody not !!

 

[VIRII]

You CAN certainly make lots of money in property. I did. But it isn't as easy as some TV programs would have you believe. Nonetheless, and even bearing in mind that UK property isn't the licence to print money that it has been for most of the last 15 years, there's still good opportunities. Just don't expect it to be easy.

Buying land doesn't hurt either. No rental income but no upkeep costs either.

 

[VIRII]

No you're bloody not !!

How are you going to stop him doing that?
I have visions reminiscent of a film called "misery" and the ankle/sledgehammer scene.

 

[Piggymon]

How are you going to stop him doing that?
I have visions reminiscent of a film called "misery" and the ankle/sledgehammer scene.

Nooo .. padded room .. much more fun !

Sorry for the OT

As Desmo mentioned I have started up a pension in work , I pay in 3% and they match it

We also still have PiggyPad in Swansea making a nice profit every month from the nice Polish dude who has rented it out - Hope to hang onto it for as long as possible ( My Parents have a 50% stake in it and that is kinda their retirement nest egg )

 

[VIRII]

We also still have PiggyPad in Swansea making a nice profit every month from the nice Polish dude who has rented it out - Hope to hang onto it for as long as possible ( My Parents have a 50% stake in it and that is kinda their retirement nest egg )

Yup that's my plan for my daughter and number 2 child when s/he arrives in August. Overpay my mortgage as much as humanly possible asap till it's gone and get a small flat somewhere and hopefully a second one as well.

Failing that it's take out a big insurance policy on the wife....

 

[Bes]

My company contributes 7% when I contribute 3%. I am contributing 10.5% at the moment but I may reduce it to 3% due to this possible 'black hole' and put the rest away in ISAs or similar... :/

 

[csmager]

Had a pension since 18. I'm now 20, still at University.

Think there's about £9k there now - not really sure, haven't taken a great interest. Just have a father/grandfather who look far too far ahead, it seems.