Workplace Pensions

How is everyone getting on with the involuntary enrolment of the new workplace pensions? More to the point, are they going to be worth it?

Having spoken to many drivers about to retire in the last decade, the money they’re being offered after they’ve paid in all their lives just seem to be scandalous.

I’m pushing 30, and really should be looking into planning for after that final day of work. Are pension schemes worth paying into? Or would I be better carrying on saving money, or possibly putting it into property? Any advice would be appreciated.

I am 25 years older than you and have paid into a pension for maybe 30 years but when I get my forecast telling me what I may get back I wish I had never bothered. You get tax back on what you put in but pay tax on what you get back which should be more.
I bought a house 10 years ago for £80000 it’s now worth £110000 and that’s been in a bad time for house prices, I have also had £6000 per year in rent form 2 good tenants. if I were you get a house.

Reubs766:
Are pension schemes worth paying into?

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Yes.
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Thanks for your responses so far guys. Quite a contrast. I already own a house. My partner also owns their house too.

I’ve always avoided pension schemes like the plague as I’ve always thought they were pretty much a waste of time.

Any more views on them? How do people feel about the new workplace pensions? Of course, it’s gonna be better than nothing when we come to retire, but I can’t help but feel we’re just gonna be seriously ripped off.

For those aged 30+ it seems that to get a decent private pension a third of net earnings needs to be put into it

If you get to state pension age and are renting then be very careful about using the private pension unless it takes you well over any benefit level because the first thing that happens is that any potential benefits are cut pound for pound with the private pension

One example would be a retiree who is renting and entitled to say £100 per week in benefits but receives £80 from a private pension so they then get £20 in benefits … that will save the country some money but the individual has lost out especially when compared to another who did not save for a pension but enjoyed their money instead

Everyone has to decide what will be best for them on retirement as there is no one size fits all but that means having a crystal ball !

Some very good points made there ROG. Of course, we should all choose to be responsible for our own financial well-being when we retire, but why should any of us work and pay in for our entire working lives just to get similar amounts of money back to those who have chose to enjoy their money instead? Maybe it’s just an easy way of the government freeing up some much needed cash?

The trouble with pensions is that the results are way ahead in the future, the govt of today will be forgotten together with their lying conniving traitorous leaders (WMD anyone) and will be blamed when your pension fund gets plundered by another Gordon Brown wide boy 20 years hence, or indeed plundered by the unelected dictatorial EU Cyprus style when the banks are verging on going bust next recession around.

You’re not the only bugger wondering what to do but who do you ask?..those financial experts have vested interests so they’ll tell you what youi want to hear, politicians couldn’t tell the truth if their miserable bloody lives depended on it, you might just as well write your options down and throw a bloody dart at the list.

Property does seem to be a good bet over a long period of time, but that could change if and when Eastern Europes wages and standards come up to ours…or rather when ours drop to theirs, and a lot of the decent immigrants bugger off home creating a housing surplus, no bugger with any sense would want to live in this overcrowded multi cultural hell hole if they could have the same living with space to breathe in their homelands…obviously in practice we’ll just replace those hard working eastern eurpoeans with spongers gang rapists assorted criminals and religious extremists from further away (Calais), but whether you’d want to rent your pension pot to them is debatable.

MoneySavingExpert would be as good a place as any to peruse and ask the questions in the relevant forums.

Juddian:

I’m too bloody old to get an effective private pension pot and never worked anywhere with a final salary scheme, but we run our lives on no debt whatsoever and living within our means, we own outright our own home which is far too big for us so downsizing is an easy one for us when the time comes, i’ll probably have to work part time to boost the state pension but then since when have genuine working class people ever lived the middle class live, we sure don’t expect it when we retire.

Thats the only advice i can really give, pay your own house mortgage off ASAP, don’t take out loans, don’t buy new cars on the never never or leasing deals, don’t keep those wide boys living in luxury in Sunningdale with their trophy wives, all living off interest being paid by real working people.

Anything else you do, the best of luck to you.

Hmm…meant to edit and quoted instead, plank…

You have to ask yourself if it is such a good thing why is it being made auto enroll? Look at some of the recent news, and I mean in the last week (JP Morgan fined by regulators here and in the US, exposure of very expensive management charges levied by some fund managers), and you can see that the financial services sector is in no mood to change from the practices that have bought the world economy to it’s knees, especially since they now know that governments will bail them out (protect their friends). Consider also that should you need personal care in retirement you will be screwed again, so you having assets are just another income source for the scumbags of government and ne’er do wells that populate the financial services industry.

My place are closing our final salary scheme and at the moment the consultation has been extended. As far as I can see the new “defined contribution” scheme has only 1 redeeming factor and that is the 6 x salary death in service benifit(up from 4 x in the current scheme). If the new scheme was so good why are the company having to make a contribution to the individual pension pots as a “sweetener” (other adjectives are available). Given that I am living with a lifelong illness that will shorten my life I can only hope to die before I retire.

Again, some very good points being made. I once talked about it to my father. Fathers have an infinite amount of wisdom, and his knowledge suggested that whatever I choose to do, the government won’t let us starve, or go without heating. Sure, we may lose all the things we’ve worked hard for, but they’ll never let us die under poverty.

He did also come up with the same points as Juddian, just get the mortgage paid at the very soonest opportunity, and don’t be tempted by big flashy cars on the never never. Of course, paying the mortgage off much earlier is definitely something I’m interested in, but I’m quite car mad too. Hell, when I bought my house, I should have bought a garage with a bedroom attached.

Again, Juddian, thanks for your advice.

Wiretwister, thanks for your input. I’m sorry to hear about your illness. I agree though, they’re not enrol long us all into this new workplace pension for our benefit. It is purely to save them a fortune by letting us pay for what they’d only have to give us anyways.

Get planning now, you will be glad you did.

I’m 61 now,
I paid into a private pension for a few years at one company i worked at.
BUT, Ive got the opinion that I have given various governments loads of tax and N.I. over the last 45 years of my working life , with only about 10 weeks on the sick when i hurt my back.
So it will be their turn to look after me when I retire…

Trukkertone:
BUT, Ive got the opinion that I have given various governments loads of tax and N.I. over the last 45 years of my working life …
So it will be their turn to look after me when I retire…

So many think the system works that way, as a sort of saving scheme, but it does not

What the Treasury get now needs to balance what gets paid out now - that worked out better when more were in work than were retired etc but in this current climate with more living longer and more unemployed that balance is getting harder to do

We need less people in the UK as we cannot make more jobs and the jobs that there are need a proper wage which takes workers above benefit levels which in turn means less benefits paid out and more tax/NI being paid into the system which would then be better for those on state pensions and would probably boost private pensions

I have an IFA that loks after my pension and it’s doing OK at the moment ( value continues to rise), but frankly the forecast for the amount I receive for what is in the pot, doesn’t seem an awful lot.

telegraph.co.uk/finance/pers … n-pot.html

Currently the estimates for a 100k pension pot vary between about £3600.00 - 5600.00 p.a… How much will the workplace pension have in the pot at the end, if, and that’s if!, you pay in every month until you retire.

My accountant set up the pension around 25 years ago and ceased to look after it following some regulation changes and his advise is to pull it completely and re-invest it.

I think you can only go with your gut feeling, no-one can tell you what will happen in 15 year or so when I retire, when you are 30, it’s even more difficult to predict.

albion:
My accountant set up the pension around 25 years ago and ceased to look after it following some regulation changes and his advise is to pull it completely and re-invest it.

The trouble is that you cannot just ‘pull it and reinvest it’ unless it is in another pension scheme and none of them are doing as well these days as they were.

I stopped paying into my private pension after 25-odd years when rates started dropping a few years ago and have been buying into various share schemes and other investments - even dabbled in Gold and Silver over the years. So my advice would be never to rely on just one source of retirement income, especially as the current rules mean that, once you retire you are forced to buy an annuity with the bulk of your pension pot and, as mentioned, the returns on these are getting worse, especially as average life expectancy is increasing.

Oh, and remember that truly ‘Independent’ Financial Advisors are very rare. Unless you pay a fee up front they will recoup their money from whichever organisation they get you signed up to - so definitely not ‘independent’.

So, it would appear I’ve got a lot of reason to be sceptical about these pension schemes. I think Tallyman is right, I’d be better keeping investments of my money in a number of things - that way I’m not quite running the same risk as keeping it all in the same pot and the value not being worth the paper it’s written on.

Thanks for all your thoughts guys. I’ll take it all on board.

Depends on your age really. I’ve been in my company pension for ~5 years, I contribute 25% of my salary, work contributes another 11.5%… I do it via “salary sacrifice” (deducted before tax & NI), so that I also pay less NICS and PAYE - reducing my net ‘loss’ each month by contributing quite a high amount. We have a range of options, most people are in the ‘Balanced’ plan, which is ■■■■-poor IMO.

I studied risk management @ uni, so i have a handle on investments etc, therefore I used the ‘self-style’ option and have it 100% in high-risk funds. I currently am seeing a return of 22% overall, and 195% return on MY investment. A shed load more than if I had the money in the bank.

When I get redundancy in December, I’ll be transferring my pension fund to a SIPP, and managing it myself from there on. SIPPs give you the option of buying and selling your own pension funds, putting you in full control of it - although, you do need some investment knowledge to make this work for you. Employers can also contribute to SIPPS, but not all will.

One point I’d make… if you are getting the option of a workplace pension, yes take it… and if possible use the salary sacrifice option. it’s not for everyone, but should work out well for most. Have a look here:

moneyadviceservice.org.uk/e … ce-schemes

Also, don’t just go with the ‘default’ option, explore what other options are available.

If you’re going to self-invest, your provider will probably be able to recommend some good funds… take some advice if you feel you need to, but bear this in mind:

monevator.com/income-units-versu … ifference/

HTH

tallyman:
once you retire you are forced to buy an annuity with the bulk of your pension pot and, as mentioned, the returns on these are getting worse, especially as average life expectancy is increasing.

Not so, take a look at income drawdown. Again, it’s not for everybody… but worth considering.

moneyfacts.co.uk/guides/retireme … own160211/

telegraph.co.uk/finance/pers … wdown.html

Pensions are the biggest con going. If I were you I would be looking at houses.