Anybody got any proper knowledge of pensions?
before I go and pay for advice.
As some of you are aware i am probably going to be redundant after Xmas.
However, there is a possiblity that I will keep my job.
If I do, then the company has already decided to close its final salary pension and is instead offering a money purchase sheme, with them matching my contribution up to a max of 5%.
I am sure that i have read/ heard that many people are better off going back into the government SERPS scheme rather than joining a money purchase scheme.
What I am not sure of is if this includes company schemes to which they contribute or if it refers simply to private pensions with no company contribution
If i do survive the chop I have about 5 years to finishing.
looks like a long reading session to wade thorugh it, gotta be done though.
Rog, will probably finish up going down that route.
But the last time I used one he was fairly insistent on advising me on all my money rather than just the part I wanted advice on.
Mostly happy to keep savings in ISA’s rather than investment.
Can’t do too much untill I get a statement from current pension provider in next few weeks.
I am sure that i have read/ heard that many people are better off going back into the government SERPS scheme rather than joining a money purchase scheme
It’s not an either/or decision. You can contribute to a pension without contracting out. This is a very complicated area but, with only 5 years to go, and the present financial difficulties, it will be an educated guess which will benefit you most. Obviously you will want to stay in their scheme to get their 5%.
Under some circumstances you may even be better off if you are made redundant so you need to know the terms for that too.
You don’t say what is happening with the existing scheme. Is it being closed to new entrants, or is it being wound up? If the latter then you MUST get advice to be sure that you are not ripped off.
present pension is being " frozen" in effect.
frozen= earning 3% or inflation to max 5% per annum.
Future payments are guaranteed based on earnings to present and benefits already accrued plus earnings from now till NRA.
The new scheme would operate seperatley from the old.
But if I understand your reply, santa, then I can join the new scheme and also pay into SERPS at the same time, yes?
ROG:
My advice would be to get an independant free financial adviser - I have and it is one of the best moves I made.
Just ask if they deal with everybody and not a select few.
Whole of market I presume you mean the best way to treat independant APPARENTLY free financial advisors is to listen to them take their advice but go direct to the company they recommend that way you dont pay their fees on top of what they recommend.
Del, where Financial Advisors are concerned there are Two types. One will work for a commission, which he gets from the Insurance Company that he guides you to. His decision will be based on the amount of commission that they are paying him. Which comes out of the money that you pay them. His decision is likely to be based mainly on what is good for him. The other type will work for a fee which is a one-off payment that you agree on when you start.That way he is more likely to base his advice on what is best for you.You must remember that whichever route you and your advisor decide to take. it is probable that your investments will , at least partly, be exposed to the ups and downs of the Stock-market. At present,with the Stock market at a very low level, this is in your favour. Shares are cheap. Your weekly/monthly investment gets you more shares per pound of your investment.What you hope and pray for is that when you retire, in 5 years time, the Footsie 100 Share Index is back up to the level it was at before the recent CRASH.that is at 6000 or above. Indulging in the Stock Market is all about TIMING. it is about knowing when to get in, and more importantly, when to get out. With regard to Serps. I was never in a Company Pension Scheme.I never opted out of Serps, ( mainly because I did not know anything about these thing, until I was about 10 years off retiring)For the last 31 years of my 50 year working life. I was a waggon driver. I retired in 1999. My State Pension , at this time ,is £207.32 per week.On top of that, I have 6 Personal Pension Annuities that pay me a total of (before tax) ,£198,60 per week. I am NOT boasting. I am trying to prove a point to help you.I never had any advice from any financial advisors. What I did, was to read the financial sections of The Times, the Daily Mail, and The Mail on Sunday. they are all you need . Also check out the “Pension” section of this site www.thisismoney.co.uk If you get stuck in to the studying, you will find that it could be worth your while. Good Luck. I hope that this helps.
That is interesting advice Buycrider. Do you mind me asking what kind of investment one need to make to get around £200 per week?
I have read that absolute novices often make as good if not better stock purchase decisions that ‘pros’. There are theories out there which claim that it’s purely a matter of luck. You can buy an Unit trust where the stocks held in that trust are ‘carefully’ chosen by a pro. It is common knowledge that they hardly ever beat a fund which just tracks an index such as the FTSE. So, I agree, why not cut out the middle man with his commission requirements and do it yourself by spreading the risk amongst good FTSE companies for example and keep on re-investing the dividends which they pay until retirement.
The only advice I can offer is that you join a pension scheme as soon as you start work. When I was in my twenties I thought I wouldn’t live that long when I was in my thirties I never gave it any thought when I was in my forties, ‘I thought about it’ when I was in my fifties I considered I was too old … and now well, too old to get a job, not old enough to retire so now the only pension I will get when I retire is the state pension.
I never have understood this pension thing . Are all these firms Norwich Union etc in this game because they love and care about me or are they looking to make money out of me ? When I,ve paid all this money in they give it back to me in dribs and drabs when I get to 65 hoping I wont make 70.
I know the housing market has took a bit of a knock at the moment but I,d still be tempted to buy a small terrace house rent it out and then sell it when I was 65 . at least YOU are more in control of YOUR own money.
lefkasman:
Exactly Rog . My mums in that boat. Whats wrong with doin a day on the agency to build ya money up anyway?
They deduct any money earned from the benefit allowance but let the person keep £5 if the amount earned goes over the threshold so it is likely that £55 will be lost in benefit
Work for £55 and gain nothing
Minimum wage is about £6 per hour so 8 hrs X £6 = £48
£60 - £48 = £12 in benefit - Work for nothing
Thanks for that Del.
Now for Ader1, s question.
You have seen my figures for my Annual Pension Income. Insofar as the Personal Pension Annuity income is concerned, these are the figures. I had a Total Fund from my Personal Pensions, of £162,000. I was allowed to take 25% of this as a Tax Free Lump Sum.I got £40,500 from that. Which left £121,500 with which to give me a Pension For Life, or for 10 years after my retirement date (9/12/1999), At the time that I retired, I had an Annuity rate of 8.5%. this meant that I get £121,500 divided by 8.5 =£10327 per year pension income. = £198.60 per week. At present, the Annuity Rate is about 7%. Now to answer your question. This means that to get £200 per week Pension you would need.a fund of which 7% is £10,400. That is 10,400 divide by 7 = 1485.71 =1% therefore your Total Annuity Fund would need to be 1485.71x 100= £148,571. which would mean that when you add to that fund the 25% Tax Free which you are allowed to take, would require an initial Total Personal Pension Fund of £198,100 at your Retirement date. To get what I got , I had packed in Smoking, and Heavy Duty Bevvying, and I worked every hour that God, and the Fuse on my Tacho allowed, Plus My wife,s Income from her job. All of which I invested in Self Invested Personal Pensions, to which the Government added 20p in every pound that I invested. I was also very lucky in that , at the end of 1999, the Footsie 100 index stood at about 6,200. If I had retired 1 month later, by which time the Stock Market Bubble had Burst, I would have LOST 38% of my fund. So you see guys, you also need a lot of luck. I also got full whack SERP, as I had always worked top hours, and that reflects in the £207 per week State Pension which I also get. To take up Rog,s point about the Means Tested bit. He is quite correct. I am eligible for nothing. Which is fair enough in my book. I do not need it. That is why I do not even have a Free Bus Pass. I read it somewhere recently that the best way to be is this. Do not ever work. Have lots of children. Never buy your own home .Smoke and Drink, and spend all that you get given by the State,and Bingo!!. the State will look after you for the rest of your life. That is the way that the Communists did it. That is why every former Communist State is now ZB,d. It is the way that this country seems to be heading.
Good Luck to you all.
My advice would be to dump pensions.
They encourage you with all these schemes and then take it back so it’s practically worthless.
Gave up paying into one 5 years ago.
I think that if I was starting out now, I would simply put my money into cash ISA’S.
putting in £50 per week every week for 40 years earning 3% would leave you with £188791.91 in cash.
going to the present limit of £3600 per year (£70 per week) at the same interest rate would give you £283187.71
of course you have to take notice of inflation in this
But fun to play with the figures anyway
when I was in my thirties I never gave it any thought 
when I was in my fifties I considered I was too old 
… and now 
well, too old to get a job, not old enough to retire 
so now the only pension I will get when I retire is the state pension.