Pension

Frodo2

Member
I remember starting mine at 21, a con man came around with his book of predictions, invest just £50 month and your be getting anything from 250,000 lump sum when you retire, depending on inflation he said.:cautious: Well i am now 50 and to date its value is around 35k.:( I decided to freeze mine and stopped paying into it, its still growing just slower than it was before, luckily i invested in property that will give me a decent return on investment in my retirement. Pensions should come with a gov health warning, be prepared to be disappointed and have a plan B.
So your 18000 invested over 30 years is now worth 35k, not a disaster, where I am pretty sure the rampant inflation required to get you to 250,000 would have ended in tears for many.
 

Campbell

Member
Location
Herefordshire
I took a partial draw down on a Private Pension last year, they do make it clear they really don't want you take it. You get loads of advice on how it can go horribly wrong for you and damnation awaits those who proceed. HMRC obviously dip their hands in first and then 'generously' hand most of it back, but over a year later..........;)
 

HolzKopf

Member
Location
Kent&Snuffit
There's a lot of negativity on here re pensions - some of it maybe well placed and based on experience. However, there is no doubt that we all need to think about how we're funding our 'retirement' / old-age - call it what you like.

We simply need to work out what we think we'll need money wise at whatever age we think we'll stop doing what we do and that calculation needs to factor in the physical side of what we do too. Ok, some maybe in a position where family coming through or employees can take over some of the physicality but in any case we'll all need money to live off whether that be a 'pension' from the State (not enough), savings (unlikely to last), investments (traditional paper based or rental income from cottages / land / buildings).

If you can work this out yourself, fair enough, but a good accountant in partnership with an ifa (and they're not all cheap suits and tin boxes) will advise you now for a future that suits you. It's not just about pensions, it's about money management - and that will include inheritance tax planning and what would happen to you and your family if you could no longer work before 'retirement' age.

There's plenty of sound advice out there. Just spend some time thinking about the future and once you have plans in place, you should only need to review and tinker on a yearly or six-monthly basis.

It's your life......
 

icanshootwell

Member
Location
Ross-on-wye
So your 18000 invested over 30 years is now worth 35k, not a disaster, where I am pretty sure the rampant inflation required to get you to 250,000 would have ended in tears for many.
No its not a disaster, but its not the golden nugget i was promised, what you need to remember you don,t get that as a lump sum when you retire either, its drip fed to you. All i,m saying is, it,s nice to be in control of your money and use it when you need it, a pension does,t let you do that.
 
Dad said the best pension was land
I would think property as in buy to let houses would have provided a far better return over my lifetime both in rental income and appreciation in value.
Not that houses are without their hassles and need a bit spending on maintenance.
Land is simple and certainly hasn’t been a bad investment, the advantage for farmers being that they can utilise it themselves and has a great advantage to working farmers when it comes to passing it down a generation.
But if buying as a pure investment to rent out I’m sure houses offer a better return.
 

icanshootwell

Member
Location
Ross-on-wye
I would think property as in buy to let houses would have provided a far better return over my lifetime both in rental income and appreciation in value.
Not that houses are without their hassles and need a bit spending on maintenance.
Land is simple and certainly hasn’t been a bad investment, the advantage for farmers being that they can utilise it themselves and has a great advantage to working farmers when it comes to passing it down a generation.
But if buying as a pure investment to rent out I’m sure houses offer a better return.
If you needed to raise a substantial amount of money at anytime in your life, you just sell the house, job done, you can,t do that with a pension.
 
No its not a disaster, but its not the golden nugget i was promised, what you need to remember you don,t get that as a lump sum when you retire either, its drip fed to you. All i,m saying is, it,s nice to be in control of your money and use it when you need it, a pension does,t let you do that.
What’s your annual pension statement forecasting your pension pot will buy you as an annual pension? A small proportion of what you’d need to get by on for sure.

I’m pretty sure you can take your pension out as a lump sum nowadays, 25% tax free, the rest taxable.
 

Bloders

Member
Location
Ruabon
If you needed to raise a substantial amount of money at anytime in your life, you just sell the house, job done, you can,t do that with a pension.
its not that easy to "just sell the house" though!

I have both, i appreciate im fortunate.
However, i did generate a comparison between investing in a pension on a 4% return and buying a house with 7% return.
As a higher rate taxpayer (which makes a massive difference), over the years, the pension forecast was significantly better. this was a forecast though...

As it is my pension pot, i can do what i want with it - draw it all out in one go when im 55, give it to my children etc. It is mine, not the governments (as I understand it)
As above, there are many ways to plan for your future, please consider several options. There are no free dinners, and there are lots of bad choices. There are also many good choices.
 

Nearly

Member
Location
North of York
If you've made the money in question, you should be able to trust yourself to make it provide a return on itself?
I'm all for a mix of investments but I'd like to be in control of most of them.

What if I drop dead before I hit 60, the house etc will still be there, will the pension go back to them?
The pension co are basically gambling that you'll die young?
 
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icanshootwell

Member
Location
Ross-on-wye
its not that easy to "just sell the house" though!

I have both, i appreciate im fortunate.
However, i did generate a comparison between investing in a pension on a 4% return and buying a house with 7% return.
As a higher rate taxpayer (which makes a massive difference), over the years, the pension forecast was significantly better. this was a forecast though...

As it is my pension pot, i can do what i want with it - draw it all out in one go when im 55, give it to my children etc. It is mine, not the governments (as I understand it)
As above, there are many ways to plan for your future, please consider several options. There are no free dinners, and there are lots of bad choices. There are also many good choices.
I thought you could only draw 25% as a lump? maybe i,m wrong.
 
Over the past year or two I started taking more of an active interest in mine and I think its beneficial. My uncle set me up with an NFU one when I was 18 and it was only £150 a year to start. I've moved it to Aviva a few years back as I like their online portal ie you can move investments about etc. and I stopped paying for a few years (mistake) and now aim to put about £2-3k a year into it. I'm 42 and its about £85k but it has gone up £12k in 12 months (incl what I'd paid in) which if it can do that every year is pretty bloody good isn't it? (Not saying it will). But I know I need to grow it over the next 20 years presuming I survive that long - currently predicted to be worth £116k @ aged 60 - I think it needs to be double that but who knows what the future holds.

I don't know a lot about the funds but I mix them up a bit I have started putting smaller % into higher risk catagories of my choosing accordining to performance/ gut feeling. I maybe every 6 months-12 months chop and change a few things.

I definitely think having a pension is a good thing. I also think its worth teaching yourself to be hands on a bit and take an interest. Yes they don't grow like they used to (as in put the money in and shut the door) but that's because of a general flattening off of everything and at least the low interest rates in business have allowed advantages elsewhere.
 

curlietailz

Member
Arable Farmer
Location
Sedgefield
I started paying into a private pension 30 yrs ago at 19 with £10 a month, I was always advised and still am that a regular monthly amount increased throughout ones working life will create a tidy pension pot at retirement

me too. £15 a month started when I was 21
Unfortunately I didn’t index link it and I still pay £15 a month into that one
 

Bloders

Member
Location
Ruabon
I thought you could only draw 25% as a lump? maybe i,m wrong.
i understand thats the tax free amount you can take. the rest is then taxed as income.
so if you have a 100K potm you can take 25K tax free (when you reach 55) and then iether 75K in one year (and pay the tax etc) or draw it more slowly and pay less tax on it.

In year 2 (say) you could have an inome of 10K bu want 10K for something so just draw that off as a lump, though it will then be a 20K draw for the year (and taxed accordingly)

One thing i am conscious about, is if we have a change in government, they can (and will) change the rules. remember Gordon Brown and his windfall tax on the oil and gas industry, and then the less well publicised tax on pension fund earnings?
 
Forgot to say you should be able to view all your pension possibilities in real time nowadays (rather than waiting for annual statements) and you can move stuff about in real time, change dates of retirements, amounts invested etc etc.

I'm definitely not an expert but being a hands on manager of your own pension can give you a lot of clarity about what needs to be done. The magic of compound interest...
 

capfits

Member
Just for a bit on context on pension growth.
I actively manage my own pension by moving units.
My lowest performer cash down 0.2% on the year.
Next worse bonds up 8%.
Best North American up 28% (a bit of a currency play too)
In the last 5 years the fund overall has moved up just shy of 60%.
If at retirement age could sell all tomorrow and get 1/4 tax free lump sum.
Or if I die before retirement it goes tax free to beneficiaries, a kinda life assurance.
Could you do that with a house or farm?
Not going to burden the business post active work.

It is fair to say you really need to be thinking of a fund of circa 350000 if you want a reasonable retirement rather than an existence.
 

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