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Ok I know you may not want to think about this but(38 Posts)
I'm really interested to know what arrangements you, or your partner, have made for pensions?? Yes it all seems a long way off, with kids at home and a lot of working years left, but it seems to be such a contentious topic. Dh and I both have pensions with our jobs (we're public sector workers) and though we won't be rolling in it while we retire, I imagine we'll be comfortable. But a number of my friends are convinced that property is the only way to go, and are stretching themselves to purchase buy-to-lets. There also seems to have been so much in the media over the last few years about how there'll be huge numbers of retired people with not enough workers to support them, and pension funds not being what they're cracked up to be. What are we all doing about it??
work attached pension. a very good one im told. superanuation
Company pensions are good especially if they contribute in to the pension. Personal pensions I would only do if you are 40% taxpayer and as such get 40% tax relief on your contributions.
The issues I have around pensions is that 1) You tie your money in for a long time which might not suit your financial circumstances and 2) No one can predict what the annnuity rates will be when you retire. Annuity rates are the terms under which you are offered a pension. So for example you may get £1 for every £100 you have or you may have £2 for every £100 you have. These rates are dictated by interest rates, people's lifespans, investment returns, etc. My guess is that as people live longer, annuity rates will decline as they will have to pay out more and for longer.
So, (I hope you have not switched off at this point!) there comes a point when these rates are so poor they are not worth the investment you have put into them since it has cost you a fortune to get a decent pension. Currently for a male retiring at 65, £100,000 will buy around £5,000 yr pension. Now bearing in mind that equates to 5%, you can get that in a long term savings account AND you have access to your savings which is the other thing to remember with a pension. Once you invest your money you cannot retrieve it unless you retire and then in most cases only 25% of the fund. Additionally if you die unless you have specified a spouse option the pension and the money you have invested will die with you. In the case of the spouse option if you die it will carry on until they die.
I am an IFA and for the reasons stated above I am uncomfortable with personal pensions.
What else can you do? Diversify your investments, if you can afford buy to lets that is one option, although study the tax implications on selling as that will negate your profit somewhat. Look at ISA's etc as they offer good tax free savings over the long term. Invest money into your house, maybe buy a bigger house etc. When you retires you will be able to downsize and release the equity and that will be tax free.
In the main do not put all your eggs into one basket.
Sorry if long winded but hope it helps.
DH's pension plan is that his parents will be dead by the time he retires! Mine is to stay married to dh .
Actually inheritance is another but that can be eroded by nursing home care fees. My FIL is in care, £850 a week
Do they charge extra for Euthanasia ?
Work pensions, both of us (public sector)
DH at the tender age of 48 yesterday, is due to retire in less than 18 months.
DH has a final salary pension and has 18 years to go til retirement .
I have a tiny company pension which will be worth peanuts I expect, but it's a bit extra.
Things may change on that score if I do more or less work in the future.
We have endowments not linked to our mortgage which we will use to pay chunks off when they mature.
The remainder of our repayment mortgage will be paid off the year DH retires (assuming 65) and then we will have the option to downsize. I will still have 10 years working life if necessary (I'm 10 years younger than DH). Also, based on the experience of our parents, DH will probably continue to work in some capacity beyond 65.
That's about as far as we've got, planning-wise.
we were told by PIL not to waste our money on saving for pensions as they are shite and they will ensure the family is well kept once theya re gone..
To mw though it sounds arrrghh I hate to rely on that FFS
Final salary schemes are worth their weight in gold and it is one of the travesties of this government that they are determined to drive these schemes to extinction as they believe these schemes to be unaffordable to most employers. (I have had this confirmed to me by a very high ranking civil servant who happens to be a client of mine)
DH - company pensions plus personal pension
Me - teachers pension. Will buy in missing years I think.
What do I do?
Well DH has a final salary scheme. I invest in a personal pension. BGD has outlined two of the main disadvantages of a personal pension - firstly that you only get 1/4 of your cash back when you retire and secondly that annuities (in which you are forced to invest the 3/4) of your fund are not good products.
A third disadvantage is that they are invested in stocks and shares. This means that they are very very volatile investments.
So as a bit of insurance I have savings and a buy to let property. Currently the tenants are not good payers so that's another hitch ...
Stocks ands shares are volatile but historically over 15 years plus thay have proven to be good investments. The key is to diversify your investments so that you spread the risk.
If the tenants are no good, get someone else.
That thought had occurred to me BGD. Unfortunately I have to get the current tenants out first.
Hummm, you need a cunning plan [Need a Baldrick emoticom}
This subject terrifies me, I had a really good pension at a blue chip employer before I took redundancy and had DS. Currently I have no pension provision at all and nor does DH. When I get back into work I hope my job will have a decent pension scheme, if not I'll make some private provision. I must give DH the lecture again it's not as if he'll inherit anything either. Head in sand, head in sand.
You know what I honestly believe? I honestly believe that unless you are quite well off, and can therefore afford to fund a pension scheme FULLY, then it is not worth bothering.
This is because if you scrimp and scrape for a pension that is worth (say) £6k a year you would get top ups of benefits.
So why scrimp and scrape?
Oh btw I am aware that state pensions are not currently means tested but £1 gets you £25 that they will be means tested by the time I retire ...
<BGD Please come up with cunning plan>
owrk pension and property - i plan to sell off any property i have and downsize
drink copius amounts of beer - have wrinkley sex and then die
I am single with no pension and will never have one...so i try not to think about it
i will continue to muddle haplessly along..plus ca change or whatever the expression is
BigGitDad that's really useful. I feel that the whole pensions things is currently in a state of transition, and those of us our 40s are in danger of being the victims. We've had it banged into us that pensions are the sensible option, but as you point out, there could well be better ways of investing and accessing our money. Hurlyburly I also agree that state pensions will probably be means tested in the future. So once again, those who work hard and make provision for themselves will be penalised. Custardo - think you've got the best plan!!
The best plan is to find an employer who contributes generously to your pension - my husband's firm pays 15% on top of his 6% contribution.
Secondly, overpay your mortgage if you can, the quicker you pay off the mortgage the more mortgage-free time you have to work and save/invest for retirement. We're overpaying and will finish the mortgage when we're both still in our forties.
Which brings me to... start saving and/or investing as early as possible. Many people don't think of anything to do with pensions or other retirement funding until they're in their forties.
Our last plan should all of the above fail to bring us a decent income in retirement is to downsize. Although some financial analysts would have us believe that in next 10-20 years there is going to be an ever-growing glut of homes for sale as everyone tries to downsize...
I don't think there's anything inherently wrong with personal pensions per se, I do know people who have done very well out of them. No-one has mentioned the tax benefits.
However, I agree that the key is probably diversification, keep your options open and spread your risks.
Piffle - that's what my m&d thought, until dad had to retire early due to ill-health, both his parents were still alive at that stage and they had to change plan dramatically. Fortunately, (ifyswim), his dad died fairly recently and left some money but his mum is still going strong at about 96 - so hardly the sort of retirement that I wish they could have had.
And no, we don't have a pension either, (note to self, take own advice before preaching to others, )
The plan is to work until we no longer can and then die in poverty.
It truly is.
We cannot afford to save or buy property and so we plan to just keep dodging along as long as possible.
I hope not to live long past the point where I can no longer work.
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