Please tell me I am not the only oldish person without a pension plan

[QuentinLettsisAbitofAtool]

Not a TAAT well it is a bit but sod it

I'm having a bit of a panic attack brought on by the MN survey about pensions. I don't have one, have a big mortgage, not due any parental inheritances and am in my 50s.

Please tell me I'm not alone as that might make me feel less dumb!

Oh and I put "oldish" in the thread title because I mean old in terms of a pension. Twenty somethings who don't have a pension don't fit my criteria!

@Powerless

Whilst i sympathise about your mother’s situation surely they knew what they were signing when they did the equity release??

I did say, if you don't have an expensive car to run! I live in London, I'll get a freedom pass. I don't have a car now, so I won't have one then! I rent so any big repairs will be done by my HA. And before anyone berates me and says about claiming housing benefit, I will have a lodger who will cover my rent. I don't spend a lot on clothes and what not now so again, it's not going to be a huge expense. If I am short of cash there's always charity shops, ebay etc. I have lived on far less in my life.

Motorcycle
The Police scheme IS A DEFINED BENEFIT SCHEME
Career Average - ie it is linked to your earnings
not your contributions.

Even with the changes, ANY DB scheme - even of the Career Average type - is better than the lottery of defined Contribution
do not start me on what a hard Brexit will do to the value of pension pots up and down the country

re 60-67 period

I would agree that this is the "danger" period. I know I could manage on a pension, I couldn't manage on £70 a week JSA or UC or whatever it is! For that reason I personally think that if someone is already 50 without a pension, it is better to try and load up savings rather than paying into a pension. This is exactly what I'm doing right now. Maybe there are pensions you can start at 50 and claim from 60, but I doubt that would be much money.

@greendale17 How is that a helpful thing to say? I'm talking about whether they knew about it, I'm talking about how disgusting it is!

FYI - No they didn't! It was mis-sold to them. I'm not going into detail to 'justify' it to a total stranger on an internet parenting forum!

@Craft1905 I beg your pardon? How dare you? You know nothing!!!!!! My mum wouldn't do that! She was in tears for months over it! She DID pay into it! I just don't know the details of how they 'diddled' her out of it. My mum is NOT a liar. What a bitch troll you are!

Bitching about somebody's mother is crossing the line

I also missed out on the other huge con. Don't buy an insurance product to provide you an income for your retirement. These annuities are loaded with fees. They very rarely work out. £100k gives you £5k a year income. When you pass you will still have the £100k. Buying an annuity, the returns are much lower because of the fees (which they don't make clear), so when you pass there is much less left of the annuity. After 15 years the annuity left in my example would be about £60k. It's also very expensive to take capital out of an annuity compared to taking cash out of an investment account.

An IFA who pushes an annuity on you, please ask them how much they are paid when you buy that product. Its your money paying that IFA. Ask yourself if you think it's worth it.

For those who are scared of investing, just stick it in a tracker. These funds are the cheapest with extremely low fees so you get the most return for your money.

Im still confused by pensions. Is just saving money better than a scheme that pays x amount a week (annuity? I thought that is what a pension IS.?)

JustKeepSwimming I am not an expert but here is my understanding.

There are different types of pensions. Defined benefits (wish I had one as these and are often referred to as final salary or average salary pensions) and defined contributions.

If you put money into defined contributions then it's better than regular savings due to the tax relief on your contributions. Pensions were changed a while ago so you have more options than just take an annuity out (this is where you use the pot to buy an annuity that pays you x per month). You can now continue to invest, drawdown an amount but leave the rest to continue to invest or take it all out as one big amount (subject to tax).

Compare that to regular savings which do not have the same tax relief and at the moment rates are so poor that sticking it in a high street saving account runs the risk of losing money due to inflation.

I have near to nothing. Moved abroad, moved back and what we saved while abroad- self employed not an expat package - are almost gone. DH is working and has a small amount in pension but I’m not optimistic about our future.

Note if you have a public sector pension, you can not cash it in.

Powerless - why is equity release disgusting? You can't get a proportion of your house value in cash, remain in your house and then expect to enjoy the full house value when you want to move/when you die. In fact many schemes are very good for householders. It's the disappointed heirs who are usually the ones complaining about "mis-selling"...

justkeepswimming Save into a pension account so you get the tax benefits. A regular savings account isn't great because you pay tax on the interest you earn. Also you get dire returns in a savings account. You need an account where you can own securities such as shares, bonds, mutual funds (always check the fees on these) to get healthy returns. Pension accounts offer this.

If your employer offers a match always contribute to the plan up to the match. After that, if you have money spare, contribute to your ISA. If your employer doesn't offer a match, save into an ISA first, especially if you sometimes struggle financially. This way you can withdraw the money you have contributed if you must and interest/dividends earned are not subject to tax until you withdraw.

I get that it's mostly the disappointed heirs who feel aggrieved about equity release, even so it's not a very efficient use of capital/resources is it?

furthermore would equity release not be considered deprivation of assets in the event that you need to pay for your care?

If you have nobody that you are bothered about passing money onto, then equity release is great.

Or if you just want to say a big fuck you to your kids who can't afford somewhere to live because of the housing bubble

Anything you can save into a pension will have tax at 20% added back to it. (So for every £100 you get a "free" £20)

When you come to draw the pension the first 25% is tax free (either as a lump sum or as part of the monthly income.
Then, as a PP said up thread, you will have an annual allowance of tax free income each year - next year for example is £12500.
State pension will be £8767 meaning you can still have income of up to £3733 tax free each year. If you only start paying in now it is likely that you would be under that amount.

So for everything you have put into a pension, you'd have got an extra 20% on top. For that reason alone it is worth paying in to a pension.

You can complete a declaration of wishes, and if you die before you have started drawing the pension the whole pot will pass to your nominated beneficiaries. (what happens if you die once you have started taking you pension depends on how it has been accessed so it is important to get advice BEFORE drawing a pension)

Companies like Aviva and Standard Life have relatively low management costs, or you can see an IFA and they will charge you a fee to set one up.

My post assumes you do not qualify for a scheme an employer contributes to - but if you can, join that first!!!

Equity releases can be great in the right circs, but they are expensive solutions.

If the homeowner spends the money then it isn't deprivation. It is only gifting it/buying things for others that fall under deprivation. People have the right to spend their own money as they wish.

What people who are younger don’t realise is when us oldies started work you could pay into a pension scheme, but the pension pot was open to the top people in the company and there was a lot of sticky fingers and almost counting the pension pot as a personal bank.

You only have to look at Robert Maxwell as an example

Equity releases are just awful. Never do one. Sell the house and release the cash. Move to over 55s housing once the cash is spent.

AlaskanSnow what happens if you cannot afford to pay into a pension

The core point is that 60% of the population have no savings
The second core point is that 50% of adults earn below the Income Tax threshold
The third core point is that the 6m + self employed people will never get employer pay in
The fourth core point is that people who work two low paid part time jobs will get neither Employment nor State pension
and are the least likely to have savings.

There are a lot of very rich some well meaning, some less so people on Mumsnet who forget that they are in the top 10% of the country and the top 0.1% of the world by income.

If we sell our house we wont have anywhere to live (entry level house) unless we used it to rent...but then it will run out and id be anxious about being moved.

We dont have savings or pension. Equity release might just give us some money to live on surely?

Im really anxious about our future :(