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!

craft Most of us are NOT higher rate taxpayers. And many of us paying into them lost the additional state pension entitlement through being contracted out.

Even for a 20% taxpayer it's a great deal. And being contracted out of SERP is an entirely different thing than a private pension, and for many people has been brilliant.

I contracted out in the 80s, and back in again in 2012 when you had to. My contracted out pot is almost £200K on it's own, separate from my pension. And that's my money, not the govts. When I retire, I can draw down as I choose, take 25% tax free, and if i die leave the balance free of IHT to my kids. Just fantastic.

So much misunderstanding around pensions, as this thread shows.

Craft why are you being so antagonistic? This is a chat forum not the House of Commons.

Both DH and I are self employed- we paid into a private pension for years. However most of what we paid in seems to have disappeared in "fees" and charges so its worth next to nothing.
Add into that the fact I should have been retiring this year, but now have to work another 6 years.

I don't think we will ever be able to stop working, God help us if either of us get ill.

Craft
So you are well off. Whooppeee doos.
Not relevant to the OP's question.

The average public sector pension you know the groovy gold plated ones is under £5000 a year

With 50% of adults earning under £20,000 a year, on the Auto Enrollment rates of total 8% of earnings, it will take them 125 years of contributions to build up a pot like yours.

Stop gloating and start giving advice that is useful to the OP and others in their same position.

And being contracted out of SERP is an entirely different thing than a private pension, and for many people has been brilliant
Really
How many people have retired so far JUST on their SERPS opt out pensions ?
Not many, as most of us are in our 50's and still working.

Still waiting to hear the name of a reliable Equity Release company by the way .....

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.

You may be right about fees, but low as it is, the income from an annuity is guaranteed. "Trackers" can track down as well as up. Mine tanked before climbing again, took several years to return to its original value.

Craft is obviously very well off and does not have the intelligence to understand how life is for most people.
And many poorer people who were contracted out lost money. It was an enormous miselling scandal that people got no compensation for.

the income from an annuity is guaranteed
My aunt took out an annuity. It cost her £300,000
She died suddenly before a single month's payment had been made.
Not much guarantee there.

If that money had been in a tracker her kids could have inherited it.

If that money had been in a tracker her kids could have inherited it.

True, but if she had lived to be 105 the annuity would still be paying out. Like all insurance, it's a bit of a gamble. They're priced with the assumption that some people will collect way less than average.

With 50% of adults earning under £20,000 a year, on the Auto Enrollment rates of total 8% of earnings, it will take them 125 years of contributions to build up a pot like yours.

No it won't, because you are overlooking the small matter of the growth on the money you've paid in, over decades. That, along with the tax relief, is where the benefits lie. Start paying in, even a moderate amount, in your 20s, and it'll have grown massively over 40 years. Plus any employer contributions.

With tax relief, growth and employer contributions, I suspect I have paid in only about 25-30% of what my pension pot now stands at.

But you need to start young if you can. The older you are when you start, the larger proportion of salary you'll need to pay in to achieve a meaningful payout.

But if you pay tax, any amount is worth doing.

Start paying in, even a moderate amount, in your 20s, and it'll have grown massively over 40 years. Plus any employer contributions.
on a part time NMW wage of £10,000 a year, total contributions of £1000 a year growing at currently 4% after costs (assuming inflation payrises of 2%
after 30 years gives a pot worth £71000 - not much to retire on there

So how much would someone of 50 have to pay in for it to be worthwhile?

Cos this thread isn't really for 20 somethings.

The income from an annuity is guaranteed
My aunt took out an annuity. It cost her £300,000
She died suddenly before a single month's payment had been made.
Not much guarantee there.

That's what I said, the income is guaranteed for life, but you are right that the capital is gone.

My point was that this is a trade-off and the pp's unquestioning recommendation of trackers is naive at best. "Sticking it (the capital) in a tracker" while it tracks down to oblivion might not work out so brilliantly either.

lots of my friends have retired in their 50's. They've all worked in the public sector since they left school and are all married. Those things make a massive difference.

Still waiting to hear the name of a reliable Equity Release company by the way .....

Talkinpeece, why are you so keen to force the elderly into moving out of the house they love when they have plenty of equity in that house to enable them to see out their days in comfort in the house they love?

One poster has already offered to give the details of the ER firm that did a great deal for her family. Either that or do your own legwork!

the house they love is often totally inappropriate for elderly people to live in
The greatest benefit from equity release is to the equity release company, all that interest rolled up on itself
lovely jubbly

I just think that the main things you need in retirement are a roof over your head, food on the table and that your bills are paid. Anything else is "extras". I've been in extreme poverty where I had £100 a week to raise 2 children on. At that point £160 just for myself would have been a drastic improvement! Then I got a decent job and have been able to do a lot of travelling, helped my kids out, bought nice things for my home etc. I guess at that point I could have put all the money I spent on those things into a pension fund but there is absolutely no guarantee I will live till 67. Even if I did, I don't want to wait that long to do the things I want to do. Why would I be waiting? To what end? If I have to live a simple life from 67 onwards that is perfectly ok with me. I will be knackered by then anyway! I've done all the things I really wanted to do so I'm luckier than a lot of people. That is why I actually don't worry about it in the slightest.

At 50 I have just bought a property suitable for DH's old age

The next step is sheltered when I'm by myself

You hate often changing when you are older; so I am making plans now!

I think many of us now in our 50's will see how things panned out for our parents if they become elderly and frail and take steps to avoid pitfalls that we saw

Quentin
As I said at the very top of the thread - around 25% of your income .....

Craft
My interest in equity release companies is entirely theoretical
you say they are amazing, then name an amazing one.
Yes, I have been given the name of one. I will file it for the possible use of my clients
I wonder if yours is the same one I have been given already

Wordthe
That's one hell of an assumption. My parents lived in their home until Dad died at 78. My relatives love their home, which is fitted and furnished to their standards, and as a bungalow is ideal until they are unable to live independently. ER might not be for everyone, but I would not presume to make sweeping statements about other's circumstances. So the ER company are making a pre-agreed level of profit from the deal - where's the problem in that?

Talkinpeece
I have sent you a DM with the contact details of the FA we used.

Word - it depends. I think many of our parents might have had good final salary pension schemes and that makes a huge difference. My father worked for the same public utility company all his life and has a final salary scheme. He and my mother live very comfortably in their mid-80s. Who knows how things will pan out for them in the remaining years of their lives? But I will never have the pension scheme that he has.

I would not say ER companies are amazing - they serve a purpose, pretty much as a dry-cleaning business might. Some choose to use them, others don't. As long as you do your homework, your choice.

Yes Wordthe I saw my grandparents in a ouse that was so unsuitable for them from about 80 onwards so I won't get in that position

My mum has just downsized to a bungalow and got rd of so much stuff because she and my dad (before he died) were so distressed clearing the house of my grandparents - after mmy grandad died but before my grandma died

I am constantly clearing and getting rid of stuff too & changing my life so it will be easier as I get older - grab rail for bath bought and will be fitted next week and plans started for a downstairs shower room....little steps

Realistic expectations go hand in hand with these changes and low pension is part of them

If anyone is interested, the Pensions Advisory Service gives free and impartial advice on pensions.

I do have a pension and have made an appointment with them to try and make sense of the statement that drops through my letterbox each year but I have just checked with them and they tell me they help anyone who needs information to help them consider their options as well.

ajandjjmum 'So the ER company are making a pre-agreed level of profit from the deal'

oh sure but of course this is a euphemism for 'laughing all the way to the bank'