I don’t trust pensions

[Orangepolentacake]

I’m in my mid-30s and, for the first time, in a decent position to properly save for the future, pay into a pension, invest.

I also have some medical conditions, which means it’s possible I won’t live to see mid-70s, if that.

I know pensions come with tax and employer matching benefits but, hear me out:

I don’t trust pensions partly because the goal posts keep changing. Minimum access age for pensions is currently 55. This will soon increase to 57. It could keep increasing and increasing until it matches state pension age. What’s to say it won’t? What is certain is the average person won’t have much of a say in this.
And state pension age could be almost 80 by the time I reach the current retirement age of 67.

then there’s the matter of inheritance. I can nominate a beneficiary but, depending on how I choose to access my pension, the beneficiary won’t have access in case of my death. Who knows what perceived priorities I’ll have at an unknown age in the future and/or minor mistakes with drastic consequences I’ll make. The goalposts can just change along with access age and all my savings are then lost into some ether and my family isn’t able to access them. I don’t think the latter is that unlikely, given ageing population and need to fund longer lives with long term conditions etc

AIBU? What is the best and safest way to save for the future?

I'm curious to know more about this - roughly what level of investment are we talking about? And how do you know the stocks or whatever its in will give that return?

You can put it in an ISA, but would miss out on tax relief, government top up and employer matching (potentially). I actively contribute to both, but the reason I have a pension is

• extra money from employer and government
• it will allow me to retire before state pension age (10 years earlier at the moment) if I want to or need to
• I am more afraid of spending my 60s, 70s, 80s in poverty than I am of losing/ wasting/ not being able to enjoy the money in a pension.

all of your concerns could be really easily addressed with a good financial advisor (most don’t recommend annuities these days for example).

Yikes.

as I read on another thread - who pissed on your cornflakes?

jog on with your rudeness, hun 😘

Apologies, I see you answered this. Didn't mean to clog up the thread!

3 quick Qus please :
When does the 'allowed to withdraw 25% at age 55' change to age 57 please ?
Is that 25% a % of the whole pension Pot, or the weekly payment (if in payment by then)
What is the 'swap £1 of pension for £12 of money out now' type of scenario ?

I've gone with standard life who charge 1%
The enormous benefit the children have is time on their side, at my age (late 40's) I have to balance risk with cost of managing the funds.

I probably ought to see an IFA for both, no doubt i'm leaving lots of money on the table.

2028

And it's 25% of the pot.

Not sure I understand your last question?

@Orangepolentacake Ok you don't trust pensions. I think can understand that even if I don't agree.

You said save for the furture. Is this when you retire? If so when is that going to be? Have you already got a house? Do you have a spouse? Do you want to leave anything inheritance to your dependants?

Will that be £30,000 in real terms? Thanks.

@Labraradabrador yes I guess I am trying to consider various fears for the future and see which one is easier to live with 😂 and the pros and cons of different options.
fear of poverty in retirement versus lack of control and possible ‘loss’ versus fear of missing out on the tax and employer matching benefits versus etc

it doesn’t help I’m rather anxious around money!

There are always risks with investments and pensions are no different, however they're relatively low risk and well worth having.
Yes, the goalposts have moved in the past and may do again although this isn't something changed lightly but it does makes sense when you look into why that decision was made.

The options available are quite vast if there are specific requirements you're after. It's definitely worth looking into but certainly don't give on them. You'll really regret it when you hit retirement age and have next to no money to live on. You've done the right thing to reach out after feeling concerned for sure, they can be quite confusing.

Also, lost pensions can 100% be found again. If you're based in the UK, the government website can help you track them with some basic employer info, just give it a Google!

It will be yes, assuming there's no 1920's style crashes but even then, they have 45 years to recover from them if they retire at 57.

@bob1985 - Thank you ! x
Re last Qu - sorry, I don't understand it either (exH is came out with all sorts of inaccurate waffle when it came to discussing pension divisions iirc)

Maybe you are Final Salary but very few now a days will be able to have those pensions now.

A DC pension has no guarantees, they are Equity/Bond Gilt based, and certainly there is no interest payable, so i don't really know what you are talking about with "not contributing a penny" comment.

If i was relying on accessing a pension early and had a life limiting health condition, i'd stick with an employer based scheme but then look to use extra money to invest in my house (then down size when older) or if a cash buyer, property to rent.

@WannabeMathematician thank you. it could be for when I retire or it could be for an earlier necessity.

I have a spouse who is not a first time buyer but is the main earner. He has a property that is not suitable for our needs (size, and our growing family. Accidental landlords with only the asset % as ‘profit’) but mortgage is up for renewal next year (element of shitting our pants here). No other properties.
would like to leave something for DC (that’s another thread - but I’ve opened a JISA but monthly contributions are small) but am more concerned about financial independence for me and DH as afraid of retirement age ever increasing and my health not keeping up

Thanks, from cake to cake! 😁 @CarrotCake01

Pensions work if you start young, I opened the kids pensions at birth and mine will have about £30,000 a year to retire on without contributing a penny towards them

But how much have you contributed to them @3BSHKATS?
Even with compound interest from an early age you are going to have to put in a significant amount to ensure 30k a yr in retirement.

My partners private pension provider went bust several years ago and he lost all his money. That does make you think!

I did have several small pensions and consolidated them all several years ago. It took over 2 years and i signed about 100 bits of paper before I could move them. it wasn’t hard to track them down but the whole process is a headache. I’m currently watching my pot decrease by several thousand a year…

@Orangepolentacake the best thing imo about a pension is the fact your employer contributes.

You can trace these small pension pots yourself free of charge, you just need to know the name.of the company. You can then consolidate them into one pension pot or cash them.in if you are old enough. Don't use these firms who charge you % of the pot, you can do it for free yourself

I work with two people retiring this year who have no private pension. They are terrified about how they'll survive on the state pension and are resigned to the fact that they may have to get a part-time job to top it up. I do not want to be stressing over finances at that age and very glad I took my dad's advice and started a pension in my early 20s

@Orangepolentacake Ok, the house that's not your main residence makes things more complicated. The fact that it's not your main residence does have inheritance implications.

I'm not sure about Telling you about LISAs or ISAs as I'm not
sure how far your worry about changing the goal post goes. These are both tax
free wrappers (The gains you make in them a tax free) but have rules about how
much you can put in and how much you can take out. The LISA can only be used
for your first house or retirement, and I think if you're married to someone
who already owns a house you might not be a first-time buyer so the LISA might
be out the door for you due to the same concerns you have about Pensions and
potential shifting goal posts.

So, I would advise you to go look up three things:

1. Diversification - This isn't a product or anything like that.
   It's a way of managing risk by owning lots of different things.

2. Low-cost index funds - This is a type of fund that you can
   buy into that will track the market. Pretty good if you want to set and forget.

3. S&S ISAs. If you are going to have your money in there
   for a long time this is probably the best way of holding SOME of it. Not all,
   see the note about diversification above.

I'm not going to tell you exactly what you should do as I'm not
a professional and I don't much about you but those things with hopefully be
enough to get you started. (Assuming you know what a stock is, and a bond is,
if not go look up what they are as well)

Best of luck and avoid anything thing that says it can guarantee
you a high return. They are scammers.

And if you don't know the name of the company ? From memory they ask for dates and account numbers too.
We have a lot of catching up to do in terms of tracing services.

Assets. Tangible assets are the backbone of the economy, think property, gold, land,etc. When you think about it. I don't trust pensions either, you have good years and bad years and in the end is never growing enough, so with inflation you are losing money ..don't understand what's the point of it when I could take out and use it in property for example...

Thanks. Wow, what a wonderful thing to be able to do for your children.