to think too few people worry about pensions ...

[redskyatnight]

Was chatting to a group of friends (and friends of friends) the other day when the subject of pensions came up.

Only about half the people there (all in their 30s and 40s) had any sort of pension. Quite a few of those said that they didn't pay in as much as they ought to.

Of the others, the reasons for not having one varied from - not wanting to think about it, assuming the kids would support them, relying on inheritance (!), wanting to spend their money now and let the future take care of itself etc.

Maybe I am unduly worrying (I was in the "have a pension fund but don't pay in as much as I should do" group) but I'm astounded that so many people have effectively closed their eyes to saving for their old age. The state pension isn't going to be much to live on, and can we really rely on other sources of income just materialising from nowhere?

I do appreciate some people genuinely have no money for a pension after essential bills, so am talking about the people who do have disposable income but choose to spend it elsewhere.

This thread makes very interesting reading - particularly the £100K example - on the one hand it is seen as not likely to last long and on the other gives a 6000 annuity (although my friend was recently quoted 4000)- if it was spent at the same rate as the annuity and assuming no interest was received it would still last 16.67 years with interest at 3% this would be around 20 years - so were you not to see 20 years retirement you would have something to leave - if you made more or needed care the picture would be very different.

It's pretty pointless to worry about a pension when you're living paycheque to paycheque.

And not out of buying fripperies and a huge mortgage.

I agree with MrsHappy.

Anyone who thinks he/she is going to be able to 'retire' in the way the past two generations have, and go and play golf for the last 30 years of their lives whilst developing more and more health problems, is delusional, unless he/she is very rich.

Yes it's the compulsory buying of an annuity at the end which is not good - why would anyone want to do that?

But say you didn't particularly want to live in poverty as a pensioner, and had the fairly modest ambition of wanting to live on an average sort of income of around £25k a year, you'd need a pension pot of around £500k.

My experience of 17 years in a money purchase pension scheme is that the pension pot is just about worth the contributions I have put into it (and an awful lot less than if I'd been able just to save it in a building society account). So you need to save around £12.5k a year for 40 years.

S'easy, innit.

Yes Quattro that is EASY

Now all I have to do is EARN 12.5k a year, and then I can put it into a pension

but I want to buy pretty handbags and shoes instead

Um, yes I quite see that might be putting the cart before the horse.

I really think the pensions companies are making a bomb here though .

Pensions companies pay all sorts of people significant sums of money to invest your money for you. You'd rather they didn't bother and just tracked the FTSE or something. But oh no, they decide they can outperform the market. And surprise surprise, they can't. They turn in shoddy investment performance leading to "negative growth" (which roughly translated means they have gambled with your money and lost it). And then send you letters telling you that their predictions were useless and you have to make up the shortfall.

They are appallingly badly regulated IMO

Yes I agree Quattro

What's a pisser is that I had a few pensions when I was young and in and out of dodgy jobs and they all had a few hundred in - which has now bloody disappeared in fees!!! It's immoral really

Lenin, I have a spreadsheet which tracks the contributions made into the scheme, against the value of the pension pot. I can assure you that my pension pot is only just at breakeven point. It's not as though I specified funds that were anything other than low/moderate risk, either ...

yanbu. But I just can't understand pensions.

Quatt, when I get a bit older, can you tell me all about them and tell me what to do?

I've heard of investment handbags, MP. I'm not sure if shoes will hold their value. Mind you, neither does an investment in a pension fund, and at least you get to wear the shoes ...

What is the conclusion?

Don;t have a pension, have a big saving saccount?

hmmm

Do you think my Primark handbags will count as Investment Handbags?

The conclusions is: WE'RE ALL DOOMED TO POVERTY

BUT, if you can save several thousand pounds every year of your working life, then you'll be REALLY pleased when it buys you an extra £50 a month because it'll be ALL YOU'VE GOT, SUCKERS

hth

dogonpoints - I'll happily rant tell you about pensions. But really you need a massively overpaid pensions advisor to tell you all about how to watch your money dwindle over time...

Quattro, blimey, that is really poor performance for a 17 year old pension.

I only have a 7 year old pension which is still doing pretty well in relation to what I put in.

Have you had a financial adviser do a regular pension MOT?

The fees for a tracker pension fund are not necessarily significantly less than that for an actively managed fund but of course, you don't want a dog fund either.

My provider too. I spread my risk when I changed jobs though. I continued contributing into the old shite scheme and now contribute into a new shite scheme.

Balanced managed = badly managed

S'true

I've always felt I should speak to a finance person about pensions but couldn't be bothered getting round to it.

I am delighted to hear they are a waste of time and I needn't bother.

Darlington semi under £60,000 in good condition and in a popular area.

Ryhope, Sunderland £55,000 with a rental income of £500pcm