Pensions : I'm very glad I've not put any of my money into one

[TalkinPeace]

www.betterfinance.eu/fileadmin/user_upload/documents/Research_Reports/en/Pensions_Report_2014_FINAL_-_EN_FOR_WEB.pdf

Averaged over the last 14 years, returns on pension funds have been negative in the UK

Whereas I'm very pleased I've been putting money into mine for the last 30 years. :) Even leaving out the performance of the fund itself (and the 2008 crash was a low point), I'm getting a lot more back in tax relief than if I was to put the cash on deposit somewhere. It won't be my sole source of income when I retire. That would be daft.

It won't be my sole source of income when I retire. That would be daft.
But for many of the basic rate taxpayers who have been conned into such things, it will be their only income other than the State pension.

The cruises and grey pound holiday markets are going to have the mother of all slumps in about 15 years time
as the rich pensioners die and the ones coming along behind are not on DB pensions

I don't think it's a con. Your example is a 14 year period when most pensions are accumulated over a 40 or even 50 year working life. If there's a slump in 15 years it's going to be because people are unrealistic about how much has to be put away in order to fund their retirement. They're under-contributing and that would be true whether they were salting it away into ISAs, pensions, works of art or anything else.

Talkinpeace what would you recommend as a better option then?

I'm interested. I have a small DC pension from previous employment but both DH and I are now self employed and so we don't get an employer contribution.

atticus
I am maxing out my ISAs each year and having built a cash cushion am now putting the £15,000 a year allowance into the stock market on a 10 year at a time window.
My mortgage finishes in 25 days : then the money that was going into that will go towards some other investments like land and original art
BUT
I do not plan to retire - just work less months of the year

"retirement" as a concept needs reinventing

oh well, mine seems to have grown quite satisfactorily over that period with no contributions. I stuffed it full when I was working.

It is a stockmarket job so you have to think long-term.

Currently I have a spread:

50 a month into pension
200 a month into ISA
Some short term investments: company bonds that I tend to reinvest on maturity
Some gamble the interest money: premium bonds
Small amount in instant access savings.

Would love to know where it is best to put money.
Suppose I could make (or lose) some on betting on currency exchange, saw that on a recent BBC finance programme. Not sure I am prepared to take that kind of risk but I appreciate that without risk there is often little reward.

Don't know the ages of most people on this thread, but retirement at 65 is going to be a thing of the past - cutting down hours will be the new normal.

'Original art'? And you're telling people that pensions are a dodgy place to stash the cash?....

Cogito
The art would be very much at the fluffy extra end of things - and with a max budget of £100 an item.
Many of the items we have bought over the last 20 years have upped in value by around three times inflation because they are unique and irreplaceable.
But for now they live on our walls because we love them. In time they will be sold.

But even with a slump, my pension is 3% from me and 8% from my employer - I think it would take a significant crash to lose the 8% that was never mine.

I agree that you shouldn't put all your eggs in one basket but it is equally mad, if you have a scheme like mine, to turn down 8% of free money.

In 2008 the stock market fell 32% in seven weeks.

What are the fees on the fund, what is the actual return.

If you look at the link at the start of the thread, real returns on pension funds have averaged -0.7% over the last 14 years

if 11% of your salary turns into 10% of your salary when you need it, that is possibly not such a great investment

How is you putting £15k on the stock market any less risky than a professional pension fund manager doing it for you? Or are you saying that your investments didn't drop in 2008 like everyone else's? And ISAs, last time I looked, weren't making much more than 2% It's all very well saying people should avoid pensions but your own alternatives sound rather hit and miss

I did not have investments back then : but I know what the investment managers for family members did drop everything back to cash once the crash started

my ISA funds are in passive trackers of a variety of sorts : I do not intend to beat the market : merely to not lose money for now

my main 'pension fund' is a mortgage free house

I think what you have is a system that works very well for you (and is actually similar to what we're aiming for)

It's wrong to assume that it's the right solution for everyone, but what's great is that you are thinking about your future and actively planning it. Not to mention that you have the resources to do such, which is increasingly a luxury many don't have.

(Sorry if that sounded preachy, didn't mean it to)

bear in mind I have no pension - as I've been self employed for 17 years, as has DH so I've always known I'd have to look out for myself.

I was lucky that we hit the property market at a time that our current mortgage balance is £14.56 (yes really)
and that we live where State schools are available and pretty good leafy is the standard MN insult
and that we are both able to work
BUT
all of my savings have been in the last 6 years - before that zilch
and I still have to get 2 kids through Uni and out into the world.

If you put your 15K into a self invest pension, you could invest image same tracker funds and also get tax relief on your contributions

onehand
not with the earned income I declare
but yes, other people could

So what you're actually saying, OP, is that those of us who have invested in pensions and declare all our income thus subsidising you in terms of tax are mugs?

Optimist
I'm a qualified accountant whose clients are public sector bodies : my company declares every penny of its income.
Just that that not all of it reaches me in the form of salary : and dividends do not count as income for pensions

So your was meaningless?

I'm really not sure why anyone would have a problem with pensions, especially after this years budget.

Everyone gets tax relief, most employed people get an employers contribution; that's a lot of 'free money'. As of next year the max charge per annum on a employer sponsored, automatic enrolment scheme will be 0.75%, making it a cheap way to save as well.

Of course, they don't need to be the full retirement plan, but they can be very easy and tax efficient way to save.