many cashing in pensions, this is not going to end well
Discussion
Zigster said:
I'm still not convinced that many people will cash in the lot. If you've been thrifty enough to have stashed it away over the years, you're not suddenly going to go all crazy on retirement.
I'm in the relevant age group and what surprises me is how much the amount of money people have varies - and it can be the opposite of what you'd expect. Apparently comfortable people are running overdrafts and people whom you'd think would be struggling a bit will have 6 figure sums sitting in a building society.I reckon it's the "apparently comfortable" who can't wait to get their hands on a bit of cash. I do fear for them in the longer term.
And getting into BTL now, and at our age, strikes me as madness. Especially people doing it on a single property.
SunsetZed said:
I was believing you and then you said nice Audi A1, these don't exist
Imagine I was going like this; "nice"Originally her father was looking at RS4's and the like, then when he couldn't find one suitable it was going to be an Astra VXR.
Then somehow settled on a diesel A1
Oakey said:
SunsetZed said:
I was believing you and then you said nice Audi A1, these don't exist
Imagine I was going like this; "nice"Originally her father was looking at RS4's and the like, then when he couldn't find one suitable it was going to be an Astra VXR.
Then somehow settled on a diesel A1
The Leaper said:
It's no surprise that the media concentrates solely on those who may wipe out their accumulated pension assets by splurging on a cruise or Lamborghini or both, and the bad news regarding the "surprise" of a tax liability on the lump sum. In this latter respect, what else do people expect given that they have received full tax relief on the contributions going towards that accumulating asset?
So-called guidance is available to anyone seeking information through Pension Wise, a government financed independent set up. The service is via a pre arranged telephone conversation lasting usually about 30 minutes to an hour. Pensions Wise is provided by the Citizens Advice Bureau and also The Pensions Advisory Service (I'd recommend using the latter). I'm aware that Pension Wise has had a huge number of sessions giving guidance and that in the vast majority of cases it seems people are wanting to act responsibly and want to be told the downside ie mostly the tax position and how taking cash affects their future pension expectation.
Of course, people acting responsibility will not attract the attention of the media.
R.
Agree. That was the point I was perhaps too subtly making earlier.So-called guidance is available to anyone seeking information through Pension Wise, a government financed independent set up. The service is via a pre arranged telephone conversation lasting usually about 30 minutes to an hour. Pensions Wise is provided by the Citizens Advice Bureau and also The Pensions Advisory Service (I'd recommend using the latter). I'm aware that Pension Wise has had a huge number of sessions giving guidance and that in the vast majority of cases it seems people are wanting to act responsibly and want to be told the downside ie mostly the tax position and how taking cash affects their future pension expectation.
Of course, people acting responsibility will not attract the attention of the media.
R.
Certainly my clients seem to be taking a sensible approach and haven't amassed large pensions pots by being dim.
tescorank said:
Talking to someone in the trade and reckons over 40% are going for the cruise option, so this would appear plenty of tax in coming year but longterm huge amount of benefits to be paid out and the county will be fekked but we are not helping ourselves by baby boomers seeing wealthy people in nursing homes paying £800 a week as opposed to the spenders getting this for free-it now seems the government are creating a live for the day society.Is this madness?
First of all how would that person know what people are spending their money on? Secondly if they are cashing in their whole pension and going on a cruise then it can't be a very big pension in the first place!If someone is taking less than 25% of their pension and spending it on a cruise, haven't they always been able to do that?
Personally I don't believe that anyone sensible enough to build a decent pension is suddenly going to blow it all in one go.
I stopped paying into pensions years ago when I went self employed. Why lock up money, get a s
t return, then lose the pot when you die. The recent changes are the most sensible thing to happen in pensions for a long time and may well push me back into saving for my retirement.Oakey said:
SunsetZed said:
I was believing you and then you said nice Audi A1, these don't exist
Imagine I was going like this; "nice"Originally her father was looking at RS4's and the like, then when he couldn't find one suitable it was going to be an Astra VXR.
Then somehow settled on a diesel A1
If the sum value of your retirement pot is enough to buy you an A1, or a cruise, or a kitchen then I fail to see why we should be concerned. Generous tax breaks apply to give an incentive to accumulate sufficient funds so that you won't be a burden on the state in retirement. If you take advantage of those tax breaks you are less likely to rely on the state, but the state has less tax from you as a result. If you haven't saved, you haven't had the tax relief, so luckily the state will give back all your hard-earned tax in benefits when you retire. Or not.
Accumulating £20k is going to make next to no difference to your ability to be self sufficient in retirement, I doubt the equivalent of £800 or so of taxed income a year is going to be the knife-edge for the majority of OAP's, those that are likely to be troubled by this amount are already struggling and quite likely to be a burden on the state in any case.
Those who have accumulated more tend to be savers by nature and are unlikely to blow it recklessly.
So far the enquiries I have had bear this out.
Accumulating £20k is going to make next to no difference to your ability to be self sufficient in retirement, I doubt the equivalent of £800 or so of taxed income a year is going to be the knife-edge for the majority of OAP's, those that are likely to be troubled by this amount are already struggling and quite likely to be a burden on the state in any case.
Those who have accumulated more tend to be savers by nature and are unlikely to blow it recklessly.
So far the enquiries I have had bear this out.
DoubleSix said:
tescorank said:
Talking to someone in the trade and reckons over 40% are going for the cruise option, so this would appear plenty of tax in coming year but longterm huge amount of benefits to be paid out and the county will be fekked but we are not helping ourselves by baby boomers seeing wealthy people in nursing homes paying £800 a week as opposed to the spenders getting this for free-it now seems the government are creating a live for the day society.Is this madness?
The 'cruise' bit is a big assumption on you and your friends behalf though.Many are accessing pension monies and reinvesting in BTL, redistributing amongst offspring, or investing in other value accretive areas.
Burwood said:
Spot on. The op means won't end well for the lazy thieves returning .1 percent on annuities when it's not difficult to get a safe return better then that.
True, even when you are chronically ill and qualify for enhanced annuities the rates are still very underwhelming but they are guaranteed which is more than can be said for rental income.turbobloke said:
Is there somebody in the pensions industry who knows, and can explain, how the situation is likely to change from April 2016 when existing annuities can be sold i.e. cashed in? It could be that the detail is still missing but April 2016 isn't far off now and with the gov't elected to fly solo they may have taken the idea further.
I'm not sure that will ever happen. It was a stupid idea from the Government which got widely criticised.It's not workable in practice. The only pensioners who would cash in annuities would be those who have good reason to believe they have a shorter than average lifespan, so they would get a payout that reflected that. As soon as the pensioner sees the small sum of money they'd get ("derisory", or "insulting" would be good words for the Daily Mail to use) they won't cash it in.
PurpleMoonlight said:
Jimboka said:
Can you take out the 25% tax free @ age 55+, then park the remainder in a draw down fund. Perhaps drawing nothing for a few years (when can draw down more tax efficiently)?
Yes.tescorank said:
Talking to someone in the trade and reckons over 40% are going for the cruise option,
It looks very much as though, as some of us have expected, people sensible enough to save for a pension aren't daft enough to suddenly cash in and spend the lot.Reports suggest that only 6% of eligible people have taken any action and those have typically had small "pots" of up to £15,000 which won't buy much pension anyway. Indications are that the cash withdrawn has typically been used to pay down debt such as mortgages - which seems sensible use of the money.
The ABI’s Yvonne Braun said tens of thousands had used the freedoms to access their money although "the amount of cash withdrawn accounted for less than 1 per cent of pension funds held by over-55s. The majority of people have only been cashing in relatively small pots which account for a tiny proportion of all the money which could have been released. This shows that on the whole the British public are taking a sensible approach."
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