Official. Property is better for retirement than a pension.

Official. Property is better for retirement than a pension.

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Ginge R

Original Poster:

4,761 posts

218 months

Sunday 28th August 2016
quotequote all
It must be true, the Chief Economist at the Bank of England says so. In fact, the very same 'Chief Economist at the Bank of England' who confessed the other month that he didn't understand pensions. I mean, seriously. Anyway, whether or not anyone on here has actually considered the merits of a Buy to Let (anyone?) over a conventional pension to fund retirement, it's all good mill for the grist on PistonHeads!

http://www.thetimes.co.uk/article/property-is-a-be...

sidicks

25,218 posts

220 months

Sunday 28th August 2016
quotequote all
Ginge R said:
It must be true, the Chief Economist at the Bank of England says so. In fact, the very same 'Chief Economist at the Bank of England' who confessed the other month that he didn't understand pensions. I mean, seriously. Anyway, whether or not anyone on here has actually considered the merits of a Buy to Let (anyone?) over a conventional pension to fund retirement, it's all good mill for the grist on PistonHeads!

http://www.thetimes.co.uk/article/property-is-a-be...
It also sounds as though Mr Haldane doesn't understand the difference between a wrapper (pension) and an asset class (property'!).

Because of leverage, long term property investment can produce attractive returns, so it would be surprising if it outperformed unleveraged investments. Compare against leveraged strategies and then see how good it is!

Regardless, not sure how the average man on the street is able to invest their £50 per month into buy-to-let properties...!

Ginge R

Original Poster:

4,761 posts

218 months

Sunday 28th August 2016
quotequote all
His DB pension (£85k) would cost somewhere in the region of £2/2.5 million to buy. I wonder if he could let us know how he intends to own a Buy to Let portfolio (paid off) to that value when he retires.

Ozzie Osmond

21,189 posts

245 months

Sunday 28th August 2016
quotequote all
Property is ideal for pension purposes because,
  • you won't have to deal with tenants or property repairs in old age, and
  • you can withdraw a proportion of your investment at any time by selling off the bathroom.
Risk is spread ideally if you let out downstairs to a working couple and upstairs to a family on state benefits.

Also the huge tax relief available for conventional pension investments is just a scam so should be ignored.

I feel such a fool not to have realised these things before....

Ozzie Osmond

21,189 posts

245 months

Sunday 28th August 2016
quotequote all
Ginge R said:
His DB pension (£85k) would cost somewhere in the region of £2/2.5 million to buy. I wonder if he could let us know how he intends to own a Buy to Let portfolio (paid off) to that value when he retires.
Question: If I recall correctly HMRC values DB pension on a multiplier of x20 per £ putting the HMRC value of his £85k pension at £1.7 million. The current maximum amount allowed by HMRC is around £1m. Nice work if you can get it.

[NB: Ginge's figures are correct for the real-world cost of pension. Very curiously MPs and civil servants, who just happen to have the most generous DB pensions, are happy for HMRC to continue applying an unrealistically low multiplier. Strange, isn't it.....]

sidicks

25,218 posts

220 months

Sunday 28th August 2016
quotequote all
Ozzie Osmond said:
Property is ideal for pension purposes because,
  • you won't have to deal with tenants or property repairs in old age, and
  • you can withdraw a proportion of your investment at any time by selling off the bathroom.
Risk is spread ideally if you let out downstairs to a working couple and upstairs to a family on state benefits.

Also the huge tax relief available for conventional pension investments is just a scam so should be ignored.

I feel such a fool not to have realised these things before....
clap

Ginge R

Original Poster:

4,761 posts

218 months

Sunday 28th August 2016
quotequote all
Ozzie Osmond said:
Question: If I recall correctly HMRC values DB pension on a multiplier of x20 per £ putting the HMRC value of his £85k pension at £1.7 million. The current maximum amount allowed by HMRC is around £1m. Nice work if you can get it.

[NB: Ginge's figures are correct for the real-world cost of pension. Very curiously MPs and civil servants, who just happen to have the most generous DB pensions, are happy for HMRC to continue applying an unrealistically low multiplier. Strange, isn't it.....]
Correct, and you also add the tax free cash to that - typically three times the annual income. Given gilt yields right now, I added a bit on top for, as you say, real world transfer values.

PurpleMoonlight

22,362 posts

156 months

Sunday 28th August 2016
quotequote all
Ozzie Osmond said:
Property is ideal for pension purposes because,
  • you won't have to deal with tenants or property repairs in old age, and
  • you can withdraw a proportion of your investment at any time by selling off the bathroom.
Risk is spread ideally if you let out downstairs to a working couple and upstairs to a family on state benefits.

Also the huge tax relief available for conventional pension investments is just a scam so should be ignored.

I feel such a fool not to have realised these things before....
clap
biggrin

sidicks

25,218 posts

220 months

Sunday 28th August 2016
quotequote all
Ginge R said:
Correct, and you also add the tax free cash to that - typically three times the annual income. Given gilt yields right now, I added a bit on top for, as you say, real world transfer values.
Looking at the best annuity rates on the FT website, for a 60-year old, a single life annuity escalating at RPI, a £100k premium would get you a starting pension of just over £2,000 p.a.

Making his £85k pension worth over £4m (the Times article linked to, refers to £3.5m, provided by HL).
beer

Edited by sidicks on Sunday 28th August 12:05

Jockman

17,912 posts

159 months

Sunday 28th August 2016
quotequote all
Ozzie Osmond said:
Property is ideal for pension purposes because,
  • you won't have to deal with tenants or property repairs in old age, and
  • you can withdraw a proportion of your investment at any time by selling off the bathroom.
Risk is spread ideally if you let out downstairs to a working couple and upstairs to a family on state benefits.

Also the huge tax relief available for conventional pension investments is just a scam so should be ignored.

I feel such a fool not to have realised these things before....
hehe

Jockman

17,912 posts

159 months

Sunday 28th August 2016
quotequote all
sidicks said:
It also sounds as though Mr Haldane doesn't understand the difference between a wrapper (pension) and an asset class (property'!).
Beggars belief.

I hold unit trusts, cash AND property all within a pension.

This is NOT a difficult concept to grasp!

Jockman

17,912 posts

159 months

Sunday 28th August 2016
quotequote all
Ozzie Osmond said:
Question: If I recall correctly HMRC values DB pension on a multiplier of x20 per £ putting the HMRC value of his £85k pension at £1.7 million. The current maximum amount allowed by HMRC is around £1m. Nice work if you can get it.

[NB: Ginge's figures are correct for the real-world cost of pension. Very curiously MPs and civil servants, who just happen to have the most generous DB pensions, are happy for HMRC to continue applying an unrealistically low multiplier. Strange, isn't it.....]
Jeremy Corbyn's final salary pension was calculated yesterday in the Times at circa £50,000 pa.

He is currently receiving £138,000 pa in salary plus £6,000 state pension.

Ginge R

Original Poster:

4,761 posts

218 months

Sunday 28th August 2016
quotequote all
sidicks said:
Looking at the best annuity rates on the FT website, for a 60-year old, a single life annuity escalating at RPI, a £100k premium would get you a starting pension of just over £2,000 p.a.

Making his £85k pension worth over £4m (the Times article linked to, refers to £3.5m, provided by HL).
beer

Edited by sidicks on Sunday 28th August 12:05
Staggering, isn't it? SCAPE lives in a fur lined, fluffy world.

GT03ROB

13,207 posts

220 months

Sunday 28th August 2016
quotequote all
Ozzie Osmond said:
Property is ideal for pension purposes because,
  • you won't have to deal with tenants or property repairs in old age, and
  • you can withdraw a proportion of your investment at any time by selling off the bathroom.
Risk is spread ideally if you let out downstairs to a working couple and upstairs to a family on state benefits.

Also the huge tax relief available for conventional pension investments is just a scam so should be ignored.

I feel such a fool not to have realised these things before....
Don't forget that scam where my employer throws money at me & doubles whatever I put in then adds a bit more for luck....

Jockman

17,912 posts

159 months

Sunday 28th August 2016
quotequote all
GT03ROB said:
Don't forget that scam where my employer throws money at me & doubles whatever I put in then adds a bit more for luck....
Lol.

Hope you're enjoying the Kuwati beaches Rob !!

Countdown

39,685 posts

195 months

Sunday 28th August 2016
quotequote all
GT03ROB said:
Ozzie Osmond said:
Property is ideal for pension purposes because,
  • you won't have to deal with tenants or property repairs in old age, and
  • you can withdraw a proportion of your investment at any time by selling off the bathroom.
Risk is spread ideally if you let out downstairs to a working couple and upstairs to a family on state benefits.

Also the huge tax relief available for conventional pension investments is just a scam so should be ignored.

I feel such a fool not to have realised these things before....
Don't forget that scam where my employer throws money at me & doubles whatever I put in then adds a bit more for luck....
To be fair, if and when you pop your clogs how much of your pension will be available to your wife, and then after she passes on, your kids?

There are pros and cons for all methods of investment. Nothing wrong with BTL as long as you understand these.

sidicks

25,218 posts

220 months

Sunday 28th August 2016
quotequote all
Countdown said:
To be fair, if and when you pop your clogs how much of your pension will be available to your wife, and then after she passes on, your kids?

There are pros and cons for all methods of investment. Nothing wrong with BTL as long as you understand these.
Depends if you are talking about 'pension' as in 'pension savings product' (in which case the full amount would be available) or as in ' retirement income', in which case you can obviously choose to include a spouse's pension as part of your choice of annuity. Of course these days you do not have to take an annuity if you don't want to.

GT03ROB

13,207 posts

220 months

Sunday 28th August 2016
quotequote all
Jockman said:
GT03ROB said:
Don't forget that scam where my employer throws money at me & doubles whatever I put in then adds a bit more for luck....
Lol.

Hope you're enjoying the Kuwati beaches Rob !!
Yeah, fairly quiet at the moment as most of the Kuwaiti's are in London with their supercars. The absence of the Kuwaiti teenage bikini clad lesbians has been a disappointment though, but that's one for the Burqini banning thread.

ellroy

7,000 posts

224 months

Sunday 28th August 2016
quotequote all
Countdown said:
To be fair, if and when you pop your clogs how much of your pension will be available to your wife, and then after she passes on, your kids?

There are pros and cons for all methods of investment. Nothing wrong with BTL as long as you understand these.
Assuming IHT applies you'd be significantly better off with the pension.

sidicks

25,218 posts

220 months

Sunday 28th August 2016
quotequote all
ellroy said:
Assuming IHT applies you'd be significantly better off with the pension.
Aren't husband to wife transfers exempt from IHT?