Lease cars and lack of pension provision
Discussion
sidicks said:
Why would you opt out of a non-contributory scheme?
The workplace pensions are not non-contributory so that is why people opt out because the 1% and rising amount they are compelled to put in can sometimes make the difference between feeding their kids baked beans or a decent mealdrainbrain said:
desolate said:
Or find a job you enjoy and don't retire.
That is braindrain's strategy.
Well that's certainly part of it. Seems to work for everyone who's anyone who's actually got a few bob. So why not?That is braindrain's strategy.
I can't envisage not working really - but then I haven't been 9-5 for years.
And as you say, everyone I know who has a few quid keeps working in one way or another.
craigjm said:
The workplace pensions are not non-contributory so that is why people opt out because the 1% and rising amount they are compelled to put in can sometimes make the difference between feeding their kids baked beans or a decent meal
Exactly. And this 1% becomes 3% and then eventually 5%. Hence my comment about a large chunk of your salary.
I fully expect the 'opt-out' part to be removed at some point, and then later the employer's contribution part, making it effectively a tax paid directly to pension providers. These fears were raised by many when the idea was first announced.
drainbrain said:
I see you're in the SE.
Someone's estimated Dot Cotton's house is worth £875k.
Just out of interest, What would that shabby east end terrace have required to deposit zero on 20 years ago with a 100% 25 year mortgage the tenancy will have paid off by 2022 (when, no doubt, it'll be worth £1m+).?
And let's not even venture down "what could have also been done using the dump for a bit of leverage over the last 20" lest it becomes too shouty....
This can only be relevant in a alternate reality. However, to indulge you... when I started at JP Morgan in the early 90s I looked at some flats in Islington for 90k. Lovely high spec conversions. Decided they were too expensive and what I really needed was a Renault Clio Williams 2, and live at home for a ton a month. Of course the flats are now worth 6-700 grand and the Clio (had I kept it be worth a few buttons). Pretty poor financial planning. Anyway, over time you learn from these mistakes and you tend to maximise opportunities or use the system to your advantage. Someone's estimated Dot Cotton's house is worth £875k.
Just out of interest, What would that shabby east end terrace have required to deposit zero on 20 years ago with a 100% 25 year mortgage the tenancy will have paid off by 2022 (when, no doubt, it'll be worth £1m+).?
And let's not even venture down "what could have also been done using the dump for a bit of leverage over the last 20" lest it becomes too shouty....
Why people are not using money purchase or defined contribution plans is beyond me. They can not be administered by your firm (so raiding is impossible), and are FCA regulated so allow for redress through FCA systems (although that won't cover all pots). There is too much confusion between defined contribution and legacy defined benefit schemes or company administered pensions. The two are not the same.
The reality is for the majority of people these are sensible tax free investment wrappers. Investment is a key term, of course the estimated return may be lower than anticipated, or even less than what was paid in if a major crash. However these risks can be self mitigated. Simple understanding of macro economics should tell you what funds to invest and the closer to retirement, you should be shifting into low risk, low return (govt bond funds) to protect (hopefull) historic gains (so not get wiped out if the ftse crashes).
Of course there are other ways to plan for retirement, and on balance diversification is the best policy. You could build a buy to let empire, but it's clearly not risk free (and depends how you value your time or if you want to go hear the end user). Clearly a DC pension wrapper is much more easily replicated then BTL portfolio as it's not regional specific (please feel free not to justify your Rachman model, even if you did well and if it could've been replicated in the past it cannot be now - and clearly it's unsuitable for millions of pension savers).
What happens in these debates is people with little understanding repost nonsense they heard elsewhere (or repeat brevity). Confusing pension schemes, annuity and financial risks is typical in here - especially when financial understanding is so poor. Using leases, Northern Rock mortgages, DC pensions and B2L can all be made to work - if you understand the products and risks. None of these products are a con, you just need to know what you are doing. 2015, was a shocking year for my pension savings as Equities tanked in H2 (SWF sell off etc), I wasn't at the bong water calling foul - investments go up as well as down. I've had a shocker with B2L, not the numbers but scum tennents; we changed the way we do it insulated ourselves to the wrong type of tennent and also invest in development land. Hell I even took one of those 120% northern rock mortgages in the past - but I spent the extra on an extension not a holiday in Malia (so made a hefty return on selling).
Not a single product mentioned thus far deserves the vitriol posted, its a few idiiots inability to deploy them.
zarjaz1991 said:
Exactly.
And this 1% becomes 3% and then eventually 5%. Hence my comment about a large chunk of your salary.
5% isn't a large part, it's 1/20th.And this 1% becomes 3% and then eventually 5%. Hence my comment about a large chunk of your salary.
zarjaz1991 said:
I fully expect the 'opt-out' part to be removed at some point, and then later the employer's contribution part, making it effectively a tax paid directly to pension providers. These fears were raised by many when the idea was first announced.
Pension providers hold the money on your behalf and lose money on small contributions, so they wouldn't benefit in the way you claim.sidicks said:
zarjaz1991 said:
Exactly.
And this 1% becomes 3% and then eventually 5%. Hence my comment about a large chunk of your salary.
5% isn't a large part, it's 1/20th.And this 1% becomes 3% and then eventually 5%. Hence my comment about a large chunk of your salary.
desolate said:
drainbrain said:
desolate said:
Or find a job you enjoy and don't retire.
That is braindrain's strategy.
Well that's certainly part of it. Seems to work for everyone who's anyone who's actually got a few bob. So why not?That is braindrain's strategy.
I can't envisage not working really - but then I haven't been 9-5 for years.
And as you say, everyone I know who has a few quid keeps working in one way or another.
So why shouldn't little old me and you do it too.....?
Perfectly viable strategy or part of a strategy for all but the un/disabled and for plenty of them too.
Social and psychological benefits too. Not to be underestimated
sidicks said:
5% isn't a large part, it's 1/20th.
I contend it's a lot to a great many people.sidicks said:
Pension providers hold the money on your behalf and lose money on small contributions, so they wouldn't benefit in the way you claim.
When you take into account the millions of employees who will be funneled into these schemes, set against the comparatively small number of licensed workplace pension providers, I don't believe for one moment they won't benefit to some degree. It will be an unprecedented amount of cash pouring into their coffers - bearing in mind you have the employer match contribution also - with which they will actually do very little beyond investing it en masse. There's absolutely no chance they will do anything other than make an absolute killing on the deal.And then when the poor 'ordinary people', who have built up a really small sum in one of these things, gets made redundant and changes jobs, they get told that the charges to move their plan to their new employer's provider 'may exceed the value of the plan'. In other words, they grab the lot! And yes you can leave it where it is but who wants to have dozens of tiny pensions scattered around everywhere?
sidicks said:
desolate said:
If you are on a low wage and don't live with the support of family 1/20th is likely to a large part of your disposable income.
Indeed, but not a 'large chunk of your salary'!Anyone who suggest it isnt significant needs to open their eyes to the realities of how lots of people have to live in this country
zarjaz1991 said:
sidicks said:
Indeed, but not a 'large chunk of your salary'!
Yes it is. You like so many others are demonstrating that you have absolutely no idea what it's like for people on minimum wage or similar.It may be significant for some people, but thats not the same thing!
mike9009 said:
sidicks said:
What do you think annuity funds invest in?
Letting fruit machines in hairdressers? 
Same thing, really, I suppose
See. You're not as helpless as you think! There's how to think 'scaleable'!!
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