Lease cars and lack of pension provision
Discussion
All this talk of a few hundred quid here or there, charged against a pension transfer is moot by the time we wade through the Defined Benefit Green Paper later today. BHS, Tata, and now PSA trying to buy out Vauxhall, all will have greater impact on outcomes for their retirees (and potentially, other members of Defined Benefit schemes) than an opportunistic, annoying, unfair and unwarranted charge to carry out a simple administrative function on an outdated pension.
Ginge R said:
All this talk of a few hundred quid here or there, charged against a pension transfer is moot by the time we wade through the Defined Benefit Green Paper later today. BHS, Tata, and now PSA trying to buy out Vauxhall, all will have greater impact on outcomes for their retirees (and potentially, other members of Defined Benefit schemes) than an opportunistic, annoying, unfair and unwarranted charge to carry out a simple administrative function on an outdated pension.
Do you know what the split is now between DB & DC type pensions? With the benefit of hindsight (perhaps), DB does seem like a disaster waiting to happen. Historical observation has always been a sh*tty way to model financial product pay-outs and it feels that in the last 10 years or so we have moved to modelled pay-outs. Given the amount of variables required (and increasing chance of Black Swan events) - it would almost be sensible to ban DB type schemes (they are a recipe for can kicking).What's almost humorous is that we start a discussion on leases Vs. pensions; and some posters (on PH of all places) would have you believe that a pension has lower levels of capital protection than a lease car. You couldn't make it up.
Its also curious that the financial services industry gets broadsided, but when we look at alternate retirement planning (such as BTL) - its hardly a paragon of virtue:
https://stv.tv/news/west-central/1374195-six-rogue...
http://www.bbc.co.uk/news/uk-scotland-glasgow-west...
https://www.mortgageadvicebureau.com/blog/30,000fi...
If you think its just FS that is full of shiesters and crooks, you'd be widely mistaken. If its government intervention that is a risk, then maybe those NOT planning for the future should take some of the blame. It will be the prudent having to pay for them in retirement (or our kids will be).
Or it'll be zombies, or aliens...........(to add to zarjaz1991's amazing list of excuses).
We'll learn in the next hour or so what the levels of DB protection are going to be - it's a seeming given that scheme trustees will be given more latitude in determining the levels and nature of payment indexation. One one hand, I can see why.. we're living much longer than we were forty years ago and companies cannot sustain the burden, and companies are not, as a consequence, investing in their own development and/or creating new jobs.
On the other hand, it presents a convenient opportunity for trustees to abrogate responsibility when they might not need to, and to sell themselves and create an inducement to buyers who don't want to bother with a commitment to the workforce. We saw it with BHS and Tata, and more recently with Bernard Matthews and now, possibly, JSA buying GM Europe. I imagine anyone in a DB scheme will be looking at two things this week, more closely - a recent transfer value and a trustee statement detailing a scheme deficit.
Edit: pic sums it up perfectly.
v
On the other hand, it presents a convenient opportunity for trustees to abrogate responsibility when they might not need to, and to sell themselves and create an inducement to buyers who don't want to bother with a commitment to the workforce. We saw it with BHS and Tata, and more recently with Bernard Matthews and now, possibly, JSA buying GM Europe. I imagine anyone in a DB scheme will be looking at two things this week, more closely - a recent transfer value and a trustee statement detailing a scheme deficit.
Edit: pic sums it up perfectly.
vEdited by Ginge R on Monday 20th February 09:17
drainbrain said:
stongle said:
Pension education is crap. Any vehicle that enables tax fee savings and potentially free money from your employer (matched contribution etc), or govt should be top of anyone's agenda. I started pension contributions at 23, now 42 the pot is >500k. Most of that was free money from employers.
In the main, people need this explaining to them but there are too many shouty idiots either end of the spectrum clouding the issue with noise.
I see you're in the SE.In the main, people need this explaining to them but there are too many shouty idiots either end of the spectrum clouding the issue with noise.
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....
99.999% of people who have made money from property have done so because they have ridden the magic ride of HPI.
oyster said:
drainbrain said:
stongle said:
Pension education is crap. Any vehicle that enables tax fee savings and potentially free money from your employer (matched contribution etc), or govt should be top of anyone's agenda. I started pension contributions at 23, now 42 the pot is >500k. Most of that was free money from employers.
In the main, people need this explaining to them but there are too many shouty idiots either end of the spectrum clouding the issue with noise.
I see you're in the SE.In the main, people need this explaining to them but there are too many shouty idiots either end of the spectrum clouding the issue with noise.
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....
99.999% of people who have made money from property have done so because they have ridden the magic ride of HPI.
stongle said:
Pension education is crap. Any vehicle that enables tax fee savings and potentially free money from your employer (matched contribution etc), or govt should be top of anyone's agenda. I started pension contributions at 23, now 42 the pot is >500k. Most of that was free money from employers.
In the main, people need this explaining to them but there are too many shouty idiots either end of the spectrum clouding the issue with noise.
Amen to this. Thanks to a combination of tax relief, a decent employer contribution, investment returns and consciously choosing tracker funds with rock-bottom fees there is roughly £5 sitting in my pension for every £1 I've had deducted from my net salary over the last decade. So perhaps unsurprisingly I'm quite keen on pensions, and I find the general the lack of knowledge about them (or even wilful ignorance as displayed on this thread), quite depressing. Yes I suppose big bad Gordon Brown could jump out from under a rock and nick my pension off me at any minute but that's a risk I'm willing to take; plus if anyone can tell me which investments likely to produce a decent return are guaranteed to be free from government interference then I'm all ears. In the main, people need this explaining to them but there are too many shouty idiots either end of the spectrum clouding the issue with noise.
Roger Irrelevant said:
stongle said:
Pension education is crap. Any vehicle that enables tax fee savings and potentially free money from your employer (matched contribution etc), or govt should be top of anyone's agenda. I started pension contributions at 23, now 42 the pot is >500k. Most of that was free money from employers.
In the main, people need this explaining to them but there are too many shouty idiots either end of the spectrum clouding the issue with noise.
Amen to this. Thanks to a combination of tax relief, a decent employer contribution, investment returns and consciously choosing tracker funds with rock-bottom fees there is roughly £5 sitting in my pension for every £1 I've had deducted from my net salary over the last decade. So perhaps unsurprisingly I'm quite keen on pensions, and I find the general the lack of knowledge about them (or even wilful ignorance as displayed on this thread), quite depressing. Yes I suppose big bad Gordon Brown could jump out from under a rock and nick my pension off me at any minute but that's a risk I'm willing to take; plus if anyone can tell me which investments likely to produce a decent return are guaranteed to be free from government interference then I'm all ears. In the main, people need this explaining to them but there are too many shouty idiots either end of the spectrum clouding the issue with noise.
oyster said:
Please don't equate rising house prices with clever investing.
99.999% of people who have made money from property have done so because they have ridden the magic ride of HPI.
So......if a bloke gets a house (or any other asset) with a 100% loan and a tenant (or any third party) pays the loan off, how much of the gain, should the bloke decide to sell the house (or any other asset), can be attributed to HPI? 99.999% of people who have made money from property have done so because they have ridden the magic ride of HPI.
Take, for example, a house that is bought in 2005 for £100000 that sells 20 years later for £90000. This bloke's made £90000 hasn't he? Or has he lost £10000? And if he's gained £90000 (which, given he started with £0 seems likely) how much of that gain is attributable to HPI?
Hmmm
drainbrain said:
oyster said:
Please don't equate rising house prices with clever investing.
99.999% of people who have made money from property have done so because they have ridden the magic ride of HPI.
So......if a bloke gets a house (or any other asset) with a 100% loan and a tenant (or any third party) pays the loan off, how much of the gain, should the bloke decide to sell the house (or any other asset), can be attributed to HPI? 99.999% of people who have made money from property have done so because they have ridden the magic ride of HPI.
Take, for example, a house that is bought in 2005 for £100000 that sells 20 years later for £90000. This bloke's made £90000 hasn't he? Or has he lost £10000? And if he's gained £90000 (which, given he started with £0 seems likely) how much of that gain is attributable to HPI?
Hmmm
WindyCommon said:
An interesting gedankenexperiment. What has the bloke in your example done to earn his £90000?
Bought an asset and sold it some time later. There is a certain very small amount of effort required in this. But in a Marxian sense he has done nothing and is, essentially, a parasite.
The point is that his gain is unattributable to inflation.
Edited by drainbrain on Monday 20th February 18:04
drainbrain said:
Bought an asset and sold it some time later. There is a certain very small amount of effort required in this.
But in a Marxian sense he has done nothing and is, essentially, a parasite.
The point is that his gain is unattributable to inflation.
No, he's taken interest, credit and regulatory risk over a 25 year period. His gain is directly driven by risk. Any voids (credit risk) or rate hike (interest rate risk) over and above rentable value impact his payoff. And that before we assess any opportunity losses (if indeed the asset devalued). He'd have to include any CGT into his calculations (not here but if he made a gain). Basically a crap investment over the time horizon.But in a Marxian sense he has done nothing and is, essentially, a parasite.
The point is that his gain is unattributable to inflation.
Edited by drainbrain on Monday 20th February 18:04
For someone whom thinks banks are sheister casinos, you have a funny attitude to risk pricing.
Edited by stongle on Monday 20th February 18:29
Edited by stongle on Monday 20th February 18:31
Edited by stongle on Monday 20th February 18:41
stongle said:
drainbrain said:
Bought an asset and sold it some time later. There is a certain very small amount of effort required in this.
But in a Marxian sense he has done nothing and is, essentially, a parasite.
The point is that his gain is unattributable to inflation.
No, he's taken interest, credit and regulatory risk over a 25 year period. But in a Marxian sense he has done nothing and is, essentially, a parasite.
The point is that his gain is unattributable to inflation.
Edited by drainbrain on Monday 20th February 18:04
Edited by WindyCommon on Monday 20th February 18:41
I kind of sense a nerve has been pinged somewhere in this latest darkening atmosphere.
Okay. Supposing I was to agree that the gain in the example was wholly attributable to HPI, would that calm things?
OTOH can I pour some oil on the flames? This new diversion into 'risk'.....
I'd say ANY investment really carries only one risk. And that is that it fails, or fails to make any satisfactory gain.
There are at least two contrary opinions.
1) No, there are a number of well defined categories of risk although these are not scientifically measurable and are mainly the province of theoreticians.
2) That risk - even the one I believe in - is not worth considering as everything carries an element of unforeseeable risk which the only way to avoid is to do nothing at all.
O and just to get the tangent back on track, how much of the gain in my example WAS attributable to inflation?
(and it's "shyster" not "sheister". "Sheister" is not a word at all afaik).
Okay. Supposing I was to agree that the gain in the example was wholly attributable to HPI, would that calm things?
OTOH can I pour some oil on the flames? This new diversion into 'risk'.....
I'd say ANY investment really carries only one risk. And that is that it fails, or fails to make any satisfactory gain.
There are at least two contrary opinions.
1) No, there are a number of well defined categories of risk although these are not scientifically measurable and are mainly the province of theoreticians.
2) That risk - even the one I believe in - is not worth considering as everything carries an element of unforeseeable risk which the only way to avoid is to do nothing at all.
O and just to get the tangent back on track, how much of the gain in my example WAS attributable to inflation?
(and it's "shyster" not "sheister". "Sheister" is not a word at all afaik).
Come on.
You guys need to stop arguing. As someone who values both btl and pensions I can see merit in both. But Drainbrain, you need to accept that to most people, who just go to work and then get on wth their lives the thought of BTL is just a non starter. Most people don't ever want to think about what a tenant may or may not do to their property. It makes a huge amount of sense, almost a no brainier to some, myself included. But most people wouldn't give it a thought and quite rightly so.
Pensions are fantastic for people who can afford to put money away, have their employer add to it, see the tax benefits and probably have a little think about it every 5 years or so. Separate it from "investing" in the way peoplle choose to invest in different ways. Yes there's probably better ways to "invest". But again, most people just want to get on with their lives. Pensions do a great job of allowing this.
You guys need to stop arguing. As someone who values both btl and pensions I can see merit in both. But Drainbrain, you need to accept that to most people, who just go to work and then get on wth their lives the thought of BTL is just a non starter. Most people don't ever want to think about what a tenant may or may not do to their property. It makes a huge amount of sense, almost a no brainier to some, myself included. But most people wouldn't give it a thought and quite rightly so.
Pensions are fantastic for people who can afford to put money away, have their employer add to it, see the tax benefits and probably have a little think about it every 5 years or so. Separate it from "investing" in the way peoplle choose to invest in different ways. Yes there's probably better ways to "invest". But again, most people just want to get on with their lives. Pensions do a great job of allowing this.
rufusgti said:
Come on.
You guys need to stop arguing. As someone who values both btl and pensions I can see merit in both. But Drainbrain, you need to accept that to most people, who just go to work and then get on wth their lives the thought of BTL is just a non starter. Most people don't ever want to think about what a tenant may or may not do to their property. It makes a huge amount of sense, almost a no brainier to some, myself included. But most people wouldn't give it a thought and quite rightly so.
Pensions are fantastic for people who can afford to put money away, have their employer add to it, see the tax benefits and probably have a little think about it every 5 years or so. Separate it from "investing" in the way peoplle choose to invest in different ways. Yes there's probably better ways to "invest". But again, most people just want to get on with their lives. Pensions do a great job of allowing this.
AGreed.You guys need to stop arguing. As someone who values both btl and pensions I can see merit in both. But Drainbrain, you need to accept that to most people, who just go to work and then get on wth their lives the thought of BTL is just a non starter. Most people don't ever want to think about what a tenant may or may not do to their property. It makes a huge amount of sense, almost a no brainier to some, myself included. But most people wouldn't give it a thought and quite rightly so.
Pensions are fantastic for people who can afford to put money away, have their employer add to it, see the tax benefits and probably have a little think about it every 5 years or so. Separate it from "investing" in the way peoplle choose to invest in different ways. Yes there's probably better ways to "invest". But again, most people just want to get on with their lives. Pensions do a great job of allowing this.
I also think that the demographic of this forum is such that a lot of the posters have absolutely no idea what life is like for people who don't have large salaries.
We have seen in this thread very clearly that many don't understand that people on minimum wage cannot simply 'make sacrifices and shove half their income in a pension'.
And the idea that people in that position could look at BTL is just laughable. Most would be grateful to be able to afford a house just for themselves. I know I would and I earn far more than minimum wage.
Pistonheads - Fantasy Matters
zarjaz1991 said:
AGreed.
I also think that the demographic of this forum is such that a lot of the posters have absolutely no idea what life is like for people who don't have large salaries.
We have seen in this thread very clearly that many don't understand that people on minimum wage cannot simply 'make sacrifices and shove half their income in a pension'.
No-one has suggested any such thing, not even for high earners.I also think that the demographic of this forum is such that a lot of the posters have absolutely no idea what life is like for people who don't have large salaries.
We have seen in this thread very clearly that many don't understand that people on minimum wage cannot simply 'make sacrifices and shove half their income in a pension'.
zarjaz1991 said:
And the idea that people in that position could look at BTL is just laughable. Most would be grateful to be able to afford a house just for themselves. I know I would and I earn far more than minimum wage.
Pistonheads - Fantasy Matters
No one has suggested any such thing.Pistonheads - Fantasy Matters
Zarjaz1991 - misrepresenting other people matters...
Zarjaz1991 - making false claims matters
Edited by sidicks on Monday 20th February 21:15
drainbrain said:
I kind of sense a nerve has been pinged somewhere in this latest darkening atmosphere.
Okay. Supposing I was to agree that the gain in the example was wholly attributable to HPI, would that calm things?
OTOH can I pour some oil on the flames? This new diversion into 'risk'.....
I'd say ANY investment really carries only one risk. And that is that it fails, or fails to make any satisfactory gain.
There are at least two contrary opinions.
1) No, there are a number of well defined categories of risk although these are not scientifically measurable and are mainly the province of theoreticians.
2) That risk - even the one I believe in - is not worth considering as everything carries an element of unforeseeable risk which the only way to avoid is to do nothing at all.
O and just to get the tangent back on track, how much of the gain in my example WAS attributable to inflation?
(and it's "shyster" not "sheister". "Sheister" is not a word at all afaik).
Seriously, don't post on risk if you know FA about it, because that could've been written by a 13 year old with no understanding of capital asset pricing ( that's for you at the basic end of the spectrum). What's more idiotic, is the preferred retirement vehicle you gleefully bang on about is overloaded with systemic risk and you then diversify into more of the same (so correlated).Okay. Supposing I was to agree that the gain in the example was wholly attributable to HPI, would that calm things?
OTOH can I pour some oil on the flames? This new diversion into 'risk'.....
I'd say ANY investment really carries only one risk. And that is that it fails, or fails to make any satisfactory gain.
There are at least two contrary opinions.
1) No, there are a number of well defined categories of risk although these are not scientifically measurable and are mainly the province of theoreticians.
2) That risk - even the one I believe in - is not worth considering as everything carries an element of unforeseeable risk which the only way to avoid is to do nothing at all.
O and just to get the tangent back on track, how much of the gain in my example WAS attributable to inflation?
(and it's "shyster" not "sheister". "Sheister" is not a word at all afaik).
There are plenty of ways to model risk, you just can't be bothered to understand them. What you believe is irrelevant with such a poor grasp on risk premia.
Do you get some thrill out of offering crap advice, particularly on retirement planning? I won't be replying again.
rufusgti said:
Come on.
You guys need to stop arguing. As someone who values both btl and pensions I can see merit in both. But Drain brain, you need to accept that to most people, who just go to work and then get on wth their lives the thought of BTL is just a non starter. Most people don't ever want to think about what a tenant may or may not do to their property. It makes a huge amount of sense, almost a no brainier to some, myself included. But most people wouldn't give it a thought and quite rightly so.
Pensions are fantastic for people who can afford to put money away, have their employer add to it, see the tax benefits and probably have a little think about it every 5 years or so. Separate it from "investing" in the way peoplle choose to invest in different ways. Yes there's probably better ways to "invest". But again, most people just want to get on with their lives. Pensions do a great job of allowing this.
Well what do you want? Do you want only agreement? With all or every form of nonsense? You value both btl and pensions. Good! I'm sure you're not alone. Nor are the people who value one over the other and say so and why. Nor are the people who don't value either. And this might be hard to understand, but some people (I'm one) find ALL their views interesting whether I agree with them or not. You guys need to stop arguing. As someone who values both btl and pensions I can see merit in both. But Drain brain, you need to accept that to most people, who just go to work and then get on wth their lives the thought of BTL is just a non starter. Most people don't ever want to think about what a tenant may or may not do to their property. It makes a huge amount of sense, almost a no brainier to some, myself included. But most people wouldn't give it a thought and quite rightly so.
Pensions are fantastic for people who can afford to put money away, have their employer add to it, see the tax benefits and probably have a little think about it every 5 years or so. Separate it from "investing" in the way peoplle choose to invest in different ways. Yes there's probably better ways to "invest". But again, most people just want to get on with their lives. Pensions do a great job of allowing this.
Another thing. I'm not especially interested in suggesting people invest in btl even although I may suggest to someone that they do, or that they consider it. And I might if they've asked whether they should or not, assuming it appears that it might benefit them. It's something I've done. But in all honesty because of a myriad of changes to a myriad of things it is absolutely IMPOSSIBLE to copy what I've done and would be absolutely pointless to suggest that they try it. That isn't the same as being impossible to get involved in it and to do very well and far better than I could ever hope to do. Because people do, y'know. They do it all the time. It's also only part of a bigger story called 'the Property Industry" which like every other industry has such a huge variety of ways and means and methods and systems that it would be senseless to trumpet one as the be all and end all.
I have a thread, which I will bump in a couple of months, which involves retiring using rented property for income. Not a diversified range of investments INCLUDING rented property, but rented property ONLY. This thread attracts 'attack hyenas' of many colours. Some want an argument, some want to create ridicule, some want to interpret it as a flag waving exercise for btl against all and any form of alternative, including diversified investments, and some want goodness knows what. But that doesn't mean that the thread isn't simply the tale of a retirement based on rented property. Y'see there's a chunky number of people who raise the issue of btl v pension v ISA v sharetrading v whatever you like. And they possibly find it interesting to read the btl perspective. Is that reasonable? It also attracts other commentary that I find very very interesting and useful and occasionally inspirational too.
Then there's the issue of pensions. No one disputes that these CAN have a place in the spectrum of retirement income. For SOME people they are first class. But the 'pension concept' is probably the one that most questions arise about on the forum. And that in itself speaks volumes about the thing. Let me say it again: NO-ONE DISPUTES THAT THESE CAN HAVE A PLACE IN THE SPECTRUM OF RETIREMENT INCOME. FOR SOME PEOPLE THEY ARE FIRST CLASS.
Could that perhaps become understood as my personal position? Pensions are excellent. For SOME people.
However, for example, your post paints a picture of "most people" just trucking on, dripping money into a pension scheme, having a small peek at its contents now and then, and getting on with their lives content with their investment and, one assumes, looking forward to the comfortable income it'll bring them in retirement. Tell you what, would agreeing with that help it to become anything more than a fantasy? Because it IS a fantasy. Would you prefer that fantasy to remain unchallenged?
THEORETICALLY pension funding should be precisely how everyman secures his retirement income. In reality MOST people either don't have a pension fund at all OR have a meaningless contribution-starved one or have the worst of all - a decently funded one with woeful performance. That's MOST people - am I wrong? SOME people - skilled at handling the concept from their knowledge of this most complex and ever changing investment - can make a certain type of pension scheme work very well. Amongst them are people well versed in the underlying investment within them. But even these people come up against the rules and regulations which prevent them, for example, from accessing their funds till they reach a certain age. Or come up against the restrictions as to how much or even what they can fund them with.
There are HUGE areas of the pension concept that are unsatisfactory IN MY OPINION. But there is a fast increasing need to evolve a realistic and workable way
in which comfortable retirement income can be generated. Today I am told and further read that the average DB pension is £7k a year!! And - apart from the skilfully managed SIPP, the DB scheme is arguably the holiest of holies in planet pension. And even THAT is becoming deemed unworkable.......
So what?
Well even in the forum there has been a GRADUAL shift away from the understanding that old age survival = pension and a grudging acceptance that it = anything that can earn a crust. I have suggested that people think hard about working longer than is traditional and maybe even working until they die. Which is where the 'retirement' concept crumbles.
Oh dear! In come the attack hyenas.....
But - trust me here - this will most certainly be the future for many. Maybe most. It's as good as guaranteed. So it might, just might, be an idea for people to find something they can make or do that they enjoy. For many - not all - this might be something they do themselves. That doesn't mean they should abandon the notion of funding a pension plan. But IN MY OPINION most people are going to find pension funding a much less lucrative idea than they imagine it will be. DEFINITELY for most a scheme that can form PART of old age income. But in it's present shape and form, that's all. For MOST.
But hey-ho. Let's not argue about it. Why even try to think about a better alternative way to fund old age than pure pension dependence when we can resign ourselves to apathy? After all, it's good enough for SOME people, so why not just stop being so lazy and wasteful and accept it's only that + "ignorance" that prevents us all living high on the hog in old age on nice DC company or private pension plans!! And ditto with home ownership too!!
£7k a year?? Who's zoomin' who?
Well?
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