Uber dumb pension questions.
Discussion
When people talk about annuities (pre-budget) are they talking about private pensions and not occupational pensions?
So self-employed people only.
In an occupational pension scheme your employer pays you the pension out of funds that they manage?
In occupational pensions you have no say as to what happens to your contributions and the employer is fairly free to change the terms of the pension?
Is there anything stopping someone paying into an occupational pension also paying into a private pension or sipp as well?
Ta.
So self-employed people only.
In an occupational pension scheme your employer pays you the pension out of funds that they manage?
In occupational pensions you have no say as to what happens to your contributions and the employer is fairly free to change the terms of the pension?
Is there anything stopping someone paying into an occupational pension also paying into a private pension or sipp as well?
Ta.
rfisher said:
In occupational pensions you have no say as to what happens to your contributions and the employer is fairly free to change the terms of the pension?
Occupational schemes are generally a form of trust arrangement where the ownership is separated from the employer and the control is in the hands of the trustees. Member-nominated (I.e. The employees and pensioners) trustees have been a feature for many years. So the shift of power has been away from big newspaper tycoons being able to steal the money back to buy their yachts ....rfisher said:
When people talk about annuities (pre-budget) are they talking about private pensions and not occupational pensions?
Annuities are only irrelevant if you are in a "defined benefit" scheme, also sometimes known as a "final salary" scheme. In these schemes the employer (or taxpayer) takes the investment risk and you just get your pension paid from the scheme. There's usually no annuity involved.rfisher said:
So self-employed people only.
No. Also people in "defined contribution" schemes run by their employer (also known a "money purchase" schemes.rfisher said:
In an occupational pension scheme your employer pays you the pension out of funds that they manage?
See above.rfisher said:
In occupational pensions you have no say as to what happens to your contributions and the employer is fairly free to change the terms of the pension?
See above the distinction between two types of occupational scheme. The employer may have the right to vary a scheme for the future if you are still working there, but any pension you have already earned cannot be reduced.There's nothing at the moment stopping people transferring their final salary pension into a personal money purchase scheme. Final salary schemes can be worth a LOT of money.
I think the government are going to legislate against this so you may need to act fast to do this. Depending on individual circumstances it could be a good option - previously transferring a final salary pension to money purchase scheme was madness.
I think the government are going to legislate against this so you may need to act fast to do this. Depending on individual circumstances it could be a good option - previously transferring a final salary pension to money purchase scheme was madness.
What pattyg says is true. However, I suggest you would need to think very carefully before making that decision. Unless you are financially competent I would certainly (and unusually) recommend talking to an independent adviser before taking any action, even if it means spending some ££ to get that advice.
These days occupational pension schemes tend to have pretty "safe" investments. It's highly likely your situation will be much riskier if you decide to go it alone.
Question for pattyg: What do you think is likely to happen? A big outflow from occupational schemes causing them to panic and squeal to the government for protection? It's certainly "all change" out there.
These days occupational pension schemes tend to have pretty "safe" investments. It's highly likely your situation will be much riskier if you decide to go it alone.
Question for pattyg: What do you think is likely to happen? A big outflow from occupational schemes causing them to panic and squeal to the government for protection? It's certainly "all change" out there.
Pension minister Steve Webb spoke a little about the future of occupational pensions yesterday:
"In addition, we will create a new ‘defined ambition’ framework for workplace pensions, enabling new forms of risk sharing between employers and employees."
Defined Ambition (DA) models will affect Defined Benefit (DB) schemes, which could finally start to dissapear completely. The death knell for public sector DB pensions has not yet been rolled out or even chimed, but someone in government will almost certainly be looking around for the brasso just in case it's needed.
Webb's love for collective defined contribution schemes, a la Dutch model, is well known (it is if you're a pension geek). I can't see how DA proposals can support the rape 'n pillage approach announced by Osborne though. If the new concept of DA risk is that it is shared intergenerationally, might it be that either the new DC guidance is changed again, possibly in the life of the next Parliament? Hence my point in the 'Who doesn't have a pension?' thread.
Going back to my earlier point, even if DB public sector schemes do survive, Webb has to make them more affordable. So it might be that he focuses on various discretionary benefits, such as the existing statutory indexation (to put it in context, CPI/RPI bunfight will look like handbags at dawn by comparison), spouse's benefits and an automatic transfer of benefits once you've retired back and yet more changes to the age that you can take benefits.
We'll see preserved pension dates shuffle a little to the right - Webb is already referring to 70 or a 50 year working life as the new average more and more. We are being conditionally, subliminally. After the flash bang of this week and whilst we are used to absolutely nothing now being off the table, what better time to unsheath the velvet blade - whilst we're all still be treated for concussion?
As I write, I realise how clever he is. There is stuff in there that the life insurance companies will gratefully buy into because the effective scrapping of annuities has trashed their share prices this week (not the same as pension fund values being hit). Webb has potentially blown away their previous resistance because they now, somehow, have to face up to the new reality of replacing annuity income.
If the state does hand over the accumulated DB pot to be converted into a new DA, or collective DC scheme where the member shoulders some of the risk, they will have the lost income restored because they'll now be looking after the old DB liability and the state will have shifted its DB liability, brilliant!!!
"In addition, we will create a new ‘defined ambition’ framework for workplace pensions, enabling new forms of risk sharing between employers and employees."
Defined Ambition (DA) models will affect Defined Benefit (DB) schemes, which could finally start to dissapear completely. The death knell for public sector DB pensions has not yet been rolled out or even chimed, but someone in government will almost certainly be looking around for the brasso just in case it's needed.
Webb's love for collective defined contribution schemes, a la Dutch model, is well known (it is if you're a pension geek). I can't see how DA proposals can support the rape 'n pillage approach announced by Osborne though. If the new concept of DA risk is that it is shared intergenerationally, might it be that either the new DC guidance is changed again, possibly in the life of the next Parliament? Hence my point in the 'Who doesn't have a pension?' thread.
Going back to my earlier point, even if DB public sector schemes do survive, Webb has to make them more affordable. So it might be that he focuses on various discretionary benefits, such as the existing statutory indexation (to put it in context, CPI/RPI bunfight will look like handbags at dawn by comparison), spouse's benefits and an automatic transfer of benefits once you've retired back and yet more changes to the age that you can take benefits.
We'll see preserved pension dates shuffle a little to the right - Webb is already referring to 70 or a 50 year working life as the new average more and more. We are being conditionally, subliminally. After the flash bang of this week and whilst we are used to absolutely nothing now being off the table, what better time to unsheath the velvet blade - whilst we're all still be treated for concussion?
As I write, I realise how clever he is. There is stuff in there that the life insurance companies will gratefully buy into because the effective scrapping of annuities has trashed their share prices this week (not the same as pension fund values being hit). Webb has potentially blown away their previous resistance because they now, somehow, have to face up to the new reality of replacing annuity income.
If the state does hand over the accumulated DB pot to be converted into a new DA, or collective DC scheme where the member shoulders some of the risk, they will have the lost income restored because they'll now be looking after the old DB liability and the state will have shifted its DB liability, brilliant!!!
pattyg said:
There's nothing at the moment stopping people transferring their final salary pension into a personal money purchase scheme. Final salary schemes can be worth a LOT of money.
I think the government are going to legislate against this so you may need to act fast to do this. Depending on individual circumstances it could be a good option - previously transferring a final salary pension to money purchase scheme was madness.
There may be times, for some people, it makes perfect sense. I think the government are going to legislate against this so you may need to act fast to do this. Depending on individual circumstances it could be a good option - previously transferring a final salary pension to money purchase scheme was madness.
As you say, individual circumstances apply. If doing Close Protection in Afghan following a career in the infantry, sometimes the certainty that your spouse will have the entire fund on your death, is far better than the prospect of her eventually having half of a paltry preserved one. Especially if you don't need the income now.
If the statutory link to indexation goes too, if the age at which you can take benefits, if a transferred DC scheme may be taken in one go, suitably taxed, transferring might tick the right boxes for some people and be a credible course of action to a least consider.
I've just requested the transfer values of a couple of final salary schemes, to explore the possibility if moving to a DC scheme I had(but stopped when employer changed about 5 years ago)
The DC fund has doubled in that time do fund managers are doing something right.
Thank George that I do not have to go the annuity route!
The old option for say a 400000k pot would have been around 20k a year and naff all to my family if I keel over .
In 2015 I could buy a 300000k house & get 20k a year rental . When I expire the family get the house. I can do this from 55. Why wouldn't I?
The DC fund has doubled in that time do fund managers are doing something right.
Thank George that I do not have to go the annuity route!
The old option for say a 400000k pot would have been around 20k a year and naff all to my family if I keel over .
In 2015 I could buy a 300000k house & get 20k a year rental . When I expire the family get the house. I can do this from 55. Why wouldn't I?
Ginge R said:
Pension minister Steve Webb spoke a little about the future of occupational pensions yesterday:
"In addition, we will create a new ‘defined ambition’ framework for workplace pensions, enabling new forms of risk sharing between employers and employees."
Defined Ambition (DA) models will affect Defined Benefit (DB) schemes, which could finally start to dissapear completely. The death knell for public sector DB pensions has not yet been rolled out or even chimed, but someone in government will almost certainly be looking around for the brasso just in case it's needed.
that depends,"In addition, we will create a new ‘defined ambition’ framework for workplace pensions, enabling new forms of risk sharing between employers and employees."
Defined Ambition (DA) models will affect Defined Benefit (DB) schemes, which could finally start to dissapear completely. The death knell for public sector DB pensions has not yet been rolled out or even chimed, but someone in government will almost certainly be looking around for the brasso just in case it's needed.
-if you forget the move to CARE from Final Salary - a move off the DB gold standard)
-the substantial increase in employee contribution rates
-later 'normal pension ages' ( given you can start to take your pension from 55 - the normally 60 or 65 of NHS and local government pensions schemes is a significnat factor given the ill informed hype )
- move to the lower reading measures of indexation - CPI rather than RPI
- the movement to longer working lives in the Trumpton and Plod schemes - no more retiring at 50 / 30 years service - as well as the diminuition of the value of the pension from the incredibily generous 2/3 rds final salary to 50 % of FS ( 50%ish of FS being the maximum achievable with other PS DB schemes)
- the consequent later pension dates from the changes in Military TaCoS - no more retiring at 40 with a immediate pension and more to come at 55 / 60 ...
Ozzie Osmond said:
Who's going to manage the rental? How much will they charge? What will you do if the tenant trashes the place? Or doesn't pay the rent? Or both?
Very high risk strategy with all your eggs in one basket.
Absolutely agreed - double +1!!Very high risk strategy with all your eggs in one basket.
A pension is a very efficient tax free wrapper for investments (a rental property isn't!) - once the lump sum is taken out any investment gain is subject to income tax and capital gains that it isn't in a pension.
I can't see the point in taking money out of a pension to invest it and thus losing all the tax benefits... what am I missing. Transferring it to a SIP such that you are in control of the investment strategy - much better idea but you can do that now...
Mph
Yes, from 55 with AFPS.. but only with a large reduction. It'll get more pronounced and the CARE schemes were announced with the proviso they would remain affordable.
The Government has previously said that it would consider whether to base some pension increases on CPIH inflation rather than on CPI inflation once CPIH became available. The ONS said that throughout the seven years to 2012 CPIH inflation was always lower than or the same as CPI inflation. It was on average been 0.2 per cent lower and this was also the gap at the end of 2012. Watch this space..
Yes, from 55 with AFPS.. but only with a large reduction. It'll get more pronounced and the CARE schemes were announced with the proviso they would remain affordable.
The Government has previously said that it would consider whether to base some pension increases on CPIH inflation rather than on CPI inflation once CPIH became available. The ONS said that throughout the seven years to 2012 CPIH inflation was always lower than or the same as CPI inflation. It was on average been 0.2 per cent lower and this was also the gap at the end of 2012. Watch this space..
Jimboka said:
I've just requested the transfer values of a couple of final salary schemes, to explore the possibility if moving to a DC scheme I had(but stopped when employer changed about 5 years ago)
The DC fund has doubled in that time do fund managers are doing something right.
Thank George that I do not have to go the annuity route!
The old option for say a 400000k pot would have been around 20k a year and naff all to my family if I keel over .
In 2015 I could buy a 300000k house & get 20k a year rental . When I expire the family get the house. I can do this from 55. Why wouldn't I?
I think you've cocked up your zeros... 400,000k is £400 million! Gives you much more than £20,000 a year... I assume you mean £400,000 (£400k).The DC fund has doubled in that time do fund managers are doing something right.
Thank George that I do not have to go the annuity route!
The old option for say a 400000k pot would have been around 20k a year and naff all to my family if I keel over .
In 2015 I could buy a 300000k house & get 20k a year rental . When I expire the family get the house. I can do this from 55. Why wouldn't I?
Note that, by my understanding of the recent announcement, it you take £400k out of a pension in one go you'll be left with £240k after paying tax at the marginal rate of 40%...
timbo999 said:
Ozzie Osmond said:
Who's going to manage the rental? How much will they charge? What will you do if the tenant trashes the place? Or doesn't pay the rent? Or both?
Very high risk strategy with all your eggs in one basket.
Absolutely agreed - double +1!!Very high risk strategy with all your eggs in one basket.
A pension is a very efficient tax free wrapper for investments (a rental property isn't!) - once the lump sum is taken out any investment gain is subject to income tax and capital gains that it isn't in a pension.
I can't see the point in taking money out of a pension to invest it and thus losing all the tax benefits... what am I missing. Transferring it to a SIP such that you are in control of the investment strategy - much better idea but you can do that now...
BTL is an evil device full of shysters promoting it and guillible idiots buying the properties to line the pockets of letting agents while being screwed over by the promise of easy returns ...
every 'buy to let' landlord i've ever met has been an utter utter t
t probably becasue they've realised that it;s not the easy incoem they were promised - it must be BTL that does it as serious property developer types ( regardless of scale) and 'accidental' landlords seem to be far more chilled aobut it all - the serious developers take voids and damages as part of the risk and the accidental landlords realise that as long as the underpinning capital value is preserved they are still likely to be a head at the end of the game.Gassing Station | Finance | Top of Page | What's New | My Stuff