Pensions : Whats the point, why bother?
Discussion
Feeling a bit miffed. As I'm approaching the grand old age of 40 next month I thought I'd check in with my pension and see how I'm doing with retirement savings and the pot is growing nicely. I have invested into my pension since I started work and have recently increased my payments into the pot, with the aim of retiring at the age of 55, as per my pension rules.
I recently read that the government have changed the state pension age for my generation to be 67. From the age of 18, I anticipated that I'll probably never get any state pension by the time I get to that ripe old age, and I predict that in the next 20 years this point-of-entry will rise perhaps to 75 or more. Hence investing in a private pension.
However, I've read today that the government is now looking to enforce a change so that private pensions can only be taken 5 years before the state pension age - which for me would be 62 (and likely to be even hire by the time I get there), despite the fact that this is my money that I have invested with a future plan in mind.
So, hence my question - what's the point? What if state pension age becomes 75? I'll have to work until I'm 70, just because the government have decided I can't have my own cash. Why am I not allowed to choose when I retire? I appreciate the tax benefits that lie in the pension wrapper, but if I can't get hold of even part of that benefit until I'm in no fit state to ever be able to use or enjoy it, what's the point of it at all?
Instead, we'll all be part of the old-duffer brigade, desperately clinging onto jobs that the younger generation could and should be doing whilst we reap the benefits of our hard-earned.
The whole thing seems wrong - why are they meddling in private investments?! There is no wonder a huge portion of the population haven't bothered with one at all. If that proposal goes through, it would seem to be more beneficial to invest in something else instead so that the money can be used as a retirement pot when you want to retire. It might not be worth anywhere near as much to the tax position, but at least you'll be able to use it.
Anyone else?
I recently read that the government have changed the state pension age for my generation to be 67. From the age of 18, I anticipated that I'll probably never get any state pension by the time I get to that ripe old age, and I predict that in the next 20 years this point-of-entry will rise perhaps to 75 or more. Hence investing in a private pension.
However, I've read today that the government is now looking to enforce a change so that private pensions can only be taken 5 years before the state pension age - which for me would be 62 (and likely to be even hire by the time I get there), despite the fact that this is my money that I have invested with a future plan in mind.
So, hence my question - what's the point? What if state pension age becomes 75? I'll have to work until I'm 70, just because the government have decided I can't have my own cash. Why am I not allowed to choose when I retire? I appreciate the tax benefits that lie in the pension wrapper, but if I can't get hold of even part of that benefit until I'm in no fit state to ever be able to use or enjoy it, what's the point of it at all?
Instead, we'll all be part of the old-duffer brigade, desperately clinging onto jobs that the younger generation could and should be doing whilst we reap the benefits of our hard-earned.
The whole thing seems wrong - why are they meddling in private investments?! There is no wonder a huge portion of the population haven't bothered with one at all. If that proposal goes through, it would seem to be more beneficial to invest in something else instead so that the money can be used as a retirement pot when you want to retire. It might not be worth anywhere near as much to the tax position, but at least you'll be able to use it.
Anyone else?
Edited by Paul O on Monday 7th August 19:58
Pension investing may be the best investment you ever make. By the time you get to state pension age there will be so many pensioners and so few workers that state pension is likely to be a very low subsistence level.
If you don't want to tie money up for the long term then make sure you invest in ISA instead and let the money accumulate tax free. It's not as good as pension (which gets you tax relief on your contributions as well) but you can access the money whenever you like.
For many people a "do a bit of both" approach looks very appealing.
If you don't want to tie money up for the long term then make sure you invest in ISA instead and let the money accumulate tax free. It's not as good as pension (which gets you tax relief on your contributions as well) but you can access the money whenever you like.
For many people a "do a bit of both" approach looks very appealing.
To the OP - does your employer contribute to your pension fund? If yes, find me another investment vehicle that they would pay in to.
Plus, every £6 you put in is worth £10 invested if you're a higher rate taxpayer (£7.50 if standard rate).
Plus, if you earn over £50k you can use your pension fund contributions to get child benefit that you might otherwise lose.
Plus, when you take it out the first 25% is tax free.
Plus, you can do that in 15 years time, they won't change the rules in the current political situation, they want your vote!
So, do you agree that all these "wrapper" benefits should come with strings attached? Your call, of course, but I think it's a pretty fair arrangement right now.
Drainbrain will be along shortly to explain why you should invest in owning fruit machines, or something.
Plus, every £6 you put in is worth £10 invested if you're a higher rate taxpayer (£7.50 if standard rate).
Plus, if you earn over £50k you can use your pension fund contributions to get child benefit that you might otherwise lose.
Plus, when you take it out the first 25% is tax free.
Plus, you can do that in 15 years time, they won't change the rules in the current political situation, they want your vote!
So, do you agree that all these "wrapper" benefits should come with strings attached? Your call, of course, but I think it's a pretty fair arrangement right now.
Drainbrain will be along shortly to explain why you should invest in owning fruit machines, or something.
Brave Fart said:
To the OP - does your employer contribute to your pension fund? If yes, find me another investment vehicle that they would pay in to.
Plus, every £6 you put in is worth £10 invested if you're a higher rate taxpayer (£7.50 if standard rate).
Plus, if you earn over £50k you can use your pension fund contributions to get child benefit that you might otherwise lose.
Plus, when you take it out the first 25% is tax free.
Plus, you can do that in 15 years time, they won't change the rules in the current political situation, they want your vote!
So, do you agree that all these "wrapper" benefits should come with strings attached? Your call, of course, but I think it's a pretty fair arrangement right now.
Drainbrain will be along shortly to explain why you should invest in owing fruit machines, or something.
Plus, every £6 you put in is worth £10 invested if you're a higher rate taxpayer (£7.50 if standard rate).
Plus, if you earn over £50k you can use your pension fund contributions to get child benefit that you might otherwise lose.
Plus, when you take it out the first 25% is tax free.
Plus, you can do that in 15 years time, they won't change the rules in the current political situation, they want your vote!
So, do you agree that all these "wrapper" benefits should come with strings attached? Your call, of course, but I think it's a pretty fair arrangement right now.
Drainbrain will be along shortly to explain why you should invest in owing fruit machines, or something.
Brave Fart said:
To the OP - does your employer contribute to your pension fund? If yes, find me another investment vehicle that they would pay in to.
Plus, every £6 you put in is worth £10 invested if you're a higher rate taxpayer (£7.50 if standard rate).
Plus, if you earn over £50k you can use your pension fund contributions to get child benefit that you might otherwise lose.
Plus, when you take it out the first 25% is tax free.
Plus, you can do that in 15 years time, they won't change the rules in the current political situation, they want your vote!
So, do you agree that all these "wrapper" benefits should come with strings attached? Your call, of course, but I think it's a pretty fair arrangement right now.
Drainbrain will be along shortly to explain why you should invest in owning fruit machines, or something.
Thanks BF - yep, employer contributes significantly, so its a great win. But my point was, that win is kinda pointless if you can't access the fruits of the labour untl your an old dodder dribbling into your soup every morning. That's my frustration - and concern - that the money will be locked for as long as the government see fit, and at any point they choose they can change the rules. It worries me and makes it difficult to plan. I don't wanna be on the treadmill until I'm 70!Plus, every £6 you put in is worth £10 invested if you're a higher rate taxpayer (£7.50 if standard rate).
Plus, if you earn over £50k you can use your pension fund contributions to get child benefit that you might otherwise lose.
Plus, when you take it out the first 25% is tax free.
Plus, you can do that in 15 years time, they won't change the rules in the current political situation, they want your vote!
So, do you agree that all these "wrapper" benefits should come with strings attached? Your call, of course, but I think it's a pretty fair arrangement right now.
Drainbrain will be along shortly to explain why you should invest in owning fruit machines, or something.
Brave Fart said:
To the OP - does your employer contribute to your pension fund? If yes, find me another investment vehicle that they would pay in to.
Plus, every £6 you put in is worth £10 invested if you're a higher rate taxpayer (£7.50 if standard rate).
Plus, if you earn over £50k you can use your pension fund contributions to get child benefit that you might otherwise lose.
Plus, when you take it out the first 25% is tax free.
Plus, you can do that in 15 years time, they won't change the rules in the current political situation, they want your vote!
So, do you agree that all these "wrapper" benefits should come with strings attached? Your call, of course, but I think it's a pretty fair arrangement right now.
Drainbrain will be along shortly to explain why you should invest in owning fruit machines, or something.
I think you have missed the point of the OP.Plus, every £6 you put in is worth £10 invested if you're a higher rate taxpayer (£7.50 if standard rate).
Plus, if you earn over £50k you can use your pension fund contributions to get child benefit that you might otherwise lose.
Plus, when you take it out the first 25% is tax free.
Plus, you can do that in 15 years time, they won't change the rules in the current political situation, they want your vote!
So, do you agree that all these "wrapper" benefits should come with strings attached? Your call, of course, but I think it's a pretty fair arrangement right now.
Drainbrain will be along shortly to explain why you should invest in owning fruit machines, or something.
The OP is not objecting to having strings attached in order to benefit from a pension. He's objecting to these strings being changed and messing up his retirement plans.
I would agree with the OP - it does seem unfair to me that the government have been increasing the age at which pension benefits can be taken - it makes my planning for retirement a lot more uncertain.
Brave Fart said:
To the OP - does your employer contribute to your pension fund? If yes, find me another investment vehicle that they would pay in to.
Plus, every £6 you put in is worth £10 invested if you're a higher rate taxpayer (£7.50 if standard rate).
Plus, if you earn over £50k you can use your pension fund contributions to get child benefit that you might otherwise lose.
Plus, when you take it out the first 25% is tax free.
Plus, you can do that in 15 years time, they won't change the rules in the current political situation, they want your vote!
So, do you agree that all these "wrapper" benefits should come with strings attached? Your call, of course, but I think it's a pretty fair arrangement right now.
Drainbrain will be along shortly to explain why you should invest in owning fruit machines, or something.
You seem like a well clued up chap with a calculator.Plus, every £6 you put in is worth £10 invested if you're a higher rate taxpayer (£7.50 if standard rate).
Plus, if you earn over £50k you can use your pension fund contributions to get child benefit that you might otherwise lose.
Plus, when you take it out the first 25% is tax free.
Plus, you can do that in 15 years time, they won't change the rules in the current political situation, they want your vote!
So, do you agree that all these "wrapper" benefits should come with strings attached? Your call, of course, but I think it's a pretty fair arrangement right now.
Drainbrain will be along shortly to explain why you should invest in owning fruit machines, or something.
Tell me, who do you think has a better/greater income in retirement? A chap who has worked VERY hard and made much sacrifice and has bought an annuity with the entire £1M of a private pension he has contributed to all his working life.
OR
A chap who has the profit from his investment the week before he retired in ONE FOBT?
And of course (with a nod to the OP) that week could be the week he left school age 16.
(Put another way, which would you advise someone to invest in for retirement income)?
(or, yet ANOTHER way, which income would YOU prefer)?
Edited by drainbrain on Monday 7th August 22:02
CarlosFandango11 said:
I think you have missed the point of the OP.
The OP is not objecting to having strings attached in order to benefit from a pension. He's objecting to these strings being changed and messing up his retirement plans.
I would agree with the OP - it does seem unfair to me that the government have been increasing the age at which pension benefits can be taken - it makes my planning for retirement a lot more uncertain.
I think we can all see that at some point the State pension will reduce (in real terms) and potentially only be able to those with no other provision, meaning that the rest of us will be more reliant on access to our private pensions when the time comes.The OP is not objecting to having strings attached in order to benefit from a pension. He's objecting to these strings being changed and messing up his retirement plans.
I would agree with the OP - it does seem unfair to me that the government have been increasing the age at which pension benefits can be taken - it makes my planning for retirement a lot more uncertain.
Given the new constraints on contributions and lifetime limits etc, I think (hope) that the government will realise that they can't continue to increase the age at which private pensions can be taken.
x5x3 said:
do you have a link please?
I think it was this article, although I'm sure the one I read at work was more suggestive of the 5 year link than 10...http://www.telegraph.co.uk/finance/personalfinance...
Paul O said:
x5x3 said:
do you have a link please?
I think it was this article, although I'm sure the one I read at work was more suggestive of the 5 year link than 10...http://www.telegraph.co.uk/finance/personalfinance...
joking aside - it is very shortsighted to keep changing the rules.
it illustrates everything wrong with politics.
x5x3 said:
thx - I'm over 40 so I'm fine
joking aside - it is very shortsighted to keep changing the rules.
it illustrates everything wrong with politics.
But the rules have to change. To me it is blindingly obvious that in the context of rising life expectancy and stretched government finances you need to keep the pensions bill under control. joking aside - it is very shortsighted to keep changing the rules.
it illustrates everything wrong with politics.
Politicians are to blame for not acting sooner to tackle the demographic timebomb we are all sitting on, in my opinion.
Paul O said:
I think it was this article, although I'm sure the one I read at work was more suggestive of the 5 year link than 10...
http://www.telegraph.co.uk/finance/personalfinance...
That was published ages ago.http://www.telegraph.co.uk/finance/personalfinance...
I haven't seen anything to suggest the Government is looking to reduce 10 years early to 5 years early.
Paul O said:
Brave Fart said:
To the OP - does your employer contribute to your pension fund? If yes, find me another investment vehicle that they would pay in to.
Plus, every £6 you put in is worth £10 invested if you're a higher rate taxpayer (£7.50 if standard rate).
Plus, if you earn over £50k you can use your pension fund contributions to get child benefit that you might otherwise lose.
Plus, when you take it out the first 25% is tax free.
Plus, you can do that in 15 years time, they won't change the rules in the current political situation, they want your vote!
So, do you agree that all these "wrapper" benefits should come with strings attached? Your call, of course, but I think it's a pretty fair arrangement right now.
Drainbrain will be along shortly to explain why you should invest in owning fruit machines, or something.
Thanks BF - yep, employer contributes significantly, so its a great win. But my point was, that win is kinda pointless if you can't access the fruits of the labour untl your an old dodder dribbling into your soup every morning. That's my frustration - and concern - that the money will be locked for as long as the government see fit, and at any point they choose they can change the rules. It worries me and makes it difficult to plan. I don't wanna be on the treadmill until I'm 70!Plus, every £6 you put in is worth £10 invested if you're a higher rate taxpayer (£7.50 if standard rate).
Plus, if you earn over £50k you can use your pension fund contributions to get child benefit that you might otherwise lose.
Plus, when you take it out the first 25% is tax free.
Plus, you can do that in 15 years time, they won't change the rules in the current political situation, they want your vote!
So, do you agree that all these "wrapper" benefits should come with strings attached? Your call, of course, but I think it's a pretty fair arrangement right now.
Drainbrain will be along shortly to explain why you should invest in owning fruit machines, or something.
Private pensions are your money, and you are induced to save by a set of rules. If those rules suddenly change, then all the opposition have to do is say "we will revert back to the bold rules" and the majority of people with a pension would vote for them.
Add to that the current government has very little to gain by changing the rules for something happening in 15 or 20 years.
Also if it changes pensions dramatically then people will switch to non pension products, which will massively increase the risk of the Government needing to support you in your old age.
NickCQ said:
x5x3 said:
thx - I'm over 40 so I'm fine
joking aside - it is very shortsighted to keep changing the rules.
it illustrates everything wrong with politics.
But the rules have to change. To me it is blindingly obvious that in the context of rising life expectancy and stretched government finances you need to keep the pensions bill under control. joking aside - it is very shortsighted to keep changing the rules.
it illustrates everything wrong with politics.
Politicians are to blame for not acting sooner to tackle the demographic timebomb we are all sitting on, in my opinion.
I'm doing exactly that (51 now) and it not going to cost the Government anything.
CaptainSlow said:
Fair enough, but stop changing the rules, otherwise how can one decide the best course of action?
It's a fair point, but all too often I hear people who've put in £200 a month complaining that it's the change in the rules that. Evan that their pension is worth so little.It just isn't credible, people putting in so little and then blaming the government when they get so little back out.
98elise said:
The OP is talking about Private Pensions. If you've saved enough to retire at 55 why should you not be prevented from doing so?
I'm doing exactly that (51 now) and it not going to cost the Government anything.
Yep, that's my point, I should be allowed to choose when I take my private pension, otherwise its not worth over -investing as you might never be able to use it if the government change the rules.I'm doing exactly that (51 now) and it not going to cost the Government anything.
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