I'm 30 with no pension...
Discussion
drainbrain said:
Bit of an exaggeration Bob. People don't think pensions are "evil". They just think pensions (yes dear, we know they're a tax free wrapper) are a (comparatively)
crap way to build up funds for themselves.
How can that be, you may ask?
Well, Bob, sometimes it's because of their experience of pension plans, and tales they've heard of others' experiences. And sometimes it's a perception that 'the way it works' including their involvement in it, isn't for them. And sometimes it's because they believe (rightly or wrongly) that they can do far better with their money in other ways. And sometimes they just don't like 'the way it works' - the annuity system being a common example of that one. There are other reasons - many other reasons - why people don't like pension plans.
You mean the requirement to annuitise at age 75 which doesn't exist any more?crap way to build up funds for themselves.
How can that be, you may ask?
Well, Bob, sometimes it's because of their experience of pension plans, and tales they've heard of others' experiences. And sometimes it's a perception that 'the way it works' including their involvement in it, isn't for them. And sometimes it's because they believe (rightly or wrongly) that they can do far better with their money in other ways. And sometimes they just don't like 'the way it works' - the annuity system being a common example of that one. There are other reasons - many other reasons - why people don't like pension plans.
drainbrain said:
So don't be so surprised when you hear people pooh-poohing pension plan saving. It's often enough because they DO understand how they work, not because they don't.
Evidence would suggest otherwise (see above).People can rightly criticise the lack of flexibility with pension funds, which may not suit everyone. To fail to understand that they offer almost the exact same investment opportunities as are available outside of the pensions wrapper but with the benefit of tax free growth and tax relief at your marginal rate on contributions is pretty fundamental and demonstrates a significant lack of understanding!
sidicks said:
Evidence would suggest otherwise (see above).
People can rightly criticise the lack of flexibility with pension funds, which may not suit everyone. To fail to understand that they offer almost the exact same investment opportunities as are available outside of the pensions wrapper but with the benefit of tax free growth and tax relief at your marginal rate on contributions is pretty fundamental and demonstrates a significant lack of understanding!
The least said about 'annuities' the better as I'm sure you'll agree, because it just invites the debate of the borderline between a jolly capitalist wheeze and a criminal scam. People can rightly criticise the lack of flexibility with pension funds, which may not suit everyone. To fail to understand that they offer almost the exact same investment opportunities as are available outside of the pensions wrapper but with the benefit of tax free growth and tax relief at your marginal rate on contributions is pretty fundamental and demonstrates a significant lack of understanding!
And illustrating the theoretical and limited best benefits of pension plan funding isn't any argument against people preferring far better optional uses for their savings.
Some people invest in things which immediately produce income and will continue to produce income when they retire and until they die, and will even then continue to produce income until they are eventually disposed of for many times their original investment cost.
Other people invest in pension plans which don't allow them to withdraw funds for many years and even then under strict (and often tax punitive) terms. Some of them don't even live long enough to enjoy a penny of their hard saved funds which they sacrificed so much to assemble.
If YOU prefer to save for some far distant benefit which you may never need, or live long enough or to be in good enough health to enjoy, and are prepared to sacrifice current enjoyment of the fruits of your labour to the extent of being able to sufficiently fund that far flung benefit 'adequately', then don't let that blind you to the understanding that to some (many) people that isn't even sensible never mind acceptable.
drainbrain said:
The least said about 'annuities' the better as I'm sure you'll agree, because it just invites the debate of the borderline between a jolly capitalist wheeze and a criminal scam.
Not at all. They provide a cast iron guaranteed income for life, which may be very valuable for many people. No scam anywhere to be seen (except to those who don't understand them maybe?).drainbrain said:
And illustrating the theoretical and limited best benefits of pension plan funding isn't any argument against people preferring far better optional uses for their savings.
Such as?Different things suit different people, no one has suggested that pensions are the only or best option for everyone.
drainbrain said:
Some people invest in things which immediately produce income and will continue to produce income when they retire and until they die, and will even then continue to produce income until they are eventually disposed of for many times their original investment cost.
Given that most people investing for their retirement are seeking to invest relatively small e.g.£50-£100 per month, your suggestion appears fundamentally flawed...drainbrain said:
Other people invest in pension plans which don't allow them to withdraw funds for many years and even then under strict (and often tax punitive) terms.
Except they are more tax efficient than the alternatives you propose...drainbrian said:
Some of them don't even live long enough to enjoy a penny of their hard saved funds which they sacrificed so much to assemble.
And? Exactly the same applies in the vague approach you'd favour.drainbrain said:
If YOU prefer to save for some far distant benefit which you may never need, or live long enough or to be in good enough health to enjoy, and are prepared to sacrifice current enjoyment of the fruits of your labour to the extent of being able to sufficiently fund that far flung benefit 'adequately', then don't let that blind you to the understanding that to some (many) people that isn't even sensible never mind acceptable.
What is suitable for some people doesn't change the facts of what pension do and do not offer. Further, mots people investing for their retirement are by defintion seeking to 'sacrifice current enjoyment of the fruits of their labour' to benefit at a future date.Buy this has been explained to you on every pensions thread where you seek to mislead and demonstrate your lack of understanding.
Edited by sidicks on Tuesday 31st January 12:39
Back to the OP...
Based on your age, you want your total pension contributions to be about 15% (1/2 of your age when you start your pension) this includes whatever your employer is contributing.
dan_almond said:
Hi All,
Usual thread whereby i could do with your advice.
I've just turned 30, and apart from a recently introduced company pension scheme, have yet to whack money away for my retirement.
I have a salary just shy of £40k, and recently moved from our first time house, into something more sizable. I have ed equity made in the previous house, and currently mid refurb, in attempt to add value- currently spending c. £30-40k.
Now, the other half has a teacher pension, so i believe shes sorted on that front. Given all my cash up until now has gone into the house, i can currently save £800 a month as things stand.
We don't have kids (yet), and getting married in May.
I have £800 to play with (and currently going into an ISA), but unsure how much of this i should be putting into a pension?
Thought?
What are the details of your workplace pension? Can you increase the payments on that? Does your employer match if you increase? Are your contributions taken before tax?Usual thread whereby i could do with your advice.
I've just turned 30, and apart from a recently introduced company pension scheme, have yet to whack money away for my retirement.
I have a salary just shy of £40k, and recently moved from our first time house, into something more sizable. I have ed equity made in the previous house, and currently mid refurb, in attempt to add value- currently spending c. £30-40k.
Now, the other half has a teacher pension, so i believe shes sorted on that front. Given all my cash up until now has gone into the house, i can currently save £800 a month as things stand.
We don't have kids (yet), and getting married in May.
I have £800 to play with (and currently going into an ISA), but unsure how much of this i should be putting into a pension?
Thought?
Based on your age, you want your total pension contributions to be about 15% (1/2 of your age when you start your pension) this includes whatever your employer is contributing.
drainbrain said:
Calm down Sid!
I'M trying to enlighten Bob (given up with you) on WHY people don't like pension plans as a way of storing up nuts for the winter.
I take it that in your opinion it's just all about not understanding how they work.
You've done nothing of the sort, just your usual snide remarks demonstrating a lack of understanding about the difference between the constraints of the pension wrapper and the performance of the underlying asset classes.I'M trying to enlighten Bob (given up with you) on WHY people don't like pension plans as a way of storing up nuts for the winter.
I take it that in your opinion it's just all about not understanding how they work.
I am one of those who doesn't like the pension system. I have a small pension fund and I appreciate the tax-free wrapper - in fact many of my non-pension investments and even my way of life (Ltd company owner) are very much a case of allowing the tax tail to wag the dog. Perhaps more than they should be.
I even appreciate the certainty of an annuity.
What I feel is wrong is the fact you have to look the money away until an (ever increasing) age that you may not reach. What use is a £1m pension pot if you die in your 50's with no financial dependents?
If I am unlucky (or perhaps lucky) enough to find out at some point before reaching pensionable age at least my combination of property, shares, funds and cash held outside a pension wrapper can be accessed and spent however I wanted. I have however been relatively careful with my money for the last 20 years to get to this point - I have invested sums that I could not have risked locking away in a pension.
But I appreciate it is the easy and probably sensible option for many people, especially where it is part and parcel of a PAYE job.
I even appreciate the certainty of an annuity.
What I feel is wrong is the fact you have to look the money away until an (ever increasing) age that you may not reach. What use is a £1m pension pot if you die in your 50's with no financial dependents?
If I am unlucky (or perhaps lucky) enough to find out at some point before reaching pensionable age at least my combination of property, shares, funds and cash held outside a pension wrapper can be accessed and spent however I wanted. I have however been relatively careful with my money for the last 20 years to get to this point - I have invested sums that I could not have risked locking away in a pension.
But I appreciate it is the easy and probably sensible option for many people, especially where it is part and parcel of a PAYE job.
UpTheIron said:
I am one of those who doesn't like the pension system. I have a small pension fund and I appreciate the tax-free wrapper - in fact many of my non-pension investments and even my way of life (Ltd company owner) are very much a case of allowing the tax tail to wag the dog. Perhaps more than they should be.
I even appreciate the certainty of an annuity.
What I feel is wrong is the fact you have to look the money away until an (ever increasing) age that you may not reach. What use is a £1m pension pot if you die in your 50's with no financial dependents?
If I am unlucky (or perhaps lucky) enough to find out at some point before reaching pensionable age at least my combination of property, shares, funds and cash held outside a pension wrapper can be accessed and spent however I wanted. I have however been relatively careful with my money for the last 20 years to get to this point - I have invested sums that I could not have risked locking away in a pension.
But I appreciate it is the easy and probably sensible option for many people, especially where it is part and parcel of a PAYE job.
Yes, inability to access the assets (without a large tax charge) is a big drawback for some. On the other hand, that is exactly the point as the government is keen to encourage tax efficient saving for retirement thus reducing the burden on the state. With ready access to funds, many people would fritter the money away and have nothing left to live on once they reach retirement age. To my mind the trade off is a fair one.I even appreciate the certainty of an annuity.
What I feel is wrong is the fact you have to look the money away until an (ever increasing) age that you may not reach. What use is a £1m pension pot if you die in your 50's with no financial dependents?
If I am unlucky (or perhaps lucky) enough to find out at some point before reaching pensionable age at least my combination of property, shares, funds and cash held outside a pension wrapper can be accessed and spent however I wanted. I have however been relatively careful with my money for the last 20 years to get to this point - I have invested sums that I could not have risked locking away in a pension.
But I appreciate it is the easy and probably sensible option for many people, especially where it is part and parcel of a PAYE job.
drainbrain said:
Calm down Sid!
I'M trying to enlighten Bob (given up with you) on WHY people don't like pension plans as a way of storing up nuts for the winter.
I take it that in your opinion it's just all about not understanding how they work.
At the moment, I'm mostly with Sidicks, although I will agree that my use of 'evil' was exaggeration.I'M trying to enlighten Bob (given up with you) on WHY people don't like pension plans as a way of storing up nuts for the winter.
I take it that in your opinion it's just all about not understanding how they work.
I'm also not sure that the reasons you gave for people not liking pensions including 'tales people have heard' and perception is any different to my thinking that people seem to mis-understand pensions (regardless of any facts). The 'evil' is just an exaggeration of my view of people's response to these same 'tales'.
There appears to be some blind faith going on that there are better ways of investing for the future to be had than a regular investment into a pension wrapper, well I'm ready to learn.
Perhaps you can provide a worked example of what a 30 year old on £40K a year with limited disposable income should be doing nuts wise. How can said individual plan better for the future than a pension?
Bob
For full disclosure - I used to be 30 year old on similar dosh and have a few pensions from previous employment and quite often think I wish I'd contributed more over the years.
Edited by fat80b on Tuesday 31st January 14:36
Thanks all for your 'interesting' replies! I'm in a bog standard workplace pension, whereby company contributes only 1%, and will rise in line with their basic obligations.
I feel uncomfortable locking away such sums, and ask if the looming implementation of the Pensions/lifetime ISA- is this more suitable to allowing easier access? Am i right in saying the bonus (as such) is released at 55?
I did go to an IFA, who only tried to sell life/income insurance- all too much doom and gloom for my liking, and so went away perplexed!
D
I feel uncomfortable locking away such sums, and ask if the looming implementation of the Pensions/lifetime ISA- is this more suitable to allowing easier access? Am i right in saying the bonus (as such) is released at 55?
I did go to an IFA, who only tried to sell life/income insurance- all too much doom and gloom for my liking, and so went away perplexed!
D
fat80b said:
At the moment, I'm mostly with Sidicks, although I will agree that my use of 'evil' was exaggeration.
I'm also not sure that the reasons you gave for people not liking pensions including 'tales people have heard' and perception is any different to my thinking that people seem to mis-understand pensions (regardless of any facts). The 'evil' is just an exaggeration of my view of people's response to these same 'tales'.
There appears to be some blind faith going on that there are better ways of investing for the future to be had than a regular investment into a pension wrapper, well I'm ready to learn.
Perhaps you can provide a worked example of what a 30 year old on £40K a year with limited disposable income should be doing nuts wise. How can said individual plan better for the future than a pension?
Bob
For full disclosure - I used to be 30 year old on similar dosh and have a few pensions from previous employment and quite often think I wish I'd contributed more over the years.
Bob, if you believe that people don't like pensions because they don't understand them, then don't you find it even stranger that they don't simply seek advice from someone who DOES understand them - which would eliminate the understanding problem and with it their reason for disliking pension plans as a way of funding the future.I'm also not sure that the reasons you gave for people not liking pensions including 'tales people have heard' and perception is any different to my thinking that people seem to mis-understand pensions (regardless of any facts). The 'evil' is just an exaggeration of my view of people's response to these same 'tales'.
There appears to be some blind faith going on that there are better ways of investing for the future to be had than a regular investment into a pension wrapper, well I'm ready to learn.
Perhaps you can provide a worked example of what a 30 year old on £40K a year with limited disposable income should be doing nuts wise. How can said individual plan better for the future than a pension?
Bob
For full disclosure - I used to be 30 year old on similar dosh and have a few pensions from previous employment and quite often think I wish I'd contributed more over the years.
Edited by fat80b on Tuesday 31st January 14:36
Okay. Concrete example. You're in the process of buying something for £5000 which will bring you £150 a month. And which you can sell very quickly for £10000 if you want to.
Would you buy it, or put the money into a pension wrapper instead in order to possibly create more income for yourself if you ever reach retirement age?
Your choice.
danny0001uk1 said:
I'm 31 single on 20k with no career progression, live at home with my mum and dad never owned a property and you think you have problems! Ha
Can I play? I'll raise you I'm about to turn 34, am nearly 18 months clean after 13 odd years of addiction and have nothing 🙄.Like nothing nothing. As in what you're imagining I mean by nothing is probably more.
dan_almond said:
Thanks all for your 'interesting' replies! I'm in a bog standard workplace pension, whereby company contributes only 1%, and will rise in line with their basic obligations.
Its worth making sure you know all the details of your company plan just in case there's some interesting additions. If you make a voluntary contribution to a company pension, your employers have to pay less NI due to the reduction in pre-tax pay. My employers rather nicely pay that saving in to my pension rather than pocketing it themselves, so I end up gaining a bit more than I pay in. No idea if this is common practice.drainbrain said:
Bob, if you believe that people don't like pensions because they don't understand them, then don't you find it even stranger that they don't simply seek advice from someone who DOES understand them - which would eliminate the understanding problem and with it their reason for disliking pension plans as a way of funding the future.
Okay. Concrete example. You're in the process of buying something for £5000 which will bring you £150 a month. And which you can sell very quickly for £10000 if you want to.
Would you buy it, or put the money into a pension wrapper instead in order to possibly create more income for yourself if you ever reach retirement age?
Your choice.
What an total nonsense analogy!Okay. Concrete example. You're in the process of buying something for £5000 which will bring you £150 a month. And which you can sell very quickly for £10000 if you want to.
Would you buy it, or put the money into a pension wrapper instead in order to possibly create more income for yourself if you ever reach retirement age?
Your choice.
Who is selling all these assets that are (apparently) yielding 36%, (apparently) worth £10k, for £5k?
How does this help the person with £100 per month to invest?
Edited by sidicks on Tuesday 31st January 16:17
drainbrain said:
Okay. Concrete example. You're in the process of buying something for £5000 which will bring you £150 a month. And which you can sell very quickly for £10000 if you want to.
I would be very suspicious of buying something for £5,000 that i can apparently sell for double that very quickly. I would suspect that I'm being conned or lied to.CarlosFandango11 said:
drainbrain said:
Okay. Concrete example. You're in the process of buying something for £5000 which will bring you £150 a month. And which you can sell very quickly for £10000 if you want to.
I would be very suspicious of buying something for £5,000 that i can apparently sell for double that very quickly. I would suspect that I'm being conned or lied to.Edited by sidicks on Tuesday 31st January 16:34
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