Pension advice... to cancel or not to cancel?
 

Thinking of canceling my personal pension.

Since I was 18 (back in 1992) I took out a personal pension, £30 per month.
All looked good to be a millionaire by the time I retire!!

Two years in to it the advisors came round and said I should up it to £120 a month to keep on top of inflation!!

Stuff that.... so I made it upto £50 a month.

i said I wouldn't increase it and just use it as back up slush fund for my later years and invest in property (now have a nice property portfollio)

Now, I've had a yearly statement this week giving me figures on what it could pay out at the the rate of today with the £50 a month I'm paying.


To mature in 2039
Lump sum pay out £39k
taxable yearly pension of £3250.


Now, I'm no accountant and i know rates can go up, but in my eys £3250 a year TODAY is rubbish let alone in 31 years time.


I'm now thinking that I'd stop paying the £50 a month and invest it else where... maybe top up an ISa or put the money to better use now.

Am I right in doing so???

I'm not prepared to throw money at a private pension as I've seen all to many times that unless you havea company pension with.. say BOOTS, NHS, Coal Board etc you don't get a big pay out.



In todays money, how much a month would you have to pay into a private pension to give you £100k lump sum and a £25k a year pension......... £1k a month???


Do the maths, IMO there not as good they they tell you when they get you to take them out!!!!

EEK, I was just about to post a pension thread too! I'm not sure what to do with mine, well the one I stopped paying into when I changed employers 18 months ago, have since started a new one with the new employers.

I remember being sold it and the guy only talked about what I'd pay, didn't seem to know what it would pay out, very little as you say no doubt.

While you still have other debts, I'm not convinced that paying a lot into a personal pension is a great idea unless you're a higher rate taxpayer. On the plus side, you do get tax relief on your contributions - but on the other hand, you can't actually get at the money until you're arguably too old to enjoy it!

That said, you're not actually paying a lot into the pension anyway - £50 a month over, say, a 40 year working life is never going to turn into £2000 a month for (say) 25 years between retirement and death. It just doesn't add up.

IMHO if you were to put the money into an ISA then you'd have much the same choice of fund types anyway. The difference is tax relief now + cash when you're old and grey, or no tax relief but access to your money whenever you want. It's up to you really, only you can assess how likely you are to need to dip into your savings before you retire.

Pensions are good if you live forever, if you die at 66 what is the point? personally I have never seen the point in a pension I would rather pay off my house, save a nice tidy sum in the bank/investments etc which I can get into if/when I want, set my kids up for uni etc, and enjoy the rest while I still have all my bearings and can at least walk to the toilet.

Sorry if it sounds harsh but I see too many people who do not get chance to enjoy it.

Thing is, if I put £120 a month in back in 1994 whn they said too, what would i have to have kept putting it up to to keep on top of inflation?
What would I be paying now.

I was always told, put a little a way for longer will be better than those who have to cram a load of cash in when they start to panic at the ge of 45!!

To me it seems dead money and I'm not in the postion to be puttng £1k a month into a pension that I might live to see at 65!!

Get some proper adviser. But my advice is to transfer your private pensions to a SIPP. You should be able to ask you existing provider for a transfer valuation.

What is a SIPP? | SIPP | Pensions & retirement | Hargreaves Lansdown

A SIPP is real simple really as its a bit like an ISA in that it wrappers/shelters other investments and give more flexibility over how your money is invested that other pensions (eg, higer risk stuf when you're young and lower risk as you get older and you want to protect your lump sum).

If you have a fund that pays tax/fees (As I do) for you, then consolidate all other funds in to that fund. I did this recently with many of my funds and policies and I am still trying to transfer my UK pension fund value to Australia.

The figure you have are based on what you have in there now. With continued contributions and the effect of compund interest/investments if will go up significantly before it matures.

You should also increase your contributions as your disposbale income goes up - Hence the reason company pensions are a percentage of your pay; you controbutiosn go up every time you get a pay rise.

I don't think consdolidating pensions into one fund is necessarily a good idea for two reasons.

1. Pensions perform differently, some will have good year some will have bad years. If you consolidated fund performs poorly over a period of time; all your pension fund is suffering

2. If, however unlikely, a pension fund goes belly up and you have everything in it, you are absolutely screwed.

The old adage of not putting all your eggs in one basket srpings to mind.

Our comapny pension we pay in 7% of our gross pay. So for instance 30k per annum is around £175 per month which is considerably more than £50 per month. I was told when I had a personal pension to half your age and put that % into a pension. So if you are 40 u should but 20% in :eek2:

Ah I do love my non contributory pension that will pay out 2/3 of my final salary every month for life on retirement.

Incorrect Pete.

The figures Phil has been quoted assume he continues to pay in 50 per month till retirement date, but at today's anticipated growth rates.

Phil, its like this

£50 a month from now till 2039 = £18,600 invested on top of the say 6k you have to date. That assumes that although you don't pay tax on the contributions (or should be claiming credit for it), the savings go in your pocket and not to the scheme.

Thats £24,600 in for tax free lump sum of £39k plus £3,250 a year out.

Not a bad deal depending on how long you live for past the retirement date.

Its not enough to live on because you are not puting that much in.

You are extremely lucky to be in a final salary scheme. Hopefully that luck will continue and the scheme will still be solvent when you retire.

Ah ok.

Thanks :thumb:

I can't remember what I pay into mine. I pay in 4% of my salary and my company pays in an addition 5%

Happy to clarify :)

Yup, I'm around the same - coy pays 6% which I top up.

Dont talk to me about pensions. Ive worked for the same company (nearly 9 years) since Uni and have 4 pension plans. They offer a good scheme as will double my personal contribution up to 6% (so 12% from them) which Ive always done.

Thing is I get so much paperwork every month telling my pension is worth this at this rate bla bla bla and this based on inflation. Every time its a different figure.

Got a meeting with pensions advisor tomorrow to see what I can do about putting them in one pot as hard enough to keep track of them all now let alone in another 30 years. Why cant they be like savings where you see your current balance plus interest accrued so know exactly where you stand.

My old man is civil servant and never paid a penny other than some ins fee to get his final salary pension. W*nker :lol: although tbf the RAF robbed him so not all good for him.

Simon

I have three pensions.

One of which had a total fund of around £33K in it in 2007. I got the statement for it in April and it had gone down by £3K (I dont contribute to it anymore, its a previous company pension)

Bloody econmic slowdowns

Agreed however, as I stated, if the fund manager/employer is paying the fees (on contributions) then that is a safer bet than having many funds (As I did).

Like I said to Klaatu, by having them kept as 4 seperate pensions, you are spreading your risk.

Be interested to hear what any finance professionals think on this issue.

Yup I guess the fund management fees do come into play if you have a number of funds. Good point.

Depends I guess. At least 2 of mine are with same Pension Company (AXA) so not sure how well risk is spread.

Did you lose the £3k on admin fees alone or ???

Simon

As said: Personal pensions do still have their uses for tax reasons for when you do eventually make use of it.

But most certainly its not the only fund you should rely on...sure have one, but keep interests vested elsewhere as well. Depends on how much money you have to play with.

No, that was due to the economic slow down. I.e.e my pension fund investments evidently didn't perform very well.

What do you all do with pensions from previous companies that no longer have any contributions in them? I have a few with a couple of k in each of them sitting about waiting another 30 years to pay out. I guess this is wasted money? Should they be transferred to the pension you have now? I've now got a 12% non contributory pension so would the static pensions be better off being transferred into this?

Depends on the admins costs, transfer costs and whether or not your current scheme will accept a transfer in.

Chances are they are doing just as well where they are as they would be as part of a more highly funded scheme.

An IFA (as opposed to any number of ACFAs ;) ) will confirm whats best in your own case.

What a timely thread! I've got a meeting with a IFA tonight :thumb:
For the last 6 years I have been paying into a contributory pension (me 4% them 8%) but I've left that company now and work for a private practice that don't do pension schemes.
I've never thought that paying a massive % into a pension is a good idea cause unless you live till your late 80's you'll never get the benefit. This was rammed home to me when my father in-law died of a massive stroke 2 weeks into his retirement. All those years paying into his retirement fund and all my mother in-law got was a year and a half's worth of payments.

Agreed, but think of it more as an insurance policy.

You are really insuring against being alive with little income after you retire.

I plan a long, happy and healthy retirement, or at least, one where I can afford a decent nursing home where the food is better than in prison. So, I'm investing in a pension right now - and if I die before I'm able to really take advantage, then at that point I'll probably stop really caring anyway. I expect to stop caring about a lot of things once I'm dead!

SK - I cancelled mine last month. The entire system is flawed. Her indoors is on Superann, so I am going to spend the contributions on taking her out to dinner in the hope that she doesn't trade me in and keeps me in my old age :D

(Alternatively - spend the money on booze, fast cars and drugs and ensure you won't have an old age)

Just taken out a pension (I'm 42) - It's costing me £800 a month till I am 65 and is planned to give me a pension pot of approx £450K which (depending on performance) gives me an annual pension of anything between £12 - £20K a year.

All figures above are from memory clouded by 1664 Dynamo. Will dig out actual figures and repost later.

When I am facing the grim reapers changing rooms I plan to sell everything - go to Vegas and eat cake out of a h**kers P&ssy then blow the lot at craps at the Bellagio.

:norty: