Im 25, and looking at getting private pension. I have a small army pension (probably not worth eff all). I was set on getting one sorted BUT i have been told that its not worth it and putting my cash in a saving account.

What are your thoughts?

Cheers all.

Probably yes, talk to a professional

Who would this professional be? Bank?

dont go through a bank, best go through an IFA – try http://www.unbiased.co.uk
to find an IFA

Its simple.

Get a pension, you put money in, the tax man puts money in. 1+1=2

Get a company pension, you put money in, the tax man puts money in, the company puts money in. 1+1+1=3

Get a saving account, you put money in. 1+0=1

When your old and out of work you your pension will pay for comfortable nappies, with no penision you will be in the shite.

Interesting article on the telegraph finance site the other day, summarising that as a basic rate tax payer, using your Isa for stocks investment can be beneficial over a private pension, more flexibility etc.

What is the best option depends on your own current personal circumstances and how they are likely to change in the medium to long term.

Saving money is boring, particularly when you are 25 and unlikely to be in a position to draw on it for another 40 years, but it is a good habit to get into.

Similar to the advice given above I would be to speak to an IFA in the first instance. Financial planning is a very personal thing.

Yes.

Thanks for the advice guys!

Plenty of upsides, including ‘free’ money – but the one downside is that you can’t get hold of the money until you retire and what its worth is totally ‘market’ related. ie One of mine didn’t even cover inflation last year.

If you’ve debts etc, pay them off first.

also my company do not have to offer a company pension until aug 2016. There is a nice poster up in the workshop telling us!

While trimmex is right, it’s worth remembering that on a pension you don’t pay tax on the money you out in, but do pay tax on the money you take out, and you can’t touch it till you’re 55.

With a stocks and share isa, you pay tax on the money you put in, but no tax on the money you take out. You do have the option to access your money whenever you want however. Only you can decide if this is a good or bad thing 😀

No debts. I will find a IFA and see what they can advise.

but the one downside

another downside is poor fund-managers looking only at short term goals so they look good and keep their jobs, which is normally totally in opposition to the good of your fund.

thekingisdead – Member

While trimmex is right, it’s worth remembering that on a pension you don’t pay tax on the money you out in, but do pay tax on the money you take out, and you can’t touch it till you’re 55.

You don’t pay tax now whilst you are contributing to your pension, but when you draw it you pay tax because it is essentially deferred income.

The big problems with pensions are their complexity and the way that successive governments have changed the rules over time

Pension reform/auto enrolment and the RDR are the two big things coming up regulatory-wise over the next year or two.

OP – I am surprised that you will have to wait until 2016, I thought the roll out of auto enrolment was a lot quicker than that.

You don’t pay tax now whilst you are contributing to your pension, but when you draw it you pay tax because it is essentially deferred income.

Only if the pension is over the tax threshold though surely?

25! I wouldn’t bother, you want to buy a house? Put money towards that. Well that was my approach then when my mortgage was mostly paid off I started building up a pension – but only worthwhile as a higher rate tax payer IMO. Use a SIPP – Hargreaves Lansdown is the one to beat.

mastiles_fanylion – Member

You don’t pay tax now whilst you are contributing to your pension, but when you draw it you pay tax because it is essentially deferred income.

Only if the pension is over the tax threshold though surely?

This is a great example of the complexity of pensions, which tax threshold are you talking about?

As far as I know your contributions to a HRMC recognised pension are grossed up at your marginal rate of income tax.

Therefore if you earn, but not enough to pay basic income tax then you don’t really gain anything 🙁

The way I see it is that the biggest gainers, tax wise, are those who gain tax relief at just above the 23%(?), 40% and 45% tax bands, but then, after taking their 25% tax free cash allowance, take their draw down at the lower tax band.

Did you follow that? I am not sure if what I typed was totally correct and I work in the industry, lol!

Hence the reason why someone seeking advice should approach an IFA 🙂

IFA – really just a salesman – ever heard of a double glazing advisor?
Educate yourself financially and make your own investment decisions – you can hardly do any worse than the so called professionals.

Yes get one

Seek Professional Advice (not this lot!)

No don’t bother, in about 20 years the “oil wars” will start, soon after the world will devolve into a fiery ball of death.

Even if your one of the survivors (unlikely), the old system will be gone and you will be living a simpler life running and hiding from the mutants.

If you invest into a pension now, all you will be doing is buying your advisor a new audi tt, and keeping the city of London in champaign until death reigns down on us all.

What he ^ said…

You could pre book a slot with Dignitas in Switzerland for your proposed retirement date and save enough to cover the expenses. Sorted unless the World ends before then or you decide that life isn’t so bad for an older bloke with a bit of cash coming in every month.

A couple of years ago an elderly lady told me not to bother. She said that all her friends hadn’t bother, whereas, her and Ken had saved a little.
Her friends had everything paid for but they had just enough to put them the wrong side of the threshold.

Moral of the story (if it’s true..), if your going to save, save a lot?

Obviously I ignored her advice and went for property instead. I don’t like the way that pensions lock you in. But if your crap with money then being locked in is a good thing 🙂

Retire next year. Thankfully I have a good pension. It’s been worth the effort to now be able to spend time enjoying life and more MTB. Not something I could do on state benefits / pension. That’s a losers approach.

Fifteen years ago me and two of my colleagues looked into private pensions. The other two decided to take one out with two different providers. I decided to pay my mortgage off and put the rest in the building society.

Fifteen years later their pensions are worth just slightly less than the total they have paid in whereas my house is paid off and I’ve got a few grand in the bank.

The way it seems to me is that if the “investment market” is doing well the pension company makes big profits with your money and if it is doing badly they take their 5 percent management fee anyway.

Private pensions are great – for the pension company. Keep your money and look after it yourself. Today’s “Independent Financial Advisor” is tomorrow’s “pension mis-selling scandal”.

Today’s “Independent Financial Advisor” is tomorrow’s “pension mis-selling scandal”.

Alternatively

Today’s “Independent Financial Advisor” is yesterday’s “Snake Oil Salesman”.

If you are an employee of a company and they will match your contributions (mine does this up to 5%) then it is probably worth contributing.

If you are not in this position then I am dubious of the value of doing so. Lots of money seems to disappear in charges and commission and the value of (my) funds has fallen significantly over the past few years.

I am contributing 5% to a pension to get the matching contribution from my company. The rest of my spare money is going to pay off my mortgage. Once that is done (age 45) I will look at investing in property with the aim of having 2 or 3 properties owned outright by the time I retire – this will hopefully give us enough to live on through rent and also be an asset that can be sold or bequeathed as necessary.

My family do not tend to live very long so I am loath to have a big pension pot disappear if I die aged 68 as the oldest of my parents did.

Re. IFA’s my experience is that they are far more interested in selling you products that pay them commission rather than giving the best advice possible – around 15 years one was insisting that I take out an endowment when they were being discredited as an investment vehicle. If you pay them for their time you might get a more balanced view but I would rather do the research myself.

The way it seems to me is that if the “investment market” is doing well the pension company makes big profits with your money and if it is doing badly they take their 5 percent management fee anyway.

Its not 5% but their fee is for ‘managing’ your money, not increasing it…

Got an update on one of my pensions last week, hasn’t even covered inflation. 🙄

Yes and no.

Plan for retirement, whether that be savings, pension or whatever but plan for it and don’t spend it.

You want to retire on £20k a year? at todays rates of say 3.5% you’d need almost £600k in the bank – rough example I know, but you get the gist. The stock market out performs savings in the long term and while everything is cyclical a fund manager is paid to use such rises and falls to your advantage.
Besides, pension contributions are made pre-tax so you get more bang for your buck as it were, plus if it’s a company pension they pay in too so you double your money right away – so your pension fund would have to halve in value for you to lose your investment.

At the end of the day it’s your decision what you do, just make sure you do something as you can’t rely on the state giving you enough to live on.

I’ve got private pensions with various companies and have held them for over 20 years.No way would i add to them.
Growth has been pretty poor and all this talk of tax advantages means nothing if it doesn’t grow.
I wish now that i had put myself and my wifes contributions into property.A good possibility for capital growth year on year if you’ve bought well and also for income in letting.A big bonus is that this is in my control and decision making,good or bad.
The only IFA i have trusted is the one from my bank.She looked at funds chosen by my previous IFA and told me the funds were poor performers and showed me a comparisons table to show performances.
To get a reasonable pension the contributions would need to be substantial at present and on retirement you will be gambling on the stock market having steadily risen and a good annuity rate being available.Look at present rates and the stock market performance of the past 10 years before you make a judgement.

madhouse – Member
Yes and no.

Plan for retirement, whether that be savings, pension or whatever but plan for it and don’t spend it.

You want to retire on £20k a year? at todays rates of say 3.5% you’d need almost £600k in the bank – rough example I know, but you get the

I agree you should plan but you dont need that if you are just saving.

£600k would let you live for about 30 years on £20k so retire at 65 and you will be 95. After that you will just be a nice burden on your family and pissing your pants every few hrs. Hardly a life style that needs a big income.

If i am lucky enought to work till 65 then i am looking at about an £8k pension with a lump sum, hardy much but added to the stat pension then its just about enough.

The current pensioners are in the best situation that anyone will ever have, no one under 50 will have a decent pension unless they pay lotas into it.

As for Snakeoil couldnt agree more.

You could pre book a slot with Dignitas in Switzerland for your proposed retirement date and save enough to cover the expenses. Sorted unless the World ends before then or you decide that life isn’t so bad for an older bloke with a bit of cash coming in every month.

This.

Why spend all your years working hard to save up for your retirement. You die at the end of it. Don’t people realize that? You are effectively saving up to wait to die. Work for 50 years to get a two week shitty cruise in the med on a boat that stinks of piss only to die from a brain aneurysm half way through….yeah that’s totally awesome.

The day I don’t have the physical capacity or brain capacity to do some work for money is the day I throw in the towel.

Me? If I plow my money into anything as expensive as a retirement in 50 years….it will be 2050’s cryogenics, cutting edge alzheimers treatments, bionic limbs and regenerative stem cell technology so I can live to twohundredandfuckingwhatever.

The worlds not going to be anything like the world we live in now, in 50 years. Imagine the world 50 odd years ago! Technology is only advancing ever further at a faster and faster rate each year. Society will be unrecognizable, with huge divisions between the haves and the have nots. Some people will be living very very long, productive affluent lives and others won’t. Pensions won’t be worth shit and you will probably need a license to have your balls reattached so you can have a baby. The government will know exactly when you are taking a piss. Energy wars. Wars over fresh water. Justin Biebers offspring. Massive environmental destruction to try to feed the 11 billion world population by then. YAY!

But it will all be fine if I save up for a pension!

And again. What he ^ said…

Bwaarp, when you can pass your exams you can give financial advise!!!

Get a pension, it’s a tax efficient way of saving money. Learn about tax thresholds and how to use them to minimise your tax exposure. If you’re a higher rate tax payer now, you could pay into the pension pot tax free and when you claim it back, only pay tax at the lower rate. If your company also pays in to the pot, it would be churlish not to have a pension.

You could buy property instead, but will you have the means to maintain that property year on year when you have no other income and you’re (presumably) 70+, and how will you cope if the property remains unlet for a period of time?

Don’t make the mistake of thinking you will never get old. You will get old, and will have to make some provisions for when you’re *really* old – don’t leave it too late.

Not all pensions are the same.
http://www.bbc.co.uk/programmes/b01j2bmv#synopsis

Have a look at

http://www.pensionsadvisoryservice.org.uk/

thanks again! im off to see a man today!

i dont want to be in the same situation as my nan and grandad is in!