Bit of a dumb question, but is there any point in saving for a pension? Is the world likely to end in the next 30 years? Will the UK go bankrupt, making any savings pointless? Should I simply keep gold bars under the bed?

Note: 24 years old. Moderate earnings (£30+). UK resident.

Marry someone obscenely rich.

I would save money if you can but not put it into a "pension plan" as such but try to get it invested in a mix of areas. Property / land if you can – or a mix of high and low risk shares. More flexible that way.

I have near busted myself buying more and more expensive property than I need – and extra £100 per month on the mortgage has made me more money than putting that into a pension plan would. Thats a part of my pension plans – the equity in the property.

Nah – pensions are over-rated.
😆

shurrup mr retiree

Are you looking at a private pension or a company pension? My company pension is good, I put in 5% they put in 10% so it is worth something extra even if it only stays level against inflation (yes I know it may drop but I see the chances it dropping to less than the value of my contributions as small).

If it's private then you need to consider the tax advantages. In certain cases it is worth it but they are not always obvious, it depends on your tax code and how much of your earnings you are going to put in. You should speak to a financial advisor.

In broad terms you should start saving if you want to retire. By the time you (and me) reach retirement there won't be a state pension that will be anything more than the minimum to survive on. There is a risk that'll you lose everything but for 5% gross I'll take that risk as the rewards are great.

you'll be 70 or older before you're allowed to retire / claim your pension.

do you think you'll live that long? – how many years of retirement do you think you'll have?

(pension age is already 67, and it's only going to go up).

Sorry ahwiles – you have it all wrong. The OP might be 68-70 before getting the STATE pension, but the minimum age for a PRIVATE/COMPANY pension is only just about to increase to 55 (I got mine at 50). So, Flaperon, do you want to work until you are 70 (or die), or retire earlier?

Flaperon

I'm an IFA (Independent Financial Adviser). If you want to chat through your options feel free to drop me a line – at no cost.

Either use my email in profile, or click on my user name which will take you through to my website and give my phone number. You can read my bio under "experts – consultants" (i'm Chris BTW) 😀

Chris.

very hard question

*marry someone on a public sector final salary pension is a more realistic goal

1- what is your genetic life length like (ie at what age did you parents, gparents etc last to), the point being with current law (as I understand it) you MUST buy an annuity at 75 (ie your money becomes somebody elses) and pensions are of no value if you can't take them – understand how much annuity 100,000 money pot buys)

2 – depends where std pensions go and where means testing of pensioners go

3 – you get tax relief (currently on) contributions – but this may be cut to save money, hoever money is ONLY available at pension time (and 25% tax free one off)*Will you be able to contribute a;ll your life or will you have kids that impact your finances

4 – depends what they will do about age expectancy going up (mind you IMHO that may plateau when the obescity generation start getting older)

5 – *assuming you have a private pension it will be invested where you say/agree to, the sales rep gets commission on getting the sell, they DO NOT GET COMMISSION on subsquent performance, so YOU MUST do your own managing/checking/fund switching. Annual growth of 5% might sound good BUT if management fees are 2% and inflation is 3.1% thn you may ish to re-evaluate.

Do a LOT of research, and if you're going in go in ASAP (compound interest)- read up on annuity/annuity purchase, money purchase scheme, tax relief, higher rate tax relief, annual management fees, commission, % growth, fund manager, spreading across funds, risk spreading, age balanced portfolio,track record, fund switching, 25% tax free lump sum and keep your eye on the law………….. (I'd probably also unders ISA as that is another investment vehicle)

sorry, bit rushed din dins.

If your employer is going to make a contribution to the pension plan it is almost certainly worth doing – but there is no substitute for professional advice

Do a LOT of research, and if you're going in go in ASAP (compound interest)- read up on annuity/annuity purchase, money purchase scheme, tax relief, higher rate tax relief, annual management fees, commission, % growth, fund manager, spreading across funds, risk spreading, age balanced portfolio,track record, fund switching, 25% tax free lump sum and keep your eye on the law………

Which is the nub of the problem IMHO, how many people have the time or ability to do that little lot?

ChrisS – Member

Which is the nub of the problem IMHO, how many people have the time or ability to do that little lot?

They could do that instead of posting on here.

It's well worth if you're a higher rate taxpayer. Less so if you're a normal rate bod.

A mate worked at Norwich Union – apparently their average pension pays out 50% of what's in the pot before the policy holder kicks it. So my advice would be to pick something you can actually get your cash out of!

They could do that instead of posting on here.

🙄

My employer contributes something like 5% of the value of my salary to my private pension, I put in about the same and I've also opted out of SERPS so that gets put into the pot too.

But there's no way I'd rely on this as my sole option. I also put money into an ISA and have my mortgage over a shorter term than usual.

My view is that if you spread the risk and put a reasonable sum into your future, you're going to be covering yourself. But I also want to be able to live and enjoy life now, so it's a compromise or a balance.

However, you do it, saving something is better than saving nothing and if you save in a tax efficient way, so much the better for you!

1. Be older and buy a house 10 years ago.
2. Become a teacher, and start a few years ago so that you get the older pension plan, which is way better than the current one.

These may not help very much though.

Get *something* going, that's better than sitting on yer hands. I've got got caught out from a) leaving BT in my 20's at a smidgeon under 5 years (contributions returned) b) no pension scheme at first company after degree/postgrad c) when they did bring one in it was Equitable Life (before it went down the tubes) c) not joining the scheme at my current place 'cos I spent 4 years inteding to leave.

Net effect is my pension's looking all a bit crap, and I'm 46 – fat chance of retiring at 55 !

23 – just went with the company scheme which is 5% – they match – increasing when you hit 30/40/50

figured something is better than nothing !

I don't have a choice with my employers pension so have to pay, if you have the choice, discipline & financial knowledge I think you can make a hell of a lot more money via other methods. For me there are too many restrictions / lack of control over my money for me to like saving as a pension.

Oh and public servant pensions aren't all they are cracked up to be. (not talking about the old system) I was on a far better pension when I was with one of the main banks.

y'see all this kinda talk makes my head spin.

I'm in a similar position except nearly twice the OP's age, with no property, a small lump sum in a pension somewhere with no current contributions and no idea what to do.
Seeing an FA later this arvo, but I kinda glaze over when they start to speak that lingo, and end up feeling like I'm wasting their time.

There are two real problems to this; firstly, knowing how investments will perform over the next 30 years and, secondly, knowing what the benefit/tax system will look like.

The first is obvious and creates your 'return', or lack of… the second not so. Currently having a small private income (and or savings over £16k) as a pensioner can quite easily close your ability to obtain certain benefits – so £10pw 'income' can easily loose you £50pw 'benefit'.

Another problem with a pension is that it is tied up, and also future governments can erode it.

But it could be that these benefits/incomes won't exist in 2045, and any pension income will keep you out of the Workhouse…

Note: 24 years old. Moderate earnings (£30+). UK resident.

£30? A year? Week? Month? Day? Hour? 😛

Teachers pension was a LOT less than I was thinking it would be when I got the projected last month.I will be topping up,for one.

nope, live for today!

means testing will make a small pension pointless (ever wondered why pension companies don't advertise anymore)

I you are married consider getting divorced before you claim state pension

choose your advisor carefully, commission hunters will not care about you

IIRC there will be compulsory contributions soon?

I've just started my pension at the ripe old age of 38…as such I'm putting in 40% plus my company's 2.5%. The costs are low as it's one where I manage it myself. The reason for my late start is I concentrated on my mortgage 1st and also built up a reasonable portfolio of investments in ISAs.

nope, live for today!

TBH that is probabaly the best bit of advice here. 😀

We used to take independent professional advice. We went for the recommended Equitable Life deal. We got an endowment mortgage. Brilliant.

Independent professionals know jack, they have a wider knowledge of what products are out there, and the commissions etc, but performance wise, they haven't got a clue. If they could genuinely predict the market, I 100% guarantee they wouldn't be sitting opposite a desk talking to you about your pension.

We've opted for property now, hard work and a high cost of entrance, but if I lose it I know it's my own stupid fault. If I had the option of a protected company or good local authority scheme though, I still reckon that's probably the best shot for the non self-employed.

I'm putting over a grand/month into mine currently, then there's employers contribs on top of that. I can start drawing it at 55 (subject to employers consent!) and intend to do just that so want to build up a pot while I can. Also use up my ISA allowance / year for some more flexible saving.

24 years old. Moderate earnings (£30+).

£30k a year… **** me.

i'm assuming you've got uni debt payments coming out of that. i'd suggest getting that out of the way first and then bunging as much as you can into savings/property.

not much point in saving whilst you've got debt hanging about.

a small flat that you can rent out once you wan to move on.

three properties and you shouldn't have to pay your mortgage; the other two properties should cover all three….

but then again, i'm 27, work 4 hours a week and earn 25€/hour. no debt mind and £47K in savings after sticking as much as i could afford into various funds whilst living at home in the garden.

If you get a company scheme take a look at it ASAP I contibute 6% of my salary to mine and the company 23%.

I was saving like mad all the time I was in debt and I was making a bigger return on shares and ISAs than I was paying in interest on the debt. I think those days are over to some extent but if you are savvy I think its possible. I bought some shares last summer and have a 50% return already.

One year I got an ISA with an interest free credit card

Grum – I'm employed as a contractor so my actual pay depends on hours worked. It's more than £30/hr, but equally more than £30k per year. 🙂

If you are employed it is highly likely that your employer has some sort of pension scheme in place. This should always be your first port of call before exploring other options.