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Pensions
howardl
Posts: 5,120 Forum Member
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After seeing a pension thread in the advise section, I wondered how many pay into a pension....I reckon there will be a lot just relying on the state one.
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howardl
Posts: 5,120
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The downside of the current economic climate, coupled with typically huge healthcare costs for the last few years of life, is that there is less incentive for people to save into a personal pension - or even save much generally.
There is an argument that you should just spend while you have it and can enjoy it. There'll only be the value of your house to pass on anyway after you've spent the last couple of years in a nursing home with dementia.
So spend now, and any money you need in retirement for living and healthcare can come from the State - ironically, putting even more of a burden on those paying taxes.
I have a company pension from early retirement and that will be augmented by state pension eventually. But I wonder how much better off I will be than someone who has no company pension but qualifies for more benefits. I mean I will be better off for certain, I am comfortable and own my house, but how much better off I'll be in terms of disposable income I don't really know. Hopefully all those years paying into a personal pension will have been worth it. But I'm not sure it's a clear cut decision for young workers now.
Wow - the changes in pension law came just at the right time for you - you must feel lucky!
No you wont. Its a silly idea. If you are desperate to withdraw it, then take out sufficent to not attrat 40% tax each year.
I have an old closed final salary one, a closed defined contribution one, a small old personal pension which I recently transferred into a SIPP and my current defined contribution pension.
The final salary I have a rough idea what it will be worth, the others are at the mercy of the world's financial markets.
If your company are paying in contributions it really is like free money and I think you would be a fool not to, if you can afford to.
It's index linked and I now get £30k a year.
I do. I am operating on the assumption that there will be no state pension by the time I reach retirement. I think everyone should do the same.
I get my late husband's company pension and one of my own, and get about £32kplus the state pension, so am very lucky in that I have few financial worries in retirement.
However I would advise all young people to ensure that they have some form of private/company pension in place as soon as they can - it would be madness not to as I cannot see the state pension surviving in its present form in years to come.
I know that some will argue that they cannot afford to save, even though they have good salaries, but for many it just means buying a secondhand car rather than a new one, having cheaper holidays, and not buying top of the range gadgets as soon as they appear on the market. Not having to worry about money in retirement is a very big bonus. I have very little sympathy for those that have the income to save but choose not to, as opposed to a great deal of sympathy with those that simply do not have an income sufficient for them to save anything at all
Its not really about not being able to save its much more about modern private pensions not being worth anywhere near as much as the traditional pensions so people have to pay in much more to get much less out.
I think I am part of the generation pensions will have forgotten, so I put my savings into property. Eventually I will sell half of my portfolio and use that to pay off all the mortgages then I will own the other half of my portfolio outright. I will then have a very nice rental income to retire on. I wouldn't touch a pension there's no way I'd get the same pension as the houses will offer me.
Taking 100% cash pension is equal to giving away your monthly premiums, as the government will tax the life out of it. If you equate the added cash and divide it by how many year/months you think you've left on this mortal coil, you get a rough idea of whether you still have benefitted from cash: to getting %cash and monthly payments for life.
When I came into my current job posting 6 years ago, my retirement age was 60. Now it's 66. To get my company pension, it's 68.
However, after crap health last year, I'm retiring in about 12 weeks on health grounds, just short of 60. I wouldn't wish the health on anyone! (cancer + breakdown) but I'm happy to be going early, much as I did enjoy the job.
I'll have the 20 years of personal plan + slightly under half of the company pension. To bridge the gap until state pension age I'll have to draw annually some of the lump sum and not go mad - but I can't really complain.
Do a search for the pension tracing service, it's free and easy to use
Be careful of annual limits that can be paid into pensions when you do, at the moment it's only £40k
I think there will be a state pension in years to come ,with the current system of P--s poor returns on money purchase schemes, i think the state pension will be a bedrock for many years to come, without it people just will not be able to afford to live simple.
Well done shopping around, sounds like you got a good annuity rate out of it
I don't think this will be a worry for most people.
Not if you take your time over it you don't.
True, but that will take you a long time to pay for the car!
i.e.
Current annual tax free allowance = £10,000
Current max State Pension = approx £150 p.w. = £8,060
Meaning you can withdraw an additional £1,940 to avoid paying tax
Take this as taxable income from your Pension, adding £646 tax free cash.
Add this tax free cash to the tax free allowance means you can take £10,646 per annum income without paying any tax
Even allowing for increases in annual tax free allowances, and assuming you can live for free!, this will still take at least 12-15 years before you can afford the car without paying anything extra in tax...........