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Pension Statement

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Just opened my pension statements..

Good news: If I somehow continue in my job, get regular payrises, and the economy fails to collapse, then by age 65 I'll have a pot of..

£300k.

Wow, I thought. That's a decent sum.

This will give me a pension of..

£11.5k a year.

Now, by my calculations, that means that even if my 'pot' was 'invested' as cash under the mattress, it would still last me into my 90s. What do they do with it that coats so much??

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Just opened my pension statements..

Good news: If I somehow continue in my job, get regular payrises, and the economy fails to collapse, then by age 65 I'll have a pot of..

£300k.

Wow, I thought. That's a decent sum.

This will give me a pension of..

£11.5k a year.

Now, by my calculations, that means that even if my 'pot' was 'invested' as cash under the mattress, it would still last me into my 90s. What do they do with it that coats so much??

Your pension will have some degree of inflation protection, probably not full RPI but something along the lines of up to a 5% maximum each year. Not trying to defend the pension industry but you need to work this into your comparison versus the mattress. Also, when you retire you can take up to 25% of that £300k pot out tax free. And finally, your spouse will probably qualify for 50% of your pension for the remainder of her life, where as when the mattress is empty, it's empty!

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Just opened my pension statements..

Good news: If I somehow continue in my job, get regular payrises, and the economy fails to collapse, then by age 65 I'll have a pot of..

£300k.

Wow, I thought. That's a decent sum.

This will give me a pension of..

£11.5k a year.

Now, by my calculations, that means that even if my 'pot' was 'invested' as cash under the mattress, it would still last me into my 90s. What do they do with it that coats so much??

That £11.5k is mainly because annuity rates are so cr@p at the moment. Try taking up smoking for a bit. That will increase your annuity rate.

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They are probably using the optimistic forecasts of 7% capital growth per annum too. If you did get that size of pot I'd take as much cash (25%) in retirement put it in the building society and take out circa £5k a year. I bet that the state pension will diminish in time and the pension top-up will take up the slack for those that haven't made provisions (other than NI contributions) over the years. I can see the government taking £1 off your state pension for every £2 paid to you via private pensions or something like that. It's galling considering I've got 35 years left to work paying 400+\- in NI alone every month and haven't been registered with a doctor for twenty years or used the NHS and will at best get the state pension for 5 years before I kick the bucket.

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Your pension will have some degree of inflation protection, probably not full RPI but something along the lines of up to a 5% maximum each year. Not trying to defend the pension industry but you need to work this into your comparison versus the mattress. Also, when you retire you can take up to 25% of that £300k pot out tax free. And finally, your spouse will probably qualify for 50% of your pension for the remainder of her life, where as when the mattress is empty, it's empty!

Oh, I know it's not *that* simple.. but the comparison between the size of the pot and the eventual payout seems to take the p*ss, to be honest.

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Sorry you were asking what costs so much...

When I started out in banking years before transactions went entirely paperless I had to run paperwork between my bank and a few of the pension providers, the pension manager at let's just say one of the larger more 'prudent' ;) funds (very nice guy actually) once tool me for a spin in his Ferrari, they don't come cheap!!!

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Three things. If either or both of the first two apply, the rate is better than it looks.

  1. They may be assuming you take 25% of the £300k as a tax-free lump sum.
  2. The £11.5k may be index-linked.
  3. What really keeps it down is the rate on government bonds. Your pension can be invested better while you're saving for it, but the law requires the annuity to be backed by that crap.

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Three things. If either or both of the first two apply, the rate is better than it looks.

  1. They may be assuming you take 25% of the £300k as a tax-free lump sum.

  2. The £11.5k may be index-linked.

  3. What really keeps it down is the rate on government bonds. Your pension can be invested better while you're saving for it, but the law requires the annuity to be backed by that crap.

Point one... assumption is the mother all all ****-ups and they won't be.

Even if the £11.5k is indexed linked it will be 3% tops averaged.

Annuity rates are in the doldrums and there are a lot of annuity providers out there and the competition hasn't driven prices any higher.

Pensions are a con!

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The pensions and how they are operated is scandalous, you pay a fee and annual fees for supposedly knowledgeable investment managers to make your hard earned money grow so that you can feel safe and secure in your twilight years......fine but what is so wrong i) the fees are far too high and even worse ii) they take the fees not only when they make you money but also they take it from the losses...So they can't lose, only you can, they make money from losing your money....this has to change. :ph34r:

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I plan to put a wad every year into a tax free cash ISA, and any left over into a tax free Stocks and Shares ISA.

Considering the pension fees over a 30+ year period ? I would be surprised if a pension 'advisor' would get me a better return during the same time.

And if I do ****** it up - at least I will have myself to blame which I can happily accept. If it was some shiny suited chump who I had to blame and all I got for it was a wee letter thanking me for my commision payments over the decades ?

Would not be quite so easy to accept.

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Point one... assumption is the mother all all ****-ups and they won't be.

Erm, why not? 25% is normal, and you'd be a fool not to (precisely because it's tax-free).

Even if the £11.5k is indexed linked it will be 3% tops averaged.

3% over 25 years leaves you more than double the original. The £300k has become £450k.

Annuity rates are in the doldrums and there are a lot of annuity providers out there and the competition hasn't driven prices any higher.

The law heavily constrains what they can offer. If it didn't, we'd have another case of 'bad money drives out good', and annuity providers going bust. And we may yet see that!

Pensions are a con!

They certainly were in pre-Equitable times. Today's pensions are in transition to something more realistic. If you're over 50, your pension is in trouble, but if you're under 40 you'll be retiring into a much healthier system. Even if they keep on ****ing it up, demographics tell us that.

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A member of my family invested £300k into one of Kay Brandeauxs property funds just before they hit cash flow problems on the advice of their flash pensions advisor who conveniently retired last year. I told the same family member to put the money in CHF when it was trading at 2.45 to the GBP they took his advice over mine but I guess it was because he turned up in an £80k mercedes so must be good with money then - the last laugh was his fees £12,000 for that one deal alone lol

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I plan to put a wad every year into a tax free cash ISA, and any left over into a tax free Stocks and Shares ISA.

Considering the pension fees over a 30+ year period ? I would be surprised if a pension 'advisor' would get me a better return during the same time.

And if I do ****** it up - at least I will have myself to blame which I can happily accept. If it was some shiny suited chump who I had to blame and all I got for it was a wee letter thanking me for my commision payments over the decades ?

Would not be quite so easy to accept.

The problem I have is that faced by many: My employer puts most of the contributions in, the system used to invest them is fairly remote and useful data to guide such decisions almost non-existent.. it's almost like they don't want me to know..

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Porca

You don't understand how pensions work - you buy an annuity with your 300k so you lose your initial sum and wonk get that back let alone 450k

Cash in the bank at 5% interest is king.

I won't go on, if they sound good to you and the providers are telling you that they don't practice like they used to then go ahead and good luck :)

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Just opened my pension statements..

Good news: If I somehow continue in my job, get regular payrises, and the economy fails to collapse, then by age 65 I'll have a pot of..

£300k.

Wow, I thought. That's a decent sum.

This will give me a pension of..

£11.5k a year.

Now, by my calculations, that means that even if my 'pot' was 'invested' as cash under the mattress, it would still last me into my 90s. What do they do with it that coats so much??

Next year I plan to buy for cash 4 x 3 bed terrace houses in my old home town (for £300k). For similar houses I am getting on average £450/month on my current batch of BTLs. So looking at rental income of ~£18k to £20k/year (including some voids, repairs etc.).

I have not seen anything to suggest I have made a huge mistake in getting out of pensions 7 years ago. I also pay the maximum annual ISA contribution in stocks & shares to have a further pot when I will think about retiring at 50.

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Just opened my pension statements..

Good news: If I somehow continue in my job, get regular payrises, and the economy fails to collapse, then by age 65 I'll have a pot of..

£300k.

Wow, I thought. That's a decent sum.

This will give me a pension of..

£11.5k a year.

Now, by my calculations, that means that even if my 'pot' was 'invested' as cash under the mattress, it would still last me into my 90s. What do they do with it that coats so much??

Don't just accept the annuity rate offered by your existing company. I got an extra 2% by shopping around :D.

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Porca

You don't understand how pensions work - you buy an annuity with your 300k so you lose your initial sum and wonk get that back let alone 450k

Cash in the bank at 5% interest is king.

I won't go on, if they sound good to you and the providers are telling you that they don't practice like they used to then go ahead and good luck :)

Tomp

Any interesting views on Qrops ? SO much info available but much of it contradictory.

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You'd need to speak to an expert - this is a forum. If your looking at emigrating then no hesitation but otherwise you may open yourself up to tax implications (depends what kind if treaty is in place) and unfavourable foreign exchange movements although it is looking increasingly likely that they will be favourable movements for the foreseeable future (unless UK Plc is sitting on a gold mine. Quite literally). A_landlord looks as though he's done alright on property, trick is it seems not to owe the banks any money in the acquisition of the portfolio and rental incomes generally track wages (so some inflation linking).

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Don't just accept the annuity rate offered by your existing company. I got an extra 2% by shopping around :D.

Oh, I'm not retiring for another 23 28 goodness knows how many years, and I suspect that the whole lot will be wiped out by inflation/collapse/fraude/whatever by then. It'd just be nice to have some hope.

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<br />The problem I have is that faced by many:  My employer puts most of the contributions in, the system used to invest them is fairly remote and useful data to guide such decisions almost non-existent..  it's almost like they don't want me to know..<br />
<br /><br /><br />

Well yes that is another story.

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Next year I plan to buy for cash 4 x 3 bed terrace houses in my old home town (for £300k). For similar houses I am getting on average £450/month on my current batch of BTLs. So looking at rental income of ~£18k to £20k/year (including some voids, repairs etc.).

I have not seen anything to suggest I have made a huge mistake in getting out of pensions 7 years ago. I also pay the maximum annual ISA contribution in stocks & shares to have a further pot when I will think about retiring at 50.

So about 6% gross. Then you have worries, time spent chasing stuff up, fixing stuff and the rest of it.

With that in mind would 4% fixed gross in a bank not be a hell of a lot easier ?!

I can see the attraction tot his sort of thing at yields of 10%+. However below that it looks like a lot of hassle for pretty poor returns.

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Oh, I'm not retiring for another 23 28 goodness knows how many years, and I suspect that the whole lot will be wiped out by inflation/collapse/fraude/whatever by then. It'd just be nice to have some hope.

That's what I thought in the 70s and inflation was really bad then.

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Next year I plan to buy for cash 4 x 3 bed terrace houses in my old home town (for £300k). For similar houses I am getting on average £450/month on my current batch of BTLs. So looking at rental income of ~£18k to £20k/year (including some voids, repairs etc.).

I have not seen anything to suggest I have made a huge mistake in getting out of pensions 7 years ago. I also pay the maximum annual ISA contribution in stocks & shares to have a further pot when I will think about retiring at 50.

so you got your pensions out in 2003 and into properdie, when the FTSE was at 4000, and now it is almost 6000 so you are paying back into it thru ISAs

:)

you bring new and precious meaning to the phrase 'proft chasing'

Edited by Si1

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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