Jump to content
House Price Crash Forum

Recommended Posts

1 hour ago, Frugal Git said:

ūüėā¬†Where is the deprivation of capital?

Anyone who does this has *less* money now and nothing to show for it for many years ahead. There is no Ferrari spent from savings. This is an allowed deferral of income.

Why is it that the rules allow this?

Go check every HMRC site. Go check tax credit and UC calculators. There is no limit on you doing this. It is a personal choice. Where do you draw the line? Is £100 into the pension OK, but 40K not? Should anyone entitled to benefits not be allowed to make pension payments at all, because it has this effect?

Who says you cannot prioritise your retirement? This is an effect of doing so, not a reason to do it - it's a by product. I'd be prioritizing it anyway.

Why are there people in government, and at HMRC who know about this, who happily say it's within the rules, not jumping up and down?

 

Not only is it allowed, but is was a deliberate decision to allow it and costed for by both Labour and Conservative governments. Its simply deffered taxation as they see it, and good for people to pay into a pension.

Share this post


Link to post
Share on other sites
46 minutes ago, scottbeard said:

That was me and I feel I need to clarify - I said that it's unaffordable for EVERYONE to have a 75% pension.   

The basic logic being, not everyone will be able to save that much, and even if by some miracle they all did squirrel away the amounts required then that itself would reduce spending in the economy and hence company profit and hence reduce investment returns.

It's sort of the same logic as the American Dream - *anyone* can end up a billionaire if they hit on the right business idea, but not *everyone* can end up being a billionaire, because for every Jeff Bezos there must by definition be several thousand Amazon foot soldiers.

(Good post by the way @micawber)

Thanks, and apologies for misquoting.

Share this post


Link to post
Share on other sites
2 hours ago, GregBowman said:

All good stuff. I had always paid direct from my companies so didn't  see the effect of the tax relief. But after getting a smallish lump I put some directly into a pension £20k six weeks later the tax man threw in £5k  and I could also claim extra relief against my 40% band on the return. That fund following  @wish I could afford one strategies is still at £28k this morning so however you look at it I am £8k up over a 30 month period a pretty decent return. Some Vanguard funds in there. Since I am 58 it is virtually a no notice withdrawal account very liquid. I know the amount I put in will be restricted at that point but still £8k  a year between my wife and I the rest can go in ISA's and other investments like fast cars LOL

Bear in mind that SIPPs will eventually be inherited free of IHT, in contrast to ISAs.

Also that, as a business owner, and I assume also a director, you can continue to receive company contributions into your SIPP of up to £40K p.a. even after you turn 75, provided that you are still employed by the company (maybe as a 'consultant'?) and that there is no history of SIPP withdrawals. The drop in allowed contribution level from £40K p.a. to £4K p.a. is serious and irreversible, and IMHO might close a potentially useful IHT avoidance tactic.

Share this post


Link to post
Share on other sites
5 hours ago, Voltron said:

Once you get into the last 10 years of your proposed retirement age, the best scenario is to start changing your pension allocation from 100% equities, to a percentage of stocks and shares and bonds, a rule.of thumb is 100 minus your age e.g. at age 55, you should then be 45% stocks and shares, and 55% bonds. As the last thing you want to happen with your pension nearing retirement age is to lose it due to the fluctuations of stock market.

This is generally true but needs to be more specific. If those bonds are company bonds or long term gilts then you are certainly not derisking. Please DO NOT do that right now.

Derisking should be into Deposit (cash) funds and short term gilts.

Share this post


Link to post
Share on other sites
5 hours ago, Frugal Git said:

Look, the vast majority of young people are going to be f**ked in retirement unless they are lucky to inherit. 

It's choice between one of a house, kids, or retirement. Some families might be able to do two of those, but only very few will manage all three.

That *will* be a problem for governments to come, where pension age benefit payments are going to have to be a lot greater than today. A much bigger problem than a few people who might have worked out they'll take their pension jam today, and manage it themselves tomorrow.

Prioritising being able to look after yourself when you're old *is* a good thing. Use all the tools available.

Maybe Gen Y and Z (millennials and younger) , we know boomers are generally fine, but "most" Gen X like me plan to have all three too, we have the final big village house, have pension savings (including one with 15 years of 60th's Final salary payments) and have kids. mortgage is set on repayment to be cleared by my retirement @ 67 as the eldest partner, when the wife retires 3 years later will have the house. mortgage free, and youngest kid will be 22 and hopefully mostly off our hands. 

State pension who knows, but assuming it exists as today adjusted for inflation we should be "comfortable" in retirement with no housing costs to pay. Then when maybe into out mid 70's we will most likely look to "downsize" and help the kids out. 

that's will 2% inflation. If we go through some 1970's styles 30%+ annual inflations in the next 16 years as final asset holders at the top of the housing ladder, and huge wage inflation eroding debt, we will be laughing come retirement. 

Share this post


Link to post
Share on other sites
3 hours ago, micawber said:

 

Derisking should be into Deposit (cash) funds and short term gilts.

Lol. Which "Cash" ? Name one central bank FIAT that isn't going "bbbrrrrrrrrrrrrrrrrrrrrrrrrr" right now?  Surely if you want proper "risk" frr physical gold is the only low risk hedge. It's just physical theft you need to worry about, not sure of the "cost" of annual specialised insurance cover for having that in a safe at home?

Share this post


Link to post
Share on other sites
9 hours ago, Voltron said:

.

Once you get into the last 10 years of your proposed retirement age, the best scenario is to start changing your pension allocation from 100% equities, to a percentage of stocks and shares and bonds, a rule.of thumb is 100 minus your age e.g. at age 55, you should then be 45% stocks and shares, and 55% bonds. As the last thing you want to happen with your pension nearing retirement age is to lose it due to the fluctuations of stock market.

Given current circumstances? 

Bonds will pay little, an could fall in value. So little upside. 

Share this post


Link to post
Share on other sites
4 hours ago, The Spaniard said:

Bear in mind that SIPPs will eventually be inherited free of IHT, in contrast to ISAs.

Also that, as a business owner, and I assume also a director, you can continue to receive company contributions into your SIPP of up to £40K p.a. even after you turn 75, provided that you are still employed by the company (maybe as a 'consultant'?) and that there is no history of SIPP withdrawals. The drop in allowed contribution level from £40K p.a. to £4K p.a. is serious and irreversible, and IMHO might close a potentially useful IHT avoidance tactic.

Good points ūüĎć

Share this post


Link to post
Share on other sites
1 hour ago, markyh said:

Maybe Gen Y and Z (millennials and younger) , we know boomers are generally fine, but "most" Gen X like me plan to have all three too, we have the final big village house, have pension savings (including one with 15 years of 60th's Final salary payments) and have kids. mortgage is set on repayment to be cleared by my retirement @ 67 as the eldest partner, when the wife retires 3 years later will have the house. mortgage free, and youngest kid will be 22 and hopefully mostly off our hands. 

State pension who knows, but assuming it exists as today adjusted for inflation we should be "comfortable" in retirement with no housing costs to pay. Then when maybe into out mid 70's we will most likely look to "downsize" and help the kids out. 

that's will 2% inflation. If we go through some 1970's styles 30%+ annual inflations in the next 16 years as final asset holders at the top of the housing ladder, and huge wage inflation eroding debt, we will be laughing come retirement. 

I've always maintained that UK Gen X ers - especially early - mid, have the best position of all. Better than boomers. So much so I've been very surprised that there isn't any ire or memes towards them. Perhaps because they weren't necessarily in 'Power' to make the rules when the fantasy was first being created. 

If you got in the workforce around 1987-96, got a house in 94-99 (should have been doable), and got in the tail end of final salary pensions....

...You're utter laughing. And you still have relative youth too.

Share this post


Link to post
Share on other sites

Actually, the same was just about possible for the last gen X'ers too. 

However, it was bizarrely better not to go into further education - and get straight into the workforce in 95.

Those years spent at university totally f**ked me over in terms of house prices, and then immediately graduating into the tail end of the dotcom boom.....what an utter sh*tshow.

Share this post


Link to post
Share on other sites
8 hours ago, Mikhail Liebenstein said:

Given current circumstances? 

Bonds will pay little, an could fall in value. So little upside. 

Yes. Short term gilts and cash wont fall much if at all. Their only real risk is inflation but you wouldn't be in it for years and years. When I tapered I only did it over 2 years knowing that in the event of a crash in that time I would have to push back the retirement date a bit. The most important thing was that a crash % wouldn't apply to 100% of my fund. 

Share this post


Link to post
Share on other sites
9 hours ago, markyh said:

Lol. Which "Cash" ? Name one central bank FIAT that isn't going "bbbrrrrrrrrrrrrrrrrrrrrrrrrr" right now?  Surely if you want proper "risk" frr physical gold is the only low risk hedge. It's just physical theft you need to worry about, not sure of the "cost" of annual specialised insurance cover for having that in a safe at home?

See my reply above.

Anyone who tells you that gold is a good derisking asset needs to have their **** kicked.

I have a good 25% of my portfolio in gold but I expect to see it fall as much as it rises periodically - and quite violently.

Share this post


Link to post
Share on other sites
8 hours ago, Frugal Git said:

I've always maintained that UK Gen X ers - especially early - mid, have the best position of all. Better than boomers. So much so I've been very surprised that there isn't any ire or memes towards them. Perhaps because they weren't necessarily in 'Power' to make the rules when the fantasy was first being created. 

If you got in the workforce around 1987-96, got a house in 94-99 (should have been doable), and got in the tail end of final salary pensions....

...You're utter laughing. And you still have relative youth too.

Tick, tick, and tick (as a couple!) , I started work in 1987 after college, no uni, bought 1st house (2 bed semi) in 1996 , met wife in 2002 , she started job with final salary pension in 2005 on 60th's , I have always saved into private pensions since 18, and did the SERPS opt out / in thing and have co-op annunities from 1987 that cost pennies per month but pay out thousands @ 65 due to Thatcher's huge gov bonuses they threw around.  

Then the wife grabbed me as a good prospect husband (homeowner) and did well in her job too, and I steered us to ride the ladder and buy and sell at the right time. 

1st house 2 bed semi (in a town) bought 1996 £55k , sold 2007 £194k 

2nd House small 5 bed (in town) bought 2009 £230k, sold 2016 £350k 

3rd (and final house) Large 5 bed (village house) bought 2016 £501k. 

And the funny thing is we earn ok but both of us earn under £50k gross so as a family we keep all our monthly child benefit payments too as the taper starts £50k to £60k. 

Had the terrible hardship of going STR and renting two houses from August 2007 to March 2009 , and the good timing / luck to have an agreed sale on our second house in late April 2016 , but not offer on our final house until late June 2016 (after Brexit vote), and there was a mini crash before Brexit and no buyers after the shock result, so despite our final village house being on the market in March 2016 for £540k , that sale fell though (because of Brexit) and it was put back on the market @ "offers over" £500k , so we offered £501k, and the desperate downsizers with two grown 20's kids still at home (one now a single mum with kid in tow) ignored the EA advice and accepted our offer, snapped our hand off as we had a small complete chain in place, just 4 of us with them.

Share this post


Link to post
Share on other sites
4 minutes ago, markyh said:

 and did the SERPS opt out / in thing 

Meaning?

Share this post


Link to post
Share on other sites
12 minutes ago, Si1 said:

Meaning?

I have over £100k in a SIPP now that came from moving a co-op SERPS pension fund in 2010. That fund was SERPS opt out money when all the IFA's where advising to take gov deals to opt out of SERPS (State Earnings Related Pension Scheme) in the early 90's, then you were advised o opt back in in the mid 2000's. So I did both as advised. 

Share this post


Link to post
Share on other sites
5 minutes ago, markyh said:

I have over £100k in a SIPP now that came from moving a co-op SERPS pension fund in 2010. That fund was SERPS opt out money when all the IFA's where advising to take gov deals to opt out of SERPS (State Earnings Related Pension Scheme) in the early 90's, then you were advised o opt back in in the mid 2000's. So I did both as advised. 

Was that exclusively from serps opt out or did it have other elements contributed to it from work pension or whatever?

Edited by Si1

Share this post


Link to post
Share on other sites
7 minutes ago, Si1 said:

Was that exclusively from serps opt out or did it have other elements contributed to it from work pension or whatever?

Never had work pensions before the recent changes. I would say 70% of the money moved into a SIPP in 2010 was from SERPS opt out. but then the total amount was a lot less than £100k in 2010 when I transferred it. 

Share this post


Link to post
Share on other sites
7 minutes ago, markyh said:

Never had work pensions before the recent changes. I would say 70% of the money moved into a SIPP in 2010 was from SERPS opt out. but then the total amount was a lot less than £100k in 2010 when I transferred it. 

It's just that there's lots of bad experience out there of people who opted out of serps then got terrible returns on the pension vehicles they invested it in, in the past when fund charges were much higher. That's an unusually large sum you seem to have got from serps there.

Share this post


Link to post
Share on other sites
40 minutes ago, markyh said:

Tick, tick, and tick (as a couple!) ........

The financial gods are definitely looking out for you.¬†¬†‚ėļÔłŹ

I have a good working relationship with them but I seem to be most in favour with the God of Parking.

Family members are¬†astounded at how (legal)¬†parking spaces consistently present themselves to me when most needed.¬†ūüėŹ

 

Share this post


Link to post
Share on other sites
14 minutes ago, Si1 said:

It's just that there's lots of bad experience out there of people who opted out of serps then got terrible returns on the pension vehicles they invested it in, in the past when fund charges were much higher. That's an unusually large sum you seem to have got from serps there.

Yes, I’m just in robo-trackers, super low fees, and the upside of holding stocks.

Share this post


Link to post
Share on other sites
3 minutes ago, Mikhail Liebenstein said:

Yes, I’m just in robo-trackers, super low fees, and the upside of holding stocks.

So am I. They weren't available 30 years ago. The fees were shocking.

Share this post


Link to post
Share on other sites
23 hours ago, bomberbrown said:

Thanks spacedin, I hadn't considered those aspects.  

No worries. 

It just shows how poor the state pension is that the government have to top it up just to ensure people don't fall below the poverty line. 

Don't get me wrong people should be ensuring they have enough money to live on in their retirement.

Edited by spacedin

Share this post


Link to post
Share on other sites
4 minutes ago, spacedin said:

It just shows how poor the state pension is that the government have to top it up just to ensure people don't fall below the poverty line. 

Pension credit only tops you up to the level of the New State Pension though doesn't it?

The full State pension is about £7,000pa if you reached SPA before 2016, and about £9,000pa if you reached SPA after 2016.

Pension credit tops you up to £9,000pa if you haven't managed to get there between State pensions and/or private pensions, remembering that to get the full amount you need to have worked 35 years, not been contracted out and reached SPA since 2016.

So it's not a case of the government really "topping up" the State pension as such.

I may be wrong here as State pensions is not my direct area of work, but I have been looking at:
https://www.gov.uk/pension-credit/what-youll-get
https://www.gov.uk/new-state-pension/what-youll-get

Share this post


Link to post
Share on other sites
On 22/05/2020 at 13:44, CaptainCymru said:

Here's one to ponder , who here thinks the retirement age for private pensions and SIPP's will rise to the age of 70 or above? I'm in my late 20's currently squirrelling away a few percent into a private pension with the company I work for matching it . Here's the thing though, i'm not entirely sure I will ever see it.As the Government becomes more desperate for funds I can imagine the age at which I can withdraw it rising until its basically too late,that or it being raided as demonstrated previously by a certain Scottish Chancellor.

Thoughts?

I had a DB scheme which was fixed (Fixed benefit and fixed contribution). I also then was able to contribute more into a DC scheme, effectively an AVC. Max contributions ie £40k each year...allowing for employers contributions and the small amount I paid into DB scheme. With employer contributions and tax relief at 40% it was a no brainer  

I left work at 50 transferred the huge amount offered and moved everything out into a SIPP. That is not for everyone but a 48x pension offer was too much to refuse under my circumstances when balanced with the other investment income I have. 

So to your question. This all suggest I have huge faith in pensions. Nope. 

Against the advice of everyone (including myself) I took the full 25% at age 50 last year...mine was a protected rights pension so I can access at 50. The reason was I felt the goalposts could change, maybe the tax free lump sum lowered, maybe restrict how much can be taken each year even outside the 25%, maybe age restrictions etc. 

I felt the pension at 40% tax relief was a great way to acquire wealth but not necessarily to hold wealth. 

To be fair I won’t draw anymore, ie the remaining 75% for a while, due to my other investment income but I fully expect goalposts to change, change and change again. Technically my pension is now already in payment so less likely to change....but who knows. A lot of people hanging their hat on the IHT advantages...but the can change too. 

I did it to mitigate tax at the time....it felt like it wasn’t really my money anyway. Ie £1000 net in probably added £2200 into the pension (tax relief and employers contributions) and I couldn’t resist that return. I also fully expected things to change before I hit 50 but luckily it didn’t and it hasn’t yet. 

If I were 35 years old today would I do the same...probably yes.  

Share this post


Link to post
Share on other sites
3 hours ago, Si1 said:

It's just that there's lots of bad experience out there of people who opted out of serps then got terrible returns on the pension vehicles they invested it in, in the past when fund charges were much higher. That's an unusually large sum you seem to have got from serps there.

Co-op were pretty sensible, I think from memory they charged 2-3% fee for the SERPS. They certainly did an ok job of not having the pension decimated by 2010 from 2008/9, so I guess they were quite cautious. At best I probably paid £20k into non serps co-op pensions from around 1997 to 2010, it started as £100 pcm and was on a 5% fixed uplift of payments.   When I transferred all my non annuity pensions into a SIPP in 2010 to transfer figure was £63500, so the difference could have only been positive investment growth and SERPS opt out payments. 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 399 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.