Pensions

[EddieM]

I was skimming, literally skimming some stuff today on the bleeders. I can't see what the point in saving for them is now. The annuity rates have gone down to (unless your lucky to be on a defined income scheme) about 2k per annum for every £100,000 saved, meaning for an "average" retirement income, you need to have a pot of £1,000,000.

Trouble ahead! (if it's true... precious little research done I confess)

Edit that can't make any sense... so you have £1,000,000 in ur pot at 65, even burning thru the capital at £50k per year that gets you to 85, which is roughly ur life expectancy, something stinks!

 

[alumni]

Edit that can't make any sense... so you have £1,000,000 in ur pot at 65, even burning thru the capital at £50k per year that gets you to 85, which is roughly ur life expectancy, something stinks!

Yes. Pensions

 

[ajstoneservices]

And mine certainly does

 

[joinerjohn]

. so you have £1,000,000 in ur pot at 65, even burning thru the capital at £50k per year that gets you to 85, which is roughly ur life expectancy

Hmmm, Many people don't even earn £50,000 per year, so may well like to retire with a pension income of £50k per year.

PS any pensioner who reckons they need anywhere near £50k per year to live on, has just got to be out of touch with reality (slightly,,, ok rather a lot)

PPS, The way the government keep putting up retirement age, means we'll all be working till we have that fatal heart attack on the shop/office/warehouse floor.

 

[JohnD]

2% is a strangely low rate. How did you come by it?

 

[Brigadier]

I recall the rough rule of thumb was (for male retirement at 65), 1K p.a. for every 20K in the pot. Therefore, 400K pot gets you 20K p.a.
Rates have dropped since about 2007, although I don't know what to.

 

[conny]

At my age I'm more likely to put more in than I will ever get out.
Stuff them, its staying under the mattress!

 

[enyam]

I see the op mentioned annuity rates why lock yourself into an income where once done there is no going back,you are stuck with it for what ever time you have left on this planet.I believe annuity rates are around 4% to 5% depending on the provider and your health also has a bearing on the pay out as well.

 

[masona]

so you have £1,000,000 in ur pot at 65, even burning thru the capital at £50k per year that gets you to 85, which is roughly ur life expectancy, something stinks!

Not sure if that's right, if they gave you £1,000,000 then put it under your mattress then it's £50k per year for 20 yrs whereas with the pension investments with rest of the money is still invested therefore more than 20yrs pension, am'I right?

 

[EddieM]

I see the op mentioned annuity rates why lock yourself into an income where once done there is no going back,you are stuck with it for what ever time you have left on this planet.I believe annuity rates are around 4% to 5% depending on the provider and your health also has a bearing on the pay out as well.

As I say I didn't research it, but lets say its 5%, even with that to get a modest pension of £20k a year before tax, you would still need a pension pot of £400,000. This would be assuming no growth of your fund, and lets face it many have shrunk considerably. Over 40 years you would have to put in 10k per annum (I'm guessing that few could afford to pay that much in). Even then to even recoup what you put in, you would have to live for another 20 years.

So, in short, if you were able to pay tax free into a savings account or bond (your not) it would have been a far better idea paying into something like that paying even a modest 2% interest.

In short its pretty obvious why people are not paying in, when such measly offerings are forecast.

 

[enyam]

so you have £1,000,000 in ur pot at 65, even burning thru the capital at £50k per year that gets you to 85, which is roughly ur life expectancy, something stinks!

Not sure if that's right, if they gave you £1,000,000 then put it under your mattress then it's £50k per year for 20 yrs whereas with the pension investments with rest of the money is still invested therefore more than 20yrs pension, am'I right?

If he's talking of an annuity thats right,once bought the pot in not invested for you,you draw your fixed income from it and the provider will make any money from the investment.

 

[JohnD]

Over 40 years you would have to put in 10k per annum

You are forgetting that the money you put in, plus the tax rebate of 20% which is added to it, then has investment growth.

40 years investment growth can amount to quite a lot. There will be ups and downs, but it is extremely unlikely that you will see 40 years of growth as pathetic as the interest rates which will probably not even keep pace with inflation.

That's why it's much better to start your pension contributions early, rather than wedge money in during the end.
Your first few years have very much more time to grow than your last few.

 

[enyam]

In short its pretty obvious why people are not paying in, when such measly offerings are forecast.

I've been paying in since 1978 and managed to get to a 6 figure sum,I've now reached 55 and have taken it out. I was entitled to 25% tax free lump sum and have taken it but the rest I am not allowed to have I could draw an income from it or reinvest it in funds I have a choice of. In short you are not allowed to have your pension pot it may have your name on it but you will be given option's provided by other's intent on making money from you.

 

[enyam]

40 years investment growth can amount to quite a lot. There will be ups and downs, but it is extremely unlikely that you will see 40 years of growth as pathetic as the interest rates which will probably not even keep pace with inflation.

That's why it's much better to start your pension contributions early, rather than wedge money in during the end.
Your first few years have very much more time to grow than your last few.

When the dot com bubble crashed pension pot's went down 25% overnight,when the crisis came to the fore in 2007/2008 they went down 30% I have yet to see them recover those loses as quick,but has you say it is a long term investment but there is nowhere written that you will live to see the return.

 

[masona]

so you have £1,000,000 in ur pot at 65, even burning thru the capital at £50k per year that gets you to 85, which is roughly ur life expectancy, something stinks!

Not sure if that's right, if they gave you £1,000,000 then put it under your mattress then it's £50k per year for 20 yrs whereas with the pension investments with rest of the money is still invested therefore more than 20yrs pension, am'I right?

If he's talking of an annuity thats right,once bought the pot in not invested for you,you draw your fixed income from it and the provider will make any money from the investment.

Didn't know that, maybe my final salary pension is difference?