Pensions

Old Mar 20th 2015, 5:43 am
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Why are wealth management people phoning me about pension decisions in the coming months?
Is UK govt changing something?
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Old Mar 20th 2015, 8:02 am
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Default Re: Pensions

Yes they are and it's all over the money pages in UK papers. (They'll be an article about the new changes on my website some time next week if you are interested.)

The reason you are getting calls (from salespeople) is that after 5th April it will be harder for offshore companies to handle pension transfers so they want you to do it before the deadline. It's not a reason for you to jump into anything.

Some of us (proper advisers, not "wealth managers" which is an utterly twatish title) are working with UK regulated advisers and have the right qualifications to carry on, provided this is the right course of action for clients.

I really don't understand why anyone would talk about something as important as their financial future to some salesperson who calls them out of the blue, yet many continue to deal with them and frequently get burned.
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Old Mar 21st 2015, 12:57 pm
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Default Re: Pensions

Some real shysters out there trying to flog pension management with massive front end loaded charges
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Old Mar 22nd 2015, 7:02 am
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Default Re: Pensions

Yeah, I've had a bunch of calls recently.

Unfortunately I'm like striking oil for them...

Them: Hello, how old are you?
Me: 30...
Them: And do you have a pension?
Me: *sigh* No.
Them: AHA!

I'm aware I need to talk to someone (hi Keren) very soon...
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Old Mar 22nd 2015, 8:29 am
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Default Re: Pensions

Originally Posted by driftingaway View Post
Yeah, I've had a bunch of calls recently.

Unfortunately I'm like striking oil for them...

Them: Hello, how old are you?
Me: 30...
Them: And do you have a pension?
Me: *sigh* No.
Them: AHA!

I'm aware I need to talk to someone (hi Keren) very soon...
At 30, you should start salting away 15% of your salary into a pension (a % equal to half your age when you start), significantly more if you plan on retiring early.
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Old Mar 22nd 2015, 9:04 am
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Default Re: Pensions

Originally Posted by driftingaway View Post
Yeah, I've had a bunch of calls recently.

Unfortunately I'm like striking oil for them...

Them: Hello, how old are you?
Me: 30...
Them: And do you have a pension?
Me: *sigh* No.
Them: AHA!

I'm aware I need to talk to someone (hi Keren) very soon...

Is Alan Partridge working for the salesmen now?
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Old Mar 23rd 2015, 5:59 am
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Default Re: Pensions

Originally Posted by Meow View Post
Is Alan Partridge working for the salesmen now?


I've got a 'Don't Answer' contact in my phone. It's got 17 numbers in it.

When I grow up and want to think about a pension, I'll go and talk to the person I want to talk to and do some research myself. It won't be from a cold call.
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Old Mar 23rd 2015, 6:07 am
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Default Re: Pensions

Originally Posted by Johnnyboy11 View Post
At 30, you should start salting away 15% of your salary into a pension (a % equal to half your age when you start), significantly more if you plan on retiring early.
I'd certainly go with that as someone that didn't quite go with that and wishes that they had gone with that and nor did husband quite go with that, though he didn't know me way back then, when I could have forced him to go with that , so we both ended up having a right good old time of it but...now... I'd go with that.

Did that help at all?
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Old Mar 23rd 2015, 6:11 am
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Default Re: Pensions

Originally Posted by Johnnyboy11 View Post
At 30, you should start salting away 15% of your salary into a pension (a % equal to half your age when you start), significantly more if you plan on retiring early.
Good tip. ANd hey, 15%... that's less than the tax I'd be paying

Originally Posted by BEVS View Post
I'd certainly go with that as someone that didn't quite go with that and wishes that they had gone with that and nor did husband quite go with that, though he didn't know me way back then, when I could have forced him to go with that , so we both ended up having a right good old time of it but...now... I'd go with that.

Did that help at all?
Yep. Though my wife has 10 years' teacher's pension. I can't just survive on hers?
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Old Apr 4th 2015, 1:21 pm
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Default Re: Pensions

Just thought I would add my pinch of salt to this thread. I have just moved to Saudi Arabia but came from Aon Hewitt (i am (well was!) a corporate pensions actuary)

People massively underestimate how much you need to save into a pension and unfortunately the half of your age formula is a little out of date.

To have a pension of circa 50% of your final salary at age 65 you need to save around 15% of your salary from age 20 and for each 10 years you delay you need to approx double that percentage saved to have the same pension.

Note this is all saving towards retirement not just stuff that goes into a "pension" so you can add any other long term saving you have to that.

Of course if you have a DB pension (formula type pension based on typically your final salary) then you likely do not need to worry.

I would echo the comments on this thread re taking "advice" from cold callers. Be especially careful over fees (ie my pension savings have total expenses (TER) of around 22 bps (o.22% p.a.)) for most of us we do not need actively managed assets and can just opt for index tracking funds (typically much cheaper and on average do better than actively managed ones)
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Old Apr 5th 2015, 8:50 am
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Default Re: Pensions

Originally Posted by JonMc View Post
Just thought I would add my pinch of salt to this thread. I have just moved to Saudi Arabia but came from Aon Hewitt (i am (well was!) a corporate pensions actuary)

People massively underestimate how much you need to save into a pension and unfortunately the half of your age formula is a little out of date.

To have a pension of circa 50% of your final salary at age 65 you need to save around 15% of your salary from age 20 and for each 10 years you delay you need to approx double that percentage saved to have the same pension.

Note this is all saving towards retirement not just stuff that goes into a "pension" so you can add any other long term saving you have to that.

Of course if you have a DB pension (formula type pension based on typically your final salary) then you likely do not need to worry.

I would echo the comments on this thread re taking "advice" from cold callers. Be especially careful over fees (ie my pension savings have total expenses (TER) of around 22 bps (o.22% p.a.)) for most of us we do not need actively managed assets and can just opt for index tracking funds (typically much cheaper and on average do better than actively managed ones)

I agree with most of that although charges aren't everything )although they do matter) and the right asset allocation has been shown to be at least as important as charges and timing. Many trackers are cheaper although not all and many aren't true trackers.

I've highlighted the comment regarding DB schemes - also known as a final salary scheme - as that requires some clarification. Possibly fine if you have 20+ years of service but there are a lot of people who have accrued just a few years of benefits so they will never be enough. Whilst statutory schemes should be of no concern (and it's now no longer possible to transfer out even though that was rarely advisable despite what the salespeople here may claim) there are many DB schemes that are severely underfunded and that is a worry. BA is the worst of the lot with the real position being that there are only sufficient assets in the scheme to fund something like 55% of liabilities.

As ever it is worth finding someone who will give you proper honest advice, based on your circumstances and needs, and won't just flog any old plan. Fact is that the majority of people are severely underfunded in their retirement planning and it is a major worry. Too many people with their heads in the sand.
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Old Apr 5th 2015, 1:23 pm
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Default Re: Pensions

Are there any rough and ready ways to estimate a pension pot?
eg 200 pds a month * 7 years * % = ??
Retire in 5 more years (65).

(I believe my old company (and me) paid into Aviva from about 1990 to 1997.)

Lost track of the situation now.

(NI pension situation is another matter.)
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Old Apr 5th 2015, 2:46 pm
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Default Re: Pensions

Originally Posted by magnification View Post
Are there any rough and ready ways to estimate a pension pot?
eg 200 pds a month * 7 years * % = ??
Retire in 5 more years (65).

(I believe my old company (and me) paid into Aviva from about 1990 to 1997.)

Lost track of the situation now.

(NI pension situation is another matter.)

Guesses can be made but are dependent on so many factors. The best we can do is select an annual NET growth rate, although that can never be guaranteed. As an example:

Premium of GBP 200 a month over seven years (per your comment above) with a NET annual return of 7% could provide a fund of GBP 21,600.

7% net is probably quite high over a short period unless you get lucky with markets. Bear in mind that you really would have very little invested in the first few years so would get little in the way of compound growth.

The equivalent with a 5% net annual yield would return GBP 20,600.

Putting away just GBP 200 a month (GBP 2,400 a year) is never going to provide a decent income in retirement, especially over such a short period. If you are investing monthly you have to understand that you have to put away more and for a longer period.

Another example. Invest GBP 200 a month at 5% but over a long period of 20 years could build to GBP 82,200. Still not enough so you have to invest a decent amount of money.

I would also point out that I am NOT advocating a 20 year savings plan; simply that you have to look at the long term. Starting early will make a big difference but you have to make a decent level of contributions.

Any existing investments and assets need to be taken into consideration and if you have an old UK pension plan you really need to review that as chances are it is now in lousy funds and could be doing better. It's not too hard to track down pension.

Naturally, no guarantees nor specific advice given in this post
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Old Apr 5th 2015, 3:18 pm
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Default Re: Pensions

£21,600 is nothing in pension terms. At best you'll get a 5.5% annuity for your money at age 65, not index linked and with no spouse pension when you croak it. So that works out at about £100/month, enough to buy a few candles to keep warm.

Or you could always

Last edited by Johnnyboy11; Apr 5th 2015 at 3:22 pm.
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