madforfishing

Hi All,

In these times of "crisis", we are thinking of getting extra private pension. Any ideas? Any good or bad experiences?

Fred James

What exactly do you mean? Buying an annuity for cash or what?

madforfishing

We want to put a monthly sum in a pension fund. I see that some banks offer them. Are there any other financial houses that offer the same service?

madforfishing

Fred,

I saw an old thread, "Re: Are private pensions in Spain really worth it??", great help. We want to do the same, putting a fixed monthly amount into a fund, "paying out" at retirement, lump sum and monthly annuity. Which banks or other companies offer the same?

Thank

Fred James

So a bit like UK schemes.

The problem is that the annuity rates are abysmal at the moment and likely to remain so.

I believe that you get some tax relief on the contributions but I don't know the details. At the moment a box under the bed might be a good option.

Unlike the UK the lump sum is taxable, albeit at a low rate.

The only real advantage of annuities in Spain is that they are very favorably taxed - typically at only 5%.

lurchio

Lots of other factors, the biggest of which is your current age and also when do you want to draw down the plan???? Lots of advisors out there and don't forget that the UK have tightened up on so called 'Advisors' and their massive commissions, but Spain has not as far as I am aware!!!!!

Big decision in these times I can only say choose carefully and all the best.

cmw6372

if you advise your location I might be able to put you in touch with a colleague in your region ?

we are fully regulated here in Spain, unlike some "advisers"

Rotor

Pay in pension schemes can be useless, as we all know they go belly up , you cant leave them to your kids , one eyed Jocks rob them and so on , how many parasitic desk jockeys does a pension fund employ? They dont collect and invest your money for free.....better to buy a second house ,farm land / woodland ,(In the UK) yes it takes extra effort but nothing is for free , if you dont have much disposable income remember you can buy a grotty terraced house in somewhere like Manchester for £12k as a buy to let, chances are when you come to retire it could be a pleasant and desirable area and worth £120k in todays money , farm land prices have not stopped rising regardless of the recession , you can buy a pony paddock for as little as £10k , be in control of your destiny.

bigglesworth

Unless you get some sort of tax shelter for your contributions, I cannot for the life of me see why anyone would want to contribute to a pension scheme at the moment.
Linked annuity rates are currently about 2.5 percent in the UK. True inflation is running about 6 percent. Even RPI is likely to go over 5 again this year. The point being that any company writing a policy at the present time will be writing it against a backdrop of negative real interest rates.

Why not simply start some sort of structured saving scheme, where you retain control of the money, you can renounce or regain as much of that control as you like, but most importantly you are not locked into all the insurance company's terms and conditions? Which will nearly ALWAYS be in their favour.

Or use the savings to fund some other income earning asset? Even property.

cmw6372

It doesnt neccessarily need to be "a pension". There are alternatives that dont fall under the pension regulations, ie - tying your money up until 65 or having to buy an annuity. A qualified adviser in your area can go through ALL the options available.

cmw6372

And if set up properly, yes you can leave the asset to your family etc etc

johnnyone

i) Once it's in the fund you cannot get at it, which in my case means I have some savings. Otherwise, as a spender I would have just frittered the money away.

ii) Every pound that goes in only costs me 60p

iii) You can take income drawdown rather than opting for an annuity retaining your fund in investments.

I do think charges are much too high and some fund managers deserve sacking for their poor performance.

bigglesworth

Johnny, the one thing I (and many others) have learnt is that pensions are a miserable investment. Mainly because the government of the day likes to think of them as some sort of national asset, rather than your personal one.
A certain Mr Brown used private pensions to finance ten years of government excess.
Your point i) resonates. But bear in mind that while you may not be able get at it, others - most notably the Government - can.
ii) yes, but it gets taxed on the way out. Also the top limit is continually being reduced, and i seems highly probable that it will be limited to basic rate taxation.
So while an advantage it is taxation deferred. And given the fiscal mess the country is in, neither you nor I can tell what level of tax a future government will choose to levy on it. The only thing you can be certain of is that it will be less "generous" than now.

iii) a pension is not unique in that. It is however unique in having statutory limits on what you may draw down. The effect of which is much the same as the annuity - it leaves the investment company in the very comfortable position of retaining much of your capital when you shuffle off this mortal coil. There are ways you can (sometimes) retain it as a heritable asset, but they are not all encompassing.

I am not in complete disagreement with you johnny, indeed I adopted much the same reasoning when I was working. But as one who is now approaching a decision time, I am becoming increasingly aware of the amount of control that pension companies can retain over what is MY money. The funds that I could transfer without too great a penalty, I transferred to normal investment management avenues some time ago. I just wish I had been able to transfer all, but the penalties the pension companies wanted to impose (two very reputable businesses) were horrendous.

They all smile on your way in. They are less friendly on your way out.

jackytoo

As Rotor said get yourself a buy to let Avoid financial Advisors like the plague, especially the ones fishing for business on forums

bigglesworth

Seconded