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Aged 50 and no retirement savings? Here's what you need to do

There are millions of over-50s who either have no pension savings at all or not enough. All is not lost, but cobbling together a retirement income will require some considerable sacrifices.

 

Very few of us save enough for retirement and most people will fall short of the ideal target of a pension of two-thirds of final salary. Even worse, there are millions of over-50s who either have no pension savings at all or know that they don’t have enough.

We don’t save enough

A recent study by insurer MetLife Europe showed 64% of over-50s either believe they do not have enough savings put aside for a comfortable retirement or are not sure.

Even more worrying, around a third of workers in this age group also admitted that they had not even started saving for their retirement.  Of those who have saved, few have saved enough.

MetLife warned that a man retiring at 65 who wanted a private pension income of £10,000 a year would need to accumulate a pension pot of £235,000, while someone who wanted an income of £50,000 a year would need to have saved nearly £1.2 million. 

How big a pension pot do you need?

So how do you work out what savings you will need to reach your target pension income, taking into account the State retirement pension?  Using current annuity rates every £100,000 of pension savings would generate annual income of £6,745 for a man, £6,406 for a woman at age 65.

So a couple with current income of £50,000 a year wanting a retirement income of half their current income - plus the State retirement pension, (currently £97.65 a week or approximately £5,000 a year per person, assuming both partners have a full National Insurance contribution record) – would need to accumulate a pension pot of roughly £400,000.   This would give them pension income from savings of around £25,000 a year plus £10,000 a year from their State pensions making a total of £35,000 a year – just over two-thirds of their pre-retirement income.

Accumulating a pension pot of £400,000 will clearly involve considerable sacrifice now and is almost certainly unrealistic.   So if you are one of the one in three over 50s who have so far saved nothing, how much will you have to save from now on to reach a pension pot of, say, £200,000 by age 65 - or 70 if you are prepared to delay retirement by five years?

How much to put aside

According to Laith Khalaf, pension expert at Hargreaves Lansdown, ‘a 50 year old would need to save £940 a month to reach a pot of £200,000 at age 65.  This assumes 5% growth after charges and 2.5% inflation. That’s £11,280 a year, or 22% of salary,’ he says, something of a tall order, particularly if you still have children in full time education and you are paying a mortgage.

‘The reward is a £200,000 pension pot which would provide an RPI linked income of £8,400 at age 65, on top of the State pension of say £8,000 (Basic and Additional-now payable from age 66) that provides you with a decent level of income,’ he says.  Admittedly, Khalaf has opted for an RPI linked pension which is more expensive to provide.  But this is still an income starting at only £16,400 a year when the breadwinner has been bringing in £50,000 a year.

Strain on finances

For many, saving £11,280 a year out of income of £50,000 what put a severe strain on their current standard of living – even taking into account the fact that tax relief at their highest rate paid would be available on the contributions.  If they delayed retirement for five years, to reach £200,000 at age 70, our 50 year old would need to save £660 a month, or 16% of salary. The £200,000 pot would produce an annual RPI linked income of £10,110 from age 70.

‘There is time to build yourself a decent retirement income from age 50 onwards, but you need to save hard to do it,’ says Khalaf.  ‘However I suspect that someone age 50 earning £50,000 would have accumulated some pension saving over the course of their employment. I also suspect that if you drilled down into the one third of over 50s who have no pension provision you would find that proportion is populated mainly by those on lower incomes, part time workers and women who are relying on their husband’s provision.’

Pension consultant Keith Churchouse comes up with very similar figures.  To produce a pension pot of £200,000 starting to save at age 50 and retiring at age 65, ‘assuming a 5% a year compound return, then a person would need to contribute approximately  £10,500 a year gross (£875.00 per month gross, £700 per month net of basic rate) from age 50 to age 65 to achieve their objective,’ he says.

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91 comments so far. Why not have your say?

Chris

Dec 06, 2010 at 09:37

"This assumes 5% growth after charges and 2.5% inflation." How inconvenient for the muggers that we have 0.5% growth and 5% inflation. Oh and if you're 50 look forward to retiring at 68.

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M H

Dec 06, 2010 at 09:50

@Chris - try being 30 and facing the propsect of retiring at 75 !

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dd

Dec 06, 2010 at 09:54

If you can't get a job at age 50, it makes no difference how well you understand all this. It's a double whammy because you have to live on the savings which would have supported you in retirement ... until state retirement at 68 or whenever.

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Anonymous 1 needed this 'off the record'

Dec 06, 2010 at 10:02

Alternatively do what I did: Have 5 private pension schemes and put them all into Keydata at retirement to build up at 7% a year until 65, to find they go bust losing all your money.

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dd

Dec 06, 2010 at 10:10

Ouch!

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Tony Peterson

Dec 06, 2010 at 10:12

Forget about funds - even including the tax break they are a swindle. My advice would be to save as hard as you can and use the savings to acquire, as fast as you can, income producing assets, such as shares and rental property.

What is the point of accumulating £100,000 in a fund to acquire (best you can) an income of around £4000 at age 65, not inflation proofed, and have the capital seized when you die?

You'd be better off buying high yielding blue chips now.

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Jazzman

Dec 06, 2010 at 10:18

And of course the only people who make any guranteed money for all this saving will be the pension providers and investment advisors. I have been saving for a pension for years but a combination of poor performance and high charges has means its unlikely I will achieve even 30% of final salary.

The endowment that was suppposed to pay my mortgage is due to mature in 4 years and is worth 50% of what I will need - bet a lot of fund managers have dined out very well on that over the years!

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S M

Dec 06, 2010 at 10:22

The recent period has seen a dramatic change in pensions, the loss of final salary schemes from the private sector.

Who knows what the next 10 yrs hold?

Most people seem more interested in living for today. I can't see the state letting them go to the wall. Im sure that is what the young ones will be thinking.

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Martin Hicks

Dec 06, 2010 at 10:24

To anonymous1, regarding Keydata, perhaps this article might be of some encouragement?

http://www.dailymail.co.uk/money/article-1335910/Keydata-savers-begin-receive-partial-payments.html?ito=feeds-newsxml

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Rustie

Dec 06, 2010 at 10:29

5% growth after charges my a*** ! This is yet more propaganda to induce people to put their money into funds that generate income primarily for investment managers who cream off their handsome margin whatever the economic climate.....lets have the names of some of these mythical funds that are likely to generate these returns. Also agree with previous comments re: annuities being a rip-off - more money for the financial industry who keep the lot on your demise.

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RMS

Dec 06, 2010 at 10:35

I agree with the suggestion of buying income bearing assets much more than investing in an annuity where returns are so low. I also object to paying fees to underperforming fund managers who have destroyed so many peoples savings.

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Lets Face It

Dec 06, 2010 at 10:42

Ridiculous, most of us haven't got enough money to live an average life today let alone save for the future.

On top of that my 55 year old working wife won't now get her state pension until she is 66 and I won't get it until I'm 66 too.. In total, thats 7 lost years state pension at £5k per year = £35k and over the years, we have paid enough NI years as pensioners retiring at 60 now. We are also going to pay 6 more years of NI contributions and income tax etc.

Never minds the students protesting us middle aged folk should be out there with them. We needed more time to prepare for the change and it needed to be done in a fairer way so that everyone paid the cost.

All of these new government money earning schemes are unfair and there is no chance of many people working into their 50's let alone their 60's.

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dd

Dec 06, 2010 at 10:52

In the private sector, there is a generation of people with money purchase pensions who are shocked when they realize that they will not be able to retire as their parents did, on final salary schemes with the risk borne by the employer.

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Jonathan

Dec 06, 2010 at 10:53

Hahaha, this article is a joke. How anyone can go through life not saving then be expected to put away £200k in a few years is beyond funny. Also the rate of growth of investments is ludicrously overestimated "This assumes 5% growth after charges and 2.5% inflation." Come on Lorna try pullling the other one. Chris was correct with the first comment about the unrealistic estimates in the article. Why do you assume a rate of return on investments much higher than everyone else is expecting or getting and lower rates of inflation? If you have no pension savings by the age of 50 your current best plan is to save nothing and rely on the state.

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leslie wilson

Dec 06, 2010 at 10:55

I think all this is unreachable for people who do not have 20-30 years to go until retirement. In my view ( having 4 years to retirement ) the best policy is to be active in your own choices. Ie Sipps AND Stock ISA's.

Yes, you have to be a bit streetwise but you can opt for good companies offering big dividends AND capital growth possibilities.

Structure your choices to your personal risk tolerance and just be choosey where you put your cash.

However, todays interest rates make short term increases almost impossible, you take your responsibility to increase your wealth, because in truth, no one else will.

This policy gives you the opportunity to make far more money than what this column refers to, take charge and do your diligence, learn what you can. Perhaps join a company who will make you recommendations ( Fat Prophets for example ) who have a good record, and of course there are others. )

So do not accept the ultra passive route,as you will have little to show for it, take the active route and you will have a much more acceptable retirement fund. Just be careful and thoughtful in what you do, you may surprise yourself.

Les Wilson

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Anonymous 2 needed this 'off the record'

Dec 06, 2010 at 10:58

Most people in this country have serious doubts about defined contribution pension schemes. They are aware that the charges are high, the eventual pension may be derisory and the pension provider may disappear.

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leslie wilson

Dec 06, 2010 at 11:04

Just as a matter of interest I increase my Sipp fund by 28% over the last year by following the ideas I mentioned above. I am sure you agree, much better than anything offering a 5%, if you are lucky!

Les Wilson

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Medved

Dec 06, 2010 at 11:08

If you save you're a mug. Everyone should have seen that by now. Pensions are a con and the pension companies will rob you blind. What to do ? Beg borrow or steal enough to get property (preferably a house) and let it for rent. Even co-own one.

Or get out of the UK.

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marc

Dec 06, 2010 at 11:10

Well said everyone, it's heartening to know that I'm not alone in my feelings. As far as I am concerned pensions have literally been the crime of the century. Failing mortgage endowments, pension funds going bust - I won't bore you with my story - its already been said. Much better to invest yourself - shares, property, good old crap savings accounts ( rates will regress to the norm eventually). Then at retirement, live off that. Far better than paying for yet another mercedes for some 30 year old know-nothing in a suit!

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mikeran

Dec 06, 2010 at 11:16

many replies to this article have suggested investing in selected shares with a good dividend as one of the best routes to funding your own retirement. I agree to a certain extent, but the stock market big players like the Fund managers are waiting to take it away from you also. Things have changed in the Stock market, legal manipulation , Hft systems, analysts working to company agendas are all part of the plan to cream of the returns of investing in what you know is a well run profitable, good dividend paying company. The bad news syndrome is widespread, stoked by and to the Media, in support of this current Market shorting culture.

You may wonder in these times of pay freezes etc. how the Investment banking players are reaping increased salaries and bonuses. ? Perhaps not !!

So trust no body and if you can manage to survive, bonne chance.

I too have been through the fund manager/ endowment assurance/ no interest/ higher and more widespread taxation loop.

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Manilal Shah

Dec 06, 2010 at 11:16

I cannot understand where can you get 5% plus Chargeapp 1.5% return.My

Pension with Standard Life during the last ten years gave return of 3.5% after charges.The author of this article is living in a dream world.Assumption is wrong taking into account performance during last ten years and also he has

not taken investment risks into account.

Shah

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Tony Peterson

Dec 06, 2010 at 11:17

And by the way, Lorna, those quoted current annuity rates for a 65 year old are utterly misleading and wrong. In the listings in the FT on 27 November the BEST annuity rate a 65 year old man could get for £100,000 was £4191 with CanadaLife.

Since the providers can get 6-7% on equity investments and collect the whole lot when the recipient dies the scale of the annuity swindle is astronomical.

The retirement fund industry is systemically corrupt. The big insurance companies are acting like boiler room scamsters.

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Anonymous 3 needed this 'off the record'

Dec 06, 2010 at 11:27

Do not, as i did, build up a decent pension only to find the wife wants a divorce and about a half of most things, including the pension pot suddenly disappears! Not a good financial strategy:)

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Evan Owen

Dec 06, 2010 at 11:31

Pure fantasy.

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mike the bike.

Dec 06, 2010 at 12:26

Brilliant! Not sure what I would have done without the wisdom imparted in this article. Now I know.Save a grand a month. Right, for starters I'm just off to make sure it's ok with the council if I don't pay my council tax, arrange to have free electricity and water, confirm with my local asda that it will be ok to have free food and petrol, tell the dvla I won't be paying my road tax and tell the bbc I will no longer meekly yield to their annual extortion. Cheers!

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C. B. Brighton

Dec 06, 2010 at 12:54

If you are 50 , earning £50k , and have no pension funds you probably have a house and a reducing mortgage . . For all the reasons stated above do not start a pension scheme now . Accept that when you get to retirement age you will have to downsize your property to release capital . Buy an immediate annuity with say £100k then( you will still get some tax relief) ,. This together with the OAP will bring in £10 to £14k per annum as a modest but guaranteed income stream . In the meantime save using your ISA annual allowance . It is still possible to get 5/6% returns in corporate bonds with fixed maturity dates if you do not like equities.

If you dont have a principal private residence then get one now !

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Jon Gallagher

Dec 06, 2010 at 12:57

Most of us can barely get by on what we earn today which will be worse for furture generations with all that student debt, never mind saving hundreds of pounds a month for the future. What annoys me about saving for say losing your job or retirement is that you get so heavily penalised for it. Who on earth wants to pay full council tax a second time from the same earned income where you have already paid it from that same income you have saved from - it is just like getting 2 council tax bills every month during your working life - no wonder a lot of older folk keep their cash under the matress. I cannot afford a pension due to the high cost of todays housing and get fed up hearing all and sundry telling us we are not saving enough.

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Evan Owen

Dec 06, 2010 at 13:04

Vested interests waffling away as per usual, I wish journalists would do write something sensible, practical and ensure that it is based on fact not fiction.

Cut and paste isn't very original.

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L MACKAY

Dec 06, 2010 at 13:47

Buy to Let....the only private pension scheme which is full guaranteed and subsidised by the Government.

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mannyZ

Dec 06, 2010 at 13:50

having read all the comments have decided to go to the majestic web site and find out how much I'll be paying for a couple of cases of prosseco to brighten up my xmas and start saving next year.

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Broomtree

Dec 06, 2010 at 13:51

Interesting that the fig used to illustrate this article assumes a salary almost twice the average wage? Ah you say but that is good news because they only have to save £500pcm.....what nonsense! I am putting £550pcm into my SIPP but am earning 66K. I am seriously thinking of reducing the pension payment to make sure we can use our ISA allowance which lets me control things and for my family to keep what is let when I pop my socks!

MIKE-THE-BIKE: Thanks bro' my sides are still hurting; you have to laugh eh lol

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Anonymous 4 needed this 'off the record'

Dec 06, 2010 at 13:56

What i find unbelievable is that we are supposed to live in a civilised society, but absolutely nothing is run in the interests of the general population. It's madness. As a relative youngster, only been in work for a few years, I blame all the greedy middle aged people who seem to think life owes them a favour, clawing at as much money as they can get instead of being useful to society.

A radical re-think is needed of how the country and companies operate.

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L MACKAY

Dec 06, 2010 at 13:57

If your really screwed on the pension front keep any savings under the mattress and sign up for benefits (or 'Credits' as Labour like to call them)

If you have too much savings to qualify then you could contently lose your nest egg during a 'senior moment' - http://www.metro.co.uk/news/848301-pensioner-loses-80-000-by-leaving-it-on-roof-of-car

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nick evens

Dec 06, 2010 at 14:00

Do you get paid for all the nonsense you write, Lorna? Your advice is completely obvious. A cliche trotted out a thousand times a year by you and your ilk. Answer to the pension problem? Save a lot of money every month.!! Brilliant, Lorna. Just genius. Thanks for that.

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Rustie

Dec 06, 2010 at 14:01

No wonder you signed yourself Anonymous! Why are middle aged people less useful to "society" than "relative youngsters"? Who are the "general population"? We are in a "civilised society"....its the week-end binge drinking rabble that blight every town and city every week-end that make it uncivilised....could this be the "relative youngsters" to whom you so proudly affiliate yourself?....surely not!

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an elder one

Dec 06, 2010 at 14:19

Do your own thing, invest in good quality blue chips paying good dividends, though still at present mining and oils with some gold helps. My portfolio appreciated 55% in 2009 and is currently an annualised 23%, so there is some encouragement.

There is good advice to be had, eg. Fleetstreet newsletter, Investors Chronicle, and as someone else mentioned, fatprophets; you pay for it of course, but no one gets something for nothing.

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an elder one

Dec 06, 2010 at 14:23

I should have added, I've stayed pretty well fully invested throughout the turmoil.

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Patrick Moylan

Dec 06, 2010 at 14:57

If I had saved up one million, two hundred thousand pounds - and could only get an income of £50k per year ( That's what the article says ! ) then it would be clear that I'd so lost my marbles that it wouldn't matter what income I had or how much money I was prepared to give away to the crooks in pensions services . Why do they write this stuff ? Lack of marbles all round !

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Jonathan

Dec 06, 2010 at 16:05

I can now see why investing in property is seen as one of the best forms of obtaining a pension. If you don't save at all for a pension (other than NI contributions) but own your own property (your house) and it's is big enough to downsize, you can get income support from the government which is on top of your basic pension, which should take your income from about £5k basic pension to about £10k to £12k with income support. You can then downsize at any time to obtain capital to spend. This seems far better than saving for a pension which will reduce your entitlement to income support from the government pound for pound for the first £5k to £7k. Meaning if you save for a pension the first £5 to £7k don't count and you would need a fund of about £120k to start reach this point. So in conclusion investing in a bigger property is yout best bet if you have no pension and are about 50 years old. Anyone agree or disagree?

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Jonathan

Dec 06, 2010 at 16:07

I forgot to add that any gains in the price of the property are also totally tax free as there is no tax to pay on capital gains of your house.

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snoekie

Dec 06, 2010 at 18:55

The value of my fund in 2007 was the same value as it was in 1997, notwithstanding the fact that there had been a material increase in the FTSE, thanks to Gordon Brown.

So what should have been a just about comfortable retirement is going to be perhaps a bit more than bread and water, whilst the aforementioned enjoys, thanks to my taxes and that which he robbed me of, an inflation proof pension. He and balls (both) should not be getting a pension, but a 15 year stretch, no pension at the end, other than the pitiful state pension. Of course Mr and Mrs balls handsomely increased their personal assets and Mr Brown got two new kitchens, probably largely as a result of their larceny of expenses.

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Jon

Dec 06, 2010 at 19:47

Not so sure about downsizing releasing capital. In my neck of the woods bungalows are more expensive than detached houses with almost twice the floor space. And the same goes for decent flats. We have a local ageing population, many with pots of money and inflation linked DB pensions, so they drive up the market in retirement properties. Add to that the £50k moving costs with stamp duty, agent's and solicitor's fees plus an allowance to customise the new property, and downsizing takes a good £100k-£200k from your wallet !!

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an elder one

Dec 06, 2010 at 19:54

snoekie, forget both balls and brown, they are as irrelevant now as they were then; it's your fund manager who should be shot; take the cash out and do you're own thing, you couldn't do worse.

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Jonathan

Dec 06, 2010 at 20:13

Jon, My point was that if you have less than £16k in savings but live in an expensive house you could claim income support on top of the basic pension adding another £5k - £7k to your income from the government. If you were to purchase an annuity of £5 - £7k you would not get any income support from the government. So saving for a small pension is pointless. If instead you didn't save for a pension and made sure you had less than £16k savings when you retire and instead invested in a larger property, you would get income support and also have and extra £100k - £140k in assets in your property. So in effect you would have the same income as if you had purchased a pension worth £5k - £7k and have a larger house which you could downsize using certain equity release schemes and still keep income support. So you would be better off than buying a pension, just because of the government's income support.

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dd

Dec 06, 2010 at 20:25

Just an opinion ... but I agree with snoekie. The fund managers have costs relating to real work but the tax raid on pensions in 1997 and the consequent reduction in investment in British Industry (as well as others) is unforgivable. Mr Brown ruined private sector pensions, broke his promise to deal with the unsustainable public sector pensions, made that burden worse by increasing the number of public sector employees and worse than that, widened the gap between the two. like the divides which are appearing between the countries of the United Kingdom. Private sector have already been through what the public sector anticipate. Right now, we need to be pulling together, not in different directions, improving that which is bad rather than pulling everything down to the lowest common denominator.

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Evan Owen

Dec 06, 2010 at 20:31

There are pension plans and there are.. er.. pension plans. Most of them are worthless unless you are a 40% taxpayer, but what do I know?

Nothing is guaranteed, everything is gamble - risk/AKA/loss - and what is it all about? We were brought up on the premise that we pay our dues to the state and the state looks after us... what a crock of sh**, unless of course you are in the public sector..

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snoekie

Dec 06, 2010 at 21:02

an elder one, they, the funds, were with insurers.

My personal portfolio more than doubled over the same period, but I had no control over the likes of Scottish Widows etc on the maturity of the policy, nor the broker who wanted me to invest in annuities or appoint his tame brokers at an annual cost of 1,5% of the annual value of the fund, .5% to him, tail fee, even though |I would be making the investment decisions (FSA -fraudster salaries agency-found him not guilty of loss because of delays whilst the market was falling for the wrong advice he gave -saying I had no choice but to appoint brokers, loss of £15k in value, and something of the order of £3000 pa from incoming, fee charge on the value of the capital).

The original broker, back in the 80s did not advise that I could have put into a SIPP (if available ath the time).

Essentially, I got back a little more than I put in originally, but Brown/Balls probably cost me the like amount because of their raid.

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Gatser

Dec 06, 2010 at 21:12

Why oh Why do "experts" keep using TWO THIRDS salary as a desired benchmark? In these times of cut backs, lost jobs, austerity blah blah... what REALLY matters is YOUR NUMBER. (see thread on Moneysavingexpert (pensions) forum) This is how much you NEED/DESIRE to live a comfortable retirement. From feedback to the forum, many people feel that £25-£30k will provide for a very comfortable retirement... unless you are totally addicted to the jet-set lifestyle!

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Gatser

Dec 06, 2010 at 21:12

Why oh Why do "experts" keep using TWO THIRDS salary as a desired benchmark? In these times of cut backs, lost jobs, austerity blah blah... what REALLY matters is YOUR NUMBER. (see thread on Moneysavingexpert (pensions) forum) This is how much you NEED/DESIRE to live a comfortable retirement. From feedback to the forum, many people feel that £25-£30k will provide for a very comfortable retirement... unless you are totally addicted to the jet-set lifestyle!

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Evan Owen

Dec 06, 2010 at 22:18

snoekie

SIPPs wre not available back then, not that they would have saved you from folly, yours or anbody else's.

If you believe you were badly advised and can prove it you should be able to recover any losses.

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snoekie

Dec 07, 2010 at 02:44

The cost of court proceedings will virtually outweigh recovery, even taking into account a costs recovery, but I would do that, if there were funds to spare, as he tried to churn a policy nearing maturity a few years before.

I refused his advice as it made no sense at the time from my reading of various DT articles published a few months earlier, so I declined to follow advice, and I was later told by someone else my reading was right, the broker was a fees hound, and the fraud salaries agency stuck by their licence fee payer. Clearly a corrupt organisation. Se la vi.

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Anonymous 5 needed this 'off the record'

Dec 07, 2010 at 05:51

Glancing ( I admit to not reading every word ) through these replies must make Lorna understand why as many as a third of all 50 year olds have no pension provision to speak of. The ill-informed comments and bad investment experiences show how desperately we need to have financial advice in the curriculum at schools and colleges.

It is a no-brainer to invest through a SIPP and get at least 20%, maybe 40% back on day one, self selecting the shares or funds and paying minimum charges if you choose the right provider. Then you've got your 25% tax-free fund after age 55 and the possibility of draw-down so you can remain invested in inflation beating assets during your retirement.

I never saved for a pension,thinking I would sell my half of the successful business I'd worked in for 30 years, having ploughed all surplus cash back into the business, rather than saving it personally.

OOPs - the business went bust when I was 49 and I had to re-think the strategy

for retirement. That involved working out the minimum I thought I could live on from aged 60, then altering my lifestyle to live on that net income at 50. That left over £1,000 a month to go into adventurous funds in a H-L Sipp, which have grown at an average of nearly 20% over each of the last five years, even though one of the years was individually an absolute basket case.

The lesson learned for me was that our generation have for far too long thought only of current consumption and not the necessary saving to allow for a decent ( and probably very long ) retirement. That has to change.

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Evan Owen

Dec 07, 2010 at 07:24

snoekie - and you went back to him?

Anonymous 5 - Unbelievable stuff! Incredible, fantastic...

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dd

Dec 07, 2010 at 08:32

I know many excellent, trustworthy IFAs. The problem is for people who are not familiar with finance of any sort to be able to distinguish between the good ones and the bad ones.

As for education in schools, that horrifies me if the government sends in representatives of retail banks to educate my children on finance. Who was it who did such huge scale mis-selling of endowments, PPI etc? The children will be encouraged to take advice from these target driven, bonus paying, insufficiently qualified representatives of organisations which only sell their own products and don't consider the personal circumstances of an individual.

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mikest

Dec 07, 2010 at 12:37

Surely what Citywire teaches us, if we care to learn, is that around 10% of fund managers consistently outperform the market. Choosing which managers to go with depends on one’s knowledge and/or appetite for risk. In my case, my pension ‘pot’ was so pathetic, I was prepared to go for Level 4 (out of 5) rated funds which, although hit harder by the crisis, have re-bounded over the past year by an average 22.8%, compared to a FTSE100 up 8.1%.

Whether they continue to perform anywhere near this level is doubtful but I have sufficient confidence from what I have learnt through Citywire to monitor the funds and move some if necessary. I feel more in control of my future and, now retired, have more time to build my financial knowledge. I have Citywire to thank for this.

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dd

Dec 07, 2010 at 13:05

Yes, I also prefer DIY. It works for me.

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Attila

Dec 07, 2010 at 15:46

Most interesting aspect of this thread is the increasingly obvious, symbiotic relationships between fund managers, IFAs and other advisors, journalists and of course the good old HMG! As for 'good old' Lorna isn't it time she was pensioned off? But perhaps she can't afford to be? Perhaps she could try getting a proper job!

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Rory

Dec 07, 2010 at 19:55

We're all doomed! Needs must. If my pension is to get the boost it needs, it's either a career in crime or a seat in parliament. No wonder there are so many flunkies. Great, CJ. Super!

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Rustie

Dec 07, 2010 at 23:32

Rory, Isn't a career in crime the same as a seat in parliament?

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Rustie

Dec 07, 2010 at 23:36

To Mike O'Neill

You talk bollocks...are you a paid flunkie or a fool? Your pathetic attemp to pretend you know what fund managers are up to is risible.

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Atul Narharidas Patel

Dec 08, 2010 at 01:01

To comment or rather responding to the article. I believe that the annuity figures may be inaccurate however contributing in a pension scheme is a must. How much is dependent on how much you are able to put aside bearing in mind that this is going to relate to your retirement income or to be more precise in your old age when you are unable to work. Now lets look at Property for retirement. Lets assume being 50+ you already living in a 2 bed apartment and enjoying life. You have invested part of your proceeds from selling your large house into an investment property that is let out and the small mortgage that you have is being funded from the rental income.

Excellent idea but, imagine you are now 65 and lets assume with minor health problems such as Blood pressure or diabites. Your tenants who pays regularly (if you are lucky) has a problem in the winter with the boilder or roof leakage etc to that property. Do you really want the headache at that age to be bothered with calls at mid-night etc. Trust me even if you have an agent looking after your property and charging you 12.5 to 15% on all rental income and the repair costs etc do you really want that problem in old age. What assurange is there that the property will always be tenanted.

Hence, pension, ISAs is a must for everyone no matter what age. With Pensions you get tax relief and at retirement if one is not in perfect health you may be entitled to impaired annuity which can provide an enhanced income of upto 30% more than a normal annuity. Guess, what, no headache with tenants or midnight calls etc.........Yours ISAs can provide the flexible income to top up any shortfalls (ofcourse if you have utitlised both allowances ie pension and ISAs).

Regards to investment returns....Who says pensions or ISAs only provide a return of 5% or thereabouts. Hey, we live in a world that provides us with flexibility and wide range of funds. If you can keep an eye on your investment funds in your ISA and pension and switch and change depending on market conditions and you dont have to be a investment guru one can easily achieve an annualised return of averge 10% and above. Yes, you have to be with a provider that will allow you to switch between a good range of funds and an IFA that is capable to monitoring your investments and as a client you should keep an interest on your returns ITS YOUR MONEY...............

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Tony Peterson

Dec 08, 2010 at 07:35

Sound to me Atul that you work in the industry hence the lofty bullsh*t you write.

Pensions and ISAs are not a must for everybody.

Consider this. I contributed to a pension fund once. I'm retired now. The pension pays me £1,700 a year.

I put roughly the same amount as my pension contributions into my own shares and property. That now pays me £30,000 a year.

Funds swindle you.

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Evan Owen

Dec 08, 2010 at 07:51

Tony Peterson

An all too common story, the traditional life offices appear to be a milking machine, a Ponzi scheme, Pyramid selling if you like.

There may be a decent one somewhere but I really can't think of any worthy of scrutiny, most of them are now ZOMBIE funds, the investors are trapped, come to think of it even those who are still oepn to new business are pretty shaky.

Ultimately nothing is guaranteed, you may have made the right choices at the right time, others will have been born too late because this generation may be the one that has robbed all future generations.

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dd

Dec 08, 2010 at 08:24

Stealth taxes have killed private pensions (and crippled small businesses). The proceeds have been spent on today's box tickers.

The new divide is not between generations. It is between those with a final salary pension (cost borne by employer or tax payer) and those without.

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mikest

Dec 08, 2010 at 09:31

To Rusty Just giving my opinion, as indeed were you. I am neither paid nor a flunkie. The only charitable conclusion I can draw from your comments is that you must have been ‘in your cups’ at the time.

The joy of Citywire is the diversity of opinions expressed although I would suggest that far too many seem to have complaints about the past rather than positive thoughts for the future.

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Atul Narharidas Patel

Dec 08, 2010 at 10:02

Tony Peterson. You really should read the full contents of what I had written before you make your lofty bullshit comments.

If you dont manage your pension fund as you did with your property and shares what do you expect.....god to come down and manage what you dont.

Ger real man.

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dd

Dec 08, 2010 at 10:08

I acknowledge some guilt in relation to your final comment Mike.

For some, their negativity is because there is so little time left to be able to do anything about pensions, for others it is because they know that they need to take action but they can't because they no longer have a job. What's more, each time the pension statement arrives, the fund may have gone up but the "what you might receive when you retire" keeps going down, the next email received is another job rejection and the Job Seekers people can't even spell your profession.

I have expressed positive thoughts for the future earlier/and or elsewhere.

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Tony Peterson

Dec 08, 2010 at 10:28

You are wrong, Atul. I did read all the rubbish you wrote. But rubbish is what it was, like most pension schemes.

Are you a salesman for such lousy products? You didn't say.

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Atul Narharidas Patel

Dec 08, 2010 at 12:30

Tony. Thank you. It appears that millions others have it all wrong and that pension contracts all have just a poor performing fund. Wondery why pension funds also hold thousands of other collective funds including property and property funds too performing so well but, I guess heck why bother let the funds be invested in poor funds let it stay there and later on blame the pension provider.

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Evan Owen

Dec 08, 2010 at 13:03

Atul (Ajay) and Tony

You both have strongly held opinions but that is all they are, opinions. Ajay believes his clients benefit from some of his regulated advice regarding pension contracts, Tony believes he did better on his own without any concerns about regulation and no protection if he gets it wrong. Not that there is any protection for losses caused by markets rising or falling while the product charges eat into the fund.

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Tony Peterson

Dec 08, 2010 at 14:18

So Ajay (Atul) has clients but won't admit it. He issues pompous utterances about the importance of pension savings but will not admit to his own involvement in the industry. It is the present crop of retirement savers I feel sorry for, when surrounded by glib salesman pretending that they know best when they know sweet fanny adams about anything. And those being offered derisory annuities by crooked providers.

Evan. I am not talking opinions but about the facts (anecdotal evidence) of my situation. I am not complaining about anything.

People save in funds because they are too scared to make their own investment decisions, And because governments give them tax breaks to save with firms even though those breaks are nothing compared to what the fund managers will leach from their contributions. And because journalists are, by an large, complicit with the system. The system is corrupt and designed to assist insolent idiots like Ajay (Atul). Go get a real job making things, Ajay.

]

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Atul Narharidas Patel

Dec 08, 2010 at 18:49

Wow Tony. You really did get off from the wrong side of the bed. By the way there is a vast difference between an IFA and a salesman.

Since you are getting personal what do you do for a living may I ask.

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Tony Peterson

Dec 08, 2010 at 19:32

Ajay. Read my 7.30 post. I've said I'm retired. What I do for a living is live off my investments. There would be more to live off if I had totally ignored the so-called "financial services industry".

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Atul Narharidas Patel

Dec 08, 2010 at 19:35

Evan. You are right in what you say. Its all based on an individuals ability and confidence. Annuities have not favoured well particularly wth those who are retireing when interest rates are so low. However, pension is just one form of retirement and it is by far more secure then one living on interest from the bank. Annuity returns are much better than the interest one receives from their bank/building society. However, I do agree there can be other ways of securing retirement income as oppose to being dependent on pension contracts alone. However, there are less headaches with your income from an annuity as most are guaranteed. Those who had secured their annuities when rates were higher are not complaining. Those who bought properties just prior to the credit crises (which incidentally happened due to over lending to those who could not afford in States) are less happier as many have seen their property values drop. Each individual is different.

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Manilal Shah

Dec 08, 2010 at 19:43

If it is Possible to get Return of 10% and above I will happy with Net return of 7%. I do not understand where to Invest with minimum risk as it is not my job.

I invested with the advice of Finanacial Advisor during 2001 in Property and

Annuity Policies. On Annuity Policy it clearly states it was low Risk Investment

and taking that into account bulk of the Money was invested in Annuity Policies.

As on today I have lost on both Funds.Total Investment was £100,000.00 and

current Value is £55,000.00.I therefor do not trust advice of IFA, Insurance

Companies etc.As for Pension, I had this with Standard Life in with Profit Funds which was considered low risk Funds. Only return I had from 2000 to Sept 2007 app 3.5% when I converted this to SIPP in Fixed Term Bonds and

I am happy with return I am getting, knowing there is no risk on Principal Amount even though return may be low.

Shah

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Patrick Moylan

Dec 08, 2010 at 19:51

Atul and Tony. Why don't you meet up sometime - you seem to have a lot of interests in common. Go on a blind date.

I was going to write that this thread had become a shambles but truth is its more interesting than what's on TV tonight.

Where's the plot going next. I don't think that Karl Marx has put an appearance in yet. By the way the answer is 1.61.

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Tony Peterson

Dec 08, 2010 at 20:01

Ajay - read what people like Manilal (above) have been rewarded with by trusting you spivs and salesmen who pose as "financial advisers" - the ultimate in mickey mouse trades. If Manilal turns 65 this month he'll be offered two thousand depreciating quid a year until he dies at which point any remaining capital will be seized.

Don't you realise it won't be long now before plenty of Manilals are coming after

you lot with lengths of heavy duty rope?

You couldn't even declare your interest! There's a fundamental dishonesty affecting your trade. And you lot don't give a shit as long as you get your cut.

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Rustie

Dec 08, 2010 at 20:11

To Mike O'Neill

In my cups?.....cup of tea was my only beverage and I stick entirely by what I said. The only way to profit from sharedealing is via insider information - and I speak with 30 years experience of listening to the spivs in the city who have parted me from prodigious amounts of my cash. The ony successful Fund Managers are those getting good information or the occasional lucky gambler. Remember New Star Investments?....gosh, wasn't he the star of the city.....made a fortune and deceived me out of thousands.....right up to the start of the property crash he was touting commercial and residential funds - a liar and a con-man. Be warned Mike, they'll have you in the end

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judy garland

Dec 12, 2010 at 12:34

Seasons Greetings, Elder One. Enjoy your input .

Re Tipsheets & Newsletters-- Which was the one that prophesied market collapse circa june9 this year? Clearly some are better than others.....

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Robert Willan

Dec 15, 2010 at 14:05

I started work @ 23, My first pensionable employment @ 33 so filled in with an AVC, thinking this was the responsible thing to do. My employers, the Pensions section, Civil Service and Cabinet Office all recommended EQUITABLE LIFE as "safe as houses". Whan investment growth that was left was then emasculated by Gordon Bown in 1997.

Started a second private pension, but am beginning to feel that saving for a pension is a complete waste of time, especially with university fees looming, 20% VAT charged trying to make my house energy efficient, and having two elderly parents on limited means who are going to leave me with a combined IHT bill of £100,000.

I would like to see a full refund of the lost Equitable Life funds (£2000!) and a return of all the dividends that Gordon Brown has stolen since 1997. Suprised the new Government has not done either. They all make me sick

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Jonathan

Dec 15, 2010 at 14:17

Robert Willan, >>>"I would like to see a full refund of the lost Equitable Life funds (£2000!) and a return of all the dividends that Gordon Brown has stolen since 1997"

The government hasn't got any money to give back, it's in debt.

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Robert Willan

Dec 16, 2010 at 12:23

um, so when you are overpaid tax credits (through no fault of your own), or underpay tax, due to a mistake by HMRC, and you spend what you thought was yours, if HMRC say they are going to claw back what you thought was yours, you can say "sorry, the money I thought was mine has been spent"??

I think not!! All I'm saying is a small investor cannot afford to lose their pension savings. As someone who knew nothing about how pensions work, and went on the recommendation of the pensions industry, I am amazed that funds can be lost. Also that the Government bemoans the collapse of the pensions system, yet continues to skim off pensions growth.

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Atul Narharidas Patel

Dec 17, 2010 at 17:16

Patrick Moylan, I rather leave the blind dating to others.

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Atul Narharidas Patel

Dec 17, 2010 at 17:25

To Tony Peterson. Merry Xman to you too.

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Atul Narharidas Patel

Dec 17, 2010 at 17:26

Tony Peterson. Merry Xmas to you too and Mr Manilal.

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Tony Peterson

Dec 17, 2010 at 17:51

That's very generous of you Atul. I wish you season's greetings too. I prefer Saturnalia to Xmas myself. I trust that the spirit of Diwali will reward you for your broadmindedness and tolerance.

I am more concerned about Manilal Shah. I hope he enjoyed Eidh. But his trust in the system concerns me. (And I'm not sure I'd have his festival right. So hard to tell.)

However, in the spirit of the winter solstice, and all associated festivities I wish all Citywire readers well, especially those who can agree to disagree strenuously. I am sure we will find plenty more to argue about in the coming year.

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Manilal Shah

Dec 17, 2010 at 18:30

Hi Toni and Atul

Thanks for remembering. I wish you happy Christmas and Prosperous New Year.Nothing Personal every Individual have thier own views. Hope we learn

from each other.

Manilal Shah

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Atul Narharidas Patel

Dec 17, 2010 at 18:48

Hi Manilal Shah, Pleasure is mine it is always nice to discuss matters rationally and in a civil manner as oppose to rather radical approach used by some.

I do agree this forum is to learn and exchange views. We all live an learn.

Pleasant weekend

Atul

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Tony Peterson

Dec 17, 2010 at 21:19

Hi Manilal and Atul,

If I am angry it is not on my own behalf. I cannot understand why Manilal is being so civil.

If 2001 he trusted "professionals" with 100 grand and has lost 45 grand of it. Allow for inflation, and he has lost more than a half of the value of his hard earned money.

In the same year (2001) I invested on my own behalf and under my own control exactly the same amount. It is now worth around £350,000. Less of course the inflation impact.

IFAs, fund managers are for the most part incompetent twits. How they can lose money on this scale for victims like Manilal is a matter that amazes me.

Why Manilal is not angrier also amazes me.

But, it is the season of goodwill. The system, however, deserves scrutiny.

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Persevere

Aug 02, 2011 at 11:03

I did it. I returned to the UK after many years living overseas without having accumulated a penny in a UK pension. I have saved half of my salary every month through salary sacrifice and have now accumulated in excess of £150k in 6 years. My aim is to retire aged 60 with a pension pot of £310k

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Mina Myers

Sep 28, 2013 at 15:07

And here is another way to spend your retirement without any worries

The as is " Sun Park Resort" on a beautiful island Lanzarote in Playa Blanca where i am spending quality time with like minded people who is here for as long as they want it's that cheap.

Try out Sunparkliving.com you will not be sorry and only happy

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