Is it worth investing in a pension?

We are an art gallery and have noticed a marked increase in the number of people looking to invest 10 - 20% of bonuses , payouts etc into ART so that Gordon & friends can't take it off them, . The Dividend is the pleasure & the profit - is private.

I gave up saving for a pension the traditional way some time ago as it is too restrictive and the Govenment keeps changing the rules. I also do not want an Annuity or Drawdown as you lose all your savings when you die, which have already been taxed, or when you reach 75 years old. i would like to pass some of my hard earned money onto my children !

The question is why save in a pension? I've seen friends and relatives drop dead before pension age and those who make it forced to take a pathetic annuity after years of investment in an under performing fund with huge management costs.

An important factor is that the capital underwriting that annuity (the savings) is then stolen by the government on death and cannot be handed on to the next generation, as any other vehicle for saving could.

Pension as a saving is a low return high expense product with restrictive use and ultimately complete loss.

The real problem is then whether the dissillusioned, such as myself, make some sensible alternative provision for later in life.

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I save all my life into poorly perfoming pension schemes, and if they survive they might just payout 6%/7% per annum and then I pay tax on this very poor return.... no thanks

No-one seems to have mentioned that there is more than one type of pension. It may well be the case that Life Companies do not perform as well as we would like with our Private Pensions, so why not look at the Self Invested Personal Pension, where the client chooses the investments themselves? There is also no need to purchase an annuity with a SIPP, and benefits can be taken from age 55 onwards. There is also the opportunity to pass on some or all of the fund on death before age 75, dependant on circumstances. Worth a thought when it costs a higher rate tax payer £6,000 for a £10,000 investment.

As an Equitable Life pension fund holder, a good part of my hard-earning contributions have been effectively stolen without compensation, having been assured by all the "experts" including the venal FSA that this was completely safe with excellent returns (figures of 8% pa were used to estimate prospective fund growth).

The truth is, nobody can tell the future, least of all anyone selling financial services. Government departments even worse than commercial organisations, cheating and spinning to avoid responsibility.

My advice to anybody, especially young ones like my own grown-up children is to avoid, avoid, avoid pensions altogether (in fact avoid all long-term contracts with financial institutions). Your only benefit is the tax relief on contributions, and whether this is 20% or 40%, over the long periods that you are committed to your pension, this tax benefit should be matched many times over by the better returns you can get by investing elsewhere in the market.

All other aspects of pensions are negative -very long commitments, poor investment performance, excessive management fees, crippling raids every year by greedy incompetent Chancellors (nobody told me that before I signed up to my pension), compulsory annuities with pathetic returns, etc etc.

I tend to agree with the SIPP approach / ISA.

To my mind it seems strange that one should pay a fund manager up front to gamble with my money regardless of his / her performance.

As to taking a pension. In my book income drawdown makes a lot of sense to me. If I foul up / gamble badly then at least I know who is to blame. If I die early my fund goes to my family. I take the risk . I get the rewards. The only fees I can't avoid are trading fees but at least I don't get some Investment Trust Fund creaming off their share up front and every year for what at present will probably be a loss of capital.

As other people have said there are too many changes to regulation which makes you feel uncertain as to the future plus there are too many people in the finance industry who are paid too much for very little result – fund managers and insurance company charges etc which all come out of your pocket.

Despite all the guff about equity investment being a brilliant long term investment the fact is that the average manager is unable to beat the index. Given that the footsie stood at over 7000 in 1999 and here we are nearly 10 years on with it at 5400 so an ISA for many people starts to looks a good bet as it has certainty and transparency.

I am one of those who fall in to the one out of five category. I don’t trust pension fund providers and having looked at the margin in it for the companies I don’t believe it is a sound investment with 40% drawn off for the privilege of managing my money. If I choose to redirect the money otherwise put in to a pension toward a larger house or stocks and shares. It gives me the flexibility to react to circumstances whether they my own personnel financial situation or the state of the local or global economy. Having weighed up the tax breaks for a formal pension fund, and considered the fact that each successive government rewrites the rules on pension it hardly seems to be a safe place to save for retirement. Given the forthcoming pensions short fall I am sure that government policy near the time I plan to retire will be less than friendly to those who have made formal alternative pension arrangements. After all it will be struggling to provide basic support to those how have made no alternative provision, which is already started happening with gov backed opting out of state pension support. It seems that the level of payment into national insurance even at my fairly normal level of income should be enough to provide a reasonable state pension and health care. However this is not going to be the case as the level of social dependency and inefficacy of government run entries in the UK will ensure that such payments are swallowed up into the black hole of gov coffers never to be seen again. The plane fact of it is there are too many people taking out and not enough putting in to make UK gov inc a viable vehicle to save for ones retirement. While you may say that is all the more reason to have a formal alternative pension I fear the gov in their desperation to make the books stack up will not be able to keep their sticky fingers out of these pots of money. Which they can access with a simple change in tax law or maximum savings level for state pension entitlement

Pension is in part an insurance policy. In my decision making I took account of the following:

- no other saving mechanism can beat starting with 40% tax relief and as much company contribution as you can get.

- If it is defined contribution, only invest your pension money where it can be moved easily (SIPP). I.e. the investment manager must have an ongoing incentive to manage your investment well. And don't put it all in one basket.

- By the time I am 75, the accumalated pension draw down will be more than i would have accumalated in total with the same investment outside of a pension. So you can actually pass on more even if you lose more.

Advice to the young folk, do it the easy way, get a government job, no worries.

The rest of you, look after yourselves.Let no one near your savings, They may wear suites and a smile but they are all thieves and con men.

Don't tust the government, they don't even smile.

Use your ISA allowance, and that of your wife and kids. Invest in energy,food and water,and gold.

Don't invest in UK, Brown has it wrecked,what a moron.

Hey ho, there we go.

Are final salary schemes also rather dodgy too?

I've always thought the long term nature of pensions was dodgy, but the fact my employer will contribute, but wouldn't gibve me their contribution in my pay packet means I've joined a pension scheme, that happens to be a final salary scheme.

Good or bad thing to do?

I agree with some of the comments about personal pensions being potentially poor value but for me it's all about balance. As the item on SIPP mentions, the tax advantages of pension savings shouldn't be ignored and as well as SIPPs, AVCs can be a great solution for much lower savings and some pensions like the Pru Teachers pension which my wife subscribes to in her AVC has performed very well. But would I put all my retirement savings into pensions, of course not just as I wouldn't put it all into property (where many of my friends are starting to lick their wounds) or trust my own equity picks. The trick as with most things in life is to get the right balance and go into things carefully with your eyes as open as possible

everything about pensions is bonkers -

government policy and procedural nightmare.

pension fund management woeful. charges extortionate. The finance industry have been cheating us for decades and the smokescreen around pensions means they still - even now with the precipice close want our money and their rake off.

SIPPS offer a modicum of self control but youre still charged by someone for the priviledge of them having your money.

As for tax relief, who's relieving who?

The industry is full of clever sounding people still trying to delude us.

Do you know I Standard Life charge 1% for keeping your money in a sterling bond which returns 4% - 3% less than the open market for cash deposits ? For doing nothing !

Every weekend broadsheet has fund managers wanting us to give them our money- I'd rather feed it to my fish

Soon after Nu Labour came to power, Gordon Brown started taxing pension fund dividends and he has been doing it ever since at the rate of about £5 billion a year.

That may be bad enough but lets not forget that we are also losing compound interest on the confiscated money. This has been a disaster when one considers that the whole point of a pension fund is that it should grow as much as possible - the money lost in this way is crippling.

Since that money grab, private pension funds have collapsed and they will not recover until this, or some future government stop creaming off the funds.

Until then, the only pensions worth having are public sector pensions which simply milk the taxpayer for as much as the authorities wish to pay themselves.

having paid £25000 to Equitable LIfe as a market adjustment !! ie a license to steal, I paid into my own personal pension until retirement.

Under the rules prevailing at the time when I reached 65 I had to start an income drawdown programme if I didn't take out an annuity.

That rule changed so I allowed the fund to accrue until I decided that I will now drawdown as much as I am allowed until II reach 75 so that I have the least sum possible with which to take out an annuity.

In the run up to 75 I will invest what I don't need from the drawdown and align the pension fund to generate income.

I should say that I do have other income sources

If the question is why save into a pension maybe one of the answers is self control. While the restriction on the availability of the capital exist, is this not the point. How may truly build up a pension or other capital to afford an enjoyable retirement. . Ask a pensioner with an adequate pension if they would give it up. Also ask them if they have accessed other savings through their working lives. Not having access to the pension means that it’s available when you need it. When you don’t have a pay cheque. A pension is only a savings plan with conditions... If you have the self control to save and not spend a large pot of capital for retirement in an alternative plan - account and don’t want the tax relief that’s fine. Like many my father paid for me and my sister to go to school and it was a real struggle.. All the while however a pension was deducted and now, having been retired since 58 he is 73 and in fine fettle. I am very glad his employer deducted it. Many more are living longer. Your saving have to last a long time and if you are dead you can’t spend it and don’t care. If you are alive you can and will care. Any help you can get then, the better. Tax relief is the help on offer and the discount you get for the restrictions. At 20 or 40% it is quite a discount. The ISA alternative is often quoted, consider the size of pot. £100k and 6% is still only £6k per year and would you spend it before you got there... And then what would you do.. My weekly shop is about the value of the state pension….

1. I got caught up in the Equitable debacle - despite all the condemnation of the govt - any compensation ? dont hold your breath

2. I can lose money on investments I dont need men in suits to charge me to do it for me !!!

3. Tax relief ? bugger tax relief - tail wagging dog here - if the product is bad to start with - why bother

4. I am using ISAs so that I can at least have some control and not give my money to insurance companies

I feel better for that!!!!

You can put up to £7,200 p.a. into an ISA and £3,600 p.a. (including government tax top-up) into a plain vanilla stakeholder pension linked to, say, a low-cost equity tracker fund.

The ISA can be invested in an ETF with a similar broad spread of equities or other assets at very low cost, and some administrators charge little or nothing to run an ISA: no inactivity fees, for example.

Thus ten grand a year, which is as much as most young people beginning to save for retirement, can spare can be stashed away and left to fructify gradually for a few decades. The bigger the accumulated funds become, the smaller the percentage wasted on charges.

You pay the 10% withholding on share dividends within the ISA (not on other sorts of income rolled up) but that is not too onerous compared with the proceeds' freedom from gains tax, your ability to break the wrapper and access the funds before what is set to become an older first retirement date, and your flexibility in encashment compared with the clumsy sudden-death annuity purchase routine for pensions.

An ISA does not give tax relief upfront, but you can leave or gift something to your heirs and assigns.

Most claims from the fund management industry about beating markets are demonstrably shaky-- see the Efficient Market Hypothesis, passim-- and the risk-spreading management offers can be cheaply replicated by trackers.

So as the author says, what are managers good for? They are blinding millions with the mystique of "investment expertise" .But we know that nearly all long-term gains come from rolling up income.

DIY, not churning and switching, is the way to go. Anybody who can play online poker, do the pools or place bets on horses using form can learn all he needs to know about capital markets. It's largely about saving hard and leaving well enough alone.

In my 20's I remember thinking I'd never bother about a pension. Then I was lucky enough to work long enough in the Public Sector & have it all taken care of by my employer. I'd be struggling without my employment pension now.

Today you can make your own pension plan and for every £80 you invest the State will put in £20 - thats an instant 25% gain. And if you choose a good fund manager in the long term - like 20-30 yrs - you'll get an annual average of at least 5% or more on top. Looks like a no-brainer to me.

But I can see the attraction of managing it oneself. Provided you're not tempted to dip into it or 'default' you might be able to get close to the return described above. However you'd be v. lucky to equal or beat it.

I'm another 'beneficiary' of what looks to me like theft by the Equitable Life (whose former directors resemble 'The untouchables'.)

Like all others who subscribed to the 'oldest, most solid, most prudent' outfit at the time, which boasted the best IT systems and knowledge of their customers and their products, I am recommending all younger people to steer clear of all pension companies.

The impact this view on the industry, promoted by thousands of EL policy holders, must be considerable. Not that the govt. will heed it of course, as they wait for everyone to die off and shut up. But I bet the other providers are aware of the resultant lack of faith in pensions.

In MARCH 2000 my personal pension was worth £79,000. Today its probably less than £65,000 despite having has NATIONAL INSURANCE contributions paid in under SERPS.In JANUARY 2006 it actually reached £95,000............Okay so you get tax relief but if your pension actually gets paid (i.e.before you die) you get taxed on it. 25% tax free lump sum. Teriffic.........At 51 years of age aside from this I have a tiny potential pension from a part-time job even then I CONTRIBUTE 7%.

Instead of continuing with pension investment I placed £16,000 in a FOOTBALL GAMBLING FUND in MARCH 2006 & today I have £16,000. I paid fees of £700 a year up to 2013 & by then I FULLY INTEND TO HAVE £100,000+ ALL TAX FREE.Last year the fund made 69% so by 2013 I would not be surprised if I am worth £200k ALL TAX FREE. Its legitimate,its tax free & bone-fide. two days ago my three friends & myself placed £25,000 with the same firm who will trade(gamble) our money on sporting events & pay our winning out quarterly.EVEN AFTER THEIR 25% PERFORMANCE FEE I would be disappointed if we dont receive £6,000 per quarter tax free. Thats £500 per month each.NO TAX,NO FORMS JUST MONEY.

This is ALTERNATIVE INVESTING its legal & tax free.Do we win every time. ? No we dont but we win 90% of the time & they never trade more than 5 or 10% our funds in one bet & only with consent.

Once the market picks up I am taking my 25% tax free pension lump sum & betting it in the FOOTBALL/SPORTS FUND. KEN WEBB TEL 07956283902.

Please note my initial investment of £16,000 is today now worth £32,000.

Leaving pension companies to manage your money and charge you wrapper fees on top of the fund fees is an expensive way to go. In addition if you are not a 40% tax payer I question whether pensions are worth it....

Personally I am 36 and after many painful lessons in dabbling in the stock market it is true that the only way you make money is time and not timing. So I have gone down the SIPP route and invested in individual funds within a Fidelity SIPP wrapper that has 0% charges for holding or switching funds. But you only get these preferential terms if you are prepared to take no financial advice so they are not for everyone. I also pay 40% tax so for me it’s a good investment vehicle with low charges that’s forces me not to touch it for another 20 or so years. So with my pension being worth £70K now and in a good wrapper with no charges and 1000's of funds to choose from I am hopeful I can turn this into a good pot in 20 or so years. I will continue to pay into it but I'll stop when I get into my mid 40's as I don't think the time I have left for the money to grow warrants the restrictions. I'd rather go down the ISA route or stick it in the bank... So funnily enough in my view the best time to pay into a pension is when you are young (so it has time to grow), have disposable income and hopefully are a 40% tax payer. But how many of those people of out there?

One thing I have learnt is that it is not wise to enter into long term rlationships with organisations stronger than yourself. You are bound to lose out, compared with what you could have if you are able to negotiate terms whenever the context changes.

No-one has the same interest in your savings and retirment plans as you do.

But this requires information, luck and judgement.

So another thing is to get clued up young to know about financial management. It may be an unitersting burden on your time to some, but then again the burden is financial if you go passive and trust others.

Try EFTs and regular savings into larger companies at the core of the economy.

So much for the myth that Labour is the party of the common man.

Pensions are now primarily for the wealthy. If you have a salary of £235,000 you make a contribution of £188,000 and the taxpayer will initially add £47,000 to your investment. When you do your tax return you will then get a further £47,000 tax relief.

If on the other hand you have very little cash and are very proud you could save your £50 per month into the new National Savings Scheme for 20 years then when you come to pick up your £1,000 per year pension you lose some of your state benefits through means testing.

Pensions, whether state or private, have over the last ten years suffered a death of a thousand cuts. It's time for a proper re-think.

The only problem is - those who need to save are maxed-out on their credit cards, mortgages and can't afford food or fuel never mind have enough money to save.