To pension or not?

Algie
By Algie on Mon, May 27, 2013 - 8:04am

Simple question for debate, to help kick-start the UK Group?

 

Given the current financial climate, if you had a choice, would you invest in a pension?  Explain your reasoning

 

Algie

 

 

14 Comments

Algie's picture
Algie
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Posts: 27
So to answer my own

So to answer my own question...

 

I currently work for a Norwegian company and get paid gross - I have to sort out my own tax, NI and benefits.

 

Given I have a choice, I have decided NOT to invest in a pension.

 

My main reasons are...

  1. The belief that the return from any pension fund is going to be severely eroded by the stock markets crashing in the next 12 to 18 months
  2. Even if the return is positive, it is unlikely to be higher then the real rate of inflation (not the frigged inflation number touted by the government)
  3. The tax incentives for pensions are unlikely to last when the government gets even more desperate for cash to fund is largese
  4. Worst case, pension funds will be raided to "save the country", but don't worry the government will look after you
  5. I can invest the money on my own resiliancy now

 

Now that said, am I nervous about my decision?  You bet!  Everyone I speak to has a pension and sees this as the only way to prepare for retirement.  Being the only "Chicken Little" in the crowd is a nerve racking experience

 

 

Macs's picture
Macs
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Posts: 40
Tough one...

I have little faith in pensions, but that said do have a couple of small funds from previous employments. It's a rollercoaster watching their performance each year as statements come in. I'm not currently adding to them, and as they are so small am thinking of taking the cash at 55 under the 'trivial amounts' rule, assuming that stays in place long enough. It would buy me a nice handful of sovereigns for the mattress, anyway.

The problem is finding anything that can reliably pay you a cash income from savings. Bank accounts don't cut it, pensions could get raided, stocks are risky, gold offers no income, and what will happen to state pensions? The current plan of £140 pw flat rate wouldn't be a problem for me, I currently get by on approx £100 pw, so would be a pay rise :-) Still it rankles that SERPS has been done away with, as all my contributions there have effectively vanished - for a while I was contracted out (which is where one of the above funds came from) and in retrospect was badly advised to opt back in.

Investments in resilience do seem to have a better return, and I have a few more plans to implement there with the idea of reducing need for cash in the longer term.

Of course, the situation in which both private and state pensions evaporate would be one in which that would be the least of our worries. Still, I don't envisage an overnight collapse of everything, more inclined towards the Archdruid's scenario of a long, slow, grinding decline.

At the back of my mind is the thought that 'retirement' is a pretty modern concept, largely underwritten by the cheap energy interlude. Time was when a 'pension' used to be a rare and personal thing granted to a special few (usually by the monarch), whereas the vast majority died in harness, having worked to their last days. Depending on your age, you may live to see that again.

paganrongs's picture
paganrongs
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Wow just found this UK thread

...by accident!

 

With regards to pensions I stopped paying in during a difficult financial time - divorce, etc - and my finances never recovered sufficiently to restart. However I now regard that as a blessing.

I agree with both Algie and Max that not only have pensions been plundered by all parties in the UK but that they are at a lot of risk of further plundering as the UK and EU tip into deeper and deeper debt crisis. The Polish governement has already "nationalised" pensions (dont worry the government will look after you) and the EU have indicated that the new "bail in" approach piloted in poor Cyprus will be a template for the future.

Again, agree wholeheartedly with the idea to invest in resilience and reducing outgoings. Also to invest in family as an economic entity.

Algie's picture
Algie
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Welcome to the group paganrongs

Unfortunately we don't get much activity in the UK group,  but I check in to the site most days so feel free to start another topic - I'm up for a good chat/debate :)

 

Algie

 

paganrongs's picture
paganrongs
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Posts: 4
prepping in the uk

Hi Algie, thanks  for the welcome

Will also check in!

 

paganrongs's picture
paganrongs
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Posts: 4
prepping in the uk

Hi Algie, thanks  for the welcome

Will also check in!

 

lost tribe's picture
lost tribe
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To Pension Or Not To Pension

Hi everyone,

Thought I'd leave a comment to say how pleasantly surprised I was to see a UK group. I think my route to PP was as follows. The Keizer Report on RT, to Jim Rickards, to Mike Maloney, Fiat Monetary Collapse to Chris Martenson.

It's early days for me navigating all the info out there. One thing I struggle with is the US centric nature of lots of information and discussion out there. Because of this I recently started a subscription to Mondeyweek magazine here in the UK. Only just started so too soon to tell but I think it will be well worth it. They have lots of extra info on this really difficult subject of the risk to pensions, which I should be looking at soon.

I really want to make some significant changes to our food setup and make better use of the garden, and I'm trying to get set to add another heating source to the house.

So much to do and so little time ;-)

Algie's picture
Algie
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Posts: 27
Welcome to the group

Welcome to the group Lost Tribe

It's relatively quiet around these parts, but feel free to post questions anyway.  I check the site every day and will see any updates to this group

Algie

Markhemp's picture
Markhemp
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Posts: 15
Pensions

Hi there,

been reading the articles on the site for a while now but don't usually log in and get to the UK bit, nice to see I'm not on my own over here. I've been trying to put my house in order for a few years now (deep pantry) etc, even though i started to invest in PM at the wrong time I don't feel too bad about it as I think one day you will either own PM's or you will be very hungry/homeless, I stopped paying in to my pensions a year ago now when my business phone stopped ringing. I now help my wife with her business which is also in a slow decline. I for one do not regret stopping my pensions I feel very strongly the writing is on the wall and agree with some of the other comments above, this can only end badly and we are easy pickings, I have stopped talking to my wife about the likely scenario of events (I'm sure she thinks I'm nuts) and try to be more positive than I feel.

have you noticed that when you try to discuss events that are unfolding in front of us on TV etc with friends/people you meet they tend to go very quiet or stare at you as if you are an alien?, best to keep your mouth firmly closed or talk about footy or maybe what happened on corri which I don't watch (honest) anyway I'm happy to note there are some sane people still on this little island.

Off to feed the Chucks now

good luck to all

Niteowl41's picture
Niteowl41
Status: Member (Offline)
Joined: Mar 24 2013
Posts: 1
A little late in posting but.....

Hi everyone,

Here is something I posted to a different website around the end of 2011 which is around the time that these posts were written, which you may find of interest in general terms :-

Apropos nothing in particular except that it's the time of year for reflection (again), I thought that I might indulge myself with a small rant about the financial industry and markets over recent years.

Over the past twenty years or so I feel as if I've been mugged by the financial industry at every turn and it's still going on now with artificial bid/offer pricing and massive spreads. Bid prices going down whilst the ticker shows a rise and all the rest of the tricks that the market makers get up to.



A brief history of wealth destruction:



I was persuaded by a financial adviser to withdraw my pension from a defined benefit scheme and invest it in a money purchase scheme (an old story I know), during the dot com boom. I thought I was being cautious by investing half in an internet fund and half in a well established smaller companies fund. Guess what the smaller companies fund mostly consisted of? Yep, internet stocks. The rest, as they say, is history.



It felt great for a while as the whole thing grew like topsy for a year or so before it crashed to earth. I stuck with it for a while but 9/11 was the final straw and I sold everything. Every nerve in my body was screaming don't sell, this must be the bottom, but my pension had gone from over £130,000 to just over £40,000 and I just couldn't take any more.



I will never forget those contrasting emotions, initially the euphoria when you thought things were going well (really well) and you saw a chance to escape from the daily grind and early retirement seemed like a real possibility, (ho, ho) then the terrible devastation when it had all been destroyed. Add in being sold an interest only endowment mortgage and you start to get the picture. 



I don't consider myself a particularly stupid or gullible person (you may disagree) :) and I trusted these people as professionals in their industry, as I am in mine. However, from that moment on I promised myself, 'never again' would I trust my hard earned cash to the snake oil salesmen of the financial services industry. (Present company exempted)



I am luckier than a lot of people as I have a good job which pays a reasonable amount of money. I am in a company pension in which the company matches contributions and I took the decision to turn my mortgage over to capital repayment after the endowment debacle. It was hard at first but the mortgage has just been paid off and I am a lot older and wiser now than I was then. I've only got about ten years or so to retirement (unless the government puts the retirement age up again) so really don't have the time to build the gains that I had hoped for. 



It does seem though that over the last 10 years, every time you start to see your portfolio begin to get back on track, the next de-leveraging cycle hits as the various credit bubbles implode with the latest being the daddy of them all, a sovereign debt crisis as countries desperately try to stand behind their insolvent banking systems. Update: No change there then!



What should keep me awake at night is the amount of undisclosed leveraged losses that are still 'out there'. I think that they are big enough to take the whole system down. The people who implemented the fractional reserve banking system never envisaged a scenario like this, but that's a whole other subject on it's own. However, it seems to be a facet of human nature that one can only worry about Armageddon for so long before it becomes tedious and self defeating and one has to move on

As for 2012, bring it on! :)

Update,

Well they did raise the pension age and I don't much like some of the trial balloons being floated atm about those "greedy well off" pensioners taking all the peoples taxes.

If we look at how some of the pensions stateside are being destroyed without redress it's freaking scary what's happening there. I appreciate that the muni system does not apply here but even so......

Does anyone else feel like things really are starting to come unglued?

On the other hand if China can make the transition with their economy without too much economic warfare from the US, the global rebalancing thing could yet be positive. I guess we have to decide as a people if we want to cooperate or keep killing each other. No change there then either ;)

farhud's picture
farhud
Status: Member (Offline)
Joined: Mar 15 2015
Posts: 5
So now what...

Hi niteowl, read your update with sad familiarity I got caught the same way as you - endowments, pension worth less than i put in, loss on the dot com boom, etc and I think more is to come once the tax man starts emptying isa accounts for backdated tax law changes without recourse to legal protection...

 

Still at least we know. Most don't.

 

So what to invest in, then? Health. Strength. Fitness. Teeth. Family. Joy. Forget entitlement, embrace gratitude. Face down fear and choose courage. We'll never retire now so skills, skills skills. Tech skills - mobile app development, crowd sourcing, consultancy. alt coins. Armageddon/Ukraine/Greece/Cyprus skills; growing food, keeping chickens, sustainable power. Deep pantries and extensive veg gardens. Food storage. Keeping warm.

Learn to sing around a campfire.

Time2help's picture
Time2help
Status: Diamond Member (Offline)
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Posts: 2830
Re: farhud - So Now What?

Farhud,

If I could, I would upvote your post 1000+ times.

Algie's picture
Algie
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Joined: Jan 5 2011
Posts: 27
Agree with Time2help - great

Agree with Time2help - great attitude Farhud.

Wish I could find a community locally of like minded individuals.  The few times I've tried have been met with blank looks or have left me in the "Chicken Little" or "Tin-foil Hat" categories sad

 

Algie

Markhemp's picture
Markhemp
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Joined: Nov 29 2013
Posts: 15
cool post

Hey great post Farhud,

I'm thinking on similar lines, shame we are in a tiny minority.

All the best

mark

 

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