Pensions

[John]

I am losing faith in pensions.

 

Why would the government allow private companies to take over? How can they be any better? This is by no mean to guarrentee that particular pension company would go bust and then what? It has happened to a well know company and I believe more eventually will head that direction when the retirement generation comes into the picture for these private companies.

 

I was talking to a retired gent a few months back and he put a lot away into private pensions and he only gets something like £12 more than if you get it from the government. His argument was, the amount of money he put into pensions would have been better either spent, invested personally or put into a savings account for a rainy day.

 

I've got 3 pensions and completely confused with mountain of paperwork. I can't transfer otherwise I lose 20% (Greedy or what) if I do so.

 

Is anyone worried about the future of where pensions are heading?

[alert_bri]

No John,

 

I gave up the idea of a Pension years ago when I first started (trying!) to make my fortune working for myself as a software engineer - my initial (company) pension was frozen and I didn't bother to start a private one to replace it...

 

Now the company pension is worthless and ever since the Maxwell disaster I've had zero confidence in the whole field - I'm determined to work my way to financial independance before retirement age - and not rely on the state or luck.

 

I'm happy with my own situation but it's criminal for the rest of the working population not to have good solid information about how to look after themselves long term.

 

I've heard most people think their best chance of financial security is doing the lottery.

[Funky Dave]

I've got a money purchase plan, which is like doing the lottery only more expensive.

 

 

Out of curiosity, how are you planning to be financially secure at retirement if you haven't got a pension?

[Fletch]

instead of paying into a pension i would set up a new bank acount with the highest intrest possible and pay into that, because

A) if you need the money before your pension age you could pitch in and borrow some and

B) The money wont decrease in value, only increase

 

my ideas

 

Fletch

[Tony]

Unfortunately Fletch, money DOES decrease in value over a surprisingly short period of time. That is why you could buy a brand new house 40 years ago for £2,000.

[Fletch]

but not in a bank does it??

[Tony]

Yes it does Fletch.

[Fletch]

How and why?? please explain

 

because if i put £50 in the bank now i could swear that in about 50 years i would have about £150

 

is it not the consumer products that increase in value and not the money decreases in value

[Tony]

Because (and without doing any calculations) that £50 may well be £150, but it will only be worth £10 when you go in the shop compared to prices on the day when you invested it. It's a mixture of inflation and devaluation.

 

Look at it this way...

 

1950 - buy a house for £1,000 and a posh leather jacket for £5

2004 - buy a house for £200,000 (1000 x 200) and a posh leather jacket for £1,000 (1,000 x 200)

 

1950 - put £50 in the bank

2000 - £50 is worth £150 (50 x 3)

 

Do you see how money goes down in value but not amount? It just buys you less over time, therefore it is worth less. The trick is to invest it into things that go up in value faster than money goes down like property.

 

On the above (albeit inaccurate) example, your £50 is now £150 after 50 years. However, it is only worth £150 / 200. Yep, your £50 (or £150 as it now is) is now worth 75p of buying power at todays prices.

[Fletch]

but is that not the products going up in price??? not the money going down??