Sipp

[Arzosah]

I deal finance at work, and I thought that was bad - dealing with sub-projects, pre-payments, etc., it is nothing like the complexity of the pension system. You could almost think it was designed to be deliberately complex so people could not understand, and financial advisers could earn a small fortune charging to provide not very good advice!


moominmama

That is my opinion too.Go on to Money Saving Expert,and they slag you off for not understanding pensions,then tell you to get a financial advisor!!!! Then you get the bragging rights: “can I retire on a million pounds”.Any less ,they talk to you as if you are ( an ignorant)pauper.

Oh my word yes - I'm a huge fan of moneysavingexpert, but the Pensions Board on the MSE Forum is well known to be an absolute nightmare. Use the main site only, or if you really, really want the forum, go to the section called MFW - it stands for mortgage free wannabe, people paying off their mortgages early. It veers into a lot of pension stuff, eg people who've paid off their mortgages already, but don't want to leave the community (and it *is* a community, that board and the DFW - debt free wannabe. On the MFW bit, look for a thread called FIRE - it stands for Financial Independence Retire Early. Pensions are definitely a part of that.

[jansman]

I deal finance at work, and I thought that was bad - dealing with sub-projects, pre-payments, etc., it is nothing like the complexity of the pension system. You could almost think it was designed to be deliberately complex so people could not understand, and financial advisers could earn a small fortune charging to provide not very good advice!


moominmama

That is my opinion too.Go on to Money Saving Expert,and they slag you off for not understanding pensions,then tell you to get a financial advisor!!!! Then you get the bragging rights: “can I retire on a million pounds”.Any less ,they talk to you as if you are ( an ignorant)pauper.

Oh my word yes - I'm a huge fan of moneysavingexpert, but the Pensions Board on the MSE Forum is well known to be an absolute nightmare. Use the main site only, or if you really, really want the forum, go to the section called MFW - it stands for mortgage free wannabe, people paying off their mortgages early. It veers into a lot of pension stuff, eg people who've paid off their mortgages already, but don't want to leave the community (and it *is* a community, that board and the DFW - debt free wannabe. On the MFW bit, look for a thread called FIRE - it stands for Financial Independence Retire Early. Pensions are definitely a part of that.

I use the MFW section too, and second your opinion of it !

[moominmama]

so.....the long and short of it is that my money is 'trapped' in the Sipp. I can get a lump sum of it back when I am 57, and the remainder is a wait and see depending on the rules at that point in time. I am really not encouraged to save into a pension, other than my workplace, it is a very inflexible system. Workplace is a final salary, though I am expecting that to close soon. If it moves from final salary to money purchase I am going to opt out of it, and just focus on savings. I have real concerns for future of the financial system, and that was before Co-Vid! So many of the pension schemes invested in office & retail property, as well as insurance companies that have been so badly impacted by Co-Vid, and despite the beginning up about return to offices, etc. it is never going to happen. I find myself increasingly drawn to physical assets. I am defiantly thinking that when the final salary scheme ends I would put my monthly pension contribution into buying a second property. I will still have the benefits of the money I have already paid into the final salary pension.

[korolev]

If your final salary scheme closes (which is probably inevitable), then whatever your employer sets up has to be worth joining; the employer has to pay in 3% (but many pay more if you do, up to around 8%) and your contributions come out of your pre tax salary. The only downside is that the money is locked in until you retire.
An example, you earn £20k and put in 10%, that's £2000/year but you're only £1600 down "in your pocket" because it's pre-tax. Your employer puts in at least £600/year. So for £1600/year, your "pot" is increasing by £2600.
When you retire you can take 25% of the "pot" as a tax free lump sum and the rest is taxable at your standard rate. If you took it out as a drawdown over the same timespan as you put it in, you'd take at least £2080/year out of it, a profit of £480.

That's my take on it but as a caveat, I am not a financial advisor, just someone who's been through it and keep getting asked by friends who are in a similar position so have researched it a bit.