Pensions Rip-Off

I agree that you need to look into it closely and also it is a bit of a gamble what you do as much may change by the time people come to retire. At the moment having any income means that you lose other benefits available beyond the state pension so effectively amounts to a very high tax rate indeed for the first few pounds of your private pension.

Quite. And that's exactly the problem, a pension tax wrapper is effectively a gamble on government policy 20 or 30 years in the future... I'll be sticking with ISA's myself for now.

You may not be aware but the FSA decides what the official growth rates that insurance companies have to use on their quotes are. These have been reduced from some years ago. So however well or badly the pension company performs, it has to quote the same growth rates as any other company.

Furthermore, the annuity rate, i.e. how much pension you can buy with your fund, is an FSA-decided figure. It doesn't mean that when you actually come to buy the annuity you cannot do better, particularly if you are ill or a smoker. Mind you, annuity rates are not as good as they once were, partly due to more longevity.

Don't throw the baby out with the bathwater.

Rob Graham

Jo,

Most insurance companies that offer pensions have a cash fund amongst those that people can use. To use these you would have to open a pension with the provider of your choice and specify that fund. Ideally you'd do it through a broker who would reduce the charges on the plan.

You can't do this through comdirect but if you want to move the cash in the pension fund into stocks and shares in a comdirect SIPP at some point then you transfer the fund (at no cost from the provider if it's a stakeholder pension) into the SIPP and use the cash to buy the shares.

Rob

I think it's 5% before charges.

Rob Graham

Thanks Rob, appreicated.

My Wife and I have had exactly the same reaction to the statements that each of us received from our (different) Pension Providers. From the documentation received from these companies we discover that the directors still receive substantial bonus payments. Thats where the money goes and all we can do about it is discontinue our contributions and find another investment vehicle.

I take your point, my main complaint is that in the space of just 6 months the expected pension prediction has fallen by 12% (23% if annualised) whilst the fund value grew at someting like 9% over the year. ie the fund gets bigger but the prediction (only a prediction I know) gets smaller. I wouldn't have expected such a huge drop in the prediction over such a short time (bearing in mind ther is still 1 years to run) unless the company is expecting very bad returns over the remaining life. And what was Blair & co saying about this in the run up to the election, didlly squat.

Kevin

Please see my earlier post.

Rob Graham

In message , Layezee writes

What about ISAs?

THEY DO!!! Just ask your pension company to invest into their CASH fund!

Er Quite. And will cash deposits keep pace with inflation then, (over the long term)

In message , snipped-for-privacy@mwfree.net writes

NO Kevin. How can the company build in an expectation of low returns when the returns they use are those laid down by the government?

The future return is based on an expectation of Annuity Rates. That expectation is different for each different growth rate used, becuase they beleive that if there is a higher growth rate there will be higher inflation and therefore higher annuity rates.

As It happens, annuity rates have dropped, and expectation so for annuity rates have dropped, therefore the expected income in retirement has dropped. Its nothing to do with the pension company's views.

In message , Anthony WELLS writes

Sadly, it is the incompetence of the Current Government and the practices of the FSA that lead the general public to come to conclusions like this. Quite a reasonable conclusion based on what the Nanny State insist you must be told.

Sadly what the FSA and Government tell you is a load of bull and therefore your conclusion is wrong. I am not criticising you, because quite naturally you must rely on what the Pensions companies are forced to tell you. But what they are forced to tell you isnt the truth.

The blame for all of this rest quite clearly with the Government.