Stakeholder Pension fund

True enough. But most of your personal allowance will be taken up by the basic state pension anyway, won't it?

Drawdown is an option, provided you don't live too long, and you have lots of money available.

"Jonathan Bryce" wrote

Hmmm - cases of drawdown I've heard about seem to have had very high expense ratios - and funds have been depleted very quickly. And, of course, you still need to buy that annuity once you get to age 75!

I'll bet you wouldn't be saying that if the baying crowd demanded that while we're at it we should include endowment salesmen too, and of course everyone who has ever been a pension or endowment salesman.

Let him who is without sin...

And at 75, the annuity will be relatively more expensive than it would have been 10/15 years earlier because of "mortality drag".

"Ronald Raygun" wrote

I'm sure you know the answer to this already - its *mortality* risk! They may be able to cover the *investment return* risk by buying gilts themselves, but they have no way to cover the risk that they will live too long ...

"Ronald Raygun" wrote

What indeed! We might be about to find out soon, with many pension funds switching from equities to gilts lately ...

"Ronald Raygun" wrote

I suppose it might be interesting for the state to broaden their "sideline" in insurance & pension provision - but I suppose that "the gilts rigmarole" does separate-out the "conversion of a lump sum now into income into the future" side of annuities from the "mortality risk + administration" side, with the former currently being dealt with by the state (gilts) and the latter being dealt with by the annuity company.

"Ronald Raygun" wrote

I think you'll find that life offices (for annuities) and pension funds (for pensioners) are probably (at least one of) the biggest investors in gilts...

Of course they have, by living below their means and minimising drawdown. They use a wide spread of maturity dates, and at each maturity they roll the proceeds over into new ones.

Or they may prefer to live above their means and when it's all gone just call it a day and throw themselves either off a cliff or on the mercy of the welfare state.

I feel that property is more likely to give you what you need in your old age along with flexibility before then.

I don't trust pension funds and I dont trust the government.

Peter Saxton from London snipped-for-privacy@petersaxton.co.uk

How can the average man in the street 'carefully choose' (with appropriate advise, if necessary) a UT/OEIC based ISA that consistently outperforms the index over a 20 - 30 year period ? All that I've seen so far suggests they can't. I have a feeling that high yield and value investing may do, but I've yet to see any long run statistics.

Daytona

"Daytona" wrote

Why do they need to outperform the index? Who says a Stakeholder would necessarily do that anyway?

?? If there's no matching to be done, you don't *need* to know how long to match to.

What extra money? By "live belowe their means" I simply meant to live frugally off the interest without needing to draw down capital.

If you want to optimise drawdown, yes. If you reject drawdown, no.

I doubt it. In any given year, yes. In total, no.

No, but they're a convenient vehicle and have the (dis)advantage of having interest rates fixed for (their) life, unlike high street bank deposits or shares in ICI.

They don't need to, but I, for one, would consider it desirable.

Dunno - I didn't.

I'm quite happy to accept the proposed amendment to my proposal.

In message , Ronald Raygun writes

Which is what has happened recently driving the yield lower.

Go to a decent IFA and buy through a fund supermarket, like Skandia, for example and split the funds between managers and switch as necessary. Nobody in their right mind would stay with the same manager for 20-30 years. And why benchmark an index?. Absolute performance is what we are after.

Having said that, if you look at unitised 'pension' funds of the type offered by Pension Offices you will see that a far greater proportion fail to beat the FTSE all share than UTs. Pension Offices are generally pretty crap at investing money and the majority of pension salesmen dont address the investment element properly and the poor buggers dosh ends up in the company's 'balanced' or 'managed' fund or even 'with profits'. So even a poorly performing UT will beat a main stream Pension Fund anyday.

Hhhmm,,,,

In message , Tim writes

No, it would be 11+ years before the cumulative effect of the lower initial payments caught up with the level annuity.

If forced to buy an annuity you'd be better off saving the difference between the level annuity income and the index linked annuity, which would be quite a lot, and shoving into an equity based ISA upon which you could draw in later years.

Am I right in thinking that the value of the gilt edged market is some times larger than that of the equity stock market?

Are you sure about that? How do you define "more expensive"?

In message , Terry Harper writes

No idea,

but I would be very surprised if the value exceed the market cap of the FTSE100