Pension Choices

[sandyRoe]

When people are free to do what they like with their pension pots is there likely to be an increase in investments in wine, farmland that might get planning permission for development, and other cons?

[Peter Pedant]

I would expect house prices to rise
as there will be lots more money and not many more houses to chase

farmland that might or might not get planning permission seems a bit risky to me -

[SirOracle]

My fear Sandy is that the majority will have a spending spree for a year or so,dissipating the capital sum,and then throw themselves on the mercy of the government (us ),when they have no pension left.

On balance I think it is a bad Tory idea,no matter how they try to dress it up.

[Caran]

Will eventually the pension pot be taken into account when people are trying to claim benefit, eg you have a big savings pot so you cannot claim anything, forcing people to cash in their pension pots?

[SirOracle]

You are right Caran. Also liable for tax on the capital sum in the year they take it.

[janbee]

I'll be keeping my annuity.

[mikey4444]

SirOracle has it right here. This is disastrous policy, and is a blatant attempt to get the OAP vote. Most people don't have a pension that they can run off with.

[naomi24]

Mikey, If most people don't have a pension that they can run off with, claiming it’s a blatant attempt to get the OAP vote it rather contradictory. I’m tempted to say rather the people who’ve worked for their pensions rifle them than a Labour government with someone like Mr Brown at the helm - but looking at it another way, it will give some people the opportunity to take early retirement, freeing up more jobs for those who need them - and that has to be a good thing. No?

[mikey4444]

naomi...for some people this may be a good idea but I am unsure about the majority. The whole purpose of pensions and the only reason that they attract such good tax advantages, is that they are meant to provide an income in retirement.

When I was 55, I had a pension pot which I converted into a monthly pension. That pension increases with inflation every year and will continue to be paid until I die. I am not prepared to reveal how much the pension pot was, or the resultant pension, as AB seems to have so many trolls floating around these days ( not you Naomi ! )

But I took my tax-free 25% and bought a car, which I needed as my company car went along with the job when I left at 55. The great danger for many people will be that they will blow this pension pot on anything they desire and then find they have not enough income in retirement. The chances are that they will then be a burden on the state, in the form of social security handouts.

Most people find that life in retirement isn't the bed of roses that they thought it was going to be, as most of their pre-retirement outgoings still need to be paid, out of a much reduced income.

So these plans may be useful for some but everybody. But everybody will have the same temptation waved in front of their faces.

[naomi24]

Mikey, //The great danger for many people will be that they will blow this pension pot on anything they desire and then find they have not enough income in retirement. The chances are that they will then be a burden on the state, in the form of social security handouts.//

Although that will happen in some cases, I credit people who have had the wherewithal to provide for a comfortable old age with more common sense than you do. I imagine that having worked and saved for years most would be very reluctant to face a future on benefits – as you clearly are.

[ludwig]

It's incredible to me that there's a debate about 'should we allow people to spend their own money how they want to'.

If people want to take the money they're saved all their life and gamble it away in the first week, or buy a ferrari, that's their business.

As long as there's no cost implication for anyone else - which there wouldn't be, as we all get the state pension anyway, then it's nobody elses business.

[sandyRoe]

I was thinking more of the various cons that are designed to part people from their money. I guess if there is more money about the con-men will skim off a share of it.

[mikey4444]

Naomi...I would hope as you do, but I am not so confident ! We as a nation should be encouraging people to save into a pension, as indeed this Government and the previous Labour administration have done, by introducing default workplace pensions.

In all the years I was a financial adviser, it was always difficult to get people to understand that they need to think about what they are going to do when retired. Some people have the most obtuse ideas about what its going to be to like in retirement. They think that its all about playing endless games of golf, and going for lots of holidays to the Med ! But few of them actually realised that that most of their day to day expenditure would still need to be made. Council Tax, electric, gas, petrol, food, etc are unchanged when you are retired...some of those expenditures may actually increase. And for the coming generation of people, retirement is going to a lot tougher than it was for our parents generation. They didn't have expensive Mobile phone contracts, or Sky packages, or expensive foreign holidays, or two cars....but the younger generation do and they are not going to be very happy when they find that they are trying to do all that on incomes of 50% of their previous working incomes.

I have a niece and her boyfriend, who say they can't afford to save up for the deposit on a house, here in South Wales where there is affordable housing to be had. And yet they both pay £50 a month for the Mobiles phone contracts and they have the top of the range Sky package ! Neither have made any pension arrangements and they are approaching their early 30's. And they want to retire in their 50's !

Because there is such widespread ignorance and/or misunderstandings about pensions, I even found that some people hadn't even joined their salary company pensions ! There more of those than you would have thought !

[mikey4444]

Ludwig....some of these people who buy the Ferrari will be broke when they are older and will be begging at the door of the Social Security, thus being a burden on us more sensible people. Are you not concerned about that ?

[ludwig]

// I was thinking more of the various cons that are designed to part people from their money. I guess if there is more money about the con-men will skim off a share of it. //

It'll make a change from the conmen in the insurance companies getting hold of it then. You know, the ones that take 10 million quid off you and pay you an annuity of about £600 a year from it for the 10 years until you die, and then keep the rest.

That heartless scam has been operating for some time now, and the con artists behind it are worried it's coming to an end.

[naomi24]

Mikey, as Ludwig says, the people who spend their pension pots will be receiving a government pension anyway - just as everyone else does. They won't be burdening society with additional expense.

[sandyRoe]

They won't be living high on the hog, either

[ludwig]

// Ludwig....some of these people who buy the Ferrari will be broke when they are older and will be begging at the door of the Social Security, thus being a burden on us more sensible people. Are you not concerned about that ? //

No. Why will they be a burden? As I said, they'd be entitled to a state pension anyway. All they'd have to do is live off that like the other people who spent their pension along the way instead of saving it for a ferrari - ie the ones who saved f* all. Why don't you refer to those people as a burden too?

You need to focus on the fact that it's their money. Not yours, and not the governments, and you shouldn't be so arrogant as to want to save grown adults from their own stupidity.

[mikey4444]

Naomi...do you really think that the current generation of people will be happy on £113:10 a week, which is the Basic State Pension ? Because if that is the only income they will have, if they have blown all their other pensions

I couldn't manage on that and I am very careful with my money.

[mikey4444]

Ludwig...why are you being so aggressive ? Can't we debate this without using such abusive language ? I haven't been abusive to you..can't you accept that not everybody has the same rosy-eyed view if the future as you do ? Aren't we allowed to have differing views ?

[naomi24]

Mikey, //I haven't been abusive to you//

And he hasn’t been abusive to you so stop being so precious every time it suits you. It spoils the discussion. He’s simply said it’s arrogant to tell people how to spend their own money – and it is.