Pension, pure speculation

[expat]

We are encouraged by tax breaks to save in a pension, but restrictions are placed on it so that we can't spend it all too fast. The tax breaks are a trade-off for what we are giving the government, which is in effect an assurance that we will not need extra help from them after we retire, such as Pension Credit.

But the new Single Tier Pension is intended to avoid this help: you get a higher pension to begin with, and there's no more Pension Credit. So why encourage saving?

Pure speculation: HMG may remove the tax breaks on company SIPP contributions, at least for those inside IR35.

[AtW]

So why encourage saving?

Otherwise ponzi scheme is bust before current politicians can retire on hefty final salary pensions.

HTH

[vetran]

never been sure why if I lend the pension company my money for a Guaranteed 30 + years they charge a handling fee and can give me back less than I put in.

If I sign up for a 5-7 year bond I can get a guaranteed return?

That is the first change I would make if I wanted to sort out pensions. You get what you put in + x% over base rate or 5 year fixed returns and maybe a share of any profits the money makes.

Yes they take a risk you will live too long but they also collect if you die early.

[KentPhilip]

Pensions make your money hostage to the state for many years before you get some of it back. Then it is hostage to the life insurance companies for the whole period while they pay it out.
Once in a pension you can't move your money out to avoid new taxes or other regulations. Nor can you use it to invest in new businesses or other investments.

[original PM]

Given my lifestyle a pension is quite a gamble.

I think I would be better just buying lots of lottery tickets each month...



Just think even if just 1 month out of every twelve you buy letter tickets with the money you would have put in a pension --- would you get rich?

[AtW]

Just think even if just 1 month out of every twelve you buy letter tickets with the money you would have put in a pension --- would you get rich?

Obviously not - in worst case scenario it can even ruin your life (if you win big).

[lukemg]

Yes - pensions have a number of issues BUT they also have some advantages.
I am running a SIPP to keep control and will use drawdown later NOT an annuity.
GLA