Pension Fund

[ChimpMaster]

I wasn't suggesting they are the be all and end all merely that they may have a place in retirement planning , <snip>.

Geoff, appreciate your view but at the centre of my argument are 2 main points:-

1. Managing your own destiny and retirement date. I work hard now so that I can choose to part-retire early.

2. Wealth destruction on death. I work hard so that I can build wealth for my family, for my children. I do not want it to disappear in a purchase annuity or in a 55% tax raid on my death. I want to pass on my hard earned wealth to my children.

I might be missing a valuable point on SIPPs, but this is my current understanding.

[geoff from contracta IOM]

But I can't put a BTL property in a SIPP. You can have commercial property, property funds, exchange traded funds, shares etc but not a residential BTL.

Residential BTL will be the core of my investment.

Also, what happens when I die of old age? With a SIPP it is taxed heavily (55%) and so the wealth is destroyed. With my own investments I can hand them down in a number of ways before I die and avoid any charges or IHT.

Pensions and SIPPs are useful for some some people: those who have no interest in financial management and are happy to wait until a pre-defined age to retire. I'd much rather create my own path.

I wasn't suggesting they are the be all and end all merely that they may have a place in retirement planning , if you are going to buy equitites as part of a long term value investing strategy then a SIPP is one way to increase your investment by using tax free contributions.
One of the reasons that res BTL's are excluded is that it tends to be much more cyclical and could therefore cause a problem at anuity time if it has dropped by 50% in 3 years as we have seen recently thus potentially delaying your retirement date.
If you are going to be balanced in investing and retirement planning then I believe you should be truely balanced.

[ChimpMaster]

But if you used a SIPP ( self invested pension plan ) to hold these you would obtain tax relief when making contributions. You can still decide what to invest in, it is just a tax efficent way of doing so, it can also serve to protect the assets as pensions are often excluded from creditor attacks or bankruptcy.

But I can't put a BTL property in a SIPP. You can have commercial property, property funds, exchange traded funds, shares etc but not a residential BTL.

Residential BTL will be the core of my investment.

Also, what happens when I die of old age? With a SIPP it is taxed heavily (55%) and so the wealth is destroyed. With my own investments I can hand them down in a number of ways before I die and avoid any charges or IHT.

Pensions and SIPPs are useful for some some people: those who have no interest in financial management and are happy to wait until a pre-defined age to retire. I'd much rather create my own path.

[ChimpMaster]

<snip>
With life expectancy expected to rise over the coming decades, the annuity rates will probably also continue to fall, so that the expected income of £60K from a £1million pot, may only produce say £30-40K in 20 years time.

Thanks NW. So the question arises again - why bother with a pension plan?

[Nixon Williams]

EDIT: lol the Hargeaves link reckons I need to have a pension pot of £1m to generate £60k annual income! Considering I'm starting from zero I don't think I stand much chance of that happening!

These figures assume that annuity rates stay steady by the time you retire.

The Quantitative Easing of recent years has depressed the recent annuity rates, but they have been falling over the last ten years or so.

In the last ten years, the rates have fallen from about 9% to 6%, so ten years ago, your £1million pot would have produced a pension of £90K.

With life expectancy expected to rise over the coming decades, the annuity rates will probably also continue to fall, so that the expected income of £60K from a £1million pot, may only produce say £30-40K in 20 years time.

[BrilloPad]

I have no pension in place, I just don't trust them or believe in them... not in this day and age anyway.

I'm looking at property, stocks (some in ISAs) and probably a small side business.

EDIT: lol the Hargeaves link reckons I need to have a pension pot of £1m to generate £60k annual income! Considering I'm starting from zero I don't think I stand much chance of that happening!

I agree. Personally I think inflation is going to be here before too long. So your £1m pot might well be obtainable. Shame it will be worth alot les.

[geoff from contracta IOM]

I have no pension in place, I just don't trust them or believe in them... not in this day and age anyway.

I'm looking at property, stocks (some in ISAs) and probably a small side business.

EDIT: lol the Hargeaves link reckons I need to have a pension pot of £1m to generate £60k annual income! Considering I'm starting from zero I don't think I stand much chance of that happening!

But if you used a SIPP ( self invested pension plan ) to hold these you would obtain tax relief when making contributions. You can still decide what to invest in, it is just a tax efficent way of doing so, it can also serve to protect the assets as pensions are often excluded from creditor attacks or bankruptcy.

[kingcook]

I have no pension in place, I just don't trust them or believe in them... not in this day and age anyway.

I'm looking at property, stocks (some in ISAs) and probably a small side business.

My thoughts exactly too, although i'm only a newb (almost 2 years) so haven't managed to build much up yet

I plan on doing BTL on my current house in a year or 2, and getting a mortgage for a new house.

[ChimpMaster]

I have no pension in place, I just don't trust them or believe in them... not in this day and age anyway.

I'm looking at property, stocks (some in ISAs) and probably a small side business.

EDIT: lol the Hargeaves link reckons I need to have a pension pot of £1m to generate £60k annual income! Considering I'm starting from zero I don't think I stand much chance of that happening!

[northernladuk]

Thats a great calc!! will be using that and adjusting Pension pot is in addition to the house we live in, and the other one that we rent out, but it isnt a BLT its on a repayment at present.

A good start then, the reason I mentioned it is I dont base my retirement purely on a pension. It has to be a mix of things to be safe IMO.

I decreased my pension pot to overpay my house after looking at some of the overpayment calulators for example.

[scooby]

so what sort of annual income are you expecting to get would be where i'd start

check out the Hargreaves calcu'ometer

think you'll find £700 notes does not build a large enough pot for some people

Thats a great calc!! will be using that and adjusting Pension pot is in addition to the house we live in, and the other one that we rent out, but it isnt a BLT its on a repayment at present.

[northernladuk]

What other mid to long term investments do you have and do you own your own home?

[downsouth]

so what sort of annual income are you expecting to get would be where i'd start

check out the Hargreaves calcu'ometer

think you'll find £700 notes does not build a large enough pot for some people

[scooby]

Whats considered a decent pension fund? I'm young 34, and aiming for a retirement age of 55 (doubt it as I'd drive the Mrs up the wall!) so what figure should I be aiming for? At present my company pays a pension of around £700 plus i have previous pensions of a reasonable figure for my age.

IFAs dont seem to want to tell you a figure to aim for!