“Intermediate projection rate”

[lukemg]

I can pick any time period and bubble from dot-com to property to demonstrate perfect hindsight and I know I wouldn't have timed these perfectly anyway.
So, I diversify, collect some divis along the way and try to get rich slowly. If I was certain I could take big gambles and win then I would.

[escapeUK]

I use a SIPP because its a good way to extract money from Ltd co every year BUT all things being equal I would max out the ISA first for the flexibility later.
7% is still a reasonable long term rate of return to use, borne out by historical data, and dont say its different this time etc.
My longer term funds seem to be chugging along at 6-10%/year (watch those costs though, would prob go more low cost tracker if was starting from now).

Hmmm if you had turned all money into gold as you went along, how much would it be worth now?

[lukemg]

I use a SIPP because its a good way to extract money from Ltd co every year BUT all things being equal I would max out the ISA first for the flexibility later.
7% is still a reasonable long term rate of return to use, borne out by historical data, and dont say its different this time etc.
My longer term funds seem to be chugging along at 6-10%/year (watch those costs though, would prob go more low cost tracker if was starting from now)
Younger stuff is bouncing around or going sideways (I wont be chopping and changing, 5 years at least)
Building HYP in SIPP for long term which I hope will be steady performer and must admit I am enjoying the divis coming in every few weeks.
This is my plan B and will finance my life if the ass falls out of this IT rubbish or I can't be bothered with it anymore. If the work continues, then this morphs into my pension.
I actually enjoy this stuff and trying not to make too many mistakes as I am learning.
fool.co.uk is a good place to start...

[escapeUK]

Too right, the other big problem to me is inflation. As we all experience inflation is really around 8-10% with interest rates being only around 3%. And the value of money seems to halve every 10 years ish, so by the time you do retire that money that you put aside 40 years ago will probably buy about 2 bags of crisps.

My own family experience with two grandmas, one who had a nice pension and the other with nothing. Their lives were very comparable as the state tops up anyone's income who didnt provide for themselves. So why pay punitive taxes to pay to do this for everyone else and save for yourself so you don't qualify, no point really.

[zeitghost]

Why do you think they're making pensions compulsory?

It's coz everyone now knows that it's all run by a bunch of theiving scum con merchants.

And shooting is much too good for them.

I'm contemplating crucifixion.

And even that's too kind.

[escapeUK]

Currently pension companies use a so-called “intermediate projection rate” of 7 per cent in statements to savers. (AtW's comment: 7%? ) This means that someone in their 20s who earns £30,000 and saves £2,000 a year into a workplace pension can expect to have a retirement pot when they reach 68 of £540,000.

However under the new 5 per cent growth rate (AtW's comment: ) that firms will have to use, this pot will be valued at just £335,000. The change means that the person’s predicted pension income will fall from £10,400 a year to £6,430 a year, a drop of 38 per cent.

The people with half a brain keep the money themselves. £335k / 30 years (very unlikely life span from 68) = £11k a year and thats with no further interest applied. Give me that lump sum and I will give you £8k a year, and if you die I keep the rest. Sounds a great deal doesnt it? lol

[mudskipper]

I'm pretty sure the projections were 7, 10.5 and 14 when we bought our endowment in 1990. With the salesman telling us that he's expect it to be nearer 17.

[SimonMac]

Nice returns, what funds you gone for?

Anyhow, the % projection always get me, its just gives the impression that you aint gotta do anything other than sit back and watch the pot grow, cos thats what the projection said , but how many times do we ead about investors complaining the return was lower than projected, asked to contribute more etc

No funds, pure shares, todays bounce was all thanks to Lloyds, the Govt's not gonna sell their stake until they make back their money as they bought them around 71p a share, they are sitting today ~43p, I bought @ 31.99p

Investment banking is where the big money is gonna be made once the financial crisis is over so the likes of RBS will do better in the medium term, but long term retail banking can not fail which is where LBG are kings, free bankings not gonna last for ever, and everyone needs a bank account.

[AtW]

Nice returns, what funds you gone for?

They've invested in some real bulls.

[downsouth]

Nice returns, what funds you gone for?

Anyhow, the % projection always get me, its just gives the impression that you aint gotta do anything other than sit back and watch the pot grow, cos thats what the projection said , but how many times do we ead about investors complaining the return was lower than projected, asked to contribute more etc

[MarillionFan]

WATS

5/7% ridiculous. I make around 9.8% average on my investments.

[SimonMac]

I have a self invested pension and its gone up 8% just today () and 33% since the start of September ( ), I'm not naive to think times will always be this good, but there is money to be made out there

[AtW]

The Financial Services Authority (FSA) said that from 2014 the predicted growth rates used to give investors an idea of what their pension pot will be worth when they retire must be significantly lower than they are today.

Currently pension companies use a so-called “intermediate projection rate” of 7 per cent in statements to savers. (AtW's comment: 7%? ) This means that someone in their 20s who earns £30,000 and saves £2,000 a year into a workplace pension can expect to have a retirement pot when they reach 68 of £540,000.

However under the new 5 per cent growth rate (AtW's comment: ) that firms will have to use, this pot will be valued at just £335,000. The change means that the person’s predicted pension income will fall from £10,400 a year to £6,430 a year, a drop of 38 per cent.

Experts said that the lower rate will provide a “dose of cold economic reality” to savers and will give them a more accurate idea of the money they can expect to receive on retirement.

As well as pensions, the new rules will also cover the expected growth of financial products including ISAs and endowments. From 2014 all statements about existing investments will use the new lower projection rates.

Source: Pension pots to plunge under new rules - Telegraph

WTF, just where this 7% came from?!??!! And 5%?!?!

Good thing I don't have a pension... and neither does anybody who'd have misfortune to retire in 20-30 years