It takes a lot to make me really angry

This is without doubt the most crass piece of patronising nonsense ever.

Can’t argue with that.

…. the elite withdraw their pension funds en-masse and purchase “buy-to-let” property.

“Elite”? People who have saved a few tens of thousands in a lifetime of work may be called ‘elite’ in terms of their priorities, but you do them a huge disservice dredging up your trite little class-warrior phrases to describe them. I can’t blame anyone who tries to provide for themselves in their old age rather than looking for state hand-outs.

Just think it through a bit. Those people were saving for a pension at a time when the mortgage interest rates were up around 7 and 8%. The houses may have cost less than they do today, but the mortgage payments still took an equal or greater chunk of earned income than with today’s rock-bottom interest rates.

“Eaton”? Maybe future schools should concentrate more on spelling or geography?

Moggy

RE 27

It might be ‘deeply insulting’ but, is it true? Based on my personal experience, I think that it is. I had yet another canvasser calling to sell me his latest toy’s. This was a young man and as I had a moment or two to spare and, as you do, tried to extract a few goodies by suggesting that my wife and I would like a Caribbean holiday on a five star cruise liner etc.

We got to grips with ‘how much’ and I asked him – sensing some weakness – to tell me what 10% of £1,000 was ? He couldn’t. I went a bit further and asked two more very simple questions similar to the first – neither of them could he answer. My eight and eleven year old grandaughters would have answered correctly. I know, because I’ve asked them.

I believe that most of the population have been infantilised, knowing nothing and believing everything. Twenty five years ago I was a volunteer tutor teaching basic literacy and numeracy to people whose ages ranged between twenty and thirty five. They had been let down by the State education system exactly as they are to-day.

If we have a largely illiterate school age population who are now about to receive remedial tuition from Chinese educators brought over for that purpose, what does that tell you about the competance of our people to work out and approve fairly complicated investment plans and calculate yields and returns – no chance !

That is what is meant by ‘hopelessly inadequate’. To me it is all so predictable.

Well, I’ll tell you what makes me really angry…….

A bunch of millionaire, Eaton educated Tories putting out an advert saying

“Bingo – Cutting The Bingo tax and beer duty to help hardworking people do more of the things they enjoy”

This is without doubt the most crass piece of patronising nonsense ever.

1p off the price of beer and we are supposed to touch our cap to the toffs and say “thanks gov” .

Meanwhile the cost of housing is about to go stratospheric whilst the elite withdraw their pension funds en-masse and purchase “buy-to-let” property. Making house purchase for the average working person an impossible dream, particularly in the south east.

Whats going to be in the next Eaton (oooops sorry Conservative) manifesto……bring back the work house ?

PS Have a little look at the cartoon in todays Sunday Torygraph……….featuring a Lamborghini showroom with a note on the window saying ” only two pensioners allowed at a time”

In all this please don’t miss my original point.

Politicians think we are all hopelessly inadequate and unable to deal with our own affairs.

I find it deeply insulting.

Most of us will already have spotted that drawing out all our money in one lump (remember the last 75% is fully taxable) will yield a healthy windfall for the chancellor.

Moggy

Following on from my 22. Although it varies from provider to provider, there will be a temptation to feather their nest at your expense.

Admin charges will be calculated against the final payout. Admin charges will receive preferential treatment. They will start to be deducted from the day that your agreement is signed.

Maybe five years after the date of signature, you’ll be sitting having a quiet beer and performing some mental gymnastics regarding the size of your already accumulated pot. The following day – disaster. An emergency requires you to grab some cash quickly.

You won’t get it from your investment/insurance provider. What you’ve paid in has been swallowed up by the afore mentioned admin charges. This is code for a new luxurious office block for the comfort of those that sit in Head Office, It is code for ‘high on the hog’ living directors, paying themselves well padded bonuses – now where have I heard that before !

Whatever you do scrutinise the small print.

At the moment, you don’t have to be retired before you can take the 25% lump sum. You can take it once you reach 50.
Although if you do take it and are still working, you may well find your annuity is taxed. Which is what will happen in the
future if you take it all in one go. Obviously the younger you are when you take it, the less you will get.

I’m just glad I was talked into taking out a number of pension policies, when I was still relatively young.

Make sure you find out exactly how much, as a percentage, is deducted from your plan by the service provider to pay for administration and other costs.

I spotted 1% as the figure provided for charges from one company/IFA duo.

Doesn’t sound so bad huh?

But this was 1% of the original sum – every year.

So in rough figures, from the £100,000 I gave in the earlier example I would take £25,000 in tax free cash. The balance would yield a total pension income of £4,000p.a. from which they expected fees of £1,000. Doesn’t that sound to you like 25%? It did to me.

PS: Not real figures for my case – I should be so lucky, but proportionately correct.

Moggy

It’s a gamble, but I see the chance on a nice quick profit when they finally bring ‘Elite’ to market 😉

Again? Will it reach the market this time?

(This is the space trader game that was on the Spectrum, etc, years ago, innit? I recall that it is being updated for whatever is top of the heap game-player wise every other year or so…)

Re 15

There can be one rather significant flaw which anyone contemplating a savings plan with an insurance or investment organisation, would do well to remember.

Before you sign on the dotted line, remember: “Buyer Beware”. Make sure you find out exactly how much, as a percentage, is deducted from your plan by the service provider to pay for administration and other costs.

You should find out whether there will be year on year increases, also is the percentage variable; usually in the providers favour or, most unusually are the providers charges capped for the term of the plan.

I mention this because I have sometimes a conveniently long memory and remember the scandalous behaviour of at least one investment provider, some thirty five years ago, who, upon examination of the returns to investors was shown to have deducted inordinately large amounts of investors cash thus diminishing by an alarming amount the final payout to the investor.

The investment organisation concerned has now, I think, been taken over. The damage done by their activities was such that they could not continue trading under the name they were known by. At this point, permit me to be coy. The name of those that wanted more than their fair share was Allied Runfar.

Ah.. I stand corrected then. Sneaky school naming.

Moggy

Re #18: I believe so – but I am prepared to be corrected.

My wife’s grandfather was offered a place there after World War I; but the family could not afford the fees. A relative offered to pay his fees but his father would not accept the offer as he felt his son needed a trade!

As keen hockey player in the 1970s our Grammar School team from Newark always hated playing them because of their attitudes! That said, that I would however have relished the chance of playing against Ed B on the hockey pitch. 😉 Come to think of it I still would!!

Thanks for the explanation Moggy 🙂 .
I know now that a good independant financial advisor is going to be sought after by many people –well i hope so.

But was it when Balls was there?

You can’t even use that as an excuse for them Linc. Balls was a Nottingham High School boy.

Moggy

Nottingham High School is a fee paying school, with a limited number of bursaries for gifted pupils!

Please don’t get me going about pensions!! 😡

Moggy is right. We all have to relearn how to take and accept responsibility for our actions. For years we have been weaned by the state and that has to be reduced.

But there are two political and philosophical schools of thought – we all pay the state as much as can be squeezed out of us and they hold our hands during our lives or we pay as little as necessary to maintain the important levers of government and we do what we like with the rest.

As the alternative is painting a ceiling I’ll try to help translate

Today: You save money which you and your employer contribute with some insurance company or other. This money isn’t taxed – so whilst if you had taken it in salary you would have lost 30% of it to the Chancellor, here every penny goes into your fund. The insurance company invests it for you so hopefully it grows slightly more than you are contributing.

Come retirement, say at 65, that money is your ‘pension pot’. Let’s assume it is £100,000

You can now draw out 25% of it.. and that money remains tax free, however much you are earning from other activities. Spend it on something nice, spend it on the major items you don’t want to have to cope with later – make sure your roof is sound, just stick it in the bank if you wish, or self invest it etc etc.

The remainder can stay with the insurance company, growing a little (with luck) until you decide you need an income.

You are now expected to purchase an annuity. You take your £75,000+ to a raft of insurers and say “How much a month will you give me?” They take a look at your health and all the rest of it and then come back and say “£400 a month”. You say “Thanks”. Now, even if you live to be 120 you’ll get that £400 a month. So if you survive more than 15 years (£75,000 divided by £4,800) you are winning. If you die the week after you bought the annuity the pension company win because they keep your pension pot.

Apart from a few oddities such as drawdown (don’t ask), you are forced into the annuity route.

Proposed: The saving element is the same, and on retirement you can still draw out the 25% tax free, but then you will be able to draw out any or all the rest as you wish – though the extra will be taxed. There is nothing to stop you buying an annuity, and for many it is the best option, you can just leave it invested with the pension company and draw it out as required, you can buy a second property the rent from which will form a sort of pension for you. It doesn’t matter now when you die because all the remaining money is part of your estate and goes to your rellies.

Ed Balls thinks that we are incapable of making that sort of decisions and would much prefer a labour government to decide what’s best for us.

The above is very much simplified, but I hope it sheds a little light?

Moggy

I tried to understand it but it has me beat http://www.bbc.co.uk/news/business-26653312 .I really hope people go into this deeply and with good advice before making a decision,i do fear tears before bedtime though.

There will be irresponsible people though, who draw out their pension, then run out of money in the future.
It happens now, when people take a 25% lump sum (as I did last year). Some of them blow it all in the first
few years.
There will also be plenty of stories of how people are falling victim to scams, and losing everything.

Then again, there will be those who use the money wisely, and maybe also have plenty of money
from inheritances to see them through into later life.

It’s not easy to generalise.

Yes, but at least they are fiddled out of it by private enterprise criminals, not seedy politicians 😉

Moggy

. It annoys me even more that people blame this on the current bunch of trough feeders when they are simply trying to repair the crap they inherited…

Whilst i agree i also worry that people think that this lot are doing it for us – – – sorry but i really never think they are doing it for our benefit.

Going back to the pensions , i have had the misfortune to have to deal with the general public and i have to say how half of them get out of bed in the morning without mishap is incredible.
Maybe the 20% who are fairly competent when it comes to finances and have a self responsibility will be ok with the money but i really feel that for a lot of people this will cause problems.
I wonder how many scams and sob stories will now come out and people fiddled out of large amounts of life savings.

Interesting times ahead methinks.