Monday, October 03, 2011

Pension off the Pension

If you are employed by the state don't read any further. You still will not appreciate what a good deal you have and how much you annoy everybody else when you complain about your pension.

If you are a banker or one of the few who still have a final salary pension you should probably also look away now.

Still here?

OK I'll assume you are one of the poor unfortunates in the Private Sector who have been consistently shafted by the pension companies, banks and the government in no particular order.

Fact is most people in the private sector don't have a pension or at best have one that is worth around £20,000 which is pretty much the same as not having a pension.

But let's say you are fortunate enough to have £100,000 in your pension "pot". Sorted right? Wrong. You'll be very lucky to get a £100 a week when you retire.

That is of course assuming your pension fund hasn't just lost 20 to 30% of its value because the stock market has gone down (again).

What can you do?

Pretty much buggar all if you already have a pension fund.

Try to move it to a Sipp with the lowest charges you can find. Do not under any circumstances go anywhere near the rapacious individuals known as Independent Financial Advisors who for a mere 2 - 3% of your fund will advise you where to lose your money. even with inflation at 2% that would mean your £100,000 becomes around £95,000 in real terms over a year (charges + inflation) so if you put in a £100 a week (£5,200 a year) you are just standing still.

Look at it this way. The country is broke. Your pension fund is used by the markets to their advantage, not yours. Governments will find ever more inventive ways of taking your money. Even when if) you retire you can only get 25% of your own money. The rest you have to bet against an insurance company as to how long you are going to live.

Save by all means, but save it under your control. Then you can invest in what you like, spend it if and when you need to and it's not likely to do a disappearing act at periodic intervals.

Unless of course that you think endowment policies were a good idea along with every other financial product you have been stitched up with over the years.

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