General Chat

I've got two small plans which are going to pay peanuts when i retire in six years, can't afford to invest any money know, struggling to survive as it is, god knows how i will live when i do retire.

That tallies McB with the figures I quoted on opening the thread.

Heard on the radio yesterday that for every £100 invested in a pension the provider takes £80

When OH retired he had a lump sum and was advised to take an annuity - he refused - said he was perfectly capable of looking after his own money and are we glad he did. Another colleague retired same time, same length of service, took annuity and he has been sorry for some time now.

However, that isn't the entire story. Panorama and similar programs have a habit of skewing the picture somewhat.

These figures quoted assume that the money has not earned a penny in interest in those 40 years, and overlooks the fact that only around £20,000 over 40 years or £500 a year was profit to HSBC. The remaining charges are actually the cost of running the scheme, salaries for the fund managers, accountants, auditors, premises heating an all that sort of thing. Not a lot when you spread it over 40 years.

In fact, the fund would be worth somewhere in the region of £350,000 - £400,000 at the end of the period, after charges are deducted, depending on its annual growth.

This money is not taxable and used to purchase an annuity which then pays you a pension each month. However, the pension you receive is treated as income for tax purposes.

Slightly different picture if you dig under the surface.....!

The best pension I ever bought were little 1ounce gold bars whenever I had a spare couple of hundred quid. The price has gone ballistic over the past few years, getting towards £850 an ounce now.

I watched the programme and was disgusted, not that I have anything like that invested. I think the fact that my youngest brother, an accountant earning megabucks with no children, has bought property to rent out as his pension plan, speaks volumes to me, altho he probably has other investments too.

Lizx

G.son pays into a pension since he began work - his older sister is thinking about it - would feel like telling her to put it in a safe.

I forgot to watch this tonight - did anyone else. Read about it HSBC have a premier pension investment plan. If a man invested £200 per month for 40 years he would have a pot of £120,000 -less £99,900 charges by the bank! Total pot £30,100.

The Co-op was also mentioned as being nearly as bad.