Alternative to a pension

scotty365

scotty365

scotty365

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Hi folks,

With Pensions not expected to be as good as they once were, are there any other types of investment that might be more lucrative these days? I have started to pay into a scheme but the returns will be rubbish really and I would have to live till 86 just to get my money back that I've put in. Also if I die at 67 there will be nothing for my missus or children. Surely there are other ways to secure an income for retirement.
 
scotty365 said:
Hi folks,

With Pensions not expected to be as good as they once were, are there any other types of investment that might be more lucrative these days? I have started to pay into a scheme but the returns will be rubbish really and I would have to live till 86 just to get my money back that I've put in. Also if I die at 67 there will be nothing for my missus or children. Surely there are other ways to secure an income for retirement.
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A pension is just a tax avoidance wrapper, once the money is in there it can be invested in investments like you could do otherwise. The only thing is the money would be tied in there till you reach a certain age (55 I think?). Pensions have been shaken up recently, I'm pretty sure your spouse and children can still benefit from your pension investment if you die.

The question you need to ask yourself is, will you likely need to be able to access the investment before you reach retirement? If the answer is no, then a pension makes sound investment sense even just from the tax benefits, particularly if you're a higher rate income tax payer.
 
Jokester said:
A pension is just a tax avoidance wrapper, once the money is in there it can be invested in investments like you could do otherwise. The only thing is the money would be tied in there till you reach a certain age (55 I think?). Pensions have been shaken up recently, I'm pretty sure your spouse and children can still benefit from your pension investment if you die.

The question you need to ask yourself is, will you likely need to be able to access the investment before you reach retirement? If the answer is no, then a pension makes sound investment sense even just from the tax benefits, particularly if you're a higher rate income tax payer.
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Now that I'm starting a new job I will be into the upper tax bracket if I do some over time and I can get quarterly bonuses too that might be a good way to capitalise rather than just lumping it all into the tax mans coffers.
I never thought of that as I've never been a higher rate payer before.
The suggestion of property are sound but I can't really benefit if I live in it so I guess the rental idea would be the next best option rather than waiting for the property price to rise over time.
 
Pensions as said above are just special tax wrappers which help you avoid CGT so you can accumulate money quicker. Some schemes are quite lucrative (esp public sector). Starting early is the most important thing. The other side of the coin is that the less your living costs are, the less you need to have in a pension.
 
Mr^B said:
Does your new job have a pension scheme?
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Yes - I'm told that its a very good one or at least it used to be when a fellow I know worked there some years back - I haven't got the details yet and thats why I'm looking at my options right now.
 
scotty365 said:
Hi folks,

With Pensions not expected to be as good as they once were, are there any other types of investment that might be more lucrative these days? I have started to pay into a scheme but the returns will be rubbish really and I would have to live till 86 just to get my money back that I've put in. Also if I die at 67 there will be nothing for my missus or children. Surely there are other ways to secure an income for retirement.
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The rules have changed you can take the money out if you wish.
 
Your Mrs will get your pension when u die


Pension is the most sensible way to save for retirement, plus it's the only thing your employer is going to contribute too on top of your contributions
 
My pension is earning 10% interest at the moment (stocks and shares), you'll struggle to beat that even in property at the moment. Thats ignoring my employer contribution too
 
Amp34 said:
They would be far more useful if you could put the money in them pre Income tax, like pensions.
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Most pensions will allow you to put money in and claim income tax back on the amount. My pension provider automatically claims back 20% on my behalf and adds it to my pension (takes about 8 weeks though). I also write to HRMC and they knock off the remaining 20% from my higher rate tax from my tax code, so I get the full 40% tax relief. Some pensions will also let you do 'salary sacrifice' where your employer pays into the pension on your behalf, so you don't pay tax or NI on the amount you put in which can save you a lot.

You can get SIPPs which are basically the same as Stocks and Shares ISAs in terms of what you can invest in them, but they are treated differently regarding tax.
 
If you have to ask questions about such things on an Internet forum then definitely your best option is just to max out your pension. The money is invested before income tax, so that is 40% +NI saved already compared to anything else. Then all the capital gains are tax free. If you invested you pension into a some high risk stock which doubled in value you wouldn't pay a penny in tax.you only pay tax when you withdraw, and as a pensioner you can likely get away with withdrawing less than say the 40% tax band.

At 55 you can withdraw the whole lot,as a pump sum if you want. Under some circumstances you can withdraw the money earlier.

And if your employer has a arch then it is an easy way to get 100% return in a instant, guaranteed without any risk. Stock investment will take along long time to see those kinds of returns.
 
Jokester said:
A pension is just a tax avoidance wrapper.
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Strictly, it's a way to defer paying tax, not avoid.

Deus Ex said:
Pensions as said above are just special tax wrappers which help you avoid CGT so you can accumulate money quicker.
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Not capital gains. Income tax.

theMilitant said:
Stock investments and buy to let student properties are the two alternatives that immediately spring to my mind.
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I wouldn't by a student let if it were for a pension, unless you plan to sell when you reach retirement. Student lets are quite a bit of work. They only stay for a year, and you normally have to arrange a lot of repair/refurb work.
 
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Letter boxes. Buy now while the demand is low and supply plentiful.
People always need to do the toilet.
 
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