Workplace pensions,would you be in?

[Kudoscycles]

I am interested in others attitudes to the upcoming government's workplace pension deal.
The stakeholder pension,some 15 years ago,was a flop so the government are backing this with celebrity led TV advertising but what few realise is that employers are not allowed by law to 'induce' employees to stay out,the punishment on the employer for any inducements could be £10,000 per day fines or even 2 years in jail,big stick stuff!
What is meant by inducements I am asking of the pension regulator.
Everybody is automatically enrolled in and it's not easy to opt out,also every 3 years you are automatically enrolled back in,it is much easier for an employer to organise in rather than out.
All the advertising appears to me to be very one sided,there is no presentation of how much these pensions could be worth after say 30 years of contributions,most employees have no idea what is the possible end result.
It appears to me that employees are being virtually forced into this deal.
I wonder what the opt out percentage is?
KudosDave

 

[flecc]

Like you I'm deeply unhappy about the way in which this is being run Dave. Pensions history both state and private has been far from satisfactory and littered with broken promises and subsequent dissatisfactions.

As someone who largely organised his own pensions provisions with entirely good outcomes, I would have hated during my working life to have been faced with these enforced restrictive conditions and totally unknown outcomes.
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[Deleted member 4366]

I think it's worth a punt now that you have more choice in what to do with your money to get it out, which should force the pension companies to give a better deal on annuities, etc.

What a lot of people don't realise is how much of their money the pension companies take out. Most are in the range 25% to 40% of the money you put in, which is extortionate. Basically, they take the money that you save from tax relief. You'd also be surprised at how negotiable that percentage is when you sign up the company to the scheme.

When I was setting up the pension scheme for our company, the quotes were between 25% and 50%. When I told them that was too much, they all came down to about 25%, which makes a massive difference to your pot after 25 years.

When they quote you, the costs are not very well explained. They tell you that it's say 2%, but that's an annual charge, which is applied to the first money you pay in every year it's in the scheme. That means after 25 years, there's only half of it left.

The problem with pension schemes is that it makes a big pot of money that every crooked person is trying to get their hands on and take a cut of. I could see what was happening, so I put my cash under the bed until I had enough to buy a flat, which I rented out. This gave good capital growth and income that I was able to reinvest, all controlled by me. I now have a nice pension because of this idea.

 

[flecc]

I used properties too, but for an employed person this new scheme would make it a continual struggle to maintain that with the automatic enrollment ever three years snatching back our investment margin. So much for this government's pretence of giving us control of our pensions. Given that dishonesty at the outset, how can we trust them long term, we've been let down with every other government pension scheme to date.
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[Kudoscycles]

I have employees who are already making provision for their old age,such as buying a 'Buy to let' property. I have employees who have many benefits that would be means tested if they saved in their pensions,whatever the rights n wrongs of such a situation,they could be losing out and wasting their money saving in a pension.
I have employees who do not trust pension companies to offer anything like a useful pension,the poor returns on stakeholder pensions would suggest they are right.
I have employees who want the money now and don't want to put any money in.
The government have said that they want the employee to have freedom of choice about these pensions but employers are not even allowed to discuss this matter with their employees.
The government is trying to suggest that rogue employers would try to induce employees to opt out to save the pension contributions but I have been told that if I offer employees the choice between 3 per cent pension contributions or 3 per cent pay rise,then I am breaking the law under the pensions Bill as an inducement to opt out,surely human rights implications.
It seems to me that the government is so determined for everyone to opt in,obviously for their own reasons,that they are gagging any possible discussion as to the disadvantages of opting in.
This is one of the most draconian and heavy handed bits of legislation which affects every working person and yet there seems no discussion about the pros n cons.
I am not even certain that,as an employer,I might be breaking the law by even discussing it on this forum.
KudosDave

 

[selrahc1992]

I am interested in others attitudes to the upcoming government's workplace pension deal.
The stakeholder pension,some 15 years ago,was a flop so the government are backing this with celebrity led TV advertising but what few realise is that employers are not allowed by law to 'induce' employees to stay out,the punishment on the employer for any inducements could be £10,000 per day fines or even 2 years in jail,big stick stuff!
What is meant by inducements I am asking of the pension regulator.
Everybody is automatically enrolled in and it's not easy to opt out,also every 3 years you are automatically enrolled back in,it is much easier for an employer to organise in rather than out.
All the advertising appears to me to be very one sided,there is no presentation of how much these pensions could be worth after say 30 years of contributions,most employees have no idea what is the possible end result.
It appears to me that employees are being virtually forced into this deal.
I wonder what the opt out percentage is?
KudosDave

ive no idea how difficult it was twenty years ago to purchase property, but i think it's very difficult now - unless one has wealthy parents the 50k or so required as deposit to buy a property in greater london is no mean feat to put together. and one has to wonder with some apprehension how big the bubble can possible get before deflating. which leaves one with pensions or teh stock market. i'm not much of an investor, but i think shares have more prospects than pensions.

 

[Deleted member 4366]

You can get starter properties from about £50,000 if you shop around. Not everyone has to live in London. When you buy for investment, you can buy anywhere in the world.

I live in a nice small private estate in telford, where two bedroom houses with a garage are about £110, 000 to £120,000. I got my last house (2 bedroom semi) at an auction a few years ago for £66,000 and just sold a nice big 2 bed flat for £55,000.

 

[selrahc1992]

You can get starter properties from about £50,000 if you shop around. Not everyone has to live in London. When you buy for investment, you can buy anywhere in the world.

I live in a nice small private estate in telford, where two bedroom houses with a garage are about £110, 000 to £120,000. I got my last house (2 bedroom semi) at an auction a few years ago for £66,000 and just sold a nice big 2 bed flat for £55,000.

true and made me think about europe with teh weak euro

 

[Deleted member 4366]

I reckon you could make a pretty good pension buying property in Spain.

 

[Gubbins]

Speaking as someone recently retired after a lifetime of low paid work I am oh so glad I paid into a works pension. You have to bear in mind that for a lot of us life is a continual struggle to make ends meet and there is no spare cash to buy property or stuff in the mattress but a small amount saved and made untouchable is the only option. I took out a private pension with std life to enable me to retire early, unfortunately the prommissed £70 per week ended up at £80 per month but it's still another small sum I am glad I have. I can see why the government is doing this as there are so many now without the means or the will to save, it's just that they haven't got it right as yet..

 

[JohnCade]

I reckon you could make a pretty good pension buying property in Spain.

You could lose your shirt too buying one of the many thousands of houses built with no permission, or permission obtained by bribery from corrupt local officials. I know two people having problems like that where their houses have been threatened with demolition.

 

[JamesW]

As a 30 something on a wage I am happy with in a small company with a family to feed, I find myself increasingly jealous of my wife who gets her earnings "stolen" for later and put into her teacher's pension. I can't wait to be told I can't bring home all my cash as it will stop me spending too much on treats for everyone else and my wife from earmarking it for house renovation or holidays. My pension pot stands at what I managed to put in over 9 months before the financial crisis and the sum hasn't really moved since then. Roll on forcing my employer to offer a pension as setting on up personally is soo expensive!

 

[flecc]

Speaking as someone recently retired after a lifetime of low paid work I am oh so glad I paid into a works pension.

I agree Phill and I'm glad it worked out well for you. What makes me unhappy is that the new scheme appears to have no more protection than previously against the situations that rob people of their pensions. Robert Maxwell stealing the Daily Mirror pension fund was the worst example but by no means the only one.

Employment pension funds for working people should have the same sort of protection that we have for our money held in banks, underwritten by government guarantee. Anything less is not acceptable for a scheme which is effectively close to being compulsory.
.

 

[Gubbins]

I agree Phill and I'm glad it worked out well for you. What makes me unhappy is that the new scheme appears to have no more protection than previously against the situations that rob people of their pensions. Robert Maxwell stealing the Daily Mirror pension fund was the worst example but by no means the only one.

Employment pension funds for working people should have the same sort of protection that we have for our money held in banks, underwritten by government guarantee. Anything less is not acceptable for a scheme which is effectively close to being compulsory.
.

As someone with no particular legal leanings, I have a tendency toward believing all that's said that I don't understand.
My company pension was a final salary pension and I thought they were all the same, The rules were that each year you earned a 40th of your salary so after 40 years your pension would be the same as your salary... But then they changed it to 60ths.. Yep, to get the full money you need to work for 60 years, and this was 15 years before the government decided to up the pension age..
My private pension was a bit of a washout, in fact my last statement before I drew it was less than the years before even though I was still paying in, and yes I assume(d) that they were/are all the same.
Reading through this thread suggests that I, and probably millions more , are particularly naivete about all this.
And, the bombshell that's ready to drop on all those that the new pension regulations are supposed to help is .. You wont find out you have been screwed until its too late.!

 

[D8ve]

Phill
My scheme has changed like yours to 60ths . But they cannot take what you've paid in already away. Just change what happens in the future.
I was going to retire at 63 with 2/3 pension. Now I have to wait until 67 to get slightly less as 'it's fairer?'
But I keep my old pension and can get it at 60 in full. Just have to work for the last 15 years for the second part.

 

[selrahc1992]

You could lose your shirt too buying one of the many thousands of houses built with no permission, or permission obtained by bribery from corrupt local officials. I know two people having problems like that where their houses have been threatened with demolition.

i know a year ago or so budapest was touted as an ideal place to buy to let on the www with promised 10% returns. this neck of the woods i really do know and know the inside story which was a bunch of irish investors that got burnt during the 2008 crisis and then buy corrupt estate agents and unscrupulous customers trying desperately to offload stock. i suspect itys a serious case of buyer beware. one could do what my neighbour does live in thailand, where 500/month apparently go a very long way

 

[Gubbins]

Phill
My scheme has changed like yours to 60ths . But they cannot take what you've paid in already away. Just change what happens in the future.
I was going to retire at 63 with 2/3 pension. Now I have to wait until 67 to get slightly less as 'it's fairer?'
But I keep my old pension and can get it at 60 in full. Just have to work for the last 15 years for the second part.

I can see similarities here D8ve..
When I was 59 I was offered a redundancy/ retirement package.. not a great deal, in fact my 34 years had earned me about a 10 grand redundancy payment, so I could work on, or cut and run with a 3.5% reduction in my pension for each early year which ended up about 22% off but payable at 59 .. Bearing in mind that we wont live forever I decided to take it, and its been arguably the best 6 years of my life which has been well worth having to count the pennies a bit.. I sometimes wonder what it must be like to have a generous pension, but back in the real world I am happy with my lot!!

 

[Gubbins]

i know a year ago or so budapest was touted as an ideal place to buy to let on the www with promised 10% returns. this neck of the woods i really do know and know the inside story which was a bunch of irish investors that got burnt during the 2008 crisis and then buy corrupt estate agents and unscrupulous customers trying desperately to offload stock. i suspect itys a serious case of buyer beware. one could do what my neighbour does live in thailand, where 500/month apparently go a very long way

My mate married a nice lady from Thailand, sold his small business and moved over there and had a house built. Now he is a pig farmer, very well off by thai standards and doesn't want to come back.

 

[flapajack]

My company pension was a final salary pension and I thought they were all the same, The rules were that each year you earned a 40th of your salary so after 40 years your pension would be the same as your salary...

Believe it it not, you probably have one of the best company pension out there. To be able to retire with the same salary in unheard of, even if it is after 40 years. Typically, you would be doing very very well indeed to retire on 40-50% of your salary as a pension, after a full working career. These days the private pension would be brilliant if it can deliver anything nearer to 20%, which is what every working people have to put up with. One of the lucky few.

 

[D8ve]

I can see similarities here D8ve..
When I was 59 I was offered a redundancy/ retirement package.. not a great deal, in fact my 34 years had earned me about a 10 grand redundancy payment, so I could work on, or cut and run with a 3.5% reduction in my pension for each early year which ended up about 22% off but payable at 59 .. Bearing in mind that we wont live forever I decided to take it, and its been arguably the best 6 years of my life which has been well worth having to count the pennies a bit.. I sometimes wonder what it must be like to have a generous pension, but back in the real world I am happy with my lot!!

I used to have a good pension.
I still have some of it but they cut thr remainder. So when I'm 60 I could get £10k which is nice but not as nice as 15k which I was expecting.
I can survive on both but the extra makes a lot of difference to my daughters school funds.

It's tough of those who caused the financial crash 'allegedly'
For the lower paid it's much tougher. 'Not much alleging either'