Pension Alternatives ?

[swebb]

I originally posted this in the general forum but was told this forum is a better place for it.


It's that time of year again, I was about to hit the panic button and try and move some money in to my SIPP and then thought hold on a minute is this really a good plan.

Pensions have many plus points however I'm now thinking there are a lot of negatives as well. The main negative for me is that the rules keep changing, I'm putting money in to something that I have no control over when I can get it out, how much I can take out and when I take it out where it has to go and how much tax is claimed back.

My parents have been hit this year by new draw down rules which has effected there income by quite a bit.

So I don't like the fact that basically I have little control on the final outcome of my pension and certainly no clear picture as to what and when I could take. I know the upfront tax saving is large but I'm growing in the opinion that is offset by the things I have raised.

So what are the alternative, I'm interested to hear. I was thinking I could just leave the money in the company and when I finally shut it take the tax hit, grab the money and use what I would have put in a pension in to a buy to let deposit.

I'd be interested to hear about different idea's

Thanks

Steve

[northernladuk]

I personally wouldn't be looking for an alternative, I would be looking for additional ways to spread the risk. Pensions do get a bad rap but it is only one tool to save money for retirement and should (IMO) be part of your portfolio. Putting all your eggs in one basket leaves you open to problems with that method, BTL's and interest/house crashes, shares etc

A pension is tax effective so you have to lose a lot before breaking even compared to an ISA with taxed income so am happy putting a portion in to that but I have other savings for retirement such as ISA, BTL's and over paying the mortgage. Am sure something will go wrong with one of them but hopefully by having a number of options it will spread the risk should the worst happen.

[swebb]

Yes I already have a pension I've been investing in for 20+ years but really I'd like to spread the risk now. I also have an shares ISA I've had for a long time. I am going to purchase my first property this year and my wallet will be a lot lighter after that. So that is what I have at the moment I'm just looking around for other alternatives, ideally ones that company money can be invested I supposed rather they paying in to my SIPP.

[northernladuk]

Yes I already have a pension I've been investing in for 20+ years but really I'd like to spread the risk now. I also have an shares ISA I've had for a long time. I am going to purchase my first property this year and my wallet will be a lot lighter after that. So that is what I have at the moment I'm just looking around for other alternatives, ideally ones that company money can be invested I supposed rather they paying in to my SIPP.

I think every contractor wants something the company can invest in and despite ideas ranging from the sublime to the utterly ridiculous we haven't managed to find anything that works. Generally, whatever the company invests in will be profit for the company, not you personally don't forget. It will get taxed to buggery getting it out. Just need someone to come up with some clever but safe option and we can fill our boots, until that time for me it's standard ISA, BTL, Overpay mortgage, pension and hope the warchest will be unused when I finally call it a day.

[DimPrawn]

I think it is important to say that a pension is deferred taxation rather than "tax free". Yes, there is (currently) the 25% you can take out tax free, but at the stroke of a pen that could (and will probably) vanish at some point, in the name of "fairness" (i.e. another govt pension raid).

You might be putting money in gross, but you pay personal tax on it when you draw it, so unless the rate out is less than the rate in, all you are doing is paying the tax later in life. For an ISA it's the same but in reverse, you pay the tax now but can take the income and capital gains tax free later.

Personally, I still believe that the best route is to buy yourself the biggest house you can afford, if you become wealthier, simply buy a bigger more expensive house. There is no tax on your primary residence and the risk is low, plus I've never known anyone to feel unhappy about living in a house that's too big or too nice in an area that's too upmarket.

Pensions will be stolen as will savings and gold will probably be confiscated too. It's unlikely the govt will try and steal the deeds to your primary residence.