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  • Tax

    Pensions don't make money? Think again!

    I like a number of other Landlords have had to arrange our business due to the Taxation changes

    One of my plans was to invest in Pensions and a great number of folk have said its not the place to invest

    So I have been carefully looking at the performance of pension funds and reporting back my own experience

    This is my Data not a Pension Co Data its fact not Fantasy fig

    1 September                 Starting Fund  £148,638

    Extra Contribution's this month                £5,000 gross

    as of last night my fund stood at          £154,690

                                            Profit           £1052 this month Tax Free

    That is a yield of just less than .75%  which gross is around 9%

    This has been the poorest performing period of the year so far but I am happy with 9% per year tax free.

    My ISA Funds have followed a very similar Patten and its all tax free

    as a higher rate tax payer this is quite rewarding No Repairs No Arrears No Govt changing the rules at will

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    Learn Change and Adapt ?????

    2010 I swapped what there was of my state pension 14k into a SIPP and chose the Greater China Growth Fund, as I didn't care if I lost the money or not.

    2017 a few days ago, its at 51k.


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    That's a great return

    and Tax free too and If you want to you can leave it to your family IHT free too

    I just don't get it when investors say you cant make money from pensions

    You can You and I have proved the fact

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    Learn Change and Adapt ?????


    It's very interesting to see your data on pension funds and I will definitely look into it for myself - but just to let you know that your final comment "No Govt changing the rules at will" is not accurate. In my own experience the government changed my state pension date from 60 to 62 with very little notice. I then discovered by accident (aged 61) that they had changed it to 66 quietly without ANY notice or publicity. This has wiped approx £40,000 from my income without any notice at all! The government also decided that people can have access to their pension funds - another massive change (whether you think this is a positive change or not). The government is changing the rules on pension funds all the time and often with no notice and I would not be surprised if they introduce restrictions/taxation on legacies in the form of pension funds, if people start to do this on mass. They close the door on every turn. My thoughts on this are that it is to explore the pension side of things but always diversify and stick to the (your?) mantra "Learn Change and Adapt"

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    The State Pension will be means tested.

    So if you have struggled and saved into a private pension then you will be denied the State Pension

    After all why should the lazy scroungers  who didn't bother sacrificing and saving  into a pension scheme be worse off than those who did struggle!?

    With a private pension all you will be doing is subsidising the Govt.

    ISA's are a better bet.

    The State Pension if denied by means testing will just mean all that effort was wasted.

    With an ISA at least you get to keep the money invested over the years.

    I used NIC to opt out of the State Pension which has turned out would have given me nothing extra

    I did not trust the Govt. So despite their entreaties to have my extra NIC paid into the SPS I demurred.

    Unfortunately  I used Equitable  Life?

    But through my choosing not to put my funds into their useless With Profits fund I was able to convert £3000 of NIC into a pot of £12000 which I took out in entirety after having to pay even more tax on income I had already been taxed on?

    Still far better that than a pension of £11 pm!!!!!

    Do not trust the Govt to give you a State pension if you have  a private pension

    Property and ISA's are the way to go.

    If Govt starts saying that if you have too many savings to qualify for a means tested State Pension then just liquidate  your ISA's and hide the cash away.

    We are a long way from a means tested State Pension; but it is worthwhile planning for such an eventuality

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    You are right the govt have changed state pension rules  which extends retirement age

    But it has given Pension freedom for Personal Pensions and that's what I was outlining here

    I too have been effected my state retirement  age is now 66 when it was 65

    The blog I am running here is to show personal experience of Pensions

    A great number of Landlords see little sense in them but will all the changes we now face I think they have an important part to play

    Best of luck with your pension planning I would be interested to see how you get on

    Regards DL



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    Learn Change and Adapt ?????

    60 to 62 with very little notice. I then discovered by accident (aged 61) that they had changed it to 66 quietly without ANY notice or publicity.

    Are you talking about the 1995 and 2010 changes to pension ages? There was a lot of publicity about both at the time and 20+ years seems like plenty of notice the first time. I noticed both at the time they happened. There wasn't so much notice the second time.

    There have been several other major changes whilst I have been working. In the late 80s and early 00s  they were improved significantly.

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    Thank you for your views... they are very helpful and have certainly given me some food for thought - and which `i will pass on to my children (because I think the situation will become even worse for them if they don't keep their finger on the pulse and their eye on the ball). I am basing my plans on the assumption that I won't actually get a state pension anyway - I'm assuming the govt will continue to defer the age at which I qualify for it, which will keep it just out of reach as I age - so that I die before I draw it. That was the plan when state pensions were first envisaged - and we've come full circle.

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    Yes not many people  realise that when Lloyd George introduced  pensions there was little expectation that many would claim them!!

    If Lloyd  George had know what mortality rates would be he would have set the pension age at 80!!!

    Unfortunately  for Govt the pesky population  insists on living longer  costing the Govt fortunes in State pensions.

    I believe the private pension pot that would be required to provide the state pension would be about £250000

    Few if any people in their life  will ever save that sort of pension pot!

    The best thing that parents can do for their children is to start a pension for them when they are born!

    Plus start ISA's for them when born.

    Perhaps even buy a property for them!

    Time will assist the children of today to have a decent old age.

    But the investments need to be made now!

    Will parents make the sacrifices for children to benefit 70 odd years later.

    The State will be withdrawing from universal welfare

    It is simply unaffordable.

    Means testing must occur.

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    I fear to say But you are right again

    We are the lucky generation we will see our state pension but our children will not be as lucky

    I use my pensions in two ways

    1 is to extend my 20% tax threshold due to S24

    2 as a Directors pension its the only tax efficient way I can take profits from my company again the result of S24 changes

    If it had not been for S24 I don't think I would have had more pensions

    But I 100% agree ISA Planning is also worthwhile am learning and making money on ISA in my and my wife's name 40k a year shielded from Income Tax has to be worth doing



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    Learn Change and Adapt ?????


    When they were first introduced only 1 person in 4 would live to be old enough to collect (70) and life expectancy from then was 9 years.

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