Pension Charges – Pension Planning


If you are now in your mid forties or even a little older it will not have escaped your attention that your pension is probably going to be an important part of your future.

With interest rates and the connected annuity rates at all time lows if you are not concerned you should be. Annuity rates – this is the product that provides pension income at retirement have halved in recent years.

This means that your £200k pension pot that would have provided £14,000 per year will now produce less than £7.500 at today’s rate, these are before tax figures.

When talking to my seventeen year old son a few weeks ago I realised that this may well be a problem, indeed he asked me how this was going to affect me! Fact is it might.

One answer is to plough more money into your pension and hope, this is what most independent financial people would advise. Problem is no matter how much you plough into your pension there is nothing to stop annuity rates falling further, or stock market volatility wiping out some of your funds in the years before you retire.

There is also the issue of risk, the older you get the more risk you are taking with your plans, people consider all of the risky types of investing in the scramble to get better investment returns, including those below

  • Forex trading.
  • Spread betting.
  • Contracts for difference
  • Share Trading/ Day Trading

All of these appear on your radar because you are panicking and don’t have the true knowledge required. Getting returns of twenty percent per day may seem attractive but how much risk are you really taking and can you really afford this risk.

The answer to this problem lies in three parts.

Part 1 – reducing charges within your pension arrangements. Both the adviser charges and those levied by the providers and fund managers. If adviser charges are 1% and fund management charges are 2% (around average in 2013) you could expect at least 30% of your fund to wither away every 10 years.

Charges are important.

Part 2 – Investing in haystacks not needles. You have no idea which market sector is going to be the best performing in the future, you also know that you should have a diversified portfolio of investments. Buy haystacks and not needles means you will always benefit from the growth in a sector because you have bought the sector. Mathematically buying the entire market does mean lower returns, but of course guarantees you will own the winners.

You become a bookmaker and not a punter.

Given that most fund managers get it wrong this method of investing makes more sense now than ever – but it is based on proof.

Part 3 Getting skilled in investments. See your brain is not able to cope with investing. As humans, investing money is not imprinted into our genetic code as yet. Pensions and investing are a new thing for us. Some 40 years in development. Bearing in mind it took some 150 million years for fish to develop lungs. Now learning how to invest is not a complex as creating lungs but I am sure it will take a little longer than 40 years for a species to invest intuitively.

Once you have understood these three things you can start to take control of your longer term planning.

Investing money long term needs to focus on these three things and three other flexible strategies that will guarantee your pension or any other investment fund will be substantially larger over the longer term.

I have developed a number of tools and trainings to enable you to take control of your future by training and skill development – investing money is not difficult, my research around the edges of this will provide you with the providers offering contracts for very low cost. Both pensions and ISA’s at annual charges well below what you are currently paying.

The pension and ISA facts are here:-

  • Your pension and savings are realistically not going to deliver what you need.
  • A pension/annuity will lock you into a tiny inflexible income.
  • You don’t want to take risk of betting on shares or other funds.
  • You don’t want to lose money to fund managers or IFAs.

And I’m sure you don’t want to sit back and simply see your money dwindle away as you grow older.
How do I know this stuff? I have been an independent adviser for over twenty three years and understand what it takes to plan correctly and invest wisely, sadly most of the investment industry is keen to take your money and that’s about it.

Get in touch today in order to find out more about our training and guidance sessions. There is a low cost monthly spend for this training, and once you have learned what you need to know – you will never have to pay an ‘investment professional’ again.

It is about getting the skills you need, and if you can get to this website you can get the skills you need to really take control.

Get in touch today and I will get some further details out to you. No salesman will call, and we don’t manage money on your behalf so cannot run off with it!

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