Your pension. Your money?

Discussion in 'Finance, Property, Law' started by BiscuitsAB, Aug 6, 2013.

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  1. BiscuitsAB

    BiscuitsAB LE Moderator

    So maybe you are a member of an occupational scheme or you have your own personal arrangement be it a Personal Pension or a SIPP or anyone of the myriad derivatives. Have you ever asked yourself who's money is it in my pension? I think the answer for most people to that is probably not.

    The hard truth of the matter is that any money you have in any pension doesn't belong to you, you may have contributed to it for decades steadily building up a retirement pot for your old age thinking that your money would be accessible when you wanted it. Well I'm sorry to tell you this but the money in your pension belongs to the life assurance/ pension company that you have it invested with, or rather a subsidiary that is a Pension Scheme Trustee.

    Pensions are nothing more than a large trust scheme and the Trustees of the scheme dictate where, when and how you can have your money. They own it and they control it and they can pretty hang onto it for as long as they like. As an individual you have a right in law to move your pension between providors, however there is currently a massive back log of funds being held onto by various pensions companies where the policy holder has asked to transfer to another providor. Why is this happening? simple, pensions companies charge you for holding onto your money the more funds they hold onto the more they make in charges. They don't care if your funds go up or down they only care that they can take their charges come what may. The pensions industry makes billions of pounds per annum from charges why would they want to relinquish control of what is to them a gigantic trough, especially when they have there snouts buried in it!

    Don't believe me, then ask your pension providor if you can have your money. You will soon find out who owns the money, and it isn't you.

    You do however have options. The first thing any sane person should be thinking is "How do I get control of my money" well maybe you should go and look up SSAS (small self administered Scheme). You can have a single member pension scheme where you as the member are also the Trustee and you also have a massive range of investment areas available to you within a SSAS that you won't get offered by a life assurance/pensions office.

    By becoming your own trustee you become legally responsible for the funds in your pension pot. You control your own pension, you make the choices and you make the decisions. Why would anyone not want to be in that position? As the Trustee you are in charge of your money.

    Any thoughts?

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  2. ugly

    ugly LE Moderator

    A good point and sadly rather late for many of us although even tying up funds in 5 year plans can be a good way of ensuring some money for the future. Its sad that the Govt doesnt seem to recognise that investing in the property you live in now counts as a pension. A pity as thats all many of us will have at this rate!
  3. The money is held on the policyholders' behalf by the Trustees of a Registered Pension Scheme. The reason you can't get it from them is that its the law. From age 55 you can take upto 25% of the fund, tax-free, to spank away as you see fit. The rest of the fund can be used to pay an income to the policyholder.

    Maybe you should!

    SSAS is a complex, and often expensive approach to pension planning. For most people, its either not right, or not possible to be a member of a SSAS. The usual members of a SSAS are company owner / directors. I can't think of any major advantage of SSAS over SSIP, except ( of course) member contributions attract higher-rate tax relief at source, rather than needed relief via Notice of Coding. But if a member is paying into a SSAS, NICs will have been paid on the income used to pay those contributions, both by he employer and employee, so SSAS isn't the right choice.

    You can't "get at" your money in any way that differs from the situation I've outlined above. It is not possible to make loans to the member trustees or anyone connected to them.

    You can, but SSAS probably is the wrong choice for most people - see above. If you use this wonderful freedom to invest and make the wrong choice, and you could risk losing the tax-exempt status of your pension, PLUS have nasty charges / penalties from HMRC.

    That comes under the heading of "Not Good At All."

    Because the vast majority of people have no idea of investment risk, efficient frontiers for portfolios, trading costs, the importance of asset allocation and diversification, and why you should rebalance.

    You do, however, have the right to mess up your pension funds as much as you wish, without recourse to anybody. ( awaits "oh but the fatcat city boys mess it up anyway." They don't, actually.)

    Re-show ;-)
  4. ugly

    ugly LE Moderator

    I had put a fairly substantial by the standards of the time (and by my income) amount into a fund only to see every four or five years it get ditched by the pension company and sold on where I would be told after the fact and lo and behold the amount it had accrued neatly amounted to the new setting up charges by the new company. A few years ago this ended and it sits with a company (purely by chance it seems) that have reversed the decline and should allow me to get the money originally promised when its due.
    I had virtually given up hope as the ****s in pension companies seemed untouchable but something has changed. I am very glad and possibly very lucky but I wont know how lucky for another 6 and a half years!
    I live in hope that I can use the money for reducing my existing mortgage either as capital or repayments or to get the funds released into a commercial property deal where I get to live above the shop!
  5. I'll be interested to see how this thread pans out.
  6. I think we can both tell right now, Jarrod...
  7. If you've transferred your own pension from A to B, you should have been informed of the charges.

    I think there might be more to this than apparent on initial reading.

    Do you have an adviser? There is usually no point in going to the provider - they act as wholesalers, and don't usually get involved in Advice.

    Pretty near impossible, I'm afraid.
  8. ugly

    ugly LE Moderator

    You misread, I didnt transfer anything, I wasnt offered the option. Also the pension provider ceased to provide that type of business and sold my funds to another company, at the time it was considered normal and normal to be told after the event and have no input whatsoever. Nowadays I could complain but what good it would do as the original companies no longer exist and my pension adviser has long since passed away. He wasnt well at the time. So after what will amount to 35 years there or thereabouts I will see my money and be able to use it and it will be worth a lot more than had I put it in a bank then. The term was originally planned to be 25 years but they advised against me retiring so early. Back then I doubt they would have foreseen how people are rolling funds over again to hedge against future problems.
    It wont be enough to match my current declared income but I will be able to invest it myself in shorter term funds and have some decent holidays at last!
  9. ugly

    ugly LE Moderator

    Oh there are a number of deals about at the moment where you can cash in your pension if mature enough to invest commercially in property, that wouldnt preclude me living above the shop but wouldnt be allowed for purely residential properties.
    I suspect these will be outlawed soon enough!
  10. I've been in the industry a while and I can't really see how the new company levied setting up costs on your funds, for a business they'd purchased.

    This course of action has been banned for some years.

    See my reply to the OP.
  11. ugly

    ugly LE Moderator

    I dont know if they bought the companies or they bought the pension funds, I would receive a letter every 3 or 5 years telling me that my pension was now provided by an other and the following charges were raised against the funds. Sometimes the old provider would write to me but not very often. Its been quiet for about 10 years and the fund seems to have recovered and I am happy with what is on offer as a projection but should it fall short come that date then I will dig out the letters and start a claim trail.
    As things stand the last valuation was such a shock I was pretty euphoric for about 3 months. I had wondered if it would have made any change but I suspect misselling of pensions, transferring out of serps and all the other 1980s horrors will be another millstone around the industry in the future. If I had left it where it was index linked I would be getting enough for a packet of fags a week, as it is at the moment its a big lump sum of 6 figs with an annual pension of 15ish k to come should it remain stable in its growth.
    I will be leaving it sat tight unless they try and do a dirty on me!
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  12. ugly

    ugly LE Moderator

    Those investment only cash in deals are being offered still, I was offered one last month and 2 of my staff are taking up the offer. Knowing their accountant it is severely iffy but will be allowed by some clever loopholes!
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  13. BiscuitsAB

    BiscuitsAB LE Moderator

    Ah I see you are still brain washed and a member of the cult of "Pensions" mate.

    Life company pension Trustees are intersted in keeping funds in the life office and nothing else. HMRC are happy with the status quo because life offices take deductions for them and pay them directly, so its pretty much a continuation of PAYE and all the time the poor sod who was sold a pension as a good idea is paying through the nose whilst having no real say in what happens with their money.

    Anything that has a 75% defacto tax rate is a pretty poor show in my book.

    Re-show? I think not, time for some de programming for you mate.
  14. BiscuitsAB

    BiscuitsAB LE Moderator

    You'll be putting up pictures of Scprpions next mate!

    Oh and I'd suggest you read the Pensions Act 1995 and when you find the part that tells you that you can legally surrender your benefits before the age of 55 you might want to sit down and think on it a bit.
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