What is the best way to save for my retirement in UK only?

Question

I've just had a meeting with my bank's financial advisor about personal pension - who have recommended Standard Life as his choice. I know that the bank only has 6 or 7 pension companies to choose from (all big names incl. Norwich Union, Stanard Life, Prudential, Legal&General, Friends Providence, AXA) but i'm quite happy with going with the big companies.

My question is - is pension really the best way to save for my retirement? I have my own Savings account with high interest as well as ISA but wanted something a bit more long term for the REAL future i.e. retirment. If it is, I can then really take his recommendation but if there is other alternatives then I would like to know.

Retirement == 65 years for most people so I'm going with that. Also note that I know if my employer contributes, then obvosuly that is the bet choice however they do not.

Note, answers that apply in UK only please

Answer 1

You need to look at your willingness to take risk for bigger reward.

Many people are buying flats/houses for renting out.

As long as property goes up in value faster than inflation and the mortgage is less than the rental income this is a good bet.

You can take more risk and do this in say bulgaria, for holiday lets, where you get properties much cheaper but rent is the same.

You need to look at if you are willing to accept the risk that your money could go down in value for a time, so it is a long term, 10 yr min, investment

Answer 2

Some people answering your question sound very knowledgeable about pensions. Greedy salesmen, big bad men is suits, property is the best etc

lets keep it simple. Were could you invest 78 pence and get an immediate 22 pence added instantly. The £1.00 is then invested in a mostly tax free environment. The investment grows on a gross roll up basis. If you are a higher rate tax payer you put in 60 pence the government puts in 40 pence. Same question were could you get a return like this ? That's 28% for standard tax rate payers & 66% for higher tax payers before the money is invested!

Property has been a excellent investment however to take out a large mortgage to buy a property when the interest rates are rising and every body and his dog in financial services telling us there is going to be a market correction This coupled by the worry of rental income which is taxable make this a very high risk investment strategy

Seek Independent financial Advise the first interview is usually free and without obligation

Answer 3

First of all, remember that the adviser is actually qualifed to give you the advice he did - if an ISA best suited your needs then that's what he would have recommended. Advisers are much more accountable for the advice they give nowadays and as most of them are independent (check that this is the case with your adviser), they really will be offering you the best option available.

It's worth bearing in mind that the government offers a lot of breaks for people who have pensions, as it takes the pressure off the generation below you, who would have to cover your state pension in taxes.

An investment such as an ISA or an Investment bond are only designed to be medium to long term investments and therefore only have a limited tax benefit. You have said yourself, they are savings plans, and are designed to do exactly that -they provide a lump sum at the end of a given term.

Pensions are specifically designed for retirement and their structure reflects this, usually providing a tax free lump sum and the remainder purchases an annuity, which provides you with income throughout your retirement.

If you're having doubts about the advice you received, shop around - you don't have to stay with one adviser - and don't be afraid to challenge them and ask lots of questions!

Good luck!

Answer 4

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Answer 5

dont trust these liars, like you rightly say, you already have high interest savings.
"long term", is to sell risky investments which pay them large commissions (taken before the capital is exposed to risk, over the first few years, up front, and then some ongoing) but if you have high interest savings, and keep saving "long term"...its a long term investment! One of the oldest selling ploys, for risky pensions, is to say, its not "long term". Rubbish! They dismiss savings as short term. Rubbish!
Just look at all the pension disasters. By saying its long term, allows them, to make short term mistakes, and catch up later, while taking commission, as they go. (they dont invest these commissions themselves, they spend them, or put them in thier bank, as its safe, while continuing to risk Your money.)
Buy a buy to let property, or stick with savings, isa's, and deposits bearing high (long notice) interest.

Answer 6

my advice -- don't put money into pensions !!!!

buying a second property and renting it out (if you are in a situation to do it) seems , historically, the best way of ensuring you have got somthing that cant be taken off you by a thief in a suit.
the fact that the gov. is encouraging people to put money into pension schemes makes me more suspicious

Answer 7

Calculate how much you will have on retirement a) if your contributions go into pension schemes and b) if they stay outside.
Plan (a) will give you 28% more, but when you die 3/4 of your funds go to the annuity company with their thanks (They have ever so high bonuses to pay to themselves every year!)

Plan (b) will give you less, but all of it can pass to your descendants, to secure their future.

I know what I would do.

Answer 8

It's got to be property. It's a hassle, but it's an fantastic return.

Answer 9

Move to the Isle of Man or such like, if you don't Bliar will have it off you before you can sneeze.

Answer 10

look int scottish widows savings