21/08/2005 - One of the Original Ciaoers (I was Ciaos Most Wanted in around February 2001 I think, o...
21/08/2005 - One of the Original Ciaoers (I was Ciaos Most Wanted in around February 2001 I think, or was it 2000?), currently on a "semi-sabbatical"...
Member since:02.12.2000
Reviews:78
Members who trust:152
This is not an opinion of this company’s product or it’s quality of service etc! It merely is some useful commentary about pensions in general. I have written far too many opinions on popular music and it’s about time I wrote about something boring and hopefully helpful. Please bear in mind that I haven’t even started full-time employment, it really gives me no right to rant on about this subject.
First of all, as you know, a pension is a payment you get when you are old, that’s fine, and I guess you know that here in the UK we have a state pension comprising of a basic element and an earnings related element. Individuals may also have a
private pension to which they made contributions to when they were in employment.
So why am I here telling you this? (apart from getting my hard earned 10p and earnings from you reading this?) well I’d like to highlight the benefits basically, and that you shouldn’t rely solely on a state pension.
Basically what happens in a funded (private) pension, you make contributions when you are in employment to a fund, held by the pensions company, and people invest your money and it grows, and when you retire there is a sum of money you own, i.e. you get what you give, great! Let’s say you end up with £50,000, and you don’t have any other asset like land etc, or kids that pay you, and each year you spend £5,000, then with a low rate of interest, you will probably live for 10 years, and have to rely on state payments, uh oh!
Well the benefit of a pension is that you don’t have to worry, given the £50,000 your pension company will negotiate with you and determine an annuity, an annual payment to you for the rest of your life (based on how long they expect you to live) if you give then this £50,000, let’s say £3000 a year, bummer if you are going to die in a few years, but beneficial if you are going to live until 140. This is rather like motor insurance you buy certainty, the accident prone (individuals that live longer) receive payments from the sensible drivers (people that die early) and one may argue about how fair this is, but I think it’s a price worth paying for certainty.
You don’t need to be an expert in demographics to know that soon, there will be more pensioners then working people, or at least a higher dependency ratio, so who is going to contribute to the growing state pensions demands? I have no idea, except for increasing the age of retirement. So it’s risky solely relying on a state system. But recently I learnt that a funded scheme is the same, given less output from less people and lots of pensioners demanding goods, inflation is likely to rise, thus reducing the real value of your annuity, having the same implications as the state scheme.
So now what? Well a private pension on paper is very sensible, if you don’t have children who will support you, or you don’t have assets like property, and if you don’t trust the government, then you are better off getting a private pension. What if you don’t trust the pension company? I am sure you have heard about the pensions mis-selling scandal, well I don’t know, pensions companies are supposed to be regulated.
I’m sorry I can’t tell you which pension company is good, you would just have to read the other opinions here! But in my opinion, you get what you pay for, and places like “ciao” help you get more out of your cash, and since the pension may be your sole source of income in your retirement, I would suggest that you don’t compromise, but please bear in mind my warning above, given more pensioners in the future, and less workers relative to them, your income will probably buy you a smaller basket of goods than you expected, it will be far more beneficial for the government to take steps to alleviate the “pensions crisis”.
The rating below are for private pensions in general
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Great opinion, very interesting and easy to understand!
ariadne 11.02.2003 23:17
While your review *is* very interesting and contains some good general (pensions) advice, it is, as you say, "not an opinion of this company’s product". Perhaps you could consider moving it to another, more appropriate category?
nicwnacw 01.05.2001 13:17
The content could have had more facts and less speculation, but it was mildly amusing and honest.
Advantages: used to be only credit card accepted in store (NOT anymore!!), get free M&S magazine Disadvantages: will receive endless mail from M&S financial services
Connoisseur_Haggler 27.11.2000 (21.01.2001)
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Ciao members have rated this review on average: very helpful
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Advantages: Reliable, friendly service. They can provide everything you need. FREE no obligation estimates. Discounts for the eldery and unemployed. Family business. Disadvantages: The website is not working properly yet.
Jan 5th, 2001
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