pete stevens (from livejournal.com)2010-10-15 04:53 pm (UTC)(link)
Apologies for stating the obvious. I've met a lot of people who didn't know this.
Now the conclusion I came to was that saving for a pension as a private individual is basically bonkers until you've filled all your ISA allowances, because pension funds all charge much larger annual fees than good tracker funds which means that the majority of pension funds are a worse investment than a tracker.
The only tax advantage I can see is the deferring income into future tax rates on the assumption that your future marginal tax rate will be lower than the current one.
Yes. A SIPP put into index tracker(s) is a much better, more flexible option (though I'd think seriously about a mix with corp bonds). I used to work for a pensions company too. Beating the market is rare (and usually predicated on sheer luck or insider knowledge), beating it over the long term is practically unheard of.
Having said that, I am neither heavily invested nor pensioned up right now. I was all prepped for a 70's style recession with high inflation and high interest rates....
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andrewducker) wrote2010-10-15 12:01 pm
no subject
Now the conclusion I came to was that saving for a pension as a private individual is basically bonkers until you've filled all your ISA allowances, because pension funds all charge much larger annual fees than good tracker funds which means that the majority of pension funds are a worse investment than a tracker.
The only tax advantage I can see is the deferring income into future tax rates on the assumption that your future marginal tax rate will be lower than the current one.
Or am I missing something more important?
no subject
But basically you have the tax-free lump sum, and the lowering of total tax paid due to a lower tax bracket as the two main reasons.
I get cheap pension servicing, which makes it more worthwhile for me, but even so I have debated just paying off my mortgage faster.
no subject
Having said that, I am neither heavily invested nor pensioned up right now. I was all prepped for a 70's style recession with high inflation and high interest rates....