Job Discussion Forums

[JimJam]

Sorry if this has already been mentioned but from a UK perspective there are 3 advantages to having a pension:

1) your company may pay some money in
2) you get tax relief
3) you can't touch the money until you retire.

If you don't work in the UK you won't get 1) and 2), that means the only advantage is point 3), which is good if you think you might be tempted to spend the money.

My advice is initially to put it in a savings account until you have a comfortable buffer of cash and then diversify into the stuff everyone else has mentioned.

I recommend against borrowing to speculate (e.g. buying a house you won't live in) unless you have some kind of inside knowledge of the market in which you are speculating.

Most importantly, always do your own research. The internet is full of full of bad advice...

[oxi]

[naturegirl321]

I'll be investing with online stock brokers. I don't know much other than diversify and be prepared to keep the money in there for a while. I'm young/ish enough with no debts or mortgage, so I-ll be following TiR's advice.

[HLJHLJ]

London is probably one of the worst places to buy. The cap on housing benefit is putting pressure on rents and also means the current glut of rental properties will likely increase. As buy to let landlords sell up, the prices will drop decreasing the chance of a good capital gain. Service charges are high (a nightmare if you have a rental void). The population is largely transient so maintenance costs are high. Unless you are very sure that you know what you are doing, London is a very high risk.

[steki47]

Anyone doing the dividend thing with their stock investing? I am slowly creating a separate revenue stream, loking at retirement. That could be 20-25 years away, but it's good to start now.

[Matt_22]

[Hod]

The main point is do something and not keep postponing it or thinking your government will help.

The question is too general and depends where you live.

If the opening poster has a UK National Insurance number, then plan to pay just enough voluntary contributions between now and retirement. Thirty years of paying (currently) �626 a year will get you the maximum state pension of (currently) �107.45 a week. If you pay less than thirty years, you�ll still qualify but get proportionally less. If you think �107.45 a week is not enough to live on, you�d be right, but for paying in so little, no one else on the planet will pay back so much.

Check out this pension calculator to see an estimate of how little �626 a year for 30 years will get you with a private pension.

http://www.hl.co.uk/pensions/interactive-calculators/pension-calculator

UK residents claim tax relief on pension payments or put an annual amount into a tax-free ISA. Unfortunately, non residents can�t use either option, which is why presumably the opening poster mentioned offshore accounts. These accounts are very expensive to run, i.e. the management fees are deducted from your profits and will ultimately take tens of thousands out of your pension fund.

Pensions will use investment funds, all of which must quote a Total Expense Ratio (TER) which ranges from 0.25% for a fund which copies (tracks) an index such as the FTSE100 right through to managed funds where teams of analysts work out all sorts of strategies on what to do with your money. The TER for such funds can be up to 3%, a huge amount when you compound this over decades, and there�s no evidence that these funds beat a cheaper tracker fund. You need to speak to an Independent Financial Adviser (IFA), or better two or three. Pay for these guys� advice. It will save you thousands in the long term.

I only know the UK financial industry, which is highly regulated. Unfortunately, so called financial advisers with no qualifications will target expats and try to sell very expensive schemes. Your pension will be decimated by the massive and often cleverly-hidden fees. I would go as far to say don�t even talk to an IFA outside of Britain.

What a load of waffle, but it�s a big subject. To sum up, do your own research and see an IFA or two (in Britain).

Buying shares is an option, but it�s very very high risk and you need to be prepared to lose big time. It�s also expensive to trade and stamp duty must be paid for every purchase.

[steki47]

[aridion]

Hi, my situation is this. I have a UK National insurance number. I am 32 years old. I come from and have an Irish passport. Would this allow me to pay into a UK pension fund?

[Hod]

If you are currently a UK resident, i.e. you live there and pay tax, yes, you can start a private pension scheme or similar.

You say you are/will be in Saudi, so the answer is no.

See an IFA or two or three (in the UK) about your options. I have no idea what sort of IFA would operate in a country like Saudi, but I promise you they won�t be regulated and are best avoided.

As a secondary issue, as already said, you can contribute to the UK state pension for 30 years to get full entitlement. You don't need an IFA to advise you on this.

You don�t like the jargon, which is fair enough, but I�d recommend a book or two
Smarter Investing (Tim Hale)
The Long and the Short of it (John Kay)

[Hod]

Now then. It�s by no means exhaustive but just a quick look at page 1�s stats includes the following:

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Why are pensions so boring then? Believe me, I�ve asked my dad; you can�t be a teacher at 80. It�s not big or clever.

Provisions for retirement has not been overdone on here. Why is it such an overlooked topic? To those in their 20s. 30s and 40s, you need to make provisions now or you will hate being old like no other hate you�ve known. Don�t listen to anyone who says don�t bother or the minority who struck lucky with a government/military pension. Don�t listen to anyone who says don�t bother. Your government can only help you so much.

[johnslat]

Dear Hod,

" . . . you can�t be a teacher at 80. It�s not big or clever. "

Gosh, I've got only 10 more years to be big and clever. Guess I'd better enjoy it while I can.

Regards,
John

[Perilla]

[scot47]

If you have worked in the Uk and paid National Insurance you can continue and this would UNDER THE CURRENT RULES yield a pension when youi are in your 60s (or 70s ?) Big changes in the pipeline on National Insurance so you might want to think twice.

[Hod]

The UK state pension is OK for pocket money (currently about �106 a week) when you reach 67, but you must under current rules pay into this system for 30 years to get this full amount. I would definitely recommend paying the voluntary contributions of �626 a year.

The system will almost certainly change in the years to come, but don't let that be an excuse not to pay anything.