If any person on this site or anywhere for that matter finds a pub selling beer 1p cheaper than it was before the budget I will eat my hat.
All Osborne has done is make it look like he's giving something to the beer drinking man but in fact all he's done is help his mates at the big breweries. Not only that he can't be blamed either.
My local has a bowl of 1p's on the bar and you can help yourself to one each time you buy a pint. Which is nice.
Pleased with the pension reforms, huge difference having Steve Webb as pensions minister, not only as he is a Professor of Social policy and knows his stuff but also he's been in post the whole time of this government. He's managed to steer some big changes through, auto enrolment, triple lock and now this. Big lessons to learn, good to have specialists as ministers and good to have a bit of longevity (think Labour got through 12 separate pensions ministers in 13yrs!). The Lib Dems quiet man has been refining these ideas and planning these reforms for a long time, not many people will give him or the Lib Dems credit for it but Steve will just get on with it anyway.
Seemed on the surface a bold and accomodating budget with some interesting new changes, though little disappointed there seemed little there targeting families, particularly low income ones.
Still, its good to know you can now save 15k a.year tax free.......
That was the announcement the day before, the subsidised/free childcare provision for kids up to ages of 12. Also the pupil premium going down to nurseries. Interesting policy the pupil premium as we won't be able to see how well it has done for years., that said using it as a cash lever to get money into schools aimed at underprivileged kids is a pretty smart from the Lib Dems. Could potentially make a big difference for social mobility, trouble is we won't see results in short term.
If any person on this site or anywhere for that matter finds a pub selling beer 1p cheaper than it was before the budget I will eat my hat.
All Osborne has done is make it look like he's giving something to the beer drinking man but in fact all he's done is help his mates at the big breweries. Not only that he can't be blamed either.
My local has a bowl of 1p's on the bar and you can help yourself to one each time you buy a pint. Which is nice.
I personally liked the budget as someone on a low income who is aiming to save a bit, the ISA amount of 15k gives me something to aim for (over quite a few years I hasten to add) and the income tax adjustments will save me over £100 a year next year.
I am not well off, and I have been helped by the conservatives.
I think nothing annoys Ed Milliband more than the fact that the Tories are doing a much better job with the economy than he ever could.
They're doing a good job at further impoverishing the worst-off in the country, just as they always have. I guess for some people that's not a problem.
George Osborne might trust pensioners to manage their finances properly but that's because he has zero experience of dealing with people who cannot or will not.
Listening to George Osborne on Today on the way to work he said he trusts them to manage their finances well because they are the sort of people were sensible enough to have a retirement fund in place in the first instance. There will be a lot of pensioners who are in this position and in a perfect world it would be fine to let them manage their funds in their own way.
But I think he is being incredibly naive if he thinks that the levels of financial acumen in the population are such there will be no problems with businesses targeting those (and I think they are probably a majority) who are not as clued up on investments or otherwise vulnerable.
Anyone who has come into contact with a cross section of the public over a period of time will testify that there are a lot of people out there prepared to exploit others to their own ends and a lot of vulnerable potential victims.
As Charlton Fan points out I doubt that George Osborne, Danny Alexander or anyone in Whitehall has seriously considered the effect of giving older people easy access to £10,000's for probably the first time in their life. Too many people in the UK already lose their life savings to scams and rogue businesses and the government has just opened the door to another source of funding to them rather than sorting out the problem properly.
The good news is of course that we have no history of the miss-selling of financial products in the UK so I'm sure everything will be fine and I'm worried unnecessarily...
Financial scammers rubbing their hands together. Products that seemingly give you a better return than what you have now!!! You can see it a mile off, and a lot of older people can be more gullable due to the effect the aging process can have on the brain! What is crazy about budgets of all colours is the press and city say it is good or bad straight away when it needs to have time, and many well received budgets have been crap.
the ISA amount of 15k gives me something to aim for (over quite a few years I hasten to add)
that's not a cap mate, that's per year
Yeah but correct me if I'm wrong but if I have £15k and save it, then after a year I can put that 15k back in (and take the interest back) I can't add 15k to it can I?!?!?! Meaning that I could theoretically have an ISA of like 150k over 10 years?
Sorry, only 23, and never really had more than a few quid to my name! Trying to get saving in the near future haha. If 15k per year is the case... I think it might take me a while to have to worry about the cap.... lol
What the tories have to do is actually make people feel they are better off. A year of being told the economy is recovering but people not noticing any or little change and the opposing line will be - sorry this is not your recovery. And that will resonate. If people start to feel better off then they will get votes.
Bloody brilliant posts Thommo Shame so many can't see past their party allegiance to see the points you raise
Not sure if that was aimed at me raising my concerns over the lack of safeguarding measures in place over the pensions reforms, but I can assure you that I would have exactly the same concerns whichever type of government was in power. It's a bloody irresponsible thing to do to avoid addressing the actual root cause of the problem, nothing to do with which party I might favour and I have been just as critical of Labour in the past anyway.
Going back to your comment, it does of course cut both ways doesn't it...
I am a voluntary adviser for the Pensions Advisory Service and from what I see, the support people need is fit for purpose regulators and education, not nannying as if everyone is feeble minded. How you stop criminals is another debate.
I agree with your points about educating consumers and having a strong regulatory system in place entirely. Which is why is such a bizarre thing to do. We are moving from what seems to have been a (poorly) regulated annuity system to effectively a potential free for all for every conman and chancer around. People who have made it to the PAS are already a step ahead of the majority in that at least they know it's there!
That is true Bournemouth. And people already had a choice as to how to invest for old age: I have long believed (whether correctly or not!) that ISAs make more sense than pension pots. Okay you don't get the up-front tax breaks but any income is (almost) tax free and you get to keep your capital. So, why not keep the pension set up as it is but explain the other options more fully? I used to carry out investigations into the ne'er-do-wells in the finance industry. The stuff some people do with their money is very scary indeed. And they do need protection from themselves. Boiler rooms, forest schemes, land banking, wine, ostrich farming, corrupt solicitors, mortgage brokers and IFAs (not Golfie obviously!), ponzi schemes like this one: en.wikipedia.org/wiki/Kevin_Foster_(fraudster); the list goes on and on. It is a sad indictment of the gullibility of people that many of Foster's punters still blame the FSA (as was) for closing the scheme down rather than Foster! (BTW, the police involvement indicated in this wiki article is far from accurate.) As well as the PAS, how many people on here can say they have heard of the (free) Money Advice Service? Or looked at its web site. Even though it advertises quite heavily. https://moneyadviceservice.org.uk/?&ft_keyword=money%20advice%20service&ft_section=e&gclid=CNKM-IiMo70CFWT4wgod5aoAIQ
Yeah but correct me if I'm wrong but if I have £15k and save it, then after a year I can put that 15k back in (and take the interest back) I can't add 15k to it can I?!?!?! Meaning that I could theoretically have an ISA of like 150k over 10 years?
It depends on exactly what type of account you choose to get, but in theory yes you could 1) Put 15K in 2) get the interest added to the account 3) Put another 15K into the same account next year 4) get the interest added to the 30K in there and so on. Some accounts will pay the interest out to a different account, but I think they're generally used by pensioners with a big ISA who are using the interest as additional income. If you can afford to keep the interest in the account it makes sense to do so, cos the next year you're getting interest paid on that interest to.
Where it gets tricky is that some banks will give you a good rate of interest in the 1st year of the ISA to get your business then drop it down to diddly squat the next year. In theory you CAN transfer your existing ISA to a new provider and then add to it in the same year, but not all accounts will accept incoming transfers or may require lots of paperwork to do so.
If you don't mind me asking Huskaris, who do you bank with?
the ISA amount of 15k gives me something to aim for (over quite a few years I hasten to add)
that's not a cap mate, that's per year
Yeah but correct me if I'm wrong but if I have £15k and save it, then after a year I can put that 15k back in (and take the interest back) I can't add 15k to it can I?!?!?! Meaning that I could theoretically have an ISA of like 150k over 10 years?
Sorry, only 23, and never really had more than a few quid to my name! Trying to get saving in the near future haha. If 15k per year is the case... I think it might take me a while to have to worry about the cap.... lol
Yes, you can it's an amount per annum and it's fresh money. But if you remove money from the ISA wrapper you lose the tax breaks. Under the new arrangements ISAs will be fully transferable from cash to stocks & shares and back again. You can't transfer stocks & shares ISAs into cash ISAs at the moment. There are significant numbers of people who have invested fully in first PEPs (personal equity plans) introduced in 1986 by Nigel Lawson, then TESSAs (tax exempt special savings accounts) introduced in 1990 by John Major who have transferred these now defunct products into ISAs introduced by Gordon Brown in 1999 and with capital growth now have ISA pots over £1mn. One firm alone - Brewer Dolphin - has several ISA millionaires on its books and claims to have one customer with an ISA pot over £6mn. Get saving - you know it makes sense.
Huskaris - because I'm a sad git - I've done some more research on this and the maximum contributions since PEPs were first introduce total £200,560 per person. Compound growth on those contributions at 7% per year for a couple would make them ISA millionaires but the punter who has got up to £6mn must have made some seriously good investment decisions!
The pension changes are a master-stroke - it virtually guarantees that Labour cannot do another pensions smash-and-grab like they did after they won in 1997. Gordon Brown wiped billions off the collective value of the UK's pension schemes, and due to legislation pensioners had to sit there and take it. Now if Labour win in 2015, any attempt to rob pensioner's of their hard-earned money and they'll simply move it out of their pension schemes.
Also, anyone in the pension game will tell you that pension schemes and annuities are taking customers for a ride and for too long - high charges and fees coupled with exit penalties and tax charges for drawing your income were eroding people's life savings. Now they actually literally have to compete against a mattress stuffed with money - say what you want, a mattress isn't going to rob £200 or so pounds a year off your pension in admin fees.
The big risk is obviously that people without big pots will simply waste their money and then fall back on state support, but this has always been the case - there is no requirement to buy an annuity, small pots can already be taken as lump sums and any pot between 100-200k definitely can't buy an annuity that coupled with the state pension comes close to covering the cost of living. What the changes do improve though is that annuity providers now need to provide much better rates of return, otherwise people aren't going to be interested. Decently invested outside a pension wrapper and you could get a decent amount in interest/dividends/capital appreciation from a 200k pension pot, whereas currently an annuity bought with that amount would barely cover your gas and food bills.
This
This is all about where you stand ideologically. Do you feel that the Govt need to nanny you through life, or allow you to make your own decisions. Do you assume that everyone of going to piss their hard earned saving away, or assume that people who have prudent enough to save for retirement will carry on being prudent?
Facts are that the pensions industry has not actually been benefiting anyone but the (previous Labour) Govt and providers for a long, long time. Now at least savers have the power to do something about it and even small pots offer the chance for a decent return rather than having to live hand to mouth.
Bloody brilliant posts Thommo Shame so many can't see past their party allegiance to see the points you raise
Not sure if that was aimed at me raising my concerns over the lack of safeguarding measures in place over the pensions reforms, but I can assure you that I would have exactly the same concerns whichever type of government was in power. It's a bloody irresponsible thing to do to avoid addressing the actual root cause of the problem, nothing to do with which party I might favour and I have been just as critical of Labour in the past anyway.
Going back to your comment, it does of course cut both ways doesn't it...
Bournemouth what do you think is the root problem that should have been addressed about annuities? The only problem was that people didn't know they could shop around for an annuity and the insurance companies quite happily offered to provide an annuity with their pot at retirement. If they didn't have an adviser pointing out they could get a 50% better annuity from another insurer, the fact they were presented with an option to shop around went over their head and they just signed on the dotted line. This problem has largely been eliminated through regulatory disclosures insurers must now provide plus compulsory guidance provided by schemes at retirement, so one of the root problems has already been addressed. Some will still probably do the wrong thing, but only because they either haven't read what they are given or haven't taken advice.
The perceived poor value of annuities is that you have to live a decent time before you get your money back, because its really insurance against living too long, its not an investment. Its a bit like saying house insurance is a poor deal unless your house burns down. The problem was lack of consumer awareness. Should Waitrose be closed down because they charge more for a loaf of bread than Lidl or should people be told there is a free market out there and they have choices. People can still buy the insurance of an annuity under the new measures, but they now have the choice to perhaps buy a small annuity and use the rest of their pension pot to invest and take a bit of risk. The 25% tax free lump sum traditionally has been taken to pay off the mortgage or take a cruise etc. Yes it is a potential minefield but the additional compulsory guidance and responsibility employers will have to provide is a step in the right direction and the majority of people I am sure will be sensible enough to handle it. Many who succumb to scams are victims of our tendency to let greed cloud rational judgement.
The vulnerable need protection but not at the expense of preventing the vast majority of normal citizens making their own life choices.
Instead it might be more appropriate to look at where the tax take comes from: In 1978/79 the top 1% of earners paid 11% of total income tax; the top 10% paid 35%; and the top 50% paid 82%. In other words 50% of wage earners contributed bugger all to income tax coffers.
The latest figures are: top 1% paid 23% of total income tax; top 10% paid 53%; and top 50% paid 89%. So, now, 50% of tax payers contribute only 11% of the tax take.
But that's the top 10% of people, not the top 10% of income. That doesn't mean the richest have been increasingly hammered, just a reflection that they've had a bigger proportion of the country's income since the late 70s.
This. If you look at the proportion of the richest peoples money, its a different story. Consider what they have in tax havens etc they aren't handing over a great proportion, although its a large amount. What we are seeing is growing inequality as the very rich get richer
The Guardian stated this week that since 2010 the divide between rich and poor has actually narrowed
Bloody brilliant posts Thommo Shame so many can't see past their party allegiance to see the points you raise
Not sure if that was aimed at me raising my concerns over the lack of safeguarding measures in place over the pensions reforms, but I can assure you that I would have exactly the same concerns whichever type of government was in power. It's a bloody irresponsible thing to do to avoid addressing the actual root cause of the problem, nothing to do with which party I might favour and I have been just as critical of Labour in the past anyway.
Going back to your comment, it does of course cut both ways doesn't it...
Bournemouth what do you think is the root problem that should have been addressed about annuities? The only problem was that people didn't know they could shop around for an annuity and the insurance companies quite happily offered to provide an annuity with their pot at retirement. If they didn't have an adviser pointing out they could get a 50% better annuity from another insurer, the fact they were presented with an option to shop around went over their head and they just signed on the dotted line. This problem has largely been eliminated through regulatory disclosures insurers must now provide plus compulsory guidance provided by schemes at retirement, so one of the root problems has already been addressed. Some will still probably do the wrong thing, but only because they either haven't read what they are given or haven't taken advice.
The perceived poor value of annuities is that you have to live a decent time before you get your money back, because its really insurance against living too long, its not an investment. Its a bit like saying house insurance is a poor deal unless your house burns down. The problem was lack of consumer awareness. Should Waitrose be closed down because they charge more for a loaf of bread than Lidl or should people be told there is a free market out there and they have choices. People can still buy the insurance of an annuity under the new measures, but they now have the choice to perhaps buy a small annuity and use the rest of their pension pot to invest and take a bit of risk. The 25% tax free lump sum traditionally has been taken to pay off the mortgage or take a cruise etc. Yes it is a potential minefield but the additional compulsory guidance and responsibility employers will have to provide is a step in the right direction and the majority of people I am sure will be sensible enough to handle it. Many who succumb to scams are victims of our tendency to let greed cloud rational judgement.
The vulnerable need protection but not at the expense of preventing the vast majority of normal citizens making their own life choices.
agree with much of what you say except the supermarket analogy doesnt really apply.
the trouble is that you have dont have a choice when talking about social welfare. if you dont protect the vunerable in society, then you will have to pay for them anyway in welfare or watch a percentage live in poverty and feel another percentage engage in black market activities, normally manifested as crime and anti-social behavior.
thats the trouble with a civilized society. there are different levels of civility but everyone is affected by the lowest common denominator.
its usually a lot more efficient to take measures before the horse has bolted. prevention is better than rehabilitation.
All I'm saying is that people didn't understand there was a market for annuities and thought they had no choice but to buy from the insurer they saved with.
Looking after your own money has nothing to do with social welfare. The poor apart, it's only when you don't look after your own money that the question of social welfare is relevant. Unless you believe there is no way people can be protected from being ripped off or acting recklessly, you allow freedom of choice and access to properly regulated guidance and advice. That seems the only difference of opinion here.
yes thats a good summary of the underlying question. i believe that the current attitude in our country means that if people are given free choice on this, a large percentage wont do the sensible thing and put away today to secure tomorrow.
Its a culture that has snowballed since the 50s. spend beyond your means because interest and inflation will bring things back within your means.
I personally believe that all pension contributions should be mandatorily collected with tax and ringfenced in some kind of PPP. there is no sustainable growth on pension investments, its just numbers on a balance sheet that at some point have to be backed up by tangibles. as we have seen, when it goes bad it doesnt go gradually. You suddenly get an adjustment and BINGO your pension is suddenly worth sweet FA. where did that money go? well it went on the excesses of the people administering your hard earned.
sounds archiac and draconian but its actually looking forward not back. the days of europeans being able to live beyond their means and rely on the old chesnut of "capital growth" are numbered. if you want a pint of milk in 10 years time, then you simply drink one less pint of milk today (to reintroduce the grocery theme). dont be telling me some stockbroker can take the 2 fluid ounces and turn it into a gallon through the magic of "capital growth". total fallacy.
Bloody brilliant posts Thommo Shame so many can't see past their party allegiance to see the points you raise
Not sure if that was aimed at me raising my concerns over the lack of safeguarding measures in place over the pensions reforms, but I can assure you that I would have exactly the same concerns whichever type of government was in power. It's a bloody irresponsible thing to do to avoid addressing the actual root cause of the problem, nothing to do with which party I might favour and I have been just as critical of Labour in the past anyway.
Going back to your comment, it does of course cut both ways doesn't it...
Bournemouth what do you think is the root problem that should have been addressed about annuities? The only problem was that people didn't know they could shop around for an annuity and the insurance companies quite happily offered to provide an annuity with their pot at retirement. If they didn't have an adviser pointing out they could get a 50% better annuity from another insurer, the fact they were presented with an option to shop around went over their head and they just signed on the dotted line. This problem has largely been eliminated through regulatory disclosures insurers must now provide plus compulsory guidance provided by schemes at retirement, so one of the root problems has already been addressed. Some will still probably do the wrong thing, but only because they either haven't read what they are given or haven't taken advice.
The perceived poor value of annuities is that you have to live a decent time before you get your money back, because its really insurance against living too long, its not an investment. Its a bit like saying house insurance is a poor deal unless your house burns down. The problem was lack of consumer awareness. Should Waitrose be closed down because they charge more for a loaf of bread than Lidl or should people be told there is a free market out there and they have choices. People can still buy the insurance of an annuity under the new measures, but they now have the choice to perhaps buy a small annuity and use the rest of their pension pot to invest and take a bit of risk. The 25% tax free lump sum traditionally has been taken to pay off the mortgage or take a cruise etc. Yes it is a potential minefield but the additional compulsory guidance and responsibility employers will have to provide is a step in the right direction and the majority of people I am sure will be sensible enough to handle it. Many who succumb to scams are victims of our tendency to let greed cloud rational judgement.
The vulnerable need protection but not at the expense of preventing the vast majority of normal citizens making their own life choices.
Again I agree with a lot of what you are saying and a lot of the issue around poor returns on annuities have been addressed (ignoring the small matter of the governments policy of quantitive easing and the effect this has had on returns).
But fundimentally I believe that the vast majority of the population do need a large degree of protection when it comes to something as important as this and letting people loose with their own fund is only going to lead to problems further down the line that the state will have to get involved in sorting out.
I've already supplied some figures (from the Natonal Fraud Authority btw) as to the billions lost each year to what appear on the surface are obvious scams and the true figure is likely to be much, much higher as under reporting is a massive issue in this area. This is without taking into account the additional billions lost through the miss-selling of financial products by the very same people who will now be circling with pension pot advice.
Those figures are facts not my opinion. To suggest that the majority of people are not at risk of getting ripped off is counter intuative to that evidence. These are not all old ladies, they are very representative of society as a whole and lets not forget a lot of small businesses got ripped off by the financial sector. Were they caught out through greed or stupidity or because they were faced with an overly complicated product coupled with an incentivised financial salesperson? What's going to be so different?
I definitely need to see an IFA as I'm hopeless with tax stuff
Do not see an IFA if you have tax problems! They have no training in Taxation other than a very poor overview in order to sell products to the unsuspecting.
Find yourself a Chartered Tax Advisor ofr a Chartered Accountant, if youcan't afford either even the Inland Revenue (HMRC) would be a better bet for accurate tax advice.
The modern world is all about ripping people off. Much of it legally. Some Virgin and Sky customers are paying significantly less than others for instance because they threatened to leave! How can a reputable company be happy that their more loyal customers are paying more – simply – because their job is to get as much cash out of their customer’s pockets as they can get away with. Reputable and big companies, but basically rip off merchants when push comes to shove. 21st century I’m afraid – get as much as you can for as little as you can get away with.
"there is no sustainable growth on pension investments, its just numbers..." Pension investment is no different to private investment, it just gets added to by the tax man. What's a PPP? If you mean a Personal Pension Plan you've lost me. The only people who seem to think capital growth is tangible are investors who scream when it evaporates.
Don't get confused between what profits get earned and delivered to investors and what price investors are prepared to pay for a slice of the future profits they can only guess. Yes the latter are just numbers so why should anyone get hysterical about a random price number unless they are about to buy, sell or speculate. It's relevance to your pension pot in 30 years time is chaff in the wind. The fund managers we appoint make as little as 50p on every £1,000 of investments, hardly the root cause of a fall in fund values. The regulated maximum charge for a Stakeholder pension (your PPP Calydon?) is £15 per £1,000, relatively high because it was set to allow cover for brokers' commissions. No one need be in a scheme today where charges have any material impact on returns.
If you are lucky you will benefit from some capital growth, but its what companies actually generate as profits, and the interest they pay for borrowing your contributions that is the substance of your pension pot. When no markets generate much more than 8% p.a over the long term why does anyone think a 15% or 20% over a couple of years in a row is going to continue, and bitch when a market re-prices to reflect reality? Its luck of timing and choosing the right market mix that dominates outcomes for longterm savers, not price movements of a market nor alleged skills of fund managers.
Stockbrokers sell stocks not milk but a hedge fund manager theoretically can contract to sell 2 fluid ounces of milk in the futures market to someone at a fixed price at a future date. If at the date of sale, milk is 128 times cheaper, then hey presto the proceeds can buy a gallon of milk. The milk hasn't grown in volume, someone has simply made a profit on selling a right to buy the milk because of a movement in milk prices.
Bournemouth - As usual I think we will agree to disagree. Pension pot management will require proper financial advice on how to best use assets to deliver income and/or growth. Many advisers will not have the necessary qualifications to be given access to scheme members, a protective net will stop any vultures landing to pick off the vulnerable. Employers and trustees will now have a duty to protect employees at the point of retirement which means that Banks, which currently can get their hands on pensioners assets at retirement through their banking service connections, will in future be beaten to it by vetted advisers brought in by the scheme at the very outset. You, like many others, seem to think that you have identified a problem no one else recognises and assume it is not being addressed.
More important things now - start worrying about tomorrows opponents!
sure. cordially agree to disagree, i think we agree on most of the economics but have different views on the social politics.
your keynes and im marx you put your points across well
i use ppp to refer to public private partnership. i want to see more regulation of the investments of the pension pot not less. i realise this may lower gains and i certainly am no advocate of bureaucratic red tape for the sake of it.
my underlying theme is that those locked out of the system still effect those within it.
Comments
Which is nice.
Shame so many can't see past their party allegiance to see the points you raise
Sorry, only 23, and never really had more than a few quid to my name! Trying to get saving in the near future haha. If 15k per year is the case... I think it might take me a while to have to worry about the cap.... lol
Prepare for lots and lots of goodies.
Going back to your comment, it does of course cut both ways doesn't it...
I used to carry out investigations into the ne'er-do-wells in the finance industry. The stuff some people do with their money is very scary indeed. And they do need protection from themselves. Boiler rooms, forest schemes, land banking, wine, ostrich farming, corrupt solicitors, mortgage brokers and IFAs (not Golfie obviously!), ponzi schemes like this one: en.wikipedia.org/wiki/Kevin_Foster_(fraudster); the list goes on and on.
It is a sad indictment of the gullibility of people that many of Foster's punters still blame the FSA (as was) for closing the scheme down rather than Foster! (BTW, the police involvement indicated in this wiki article is far from accurate.)
As well as the PAS, how many people on here can say they have heard of the (free) Money Advice Service? Or looked at its web site. Even though it advertises quite heavily. https://moneyadviceservice.org.uk/?&ft_keyword=money%20advice%20service&ft_section=e&gclid=CNKM-IiMo70CFWT4wgod5aoAIQ
1) Put 15K in
2) get the interest added to the account
3) Put another 15K into the same account next year
4) get the interest added to the 30K in there and so on.
Some accounts will pay the interest out to a different account, but I think they're generally used by pensioners with a big ISA who are using the interest as additional income. If you can afford to keep the interest in the account it makes sense to do so, cos the next year you're getting interest paid on that interest to.
Where it gets tricky is that some banks will give you a good rate of interest in the 1st year of the ISA to get your business then drop it down to diddly squat the next year. In theory you CAN transfer your existing ISA to a new provider and then add to it in the same year, but not all accounts will accept incoming transfers or may require lots of paperwork to do so.
If you don't mind me asking Huskaris, who do you bank with?
Under the new arrangements ISAs will be fully transferable from cash to stocks & shares and back again. You can't transfer stocks & shares ISAs into cash ISAs at the moment.
There are significant numbers of people who have invested fully in first PEPs (personal equity plans) introduced in 1986 by Nigel Lawson, then TESSAs (tax exempt special savings accounts) introduced in 1990 by John Major who have transferred these now defunct products into ISAs introduced by Gordon Brown in 1999 and with capital growth now have ISA pots over £1mn.
One firm alone - Brewer Dolphin - has several ISA millionaires on its books and claims to have one customer with an ISA pot over £6mn.
Get saving - you know it makes sense.
This is all about where you stand ideologically. Do you feel that the Govt need to nanny you through life, or allow you to make your own decisions. Do you assume that everyone of going to piss their hard earned saving away, or assume that people who have prudent enough to save for retirement will carry on being prudent?
Facts are that the pensions industry has not actually been benefiting anyone but the (previous Labour) Govt and providers for a long, long time. Now at least savers have the power to do something about it and even small pots offer the chance for a decent return rather than having to live hand to mouth.
The perceived poor value of annuities is that you have to live a decent time before you get your money back, because its really insurance against living too long, its not an investment. Its a bit like saying house insurance is a poor deal unless your house burns down. The problem was lack of consumer awareness. Should Waitrose be closed down because they charge more for a loaf of bread than Lidl or should people be told there is a free market out there and they have choices. People can still buy the insurance of an annuity under the new measures, but they now have the choice to perhaps buy a small annuity and use the rest of their pension pot to invest and take a bit of risk. The 25% tax free lump sum traditionally has been taken to pay off the mortgage or take a cruise etc. Yes it is a potential minefield but the additional compulsory guidance and responsibility employers will have to provide is a step in the right direction and the majority of people I am sure will be sensible enough to handle it. Many who succumb to scams are victims of our tendency to let greed cloud rational judgement.
The vulnerable need protection but not at the expense of preventing the vast majority of normal citizens making their own life choices.
the trouble is that you have dont have a choice when talking about social welfare. if you dont protect the vunerable in society, then you will have to pay for them anyway in welfare or watch a percentage live in poverty and feel another percentage engage in black market activities, normally manifested as crime and anti-social behavior.
thats the trouble with a civilized society. there are different levels of civility but everyone is affected by the lowest common denominator.
its usually a lot more efficient to take measures before the horse has bolted. prevention is better than rehabilitation.
Looking after your own money has nothing to do with social welfare. The poor apart, it's only when you don't look after your own money that the question of social welfare is relevant. Unless you believe there is no way people can be protected from being ripped off or acting recklessly, you allow freedom of choice and access to properly regulated guidance and advice. That seems the only difference of opinion here.
Its a culture that has snowballed since the 50s. spend beyond your means because interest and inflation will bring things back within your means.
I personally believe that all pension contributions should be mandatorily collected with tax and ringfenced in some kind of PPP. there is no sustainable growth on pension investments, its just numbers on a balance sheet that at some point have to be backed up by tangibles. as we have seen, when it goes bad it doesnt go gradually. You suddenly get an adjustment and BINGO your pension is suddenly worth sweet FA. where did that money go? well it went on the excesses of the people administering your hard earned.
sounds archiac and draconian but its actually looking forward not back. the days of europeans being able to live beyond their means and rely on the old chesnut of "capital growth" are numbered. if you want a pint of milk in 10 years time, then you simply drink one less pint of milk today (to reintroduce the grocery theme). dont be telling me some stockbroker can take the 2 fluid ounces and turn it into a gallon through the magic of "capital growth". total fallacy.
But fundimentally I believe that the vast majority of the population do need a large degree of protection when it comes to something as important as this and letting people loose with their own fund is only going to lead to problems further down the line that the state will have to get involved in sorting out.
I've already supplied some figures (from the Natonal Fraud Authority btw) as to the billions lost each year to what appear on the surface are obvious scams and the true figure is likely to be much, much higher as under reporting is a massive issue in this area. This is without taking into account the additional billions lost through the miss-selling of financial products by the very same people who will now be circling with pension pot advice.
Those figures are facts not my opinion. To suggest that the majority of people are not at risk of getting ripped off is counter intuative to that evidence. These are not all old ladies, they are very representative of society as a whole and lets not forget a lot of small businesses got ripped off by the financial sector. Were they caught out through greed or stupidity or because they were faced with an overly complicated product coupled with an incentivised financial salesperson? What's going to be so different?
Find yourself a Chartered Tax Advisor ofr a Chartered Accountant, if youcan't afford either even the Inland Revenue (HMRC) would be a better bet for accurate tax advice.
Pension investment is no different to private investment, it just gets added to by the tax man. What's a PPP? If you mean a Personal Pension Plan you've lost me. The only people who seem to think capital growth is tangible are investors who scream when it evaporates.
Don't get confused between what profits get earned and delivered to investors and what price investors are prepared to pay for a slice of the future profits they can only guess. Yes the latter are just numbers so why should anyone get hysterical about a random price number unless they are about to buy, sell or speculate. It's relevance to your pension pot in 30 years time is chaff in the wind. The fund managers we appoint make as little as 50p on every £1,000 of investments, hardly the root cause of a fall in fund values. The regulated maximum charge for a Stakeholder pension (your PPP Calydon?) is £15 per £1,000, relatively high because it was set to allow cover for brokers' commissions. No one need be in a scheme today where charges have any material impact on returns.
If you are lucky you will benefit from some capital growth, but its what companies actually generate as profits, and the interest they pay for borrowing your contributions that is the substance of your pension pot. When no markets generate much more than 8% p.a over the long term why does anyone think a 15% or 20% over a couple of years in a row is going to continue, and bitch when a market re-prices to reflect reality? Its luck of timing and choosing the right market mix that dominates outcomes for longterm savers, not price movements of a market nor alleged skills of fund managers.
Stockbrokers sell stocks not milk but a hedge fund manager theoretically can contract to sell 2 fluid ounces of milk in the futures market to someone at a fixed price at a future date. If at the date of sale, milk is 128 times cheaper, then hey presto the proceeds can buy a gallon of milk. The milk hasn't grown in volume, someone has simply made a profit on selling a right to buy the milk because of a movement in milk prices.
Bournemouth - As usual I think we will agree to disagree. Pension pot management will require proper financial advice on how to best use assets to deliver income and/or growth. Many advisers will not have the necessary qualifications to be given access to scheme members, a protective net will stop any vultures landing to pick off the vulnerable. Employers and trustees will now have a duty to protect employees at the point of retirement which means that Banks, which currently can get their hands on pensioners assets at retirement through their banking service connections, will in future be beaten to it by vetted advisers brought in by the scheme at the very outset. You, like many others, seem to think that you have identified a problem no one else recognises and assume it is not being addressed.
More important things now - start worrying about tomorrows opponents!
your keynes and im marx
i use ppp to refer to public private partnership. i want to see more regulation of the investments of the pension pot not less. i realise this may lower gains and i certainly am no advocate of bureaucratic red tape for the sake of it.
my underlying theme is that those locked out of the system still effect those within it.