The budget proposals to free up pension pots. Right or wrong?

durhamjen I was not talking about long term personal pension plans, or indeed exceedingly dodgy investment schemes sold by banks. I have every sympathy with anyone let down by companies whose probity previously had been a rock you expected to rely on.

I lack sympathy for intelligent people who suspend their intelligence and common sense when offered a get rich quick scheme and then feel aggrieved when, inevitably, it proves a scam and the more foolish who put all their eggs in one basket are left penniless.

And we had not started out with Axa, they took over the firm with which we took out the original policy.

Civil Service AVCs could be put into Scottish Widows or Equitable Life - both recommended schemes. By a scientific analysis I chose Scottish Widows, luckily for me (ie I did 'dip, dip, dip, my blue ship').

We did understand the concept behind our endowment mortgage and the endowment for an additional loan as we had had endowment policies for years that had always made good returns. However, both failed to achieve the sum required to pay off the mortgage or loan. We were offered a settlement for the full amount for the additional loan (as if we had taken out a repayment loan). However, the other firm (Axa) refused to budge and we were left with a shortfall on our mortgage.

That's a bit unfair, Flickety. Very few people should take out a personal pension in that case.
You may have everything explained to you, but it does not mean that you understand it all. The people who run pension schemes can change their minds about where they invest your money, and once in, you lose money if you change from one scheme to another. If you have been saving in the same pension company for over 30 years, the rules have definitely changed.

A lot of older people lost money when persuaded to buy investment products sold to them by their bank, which they didn't really understand. I have every sympathy for them. DD after being mis-sold an endowment policy with her mortgage, has come up with Rule 2 (No 1 being, as janeainsworth said, if it sounds to good to be true, it is too good to be true) Never invest in anything you do not understand. If you have read all the documents and still do not fully understand what you are investing in. Don't

I have very little sympathy for intelligent people who put all their money into get rich quick, high return schemes. For the last ten years DH has regularly been phoned by 'boiler room' fraudsters who, if you listen to them, will try and sell you shares in a company you have never heard of but whose shares, they say, will soar in value in the next year. I have heard people who lost money to these people explaining how pleasant and nice these persuasive people were and it has constantly amazed me that a) they had stayed on the phone long enough to discover this and b) anyone would consider buying something they had never heard of, from someone who cold called them. You wouldn't buy a car, sight unseen, from someone who cold called you, why put your life savings into the share equivalent? To describe such people as 'naïve and trusting' is a kindness to someone we may know or sympathise with but I would use much harsher language for them.

It may well have been the same scheme jane - a couple of years ago. Cousin not stupid but admitted he was naive and trusting.

mishap At the very least you should keep an eye on the interest rate your BS account is paying.
They often offer a relatively good rate to new savers and then when you're not looking, lower the rate to something derisory.
I had an online account with Newcastle Building Society, which initially paid a good rate but within a couple of years I had to close it and put my money somewhere else - our current account with Santander was paying a better rate.

The first thing that I intend to buy is another car but it will not be anything flash as like Galen I have problems getting in and out. Anyway, a Lamborghini is a bit heavy on petrol.

These are the reasons why my savings are in an online BS account with full compensation rights if they go under.

Jess I remember hearing a woman on the radio who had put all her savings (about 450K) into a some scheme that promised ridiculous returns and she lost all her money. No-one with any sense would have touched it with a barge-pole, but people can be greedy.
The old adage 'If it sounds too good to be true, it probably is' should be rule no 1 of Finance for The Unwary

Sorry I was meaning that the individual is better off not having to buy an annuity for small amounts, but the annuity pot will suffer. Undoubtedly advantageous to be able to take these small amounts out if we have mortgages etc to pay off.

I have a distant cousin who put his life savings (he's in his 50s and had accrued about half a million) into the hands of a chap that defrauded him. Promised fantastic returns...
Bit of a surprise to see the cousin being interviewed on News at Ten one night after the court case.

just a thought,
When this Law comes into force I suspect that Pensions will be looked on as disposable income,we will then be in a position to pay for our own care.
The disreguard I expect will be the last 10k,that is after they have taken your home as well.
Reminds me of an old Soldier I met some years ago, he was about 76ys old.
He lived in a rather expensive Flat and was hopelessy in dept,I said to him what went wrong,he looked at me and said, Mick,I never expected to live this long

What's interesting about the pension rules from now is that the pension companies do not appear to have been told about it. I thought that any chancellor always discussed such fundamental changes with the groups affected - apart from the electorate, that is.
They seem to have been caught on the hop.
I am pleased that I do not have to decide what to do until my husband would have reached 70 years old. By then the rules will be more organised and the problems sorted out. And a new chancellor/ government.

It took much persistence and a very kind and sympathetic person in that section of his pension fund administrators. Although it's only a small pension it is probably twice what it would be had it been left with L&G.

rosequartz- you were extemely lucky for that to happen. Many financial advisers deserve to be hanged, drawn and quartered.

DJen, DH was persuaded to withdraw his pension pot when he left a firm and to reinvest it with L&G by a financial adviser. After a few years of dismal returns I fought on his behalf for it to be reinstated with his old firm's pension scheme, and very luckily, after two years of wrangling, they accepted it back.

I think they are bad for the environment, Galen.

I don't know about anyone else, but I couldn't even get in and out of a Lamborghini

Yes, I know, Rose, but that was the total of my pension pot. I had been persuaded, by an exteacher, to withdraw it from the teacher's scheme and put it into a personal pension.
I had been self-employed for twenty years and after my husband's accident we did not have any spare money to put into my pension pot.
I rely on his, as he earned more, therefore could save more.

Aka

I have a vision of future generations of pensioners rolling up to food banks in Lamborghinis.

Ps I would emphasise a cash ISA if you are totally averse to risk.

Unfortunately, I fear that some people are going to be drawn into riskier investments when they are able to withdraw their pension pots.

If you are persuaded to buy a Lamborghini at least you would still have it ....

Mishap, if your money was in a cash ISA then the government could not have any of it and you wouldn't have to declare it on your tax form. Of course, the rate of interest may be worse on a new ISA than on your present taxable account minus the tax.

DJen - you could only draw it as a lump sum if that was the total of your pension pots. If it was, say, an AVC alongside a firm's pension you could not.

I have a few premium bonds and was at one time calculating the interest rate I received on them in comparison to a savings account. It seemed quite reasonable and comparable for a few years but it is now below even a poor ISA. But You Never Know!

It's their money - they have paid in over a lifetime - they are entitled to do as they wish with it.

We have a small pot of money (legacies from parents and small pension lump sums - only small as OH had to retire very early because of ill health and I had opted out for part of my career whilst raising family) which is quite simply in an online building society account. Financial purists would throw up their hands in horror and mutter about ISAs, but we do so for several reasons:
- simplicity and lack of hassle
- simple tax form filling in - only the one thing to note.
- saving on need for accountant to deal with tax matters.
- accessibility - if one of us needed an operation, or the children had needs that we might be able to help them with

It suits us - we know so little about financial investments that it is easy for us to be taken for a ride and be led into things that we do not understand and that might let us down, either in terms of returns or of accessibility.

We have enough to live on with our two pensions - we do not live extravagantly (no smoking, drinking, cruises) but we live happily and with a degree of peace of mind, which is priceless.