From: edward.mcmonagle@ntu.ac.uk (Ed_Zep)
Newsgroups: uk.finance
Subject: Re: Saving for Retirement
Date: 19 Oct 2004 03:50:46 -0700

Thanks very much for that comprehensive answer. Seems very sound advice.
Would anyone else like to add anything?

Best regards,

Ed.



Richard Buttrey  wrote in message news:...
> On Mon, 18 Oct 2004 00:33:20 +0800, "news.netvigator.com"
>  wrote:
> 
> >..
> >"Ed_Zep"  wrote in message
> >news:4e489625.0410170531.679f94ff@posting.google.com...
> >> This is pretty topical right now and I'd appreciate anyone's advice
> >> for what I should do regarding funding my retirement.
> >>
> >> I'm coming up to 34 and would like to retire at 65. I accumulated 4
> >> years of final salary pension at a well-known insurance co. where I
> >> left earning about £11k and a few years later work at a university
> >> where I've been in the pension scheme for 4 years and earn £34k. I
> >> tend to save about £600 p.m. into a high interest savings account.
> >>
> >> Can anyone recommend a better way of beefing up my retirement? I was
> >> thinking about maybe a stakeholder's pension scheme (I earned less
> >> than 30k at the start of my employment) or an AVC/FSAVC.
> >>
> >> Many thanks.
> >>
> >> Ed.
> 
> First the usual caveats. I'm not a financial advisor, so these are
> just personal thoughts.
> 
> Despite all the recent criticisms of pension schemes, I don't think
> you can go far wrong by investing a percentage of your savings in an
> AVC/FSAVC, particularly as you'll be eligible for tax relief. I
> honestly can't see any government cutting back on this given all the
> recent bad press. Over the next 30 years the stock market will almost
> certainly have outpaced savings accounts, so I'd be looking at
> provider that offers a balanced Unit trust type AVC/FSAVC, where your
> money is spread around the world in equities, with a mix of income and
> capital gain funds. There's plenty of time, at least another 20 years
> before you'd need to think of gradually moving your fund from equities
> into savings or government bonds so that in your last years you reduce
> the exposure risk to the market.
> 
> Make sure you understand the commission and charges that are paid by
> the pension companies to your financial advisor. My experience is that
> these can vary quite a bit, and are not always as transparent as they
> should be. Your employer may have a favourable arrangement with the
> main pension scheme provider, and if so the charges should be less
> than if you just walk in off the street. 
> 
> Think about what you give them as your retirement age. My FSAVC ceased
> to make charges after I'd reached my nominated retirement age, even
> though I didn't retire and went on contributing afterwards. I had the
> feeling that I could have given them an even earlier retirement age,
> and stopped the charges earlier.
> 
> There seems to be a rule of thumb that you should be saving about half
> your age as a % of your salary. Hence 17% of 34K is £481 / month which
> is well within your current savings, suggesting that you're on the
> right course. Depending on your propensity for risk, you may want to
> put more or less than £481 per month into a pension fund, with the
> balance to £600 in a savings account.
> 
> There are of course limitations on what you can do with your pension
> pot, but I'd certainly hope that in the next 30 years the government
> will at some stage have seen sense and provided more choice at the
> time of drawing the pension. If you felt that you couldn't trust the
> government to have relaxed the rules by then, you might want to reduce
> the amount you put into an AVC/FSAVC, and invest directly in any tax
> free savings schemes and/or unit trusts.
> 
> Is your main university pension scheme a public sector final salary
> scheme? If so I'd suggest that other things being equal, that should
> be an extremely good risk and perhap lead you to take a bit more risk
> with your AVC route.
> 
> The other investment of course is property. As someone once remarked
> about land, 'they're not making any more of it', so it too should be a
> reasonably safe bet over 30 years, barring war/terrorism of course.
> 
> I think whatever you do, the main advice has to be spread the risk.
> 
> Rgds
> 
> __
> Richard Buttrey
> Grappenhall, Cheshire, UK
> __________________________