From the comments already appended it is abundantly clear that a) the industry is not trusted; b) the government is not trusted and c)the (myriad) goalposts are constantly moving. As a financial services professional who is also a qualified IFA I concur utterly with all three. I put only as much in my pension as I have to; I loathe annuities (and financial repression)with all my heart and thank God that I know how to manage my own money so as to avoid the swingeing charges which - unlike investment growth - are guaranteed. Only now I find that the equity markets are so volatile that no sane person can rely on investments alone for retirement. If I had known 40 years ago what I know now, I would have taken the Civil Service job and pension I was offered. Public servants don't know how thickly their bread is buttered with others' taxes.

I am now in my 50’s, since I started work in my 20’s I have been saving into various company pension schemes. Most of the schemes have some sort of matching contribution, but your choice of funds was limited. Every year you got you annual statement but they didn’t really tell you much, it usually told you how much it was worth (transfer value), but not your total contributions or your equivalent annual rate of return or the charges.

A few years ago I visited and IFA to try to sort out my pensions, he suggested putting them all in a SIPP which I did. Since then my pension pot has slowly decreased every year and I only hear from the IFA before the end of the tax year for that year’s contribution. I do notice he still gets his cut every month.

I have been putting the full amount into ISA since they started investing in stocks and shares. I have had a few losses over the years but at least I am still up on my initial investment and match what I would have got if I had left the money on deposit in a high rate account.

So what should I do continue to invest in my pension or continue with my ISA?

I am lucky that I can do both but if I had to choose I would select the ISA. Regarding the pension; as a higher rate tax payer it is worth my while keeping it going, but will take the route of a self-invested SIPP.

Why invest in a pension for 50 years only to find the government of the day moves the goal posts. No thanks.

As any farmer knows, you don't eat all the corn you harvest this year; you keep some back as seed-corn for planting next year, otherwise you starve. The problem, to me, is that any investment into a Pension fund has these drawbacks:-
1. You ask an IFA to advise you. He suggests a platform; you accept and are hit with a "Phased Initial Charge" which can amount to between 5% and 10% of the value of the transferred funds. This is spread over about 5 years. He then also gets "Nominated Trail Commission" (a % of the value of each fund each month). The platform levies charges on any money paid in. Bluntly, this means that around 75% of any monthly contributions goes in charges for at least 5 years; 25% after that. After inflation is considered, this virtually amounts to not investing at all for 5 years.
2. Unless you actively manage your funds you cannot see if your Pension is under performing. If it is, you are again losing money.
3, You can take a lump sum of up to 25% of the Fund on retirement. If you do, your payout is reduced for the rest of your life.
4. Annuity rates have been reducing for years. Each £1000 in the pot buys less income. You must buy an Annuity before the age of 75. What do you do? Buy now and get a low income or wait and hope things improve before your 75th birthday rather than get even worse?
5. You can't touch your Pension pot before the age of 50. If you take some or all of it then, you lose out on 15 years worth of growth.
An ISA makes far more sense(in the short term at least).

1) Don't ask an IFA to advise you, manage the investmets yourself. If anyone lacks the time or inclination to choose the investments in the pension, how can they do so for an ISA?

2) Same applies to ISAs.

3) The 25% can be invested in an ISA (over several years, if necessary), and this can be used to generate a tax-free income. As a minimum, this ought to be enough to replace any reduced income generated from the pension fund.

4) Historical annuity rates are not necessarily a guide to future annuity rates. It is no longer compulsory to purchase an annuity at age 75 - drawdown can continue after this age. It is also possible to have fixed-term annuities, e.g. for 5 years, and then to purchase another, so the individual does not lock in to the same rate for the rest of their life.

5) Pension pots cannot be touched before age 55, not 50. Taking funds out of an ISA also means losing growth - and possibly for more than 15 years.


The poll results are of little value because the breakdown of individuals' circumstances are not shown. For all anyone knows, 700 of those that answered could already have retired.

Tiny...I suggest if you do not know what you are talking about you should spare us from having to read the predominantly incorrect "information" contained within your post.

Actually, whilst I can't answer for item 1 in Tiny's list, he is fact absolutely correct in every other assertion - I knoew becuase they either bear out my own experience or direct knowledge. I haven't for instance seen a single annuoity that will repay my overall pension plan invested amount unless I live to be a very very old person. So, capital drawdown would be my preference. Also, I have assiduously put my company pension contribution on a monthly basis into IFA recommended SIPP and since 2006, ie well before the first 'crash'. Virtually none of those funds have even reached their 2006 value since, ie their values have fallen/been static ever since. I've tried a few changes myself but simply do not have time to track and monitor possible alternative funds. I've stopped those contributions now - why put good money into bad funds? And so on. My simple answer now is to use ISA's, keep 'liquid' and accept small growth but certainly not lose in the way professionals have caused me to heretofore. If there is a better alternative out there Neil, tell me about them!

Ironman, points 4 & 5 made by Tiny are incorrect. There is no longer a requirement to annuitise at age 75 and you cannot access your pesnions until age 55. Points 1 is complete nonsense and point 2 wasn't far off and i'm not sure what he was trying to say in point 3. He seems to be saying that if you take out 25% of your pension the income you can expect will be 25% less......duh and what have you done with the lump sum?

Just because your funds (investments or pensions) have fallen in value does not make them bad choices, even the best will have periods when they fall in value. Having said that I find it hard to believe that your funds aren't higher that they were in 2006, what sort of crap are you in? The only things I can think that would be lower are Commercial Property Funds and European Equities ex UK!

Well, I seem to have stirred up a hornets' nest here. Good! Always good to have a bit of debate.
Neil, you say that point 1 is "complete nonsense". I pay £100 p.c.m nett into my Pension. My "Phased Initial Charge" is £46+ and my "Nominated Trail Commission" bill is around £26. This (unless my maths is completely useless) works out at over £72 p.c.m. OK, it's not exactly 75% but it's close. Point 2. Some people just buy into a Pension fund and leave it at that. Anyone who does surely only sees the 1/2 yearly/yearly statements and does not compare them to other funds. Point 3. What do you think you do with a lump sum when you're approaching retirement? You haven't saved up for all these years just to put it in an ISA. You spend it on the things you've always wanted to do but couldn't afford because you've been saving all your spare money.
I have obviously got it wrong on the age at which you can draw your pension and about having to annuitise at 75 but when I started mine these were the conditions (you could also draw 33% as a lump sum). Sorry about that but you can't keep up with everything.
One other small point. You don't HAVE to read the incorrect information in my post but it does allow you to show off your superior knowledge when you acknowledge it.

As a stand-alone statement, your Point 3 has some merit in that it is stating the obvious. However, to claim that it is a disadvantage of a pension is nonsense. Taking the tax-free lump sum is not compulsory, nor is how it is to be used if it is. Some may choose to spend it - is that a disadvantage? By putting it into an ISA, the investor has double the amount of tax-relief: tax deductible contributions on the way in, and tax-free income generated after it is taken out.

Applying your same reasoning to an ISA would result in an ISA being infinitely more disadvantageous: it is possible to take 100% of the amount and spend it on doing all of those things that could not be done before. That would leave a zero payout for the rest of yuor life.

I'm probably going to regret this but I shall try to explain what I meant rather than what I said. If a £100,000 pension pot would currently pay out about £5,200 as an annual income (this is correct as far as I know but you or Neil will, no doubt, correct me if I'm wrong), then each £1000 contributes £52 towards it. Taking a 25% lump sum would reduce the pot to £75,000 so would reduce the annual income by £(25x52) which is £1300. It is, therefore, a disadvantage in that the income you could receive has gone down from £100 per week to £75 per week. As you say, it is not compulsory to take it nor what you do with it if you do take it.
Assuming you take it, for a start you can't put it all in an ISA immediately. If you can get it out before April you could put £11,280 in for the current tax year then the same again after April 6th so £22,560, and then have £2,440 spare. This is assuming that you hadn't put anything in already in the current year or paid anything in to a cash ISA. The £22,560 has to then generate about 7% per year to pay you the £1300 you've lost just to stand still. In the current economic climate---good luck.
"If you choose to spend it-is that a disadvantage?" you ask. Well it's not going to earn you anything if it's spent so that's £1300 per year for the rest of your life down the drain.
I have both an ISA and a pension plan and will be retiring in the next 5 or 6 years. I use my ISA to generate a bit of spare money rather than drawdown or annuitise my pension. I shall leave it a bit longer before I decide to take or not take the lump sum. Although, as you say, the ISA could be 100% emptied and spent, I feel it would not have the same effect on my life as spending the lump sum from the pension.

Generating £1300 would require a rate of 5.76%, or 5.2% using the whole £25K, and not 7%.

Your comments still do not show that taking the lump sum is a disadvantage of contributing to a pension. Individuals have a choice: those that are 'disadvantaged' by this do so by their own actions and not by regulations - personal responsibility for our own actions and decisions.

I think you may have a few fair points but you have completely forgot about your tax relief in your maths!

Please author, allow me to paraphrase your sub heading a little." Mistrust, mistrust, mistrust, ever lower real earnings and apathy are leading many to the correct decision to avoid pensions".

Bob Morgan has correctly identified mistrust of pensions as the first cause of people not saving in pensions, but then does not say a single word about what his industry is going to do about it.

The situation dear Sir, will never change if all you are prepared to do is call people apathetic and by inference stupid. If you are selling a product and despite all your hard work, government inducements, huge advertising, torrents of words etc. etc. no one wants to buy it, you better accept there is something wrong with the product and change it. (I have put it very politely because actually it is a lousy product).