Pensions

[EH75]

So I really must be getting old if I'm starting to think about this sort of thing. Anyway, just qualified and have no idea how pensions work in this industry. I am fully aware this is the sort of thing you should take professional advice on but thought I would just see what everyone else on here does.

Do most people pay into company pension schemes, or is there a general merchant navy one which is better? I know that will mostly be down to the company. Does being out of the country, seafarers earnings deductions have any effect on your pension in terms of tax relief etc? Also are we still eligible for the state pension with not paying tax? Is that where paying NI voluntarily comes in? Not that I'm expecting there to be a state pension by the time I reach that age of course...

Any general advice/experience appreciated.

[bridgemonkey]

Came across this blog post a couple of weeks ago while looking for something else. Well worth a read. http://www.zenithocean.com/merchant/...s-effectively/

[laura]

If you pay NI you get pension, you can also choose voluntary- I pay the full thing. I pay into the MNOPF... or something along those lines... doesn't affect SED, I do this through my company.

[Steve]

I pay into the MNOPF... or something along those lines...

MNOPP http://www.mnopp.co.uk/

MNOPF closed to new members in 1996.

[YoungMariner]

Essentially, you get very little benefit putting money into a private pension if you claiming the foreign earning deduction but the government will still contribute a percentage to a certain extent. Bear in mind that once you put the money into the pension, you can't access it again until you are at least 55. If you have a company contributory pension scheme, without a doubt sign up for that, is it is more money in your pocket.
If you aren't good with money, then definitely go for a pension. If you are good with money, focus on investing in a good ISA or better still onto the property ladder on a buy to let or similar.
I personally transferred my company pensions all into a "SIPP" with Hargreaves Lansdown and choose exactly how to invest my pension and also pay in a minimum amount with the government also contributing even though I don't pay tax under the SED. I have increased my pensions value by over 30% in recent months by making this decision and doing a lot of research on the stockmarket (subscribed to about 15 e-mails a day).

For taxpayers, having a pension is a no brainer, well worth going for, as a non tax payer, the benefits are minimal.

[EH75]

Good advice guys cheers.

I am starting a new job in a few weeks but no idea what the pensions set up is like. I already have some investments in the stock market anyway and was considering setting up a SIPP but I am a bit concerned that I might screw it up and end up penniless! There is of course the other issue that if I am away and have no internet access I won't be able to monitor my shares. I have already been caught out by this during my cadetship and I am sitting on a bit of paper loss as a result.

Also intend to get into the property market with BTL etc but you are probably talking about 10 years down the line, need to get my own house first!

[chris]

Heres my pennys worth. Im a former investment consultant turned ETO and heres my take on stock market investment and pensions.

Buying and selling shares in individual companies is risky and should always be seen as a gamble. Dont bet what you cant afford to lose. Youre unlikely to consistently beat the market since youre competing against investment banks and investment funds but you may get lucky from time to time.

The best way to make money with individual shares is through insider trading but this is illegal, having said that very few people are ever arrested for this. If you buy the shares inside an ISA, you dont get taxed on your capital gain but the allowances are pretty generous anyway if youve used up your ISA allowance for the year.

Buying and selling individual shares should be seen as short term investment since you need to keep an eye on your shares regularly and be ready to sell in a hurry.

Pension investment should be seen as a long term investment. If you start at 20 then youve got a good 45 years or more of investing so you can afford to invest some of your money in risky sectors such as the emerging markets (since thats where the economic growth is). The risk is higher so the returns jump about quite a lot but you have 45 years to ride it out and make a decent return.

Company schemes and the latest MNOPP are contributory schemes where you invest in various pension funds such as FTSE100. The admin fees for the scheme are paid through the fund charges which can be high.

SIPPS are a lot more flexible than the above but the individual has to pay the admin fees upfront. When youre just starting out its usually cheaper to go with a scheme then transfer it into a SIPP later on, but if you start off with the SIPP you can invest in ishares and Vanguard funds with really low charges and you have a lot more freedom of choice.

The theory goes that over time the stock market efficiently prices individual companies so over the long term of your pension investment youre wating your time picking individual shares and you should concentrate on countries and sectors such as Brazil, Russia, FTSE 100 UK shares.

You also think about asset allocation. How much should I have in relatively risky shares and how much in 'safer' options such as property and bonds. In theory you should put as much as you can in shares when youre young and gradually move into safer assets as you get older and the pension pot is bigger.

Its also worth downloading the IFA study books off the web just so that you can that there isnt much more to it. Its quite an easy business really, but its in the industrys business to make it seem as complicated as possible.

[chris]

An update on my post. Im about to start a SIPP with Fidelity as my company doesnt contribute into the MNOPP.

Right now the cheapest option seems to be the Fidelity platform that charges 0.35% and the FTSE 100 index fund that charges 0.07 % so 0.42% in total. So total charges of ?15.12 a year for my ?3600 investment. If my SED claim works I wont pay any income tax but I will still get the pension topup from ? 2880 to ?3600 so ?720 for free!

Seems pretty decent.

[bobofinga]

I really need to take a serious look at pensions. My company has a scheme where u pay up to 4% and I think they match which I need to sign up for.

All my other savings I just put into ISA's at around 3% interest... is this wise? haha

[Midge]

I really need to take a serious look at pensions. My company has a scheme where u pay up to 4% and I think they match which I need to sign up for.

All my other savings I just put into ISA's at around 3% interest... is this wise? haha

Seriously worth looking at in depth, if your company match your savings then that's a free 4%, depending on what the costs are to run the scheme and who pays for that.
No idea about ISAs as not allowed to have one.

I get a nice pension from one of my old companies. Even if it did take hours trying to get through to HMRC to get them to give me back the tax they took off! It would not have been so bad but I didn't work for the company in the Uk, just the scheme is run from there.

[chris]

Bobofinga - Try to get hold of the details of the plan in terms of fund types and charges. If they are a bit rubbish (not much choice/high charges) you might be able to get them to contribute direct into either the mnopp scheme or into a sipp.

3% is pretty good for a cash isa right now.

In a good year the tracker funds make over 10% but they can of course lose money too.