Doctors are the latest in a long line of public sector workers to be striking over pensions – they won’t be the last
If Doctor’s are unhappy about getting a pension of £46,000 a year on average when they retire – what does that mean for you?
Teachers for example can expect a pension nearly than half that amount – £24,000
With this in mind let’s explore the three kinds of pension risk we are all facing and find out which of those we should be taking before we reach retirement.
The 3 risks are as follows
- Pension risk you can’t mitigate, this is otherwise known as a gamble and you can’t do anything other than hope for the best.
- The pension risk of playing it safe. This is doing relatively little with your money and taking no active involvement in where your money is invested.
- The third risk is of course the risk you can mitigate with careful planning
The first kind of risk you can’t do anything about, it is a punt or a bet on the horses, but we can’t do that with our retirement income and rely on the state to support us. They won’t unless you want to life of struggle.
Being passive about your pension – doing nothing
This brings us to the second kind of risk and this is one those doctors and other NHS workers will have fallen into and this is the reason why they are striking. They took the risk of trusting the government would leave their pensions alone.
Yet the government have good reason to start interfering with public sector pensions. The money needs to come from somewhere to reduce the deficit massive levels of debt it has to reduce as a result of the financial crisis and now the sovereign debt crisis.
So essentially this second risk is the risk of doing nothing, being passive with pensions may have been an option in the past, it is clearly not now. Ask any pensioner these days and they will say they feel like they are getting poorer every year even though their pensions are linked to inflation.
This is because historically, wages have always risen faster than pensions and many of the prices of goods we buy in the shops will be geared towards wage earners, not poor pensioners.
Doing nothing ultimately leads to people falling victim the statistics in the following headlines:
Quantative Easing and Inflation creates an £18 billion shortfall in income for savers
More than 1 in 5 British pensioners at risk of poverty
QE helps double FTSE 100 pension deficit to £73bn
Only 46 per cent of savers are putting enough away for when they retire.
£150,000 in today’s terms, only provides an annual pension of £5,700.
When he was questioned about the NHS strike The government Health Secretary said: “We all wish there was more money to go round but there isn’t, everyone is having to tighten their belts.”
The fact is there is money to go around, it just means pension savers will need to look more closely at our third risk which, on balance, is much less dangerous than doing nothing or taking a gamble.
Taking control – the pension risk you can mitigate
If you are not the kind of person who takes a gamble or who is happy to sit back and tighten your belt, then this third kind of risk maybe just the kind of risk you need to take.
This kind of pension risk allows you to take control of your pension and invest in anything from Caribbean property to self-storage units. It is flexible and works the same as a standard pension with all the same tax benefits, but also the option to take money out at 55 rather than those poor doctors we mentioned earlier who will be forced to work until 65 and pay more in
This pension risk you can mitigate is of course a self invested personal pension or SIPP
If there is one asset that feels safe at the moment it is self-storage and you can invest in it with a SIPP. People will always need room to store things and with a growing number of people forced to live in ever smaller housing with development land scarce, self-storage will be a secure investment for years to come.
You can invest from just £7,500 for a 50sq ft unit and benefit from an 8% pa guaranteed return over the next 5 years with a structured exit strategy included. This is just one of the exciting options you will have to get the best out of your pension savings.
Call our experts now on 0844 800 6661 to find out how you can fund the retirement you desire.
Please do note SIPPs are only suitable for individuals that take an active interest in their investments and have the time available to do this on a regular basis.
The value of any investments can go down as well as up and you might not get back what you put in.
You may have difficulty selling any investment at a reasonable price and in some circumstances it might be difficult to sell at any price.
International Property Success Ltd. are not authorised or regulated by the financial services authority. International Property Success Ltd. does not provide any financial or investment advice. We strongly recommend that you seek appropriate professional advice before entering into any contract.
Do not invest unless you have carefully thought about whether you can afford it and whether it is right for you and if necessary consult with a professional adviser in accordance with the Financial Services and Markets Act 2000. These products are not regulated by the FSA or covered by the Financial Services Compensation Scheme, you will not have access to the financial ombudsman service.