Pension question

Couple of questions!
Firstly my brother got a call from his Acorn Life pension rep and was told that after paying in 10,000 after 11 years his savings and life plan it would only be worth 9 thousand and odd if he cashed it in now. It's worth 109,000 on death. I know that stocks around the world went through a bad time a few years back but this kind of performance seems pretty poor to me. How much of a hit does the customer of these life plans take and how much does the company.

Is there a cheaper form of life ass/insurance?
Does this sound like a good plan and is there better out there? He's 36 now and self employed.

My other question relates to me.

I have only recently been made permanent in my job and consequently have started paying into a portable pension fund for just over a year now.

I'm 38. My question is should I invest a lump sum to make a decent pension out of it. I have about 10,000 lying around doing nothing anyway but I want it to work for me at some stage, maybe blue chip shares or investing it in this pension.

I'm on about 425 pw take home at the moment. I have a full SSIA in motion as well as about 8,000 e worth of American shares which have devalued to about 7,000.

Suggestions please!

> Is there a cheaper form of life ass/insurance?

It depends... What precisely is the intention in this context and why did he decide to go with this specific bundled savings and life assurance product? Is the plan to save for some specific future requirements, or to provide for next of kin/dependents in the event of his death, or both, or something else? Perhaps life assurance and savings might be better dealt with separately?

> My question is should I invest a lump sum to make a decent pension out of it. I have about 10,000 lying around doing nothing anyway but I want it to work for me at some stage, maybe blue chip shares or investing it in this pension.

It's not east to answer this question particularly without more details about your overall personal and financial situation but perhaps you should consider a few things:

- putting a lump sum into the pension could allow you to avail of tax relief (in respect of this year and/or last year if done before October 31st)

- putting a lump sum into the pension locks it away until retirement so if you may need it sooner then you might want to reconsider

- you need to figure out what your ideal or realistic target retirement fund value/income is and if you are plan to achieve this within the relevant constraints (e.g. your immediate financial needs, your income etc.)

- it's best to try and separate out your pension and other savings/investment needs and not consider them and either or choice since they address completely different needs

- Have you read the AAM and IFSRA guides to savings & investments and some of the other pension and savings/investments topics here on AAM?

www.askaboutmoney.com/guide/index.htm




- Do you already own your own house or do you plan to buy imminently?

- Have you considered getting a personal financial review from a suitable qualified and authorised independent, professional intermediary who should be better placed to review your overall situation and make more informed recommendations specific to your needs?

These are just a few issues to consider - there are probably many more. Sorry if this seems to be dodging the question but there is no easy answer in these situations....

No, that's sound advice. Thanks. I suppose I really need to talk to someone about a personal financial review taking into account my targets and capabilities.

With regard to my first question about my brother and the plan he's on. He only really wanted to start a pension plan because he felt he needed to and was advised to. He's not married and both he and I are living in a house funded by the family business.

Maybe a second property for investment purposes between the two of us would be a good way to work our money!

I appreciate your reply though and understand that's it's a complicated mesh that has to be sown.

> With regard to my first question about my brother and the plan he's on. He only really wanted to start a pension plan because he felt he needed to and was advised to.

But according to what you posted above what he has is not a pension (since, for example, a pension fund cannot be encashed before retirement) and seems instead to be a combined life assurance and savings plan of some sort. Perhaps he meant to buy a pension but was sold this instead? Perhaps you could post more details?

> He's not married and both he and I are living in a house funded by the family business.

Who owns the house? The business or either or both of you?

> He's not married and both he and I are living in a house funded by the family business.

Why property? If you don't own a PPR individually or jointly then perhaps that should be a priority since if the existing property is owned by the business then you don't have any secutity of tenure if things go belly up and you always need somewhere to live - and usually it makes sense to own your own home.

Apart from that it seems to me that too many people are automatically thinking "investment property" in a knee jerk style reaction without considering all of the pros/cons or other alternative investments or indeed their fundamental personal/financial circumstances and needs in the first place.

Sounds to me like a chat with an INDEPENDENT advisor (e.g. an Authorised Advisor) might be in order for you...

"But according to what you posted above what he has is not a pension......... Perhaps he meant to buy a pension but was sold this instead? Perhaps you could post more details?"

My mistake, it's a life assurane and savings plan. A pension plan is what he wanted originally but I think he was very badly advised and, with a lot of things this family does, he didn't keep his eye on the ball.

Basically knowing something had to be done, not knowing what, and getting the wrong advice on what to do!

"you don't have any secutity of tenure if things go belly up...." Who owns the house? The business or either or both of you?"

The business is family owned and therefore the house is part of our small family business assets. The business is being used as collateral (which is more than adequete).



Like I said in the last reply and following on from what I said here, we know something has to be done, we don't know how to do it and now I'm trying to get the best advice to go about doing it.
I take on board your recommendation, as I mentioned before, of getting independent advice.

".......too many people are automatically thinking "investment property" in a knee jerk style reaction....."

Looking at property is hardly knee jerk reaction though but it will be considered as a viable option.

Not ungrateful.

> Looking at property is hardly knee jerk reaction though but it will be considered as a viable option.

Sorry. It's just that and awful lot of people who usually have the PPR still mortgaged and perhaps a not very diversified portfolio of savings/investments seem to be plunging into the investment property market, both here and abroad, without really considering all of the issues, risks, etc. on the basis that bricks and mortar is somehow the ideal investment strategy in all cases.