June 2024

Don’t be fooled by the “save early for a pension” lies

We’re always being told that that the earlier we start saving for our pensions and the more we save, then the bigger our pension will be, These are, of course, lies repeated by greedy pensions companies who want our money and obedient financial journalists who are forever going on junkets paid for by pension companies. Say you start putting money in your pension fund when you’re thirty. Then the pension company (and any financial advisers involved) will be able to take fees and management charges and dealing charges for over thirty years. Pension fund charges in Britain are up to five times what pension companies in places like Holland and Denmark charge.

So what should you do? A simple rule of thumb Is that when you take a mortgage, you’ll pay twice what you borrow because of interest. So you’ll pay about £300,000 for a £150,000 mortgage. Now imagine that for the first 5 years of your mortgage you paid off an extra £2,000 a year instead of putting this in a pension fund. This £10,000 would actually save you £20,000. So you’re doubling your money by paying your mortgage off earlier – a much better use of your money than giving it to a pension company. Then when you’re in your late forties or early fifties, have paid off most of your mortgage and are hopefully earning enough to get tax relief on pension contributions at the higher rate, that’s when you should start shoving money into your pension fund. So you get the government adding 40% more to your contributions and the pension companies have less than 20 years to plunder your money. So, don’t believe the “start saving early” pension” lies!

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