To Pension - Or Not To Pension

As some posters here know, I've left my safe teaching job for a far less stable but more interesting job working for myself. I've my years of teaching pension behind me but as a self-employed person now, I am very, very reluctant to invest in a pension. I can see myself doing the work I do now until I grow crusty and die, but that may not be possible. Though it's not a job that is age dependent, things happen. What I like about being self-employed is the level of control I have over my life and my finances - while the cheques don't come every second fortnight as they did in the old job, that's a worthwhile trade-in for a more fulfilling and fascinating life.

But the pension business is niggling at me and I dread a) being tied to something, b) being tied to something I may never get the benefit of and c) most importantly now, handing over control of my future to someone else on my behalf. Regardless of banking crises, that's not how I like to live.

What do the experts out there suggest?

Kate P wrote:

As some posters here know, I've left my safe teaching job for a far less stable but more interesting job working for myself. I've my years of teaching pension behind me but as a self-employed person now, I am very, very reluctant to invest in a pension. I can see myself doing the work I do now until I grow crusty and die, but that may not be possible. Though it's not a job that is age dependent, things happen. What I like about being self-employed is the level of control I have over my life and my finances - while the cheques don't come every second fortnight as they did in the old job, that's a worthwhile trade-in for a more fulfilling and fascinating life.

But the pension business is niggling at me and I dread a) being tied to something, b) being tied to something I may never get the benefit of and c) most importantly now, handing over control of my future to someone else on my behalf. Regardless of banking crises, that's not how I like to live.

What do the experts out there suggest?

Look at a small private pension, there are costs involved, but you get to choose the trustee and you get to decide what to invest in, might be worth a look.

Kate P wrote:

As some posters here know, I've left my safe teaching job for a far less stable but more interesting job working for myself. I've my years of teaching pension behind me but as a self-employed person now, I am very, very reluctant to invest in a pension. I can see myself doing the work I do now until I grow crusty and die, but that may not be possible. Though it's not a job that is age dependent, things happen. What I like about being self-employed is the level of control I have over my life and my finances - while the cheques don't come every second fortnight as they did in the old job, that's a worthwhile trade-in for a more fulfilling and fascinating life.

But the pension business is niggling at me and I dread a) being tied to something, b) being tied to something I may never get the benefit of and c) most importantly now, handing over control of my future to someone else on my behalf. Regardless of banking crises, that's not how I like to live.

What do the experts out there suggest?

I'm not an expert, and I'm not suggesting you should follow any advice from me, but my personal thought about this is that, if you can, save a definite amount each week, even if it is small. At the end of the tax year you can decide whether you want to put it into a pension or not - there is a hefty tax benefit if you put it in a pension. It used to be possible to put it into a 'secure fund' that guaranteed that you would get a certain return. By the end of last year the best guarantee you could get was that you would get 80%-90% of what you paid in back. It was still a reasonable deal when you took the tax incentive into account. I'm not sure what the story is this year and personally our priority is to try and keep at all costs in the black with any small bit spare in cash for emergencies.

There is clearly the danger for anyone with a pension that it could be completely wiped out. youngdan was saying yesterday that when Wachovia went bust a Teachers' Union lost 28 billion dollars. The other side of it is that if you are starting a pension now, shares would be bought cheaply.

It is usually a good idea to stick to investing in what you know about. As you know about farming, perhaps you might be able to do something like buy shares in a dairy co-op, or whatever you thought was a good bet. You would be supporting the local economy then, instead of buying into the unknown with a managed pension fund.