Forex and Pensions

Forex and pensionsMost forex traders in the UK simply do not understand about forex and Pensions – You can include Forex Trading or Spread Betting in a Personal Pension Plan or Self Invested Pension Plan (SIPP) in the UK. We know this because we do it ourselves!

Setting anything to do with a pension up requires qualified, specialist help and it does involve some costs. To the best of our very limited knowledge, we were the first people in the UK to include forex trading in a SIPP. Use our “Contact Us” page to get in touch and we will connect with the Financial Advisor that arranged it for us – he was brilliant and took it on when a dozen or more others had shied away from the task.

Obviously, you must be a competent trader with proven success before you should even contemplate self-trading a pension.

Forex and Pensions – is your pension worth having?

Crazy rules in the UK mean that we are often left with little choice but to buy a very poor annuity to access our pensions. The returns are hideously low and the morals of the pension providers are “lower than a snake’s belly”. We know of one person who had a small pension pot of just £1,000. Instead of being given any of this back they got an annual pension of £0.01p.Yes, they need to live for 100,000 years just to get the money back that they put in!

A couple of years ago, when I last checked, it took 14 years of retirement, from the “normal” age to get the money back that had been put into a pension. Guess how long the average person was living after retirement? If you guessed at 14 years you would be correct but should not be surprised. However, checking again today I see that the same circumstances would give an annuity that would take 20 years to pay back its initial sum.

Personally, I won’t be putting a single penny of “new money” into the hands of the pension companies. I regret each and every penny that they already have of mine.

However, many people, especially the more mature amongst us, already have money with the pension companies. Often, as in the case of pension pots from employee pension funds, this money is outside of our control. However, some pots of money, like additional voluntary contributions, SIPP’s, personal pensions etc., we can take control of.

My experiment proves to me that unless you have a huge amount, of someone else’s money, to put into your pension pot it is simply not worth saving for a pension!

To get an idea of how things stand i visited a pension comparison website on the 14th of March 2013. I entered (false) details to reflect that I was 65 on 1/4/2013 of average hieght and weight, in good health and had a £10,000 pension pot with which to buy an annuity. 

After a search of at least 10 providers the best deal on offer was to take £2,500 on retirement at 1/4/2013 and use £7,500 to buy an annuity of £378.24 PER YEAR! That would mean it would take just under 20 years to get my money back. The offer was for a flat pension with NO INFLATION uplifts and no widow’s pension after my death.

To better this from trading I would need to make say £380 per year on £10,000 or 3.8% – per year. When I eventually died my wife would at least have the £10,000.

Unfortunately, I would not be allowed to take my £10,000 out of its pension pot for the sake of trading it and taking an income.

The next best thing, for me, would be to put the £10,000 into a SIPP and to grow it for as long as possible before buying a miserable annuity. If I could double the amount in the pot to £20,000 over 2 years

Risk – what risk?

With a “small” pension pot, like £10,000, the worst case scenario is that the whole pot would be lost on the currency markets. In this event I would lose £378.24 per annum or £31.52 a month – before tax!

Because i am able to trade successfully, there is no contest as far as I am concerned. Any small pension pots that I have are brought under my own personal investment stewardship and are highly likely to bring a much better outcome.

About The Author

Jeff Fitzpatrick

Probably the UK's most successful home Forex trader