The Anonymous Widower

Applying Control Engineering Principles To Pensions

Pensions are a nightmare and more rubbish is talked about them than any other financial matter, except possibly credit cards.

I’m in some ways typical, but the size of my pension pot is not typical.

When I worked for Metier, our wonderful accountant, Brian, set me up with a pension that I can live on.

I also have an income from the cash I got from selling the stud.

And when the DWP sorts it out I’ll have my State Pension.

So basically, I have a fixed sum coming in each month, from which I take my living expenses. Which of course varies on a month by month basis.

So at the end of each month I have a current account, which either has a small surplus or perhaps a small deficit. If it’s a surplus, the money goes into my Zopa account and if it’s a deficit, I withdraw a proportion of the payments made in at the first of the month.

So Zopa acts like a  deposit account, that pays a reasonable rate of interest. The great thing, is that it costs me nothing to transfer money to and from Zopa.

There is of course a slight risk with Zopa, but I’ve used it long enough to have developed a philosphy that minimises bad debt.

Effectively, I’m using Zopa to damp out the fluctuations in cash flow, just as a control engineer might add damping to a feedback system.

October 31, 2012 Posted by AnonW | Finance | Banks, Pensions, Zopa | Leave a comment