Uk state pension forecast

[rammygirl]

5 hours ago, Paul1Perth said:

The exchange rate alone can make what seems like a no brainer into a bad investement.

I have a couple of income streams from private retirement funds, NCB and Ferranti,  on top of the UK pension and then my super from here. My wife has her NHS one coming in already, her super but will have to wait until she's 67 to get her British one.

If you have debts or a mortgage I reckon your money would be better used to pay that off first. We never bothered topping ours up but was pleasantly surprised what I get.

On top of that, if you're paying for advice that's a cost too that has to be taken into account.

You can do it yourself, lots of information out there. 

That does depend on how complicated your situation is……

[Wanderer Returns]

2 hours ago, rammygirl said:

That does depend on how complicated your situation is……

I totally agree. I'm the first person to do something oneself rather than paying for it. Several successful visa and citizenship applications are testament to that. However, there have been times when I wish I hadn't bothered because part-way through the process I didn't have the expertise. I regret not selling our UK home through an estate agent, as it created a massive amount of remote work for me. I know they are a bunch of sharks, and that was part of the reason why I did myself, but in the end I didn't sell my property for any more and I just created myself a load of unnecessary hassle. One's time is something you can't put a price on - until it starts slipping through that hour glass at an alarming rate!

[Ken]

On 21/09/2021 at 09:29, Marisawright said:

That's not entirely true.  It's true of Australians who leave Australia before retirement age.  However, if you stay in Australia until you reach retirement age and THEN leave, you continue to receive the pension.  

The other point to remember is that the Australian pension is a welfare benefit for those that need it, like the dole.  Before the advent of superannuation, that fact was much less obvious, but it's always been that way. That's why people living permanently overseas aren't entitled, because the assumption is that as residents of that other country, they should be able to rely on the welfare system of their adopted country.

Whereas in the UK, it has always been presented as a right for everyone - you pay your NI, you get your pension.  So the decision to take it away from people would be more difficult.

More difficult perhaps but far from impossible. The UK scheme has always been a welfare benefit paid out of current taxation receipts even though the narrative has portrayed it as an insurance scheme paid out of past NI contributions. If they changed the narrative now there would be some protest of course, but the need to change the narrative so as to tell the truth is easy to justify. Plus most pensioners in Australia have already been out of the UK for more 15 years and so have lost their right to vote - so why would UK politicians be concerned?

[Marisawright]

3 hours ago, Ken said:

The UK scheme has always been a welfare benefit paid out of current taxation receipts even though the narrative has portrayed it as an insurance scheme paid out of past NI contributions. If they changed the narrative now there would be some protest of course

Some protest is an under-statement.  My parents were both from large families, so I now have several cousins in their 60's in the UK, and they are incandescent about the rise in the pension age.   I've tried explaining exactly what you've said - even pointing out that all they have to do is add up their NI contributions over the years, and it's bleeding obvious that it's nowhere near enough to fund their pension for the rest of their life   They simply refuse to accept it.  "The government shouldn't have promised if it couldn't deliver". 

I am actually surprised that I'm able to claim the UK pension even though I haven't lived there for over 30 years.

Edited September 26, 2021 by Marisawright

[Robert Dyson]

On 26/09/2021 at 14:43, Ken said:

More difficult perhaps but far from impossible. The UK scheme has always been a welfare benefit paid out of current taxation receipts even though the narrative has portrayed it as an insurance scheme paid out of past NI contributions. If they changed the narrative now there would be some protest of course, but the need to change the narrative so as to tell the truth is easy to justify. Plus most pensioners in Australia have already been out of the UK for more 15 years and so have lost their right to vote - so why would UK politicians be concerned?

The UK system is incredibly confusing and nonsensical.   It's not a welfare benefit because it's not means tested and is allegedly paid for by contributions, and will continue until you die whether you need the pension or not.  

It IS also an insurance scheme paid out of NI contributions, because you can make additional NI contributions today and watch your future entitlements rise accordingly (It's also supplemented by input from taxation).

The main trouble with the confusion from citizens as Marisawright says, is that it leads to many different opinions and entitlement beliefs....right up to the point where if people do not enjoy the standard of living they think they're entitled to, they blame it on the Government?

This is mainly to do with the lack of available information in the UK system for people to take control of their own finances and work out for themselves using solid background information. The UK system is light years behind Australia and the first step would be for the UK Government to produce masses of honest information to really encourage the people to learn from a very early age how their lives are likely to pan out if they don't pay attention.  They promised reforms years ago but they move at a glacial speed.  The reforms can only affect people going forward and shouldn't be retrospective, so the longer they leave it the longer the ignorance will continue.

 

 

[Paul1Perth]

8 hours ago, Robert Dyson said:

The UK system is incredibly confusing and nonsensical.   It's not a welfare benefit because it's not means tested and is allegedly paid for by contributions, and will continue until you die whether you need the pension or not.  

It IS also an insurance scheme paid out of NI contributions, because you can make additional NI contributions today and watch your future entitlements rise accordingly (It's also supplemented by input from taxation).

The main trouble with the confusion from citizens as Marisawright says, is that it leads to many different opinions and entitlement beliefs....right up to the point where if people do not enjoy the standard of living they think they're entitled to, they blame it on the Government?

This is mainly to do with the lack of available information in the UK system for people to take control of their own finances and work out for themselves using solid background information. The UK system is light years behind Australia and the first step would be for the UK Government to produce masses of honest information to really encourage the people to learn from a very early age how their lives are likely to pan out if they don't pay attention.  They promised reforms years ago but they move at a glacial speed.  The reforms can only affect people going forward and shouldn't be retrospective, so the longer they leave it the longer the ignorance will continue.

 

 

Personally I think the UK system is light years in front. They didn't have a system here till 92. Reason I remember that was the week I got my first job here was the same week compulsory contributions to super came in. 

How many youngsters would contribute to a pension scheme if they didn't have to? Not many I'd bet, no matter how much education you give them.

It's not as easy as saying the UK scheme is unsustainable as the amount paid in doesn't cover your pension. That money paid in by everyone would have amounted to billions of pounds, which has been invested and made billions more.

Much like your super here.

I can't see the benefit in self managed super. How would I know what's a good or bad investement more than the guys running the super funds, who's sole job is to know how to invest.

[Robert Dyson]

3 hours ago, Paul1Perth said:

Personally I think the UK system is light years in front. They didn't have a system here till 92. Reason I remember that was the week I got my first job here was the same week compulsory contributions to super came in. 

How many youngsters would contribute to a pension scheme if they didn't have to? Not many I'd bet, no matter how much education you give them.

It's not as easy as saying the UK scheme is unsustainable as the amount paid in doesn't cover your pension. That money paid in by everyone would have amounted to billions of pounds, which has been invested and made billions more.

Much like your super here.

I can't see the benefit in self managed super. How would I know what's a good or bad investement more than the guys running the super funds, who's sole job is to know how to invest.

Self-managed super isn't for amateurs, the ones i know don't actually manage the investments themselves but they use it to leverage better returns....they still pay an adviser to do the paperwork and advise them.  They have the choice to take risks and include whatever vehicles they want inside their funds.  Personally I would not do it either, but it gives people choice of their own futures.

I think the problems with the UK are that they cannot tell you how much they have in the "pension pot", because they do not have one.  They have a series of "owings" and supplement it from time to time with changes and grabbing money from Peter to pay Paul.  

You have a mixture of funded (council) and unfunded (police, politicians) public and private sector schemes, on top of the state pension. 

The last reforms have changed the value of future state pensions and the years have gone from 30 to 35 to get the "full pension", plus they have obviously raised the age from 65 to 67 with future changes to come, affecting mostly women who were traditionally disadvantaged from having lower paid jobs and from taking breaks to have children, and were less likely to have private pensions anyway.   

The value of what used to be classed "a year's contributions" based on weekly input payments now equates into a years payments of something like 93% of what you used to get before they changed the rules, so you need them to tell you how much more you need to pay to get the full pension, and it takes months and months for a response, and months and months for a contribution to show up.  It's archaic. 

What could be simplier than a personal bank-type account that collects your employer and personal contributions in one place, shows you clearly the tax incentives of savings, gives you predictions and scenarios illustrated with living standards,  allows you to take complete control over what you're getting, allows you to move your money to a better performing fund at the click of a mouse, and tells you what your actual account balance is each day?  

Some UK unfunded schemes need 6 months to tell you what the value of your personal scheme actually is if you wanted to cash out, and another 6 months to actually action the transfer.  They don't like doing that because if everybody had the choice and was educated enough to know the difference between a 6% and an 8% return over 25 years.....some of these funds would collapse overnight as they would be emptied.   I have to say, i knew next to nothing about pensions before i came here, most of my mates in England have no idea what they're going to do in retirement because they never think about it, and there's precious little information or publicity to encourage them to do differently.   This in turn leads to the attitude where people put the blame on the Government if they don't think they have enough money to retire on.  You just don't hear that over here because everyone has a boatload of information at their fingertips so have nobody else to complain about.

 

Edited September 30, 2021 by Robert Dyson

[Marisawright]

5 hours ago, Paul1Perth said:

It's not as easy as saying the UK scheme is unsustainable as the amount paid in doesn't cover your pension. That money paid in by everyone would have amounted to billions of pounds, which has been invested and made billions more.

Much like your super here.

Well, the difference between super and NI contributions is the amount.  NI contributions are to fund both the NHS and your pension, and yet when I backpaid mine a few years ago, a whole year's contribution was not much more than a thousand pounds.   I bet your employer paid a lot more than that into your super every year, and that may not even last until you die. 

[Tulip1]

5 hours ago, Robert Dyson said:

think the problems with the UK are that they cannot tell you how much they have in the "pension pot", because they do not have one

People couldn’t care less how much is in the pot or whether there is an actual pot.  People only want to know how much they’re getting.  As long as that credit hits their bank account every four weeks, where the government actually gets that money from is of little interest to most.  

[Robert Dyson]

4 hours ago, Tulip1 said:

People couldn’t care less how much is in the pot or whether there is an actual pot.  People only want to know how much they’re getting.  As long as that credit hits their bank account every four weeks, where the government actually gets that money from is of little interest to most.  

Exactly, you're describing a disinterested, disempowered population who just want money handing to them.  If they don't know where it's coming from, they don't have the information to know if they're getting shortchanged, so they just blame the government for everything.

 

[Tulip1]

44 minutes ago, Robert Dyson said:

Exactly, you're describing a disinterested, disempowered population who just want money handing to them.  If they don't know where it's coming from, they don't have the information to know if they're getting shortchanged, so they just blame the government for everything.

 

So does everyone in Australia that gets money from the government/welfare system show a big interest in where the money comes from/what pot it’s in and how that pot is performing?  That’s all on aged pension, child related benefits, job seeker/keeper and on it goes.  Be honest, they couldn’t give a shit where it evolves from, they’re just glad it keeps coming.  There’s bound to be an odd anorak out there with an intriguing mind but for most, it could come from Mars for all they care.  Why should the OAP’s enjoying their coffee and cake in the M&S cafe want or need to know where it’s coming from.  They’ve worked hard (well most have) they’re in their twilight years and they get money from their government as promised to them. 

[Robert Dyson]

54 minutes ago, Tulip1 said:

So does everyone in Australia that gets money from the government/welfare system show a big interest in where the money comes from/what pot it’s in and how that pot is performing?  That’s all on aged pension, child related benefits, job seeker/keeper and on it goes.  Be honest, they couldn’t give a shit where it evolves from, they’re just glad it keeps coming.  There’s bound to be an odd anorak out there with an intriguing mind but for most, it could come from Mars for all they care.  Why should the OAP’s enjoying their coffee and cake in the M&S cafe want or need to know where it’s coming from.  They’ve worked hard (well most have) they’re in their twilight years and they get money from their government as promised to them. 

This answer is nearly identical to your previous post and adds no new information, but is another perfect illustration of the problem.  You refer to people with intriguing minds as "anoraks" and seem to infer that they are the exception to the norm, when there are more and more pensioners being forced into poverty.  It is a very careless attitude that needs to change.

https://www.npcuk.org/post/pensions-crisis-looming-for-millenials-if-the-uk-state-pension-is-not-reformed-and-improved

Quote

He said: “As a percentage of average earnings, the UK state pension is the worst in the developed world. While the UK state pension is worth 29% of average earnings France was 74.5%, Germany 50.5% and the USA 49.1%. The most generous state pension in the world is the Netherlands where the payments are slightly higher than average earnings 100.6%.”

 

 

 

[Tulip1]

46 minutes ago, Robert Dyson said:

This answer is nearly identical to your previous post and adds no new information, but is another perfect illustration of the problem.  You refer to people with intriguing minds as "anoraks" and seem to infer that they are the exception to the norm, when there are more and more pensioners being forced into poverty.  It is a very careless attitude that needs to change.

https://www.npcuk.org/post/pensions-crisis-looming-for-millenials-if-the-uk-state-pension-is-not-reformed-and-improved

 

 

 

Well we can just accept we think differently on this.  Not everyone just expects money handed to them.  Apart from a few years not working when my kids were babies I have worked since I left school at 16 and still work full time today.   When my time comes to get my state pension I won’t be interested in how good the pot is doing,  I’ll just be happy to get it. 

[Marisawright]

17 minutes ago, Tulip1 said:

  Apart from a few years not working when my kids were babies I have worked since I left school at 16 and still work full time today.   When my time comes to get my state pension I won’t be interested in how good the pot is doing,  I’ll just be happy to get it. 

I think you're misunderstanding what Robert is saying.  Like me, you've grown up feeling that the government made you a promise.  "You work all your life and pay your NI contributions, and you'll get a pension when you retire".   .  

However the reality is that the money we've been paying in NI contributions was never anywhere near enough to fund our pension.  The government knew that, but increasing NI contributions is politically unpopular, so successive governments have been reluctant to do so. As Robert says, because all of us were blithely trusting the government to keep its promise, instead of taking an interest in our pensions, we've been unaware of that debacle.  We've already seen the government increasing the pension age, and it's likely to increase much faster than planned (they're already bringing the timetable forward) and will go up to 70 and possibly beyond. That's all because there's not enough money to pay it. 

If the UK had a culture of taking an interest in pensions, like Australia, we'd all have been aware of that while we were working, and perhaps there would've been more pressure to sort the system then, so we could be assured of a pension.  That's what Robert is saying. 

[Paul1Perth]

3 hours ago, Robert Dyson said:

This answer is nearly identical to your previous post and adds no new information, but is another perfect illustration of the problem.  You refer to people with intriguing minds as "anoraks" and seem to infer that they are the exception to the norm, when there are more and more pensioners being forced into poverty.  It is a very careless attitude that needs to change.

https://www.npcuk.org/post/pensions-crisis-looming-for-millenials-if-the-uk-state-pension-is-not-reformed-and-improved

 

 

 

And people are saying the UK one is unsustainable. How are those other countries paying higher payouts going to cope?

[Marisawright]

3 hours ago, Paul1Perth said:

And people are saying the UK one is unsustainable. How are those other countries paying higher payouts going to cope?

There are two sides to it.  One is the money going out (how much the pension is), but the other is the money coming in (how much they collect and how well that money was looked after/invested). 

The UK version is unsustainable because the money coming in has been inadequate for many years, and I believe there were some shenanigans in the management of it too.

However it's also true that some other countries are struggling.  Just look at Greece, once one of the most generous pension schemes in the world.  That pension scheme is one of the reasons their economy crashed.  France has been trying to cut down its pension payouts, too, because they can't afford them. 

I was surprised to see how generous the US is, but how many people actually receive it?

Edited October 1, 2021 by Marisawright

[Tulip1]

6 hours ago, Marisawright said:

I think you're misunderstanding what Robert is saying.  Like me, you've grown up feeling that the government made you a promise.  "You work all your life and pay your NI contributions, and you'll get a pension when you retire".   .  

However the reality is that the money we've been paying in NI contributions was never anywhere near enough to fund our pension.  The government knew that, but increasing NI contributions is politically unpopular, so successive governments have been reluctant to do so. As Robert says, because all of us were blithely trusting the government to keep its promise, instead of taking an interest in our pensions, we've been unaware of that debacle.  We've already seen the government increasing the pension age, and it's likely to increase much faster than planned (they're already bringing the timetable forward) and will go up to 70 and possibly beyond. That's all because there's not enough money to pay it. 

If the UK had a culture of taking an interest in pensions, like Australia, we'd all have been aware of that while we were working, and perhaps there would've been more pressure to sort the system then, so we could be assured of a pension.  That's what Robert is saying. 

I understood what he was saying.  My response was just to the bit he quoted (that I highlighted as a quote) where he said the problem in the UK is that people don’t have a clue about how much is in the pot.   I said people aren’t interested in what’s in the pot, only that they get paid.  I asked if those in Australia who get money from the state are interested in where it comes from and have an understanding of how big the pot is etc (as he had stated it’s a problem in the UK) and he responded with -  

you're describing a disinterested, disempowered population who just want money handing to them.  If they don't know where it's coming from, they don't have the information to know if they're getting shortchanged, so they just blame the government for everything.

I gave myself as an example as I’m sure most are equally disinterested in what pot their pension comes from and like me it’s not about only being interested in getting handouts but more about getting something promised to you after you’ve worked and contributed for dozens of years.  He was keen to reiterate that the problem with people in the UK was that they were disinterested and disempowered yet failed to answer the only question I asked which was were Australians all interested and understanding of the pot size and performance of their hand outs.  
You mention if the UK had a culture of taking an interest in pensions like Australia…….they do.  I top up my work pension considerably as do most people I work with and know.   Pension planning is common here and a huge amount of people take it seriously.  I know of many people who are both employed and self employed that regularly have financial advice meetings with experts to ensure their plans are going well etc.  Even my uni son who’s on a year placement right now had the company pension scheme explained to him and a pile of paperwork came through the post all about it and the options of topping it up by salary sacrifice.  My late grandparents who would be well over a 100 if still alive had the pension man come to the door each week to pick up their tiny contribution.  Most on here will know that was common place, the man from the pru at the door.  The state pension is very different.  People generally don’t have an interest in something outside their control that is handed to them from the state.  People getting benefits this way just take them.  How many there that have been on job keeper through Covid has given any thought to where that money has come from, of course they haven’t.  I bet those on aged pension don’t care either.  Most just take it and be grateful.  I have no interest where my state pension will come from but I have a big interest in my private pension and my employee pension and check the performance of both regularly which is a bit painful these last few months as investments are not performing well at the moment. 

Edited October 1, 2021 by Tulip1

[Parley]

Isn't their a separate system in the UK similar to Superannuation where people build up a sizeable retirement nest egg.

I'm assuming most people don't solely rely on the UK pension as their retiremen tincome.

[Paul1Perth]

6 minutes ago, Parley said:

Isn't their a separate system in the UK similar to Superannuation where people build up a sizeable retirement nest egg.

I'm assuming most people don't solely rely on the UK pension as their retiremen tincome.

Depends who you work for and if they have a private pension scheme. Luckily for me the Minworkers pension scheme I was in for a few years has done pretty well, then I worked for Ferranti who had one, that's done pretty well. I get income streams from those two plus my UK pension. 

I worked for BPPC for a couple of years too but Robert Maxwell spent that pension pot.

I should chase up Severn Trent Water Authority as I worked for them for a couple of years. They may have had one.

[Tulip1]

It’s now a legal requirement for employers to set up a pension scheme for employees and pay into it.  Employees are encouraged to pay into it as well and their contribution is taken at source so is tax efficient.   Some employers are very generous with their contributions and also match the employees contributions  (up to a certain percentage)  Self employed people have no requirement to get a pension but hopefully do.  As we all know, if you put nothing in you’ll get nothing out. @Parley some do just rely on the state pension.  Those would also get a top up called pension credit but it’s not much.  Some people unfortunately have no choice, others chose not to save for their retirement and then blame the government that they are on the poverty line. 

Edited October 1, 2021 by Tulip1

[Robert Dyson]

6 hours ago, Paul1Perth said:

And people are saying the UK one is unsustainable. How are those other countries paying higher payouts going to cope?

As Marisa says, some pay in a lot more and can quantify it, so the people can check their return and work out the best deal.   

The Dutch pay in around 18% to the state pension, and they can hold a private defined contribution fund as well, AND hold a compulsory defined benefit scheme through some employer types a bit like Australia has.   They have the choice and options freely available to mix and match to get the best deal.  Best pensions in the world.  

 

 

[Robert Dyson]

2 hours ago, Tulip1 said:

I understood what he was saying.  My response was just to the bit he quoted (that I highlighted as a quote) where he said the problem in the UK is that people don’t have a clue about how much is in the pot.   I said people aren’t interested in what’s in the pot, only that they get paid.  I asked if those in Australia who get money from the state are interested in where it comes from and have an understanding of how big the pot is etc (as he had stated it’s a problem in the UK) and he responded with -  

you're describing a disinterested, disempowered population who just want money handing to them.  If they don't know where it's coming from, they don't have the information to know if they're getting shortchanged, so they just blame the government for everything.

I gave myself as an example as I’m sure most are equally disinterested in what pot their pension comes from and like me it’s not about only being interested in getting handouts but more about getting something promised to you after you’ve worked and contributed for dozens of years.  He was keen to reiterate that the problem with people in the UK was that they were disinterested and disempowered yet failed to answer the only question I asked which was were Australians all interested and understanding of the pot size and performance of their hand outs.  
You mention if the UK had a culture of taking an interest in pensions like Australia…….they do.  I top up my work pension considerably as do most people I work with and know.   Pension planning is common here and a huge amount of people take it seriously.  I know of many people who are both employed and self employed that regularly have financial advice meetings with experts to ensure their plans are going well etc.  Even my uni son who’s on a year placement right now had the company pension scheme explained to him and a pile of paperwork came through the post all about it and the options of topping it up by salary sacrifice.  My late grandparents who would be well over a 100 if still alive had the pension man come to the door each week to pick up their tiny contribution.  Most on here will know that was common place, the man from the pru at the door.  The state pension is very different.  People generally don’t have an interest in something outside their control that is handed to them from the state.  People getting benefits this way just take them.  How many there that have been on job keeper through Covid has given any thought to where that money has come from, of course they haven’t.  I bet those on aged pension don’t care either.  Most just take it and be grateful.  I have no interest where my state pension will come from but I have a big interest in my private pension and my employee pension and check the performance of both regularly which is a bit painful these last few months as investments are not performing well at the moment. 

Just two comments on the bold. 

Super Funds have been compulsory for Australian workers since 1992 with minimum contributions payable by an employer + salary sacrifice,  so obviously people are less interested in state pensions over here because everybody has an alternative.   You said that as long as old UK people can get a cup of tea and a cake from M&S they were happy, which was pretty flippant for a place where 35% rely on the state pension and are uneducated about the need for anyhting else, so disinterested and disempowered is a fair description.  

Super funds rose around 20-25% last year, the highest rise in many decades which has produced trillions of dollars for super funds around the world.  The last few months have been static, but growth is always going to slow down for a perhaps considerable period now that Government's will switch off covid stimulus funding and start grabbing it back.

 

Edited October 1, 2021 by Robert Dyson

[Robert Dyson]

2 hours ago, Parley said:

I'm assuming most people don't solely rely on the UK pension as their retiremen tincome.

35% do,  over 18million people.

[Tulip1]

4 hours ago, Robert Dyson said:

You said that as long as old UK people can get a cup of tea and a cake from M&S they were happy

I did not say that.  My exact words were 

 Why should the OAP’s enjoying their coffee and cake in the M&S cafe want or need to know where it’s coming from.  
 

 

[Marisawright]

11 hours ago, Tulip1 said:

I did not say that.  My exact words were 

 Why should the OAP’s enjoying their coffee and cake in the M&S cafe want or need to know where it’s coming from.  
 

 

They don't, because it's too late to worry about where it came from. Robert is saying that when they're younger, they should be more interested in where it's going to come from, because otherwise there's a chance it won't come from anywhere.   

Edited October 1, 2021 by Marisawright