UK state pension going same way as Australian ?

[Letseng]

1 hour ago, soalbundy said:

I've never even had to make an appointment to see a doctor or a specialist in Munich, walk straight in.

I do too as a private patient paying cash on the way out. But the guy who comes on referral from GP with a NHS equivalent insurance? Ask him.

[mommysboy]

1 hour ago, Jonnapat said:

I would strongly suggest that you change your political persuasion. 

The Conservative party is well known for not giving a toss about pensioners

Fair point OP!  why on earth would you vote for this?

[GTgrizzly]

On ‎7‎/‎04‎/‎2018 at 9:51 PM, Stevemercer said:

 

In Australia, the old age pension is means tested. If you have another income (e.g. private pension or substantial assets) you may not be entitled to the OAP or may have it reduced accordingly. For example, if your income stream is equal to, or above, the value of the OAP, you will not receive it.

 

In addition, if you live overseas, and have just reached the age where you can claim the OAP, you will be denied. You must be living in Australia for 2 years before you can claim the OAP (assuming you are entitled).

 

Thirdly, if you are an Australian living overseas, and receiving an income from Australia, you loose any Australian tax benefits (such as no tax payable on the first $18,000 and initial low tax rates) and must pay a flat 33.2% on every dollar received.

 

 

Hi Steve

yesterday I obtained a complete coverage on every possible scenario of living outside Auss even things in there that Centrelink and others are not aware of

If you or anyone else is interested let me know and I can PM it to you or them

I have copied and pasted it all to a word document and saved it in my computer

It is about 6 pages but covers anything that could possibly happen and how to cover your butt on any issues

Anyway let me know if you would like to read it and I will send it to you

Cheers

Geoff

[Farang99]

22 hours ago, mommysboy said:

Just to recap: the UK pension is contribution based.  It is calculated by the number of years contributed to a maximum of 35.  Those who have 16, say, have the same rights as those who have the full number.

 

Unlike other systems, it is not based on residency- even non UK nationals living out of UK are part of it-  and it is neither a welfare benefit or subject to means testing- it is a pure pension scheme. 

 

The above is absolute fact.

 

 

But the Government could be within its rights to change tax allowances of a UK expat, ie, charge tax on the full amount.  Also, since the yearly increment does not form the base pension at the time of maturation then I guess it can legally withold the increase.  My guess anyway.

 

Imo, just because a few Tory nuts like the idea of doing relatively poor people out of their dues it doesn't mean that it could possibly happen.  

 

I do think the affluent pensioner,ie, those with 2 pensions and property, look set to be slammed in the future, and I'm not sure it is not well deserved.

 

 

We have already been screwed out of our normal pension rights because we don't live in the EU or a few other countries in that our pensions are frozen at the value when we came to Thailand or from he beginning if that was after our arrival here. This means that over the last 18 years the failure to pay cost of living annual increments means that my state pension is half that of someone in my position still living in the UK, plus, of course, I am not entitled to all the other benefits - free health care and so on.

There have been a number of attempts to get this changed but all, including an appeal to the  House of Lords,  have been rejected primarily because the government could not possible afford to pay the huge outstanding amount if it were accepted.

[sandyf]

On 4/8/2018 at 9:24 AM, mommysboy said:

Just to recap: the UK pension is contribution based.  It is calculated by the number of years contributed to a maximum of 35.  Those who have 16, say, have the same rights as those who have the full number.

 

Unlike other systems, it is not based on residency- even non UK nationals living out of UK are part of it-  and it is neither a welfare benefit or subject to means testing- it is a pure pension scheme. 

 

The above is absolute fact.

 

That is anything but a fact. Pure pension schemes take the contributions and invest them in an attempt to generate some sort of return in the future.

Contributions to the state pension have been immediately paid out to the state pensioners at the time, there has never been any 'fund ' in the state pension scheme. All you have is some vague obligation by the government that having paid someone's pension, someone else would pay you when your time came. For some years now there has been a shortfall been NI from the existing workforce and the state pension, this has been funded by income tax at a current rate of around 12 % of income tax.

With a declining workforce the shortfall is only going to get worse and this led to the pension reforms last year. It was only a sticking plaster and the government is still desperate to find a long term solution. 

The reality is there are only two options, either increase taxation or reduce the liability of the state pension. No government is in favour of the former so it should come as no surprise that every option on the reduction side would be explored. Means testing I would see as a fairly strong contender as it is something that could be introduced with a fairly high threshhold and the threshhold reduced in the years to come.

Pension reform does not come about quickly so existing pensioners are unlikely to see any change, it is the younger generation that will suffer. I have been telling my 27 year old son for several years that he should be thinking about his retirement but he just shrugs it off.

[mommysboy]

15 minutes ago, sandyf said:

That is anything but a fact. Pure pension schemes take the contributions and invest them in an attempt to generate some sort of return in the future.

Contributions to the state pension have been immediately paid out to the state pensioners at the time, there has never been any 'fund ' in the state pension scheme. All you have is some vague obligation by the government that having paid someone's pension, someone else would pay you when your time came. For some years now there has been a shortfall been NI from the existing workforce and the state pension, this has been funded by income tax at a current rate of around 12 % of income tax.

With a declining workforce the shortfall is only going to get worse and this led to the pension reforms last year. It was only a sticking plaster and the government is still desperate to find a long term solution. 

The reality is there are only two options, either increase taxation or reduce the liability of the state pension. No government is in favour of the former so it should come as no surprise that every option on the reduction side would be explored. Means testing I would see as a fairly strong contender as it is something that could be introduced with a fairly high threshhold and the threshhold reduced in the years to come.

Pension reform does not come about quickly so existing pensioners are unlikely to see any change, it is the younger generation that will suffer. I have been telling my 27 year old son for several years that he should be thinking about his retirement but he just shrugs it off.

What you have written does not remotely arise from my posting, which pointed out certain absolute facts.

 

It is contribution based.  It is not based on residency.  It is not means tested.  It is not a welfare benefit.  How is this not fact?

[sandyf]

1 hour ago, mommysboy said:

What you have written does not remotely arise from my posting, which pointed out certain absolute facts.

 

It is contribution based.  It is not based on residency.  It is not means tested.  It is not a welfare benefit.  How is this not fact?

You have made up your own definition for "contribution based" and called it a "pure pension scheme" so the whole thing is fiction rather than fact.

The state pension is just that, it is neither a defined contribution or defined benefit plan.

[superal]

2 hours ago, sandyf said:

That is anything but a fact. Pure pension schemes take the contributions and invest them in an attempt to generate some sort of return in the future.

Contributions to the state pension have been immediately paid out to the state pensioners at the time, there has never been any 'fund ' in the state pension scheme. All you have is some vague obligation by the government that having paid someone's pension, someone else would pay you when your time came. For some years now there has been a shortfall been NI from the existing workforce and the state pension, this has been funded by income tax at a current rate of around 12 % of income tax.

With a declining workforce the shortfall is only going to get worse and this led to the pension reforms last year. It was only a sticking plaster and the government is still desperate to find a long term solution. 

The reality is there are only two options, either increase taxation or reduce the liability of the state pension. No government is in favour of the former so it should come as no surprise that every option on the reduction side would be explored. Means testing I would see as a fairly strong contender as it is something that could be introduced with a fairly high threshhold and the threshhold reduced in the years to come.

Pension reform does not come about quickly so existing pensioners are unlikely to see any change, it is the younger generation that will suffer. I have been telling my 27 year old son for several years that he should be thinking about his retirement but he just shrugs it off.

I think that applies to many a young person as they either live for today or not in a position to afford it plus where will the unstable UK be in 30 odd years time ?  Can the pension / investment companies be trusted ?  can your employer be trusted to protect their pension pot ?  of course there are other vehicles for future financial security and the most rewarding has been property investment until now but who knows what the next few years will bring .

                   What have you advised your son to do ?  

[mommysboy]

2 hours ago, sandyf said:

You have made up your own definition for "contribution based" and called it a "pure pension scheme" so the whole thing is fiction rather than fact.

The state pension is just that, it is neither a defined contribution or defined benefit plan.

Look at it!  It is undoubtedly contribution based.  You get fully paid years up to 35 years and receive payments accordingly.  No other factors are taken in to consideration, not even a person's nationality.  

 

What part of it is means tested?

What part of it is residency based?

 

Ultimately, the government can renege on payment I suppose, or change it completely but as you say this takes a very long time.  There has just been a major overhaul, and I believe a committee makes further proposals every few years.

 

The favoured means of adjustment clearly are increasing the rate of contribution, increasing the number of qualifying years, and increasing the retirement age.  This is evidential.

 

 

 

 

[mommysboy]

3 hours ago, superal said:

I think that applies to many a young person as they either live for today or not in a position to afford it plus where will the unstable UK be in 30 odd years time ?  Can the pension / investment companies be trusted ?  can your employer be trusted to protect their pension pot ?  of course there are other vehicles for future financial security and the most rewarding has been property investment until now but who knows what the next few years will bring .

                   What have you advised your son to do ?  

Property is good until retirement.  Chronic illness and nursing homes mean that there is a very strong chance it will be used to pay the fees, whereas a person without property will not fall foul of means testing.  So the kids will be done over again- little or no inheritance.  

[mommysboy]

Lot of upsetting rubbish being posted:  The UK state pension is backed by this:

 

 

http://www.legislation.gov.uk/ukpga/2014/19/contents/enacted

 

I haven't waded through it yet, but I don't think payment is discretionary.  That's absurd.

 

[superal]

9 hours ago, mommysboy said:

Lot of upsetting rubbish being posted:  The UK state pension is backed by this:

 

 

http://www.legislation.gov.uk/ukpga/2014/19/contents/enacted

 

I haven't waded through it yet, but I don't think payment is discretionary.  That's absurd.

 

I do not confess to know too much about pensions but one thing is that if you are an independent self employed person your NH stamp contribution is small compared to paye person . The s.e.p. can then subscribe to a private pension and the benefits accrued will far exceed that of the paye person having made similar payments . So maybe the government should plan to scrap the state pension in years to come and we would all be better off . One thing is for sure and that is the UK governments seem unable to manage budgets or accounts and if they were in the private sector they would be relieved of their duties . When I hear of other European countries pension benefits I am very jealous . they can do it so why not the UK ? 

[soalbundy]

10 hours ago, mommysboy said:

Lot of upsetting rubbish being posted:  The UK state pension is backed by this:

 

 

http://www.legislation.gov.uk/ukpga/2014/19/contents/enacted

 

I haven't waded through it yet, but I don't think payment is discretionary.  That's absurd.

 

no it isn't discretionary but there are ways and means, raising retirement age to an unrealistic figure, say eventually 75 for the maximum pension, since most won't be able to continue to work up to this age there is an automatic pension reduction. Let us not kid ourselves that pensions are cut in stone, Argentina for instance stopped paying out pensions for some time when they were in great financial difficulties, it was back to bartering in the market. Historically seen, the idea of pensions for the old is relatively new as is a comprehensive health service, they can all be up for grabs.

[mommysboy]

1 hour ago, soalbundy said:

no it isn't discretionary but there are ways and means, raising retirement age to an unrealistic figure, say eventually 75 for the maximum pension, since most won't be able to continue to work up to this age there is an automatic pension reduction. Let us not kid ourselves that pensions are cut in stone, Argentina for instance stopped paying out pensions for some time when they were in great financial difficulties, it was back to bartering in the market. Historically seen, the idea of pensions for the old is relatively new as is a comprehensive health service, they can all be up for grabs.

 

Ultimately, quite right a failed state can simply stop paying out pensions.  However, that is a problem of an altogether different magnitude.  We'd be at the point of revolution- everything would be in disarray!  Any other far-fetched scenarios you would like to paint?  How about a plague!  

 

In this scenario, we are discussing paying Peter, who is a fully paid up member, but not paying Paul who is also fully paid up.

 

 

[mommysboy]

2 hours ago, superal said:

I do not confess to know too much about pensions but one thing is that if you are an independent self employed person your NH stamp contribution is small compared to paye person . The s.e.p. can then subscribe to a private pension and the benefits accrued will far exceed that of the paye person having made similar payments . So maybe the government should plan to scrap the state pension in years to come and we would all be better off . One thing is for sure and that is the UK governments seem unable to manage budgets or accounts and if they were in the private sector they would be relieved of their duties . When I hear of other European countries pension benefits I am very jealous . they can do it so why not the UK ? 

Or they could simply increase contributions for s.e.p?

 

Obviously, you can't get a quart out of a pint pot.  Contributions, age rises, and contribution years all need to increase to maintain present benefits, and this is happening already.  The Pensions Act 2014 has now been enacted, and a first review has already recommended another rise in the retirement age.

 

You can decide to forego claiming the pension if you wish, if you are against it.

 

 

[soalbundy]

33 minutes ago, mommysboy said:

 

Ultimately, quite right a failed state can simply stop paying out pensions.  However, that is a problem of an altogether different magnitude.  We'd be at the point of revolution- everything would be in disarray!  Any other far-fetched scenarios you would like to paint?  How about a plague!  

 

In this scenario, we are discussing paying Peter, who is a fully paid up member, but not paying Paul who is also fully paid up.

 

 

i don't think it is so far fetched but it would have to start slowly, one hears murmering's of there being no state pensions in the far future in Europe ( the UK is also in Europe) simply due to demographics, an example for all of Europe, in Germany now 5 workers have to support 1 pensioner, that is on the limit, in the not too distant future it will be 3 that is clearly not sustainable. Without a rapid rise in birth rates in Europe or a high amount of immigration, pensions,and a good functioning health system can't be guaranteed which is why there has been talk of taxing robots on production lines, a belated attempt that will fail.

[mommysboy]

1 hour ago, soalbundy said:

i don't think it is so far fetched but it would have to start slowly, one hears murmering's of there being no state pensions in the far future in Europe ( the UK is also in Europe) simply due to demographics, an example for all of Europe, in Germany now 5 workers have to support 1 pensioner, that is on the limit, in the not too distant future it will be 3 that is clearly not sustainable. Without a rapid rise in birth rates in Europe or a high amount of immigration, pensions,and a good functioning health system can't be guaranteed which is why there has been talk of taxing robots on production lines, a belated attempt that will fail.

We're really talking about economic failure of the present system.  I agree it is not so far fetched, indeed clearly it has been happening for the past decade or more.  And with the advent of AI large swathes of the population are effectively surplus to requirements.  But it is straying from this much narrower point about effectively taking someone's money and then not delivering. Judging by OP's opening statement, there are people who believe that is ok.

[superal]

1 hour ago, soalbundy said:

i don't think it is so far fetched but it would have to start slowly, one hears murmering's of there being no state pensions in the far future in Europe ( the UK is also in Europe) simply due to demographics, an example for all of Europe, in Germany now 5 workers have to support 1 pensioner, that is on the limit, in the not too distant future it will be 3 that is clearly not sustainable. Without a rapid rise in birth rates in Europe or a high amount of immigration, pensions,and a good functioning health system can't be guaranteed which is why there has been talk of taxing robots on production lines, a belated attempt that will fail.

I cannot imagine a country without some form of state pension or basic health system . The mind boggles .

So the answer has to be for the government to print more money ? 

  

[soalbundy]

3 minutes ago, superal said:

I cannot imagine a country without some form of state pension or basic health system . The mind boggles .

So the answer has to be for the government to print more money ? 

  

The British pension scheme didn't start until 1908, 5 shillings a week for those over 70 before that there was nothing, the NHS only began in 1946 so it is relatively new, nothing in heaven demands it survives.

[mommysboy]

1 hour ago, soalbundy said:

The British pension scheme didn't start until 1908, 5 shillings a week for those over 70 before that there was nothing, the NHS only began in 1946 so it is relatively new, nothing in heaven demands it survives.

Back to Dickensian times,eh?  A touch bleak methinks.  So any state pension advice?  Should I stop contributions?  Do you think it will be around in 2040?

[champers]

5 minutes ago, mommysboy said:

Back to Dickensian times,eh?  A touch bleak methinks.  So any state pension advice?  Should I stop contributions?  Do you think it will be around in 2040?

Do you get to choose? If you are working you will have NI contributions automatically deducted from your pay. You can no longer opt out.

Even if you are unemployed the state will "count" your contributions as long as you keep signing on.

[soalbundy]

1 minute ago, mommysboy said:

Back to Dickensian times,eh?  A touch bleak methinks.  So any state pension advice?  Should I stop contributions?  Do you think it will be around in 2040?

it will be around for quite a time in some form or another but by 2040 you may have to be 70 before you get it. In 1908 a 1 pound a month pension was affordable as most never reached that age, now 80 is not unusual. It's pretty obvious that governments everywhere would prefer you to have a private pension, I do see that say 40 to 50 years from now state pensions wont exist,people will be obliged to take out private insurance, perhaps those with 3 or more children will be rewarded in some way.

[soalbundy]

6 minutes ago, champers said:

Do you get to choose? If you are working you will have NI contributions automatically deducted from your pay. You can no longer opt out.

Even if you are unemployed the state will "count" your contributions as long as you keep signing on.

Those contributions go to supporting the pensioners now, if there aren't enough young people in work following on from you the kitty is empty, it won't end drastically, these things never do, there will be gradual increases in payments and increases in retirement age along with 'encouragement' to self insure,there will simply be a gradual phase out. I can imagine the last stages being free heating and electricity instead of a state pension and perhaps a small monthly payment for those who had 2 or 3 children,when that generation has gone then nothing.  

[Letseng]

10 hours ago, mommysboy said:

Or they could simply increase contributions for s.e.p?

 

Obviously, you can't get a quart out of a pint pot.  Contributions, age rises, and contribution years all need to increase to maintain present benefits, and this is happening already.  The Pensions Act 2014 has now been enacted, and a first review has already recommended another rise in the retirement age.

 

You can decide to forego claiming the pension if you wish, if you are against it.

 

 

Agree, like e.g. Austria.  Not much benefit in Germany after paying high contribution. Dutch are doing o.k. and Scandinavians. But high pension comes at a price before you get it.

 

[sandyf]

On 4/9/2018 at 4:36 PM, superal said:

I think that applies to many a young person as they either live for today or not in a position to afford it plus where will the unstable UK be in 30 odd years time ?  Can the pension / investment companies be trusted ?  can your employer be trusted to protect their pension pot ?  of course there are other vehicles for future financial security and the most rewarding has been property investment until now but who knows what the next few years will bring .

                   What have you advised your son to do ?  

Very valid points but not all employers manage a pension scheme. many farm it out to an external company so what you get is a group personal pension with an employers contribution.

At the end of the day it would be prudent to do something rather than just hoping for the best. Since he left school I tried to get my son to initiate a private pension as the sooner you get in the lower the contributions, had he done so he would be 10 years into it by now. The one thing we can be sure of, the retirement age is not going to come down and a private scheme offers a bit of flexibility if you want to retire early.

My son did not ignore everything I said, when they got engaged they bought a house first and then stayed in and saved up to get married a couple of years later. Been in the house about 5 years now so the major expense is behind them and ready for the next one, their first child is due next month.

[sandyf]

On 4/10/2018 at 12:24 PM, soalbundy said:

Those contributions go to supporting the pensioners now, if there aren't enough young people in work following on from you the kitty is empty, it won't end drastically, these things never do, there will be gradual increases in payments and increases in retirement age along with 'encouragement' to self insure,there will simply be a gradual phase out. I can imagine the last stages being free heating and electricity instead of a state pension and perhaps a small monthly payment for those who had 2 or 3 children,when that generation has gone then nothing.  

Quite, and the encouragement to self insure is already there. The government has indicated a threshold of £18,600 to be above the requirement for benefits. With a low pension those just on the state pension are effectively being forced into claiming benefits.

It is a clear message to those not yet of a pensionable age that if they do not have additional income in their retirement, they will also be on benefits.

[mommysboy]

7 hours ago, sandyf said:

Quite, and the encouragement to self insure is already there. The government has indicated a threshold of £18,600 to be above the requirement for benefits. With a low pension those just on the state pension are effectively being forced into claiming benefits.

It is a clear message to those not yet of a pensionable age that if they do not have additional income in their retirement, they will also be on benefits.

I see your point, but what is missed is a person's ability to finance a private pension.  Millions of people can't even cover living costs.

[sandyf]

11 hours ago, mommysboy said:

I see your point, but what is missed is a person's ability to finance a private pension.  Millions of people can't even cover living costs.

That is of little concern to the government. As far as they are concerned the writing is on the wall and its up to you if you want to read or not.

 

It has always been the same, by the time I had the opportunity to opt out of SERPS I was too old for anything worthwhile. I did not see the point of throwing a few years contributions into start up fees so just stayed with it.

A friend of mine took redundancy and effectively retired at 50. He continued to make voluntary NI contributions and then a few years down the road they reduced the qualifying years from 44 to 30. He wrote and asked for a refund on the voluntary contributions, no need to say what the response was.

[mommysboy]

2 hours ago, sandyf said:

That is of little concern to the government. As far as they are concerned the writing is on the wall and its up to you if you want to read or not.

 

It has always been the same, by the time I had the opportunity to opt out of SERPS I was too old for anything worthwhile. I did not see the point of throwing a few years contributions into start up fees so just stayed with it.

A friend of mine took redundancy and effectively retired at 50. He continued to make voluntary NI contributions and then a few years down the road they reduced the qualifying years from 44 to 30. He wrote and asked for a refund on the voluntary contributions, no need to say what the response was.

The State Pension is only a subsistence payment.  The government will care in as much as they would certainly be voted out of office if they tinkered with it too much.  If that were not true, the Tories would have done away with the NHS a long time ago.  Also there are safeguards such as the Pensions Act (2014), as well as basic law of contract.

 

But in my bleakest moments you do wonder!  When the government plays about as illustrated there are winners and losers, but I really can't see members being excluded from payment as suggested in OP's posting. 

 

I am in a similar position to you.  I thought if nothing else the State Pension would be the nearest thing to a guaranteed pay out.  

 

If the economy is ever in such a bad state that it starts to renege on payments then that would be symptomatic of a failed state.  At this point even private pensions would be folding, and we would all be suffering one way or another.

 

At it's worst point, the Greeks reduced the amount by 50% or so.  Soalbundy says Argentina also suspended pension pay outs for a while.

[sandyf]

19 minutes ago, mommysboy said:

 

If the economy is ever in such a bad state that it starts to renege on payments then that would be symptomatic of a failed state.  At this point even private pensions would be folding, and we would all be suffering one way or another.

 

You cannot compare the two, fundamentally different. Private pensions take contributions and invest them for future returns, they are wholly dependent on financial performance.

The state pension scheme faces a completely different problem. There is no "investment" so financial performance is not the overriding criteria. Pensioners of the future will be dependent on the contributions from the workforce of the future. With people living longer there is an ever increasing gap between the income to the state pension and the outgoings. The government is desperate to avoid passing that increasing shortfall on to the taxpayer so they need to find a long term solution.

A healthy financial market would be good for the private pension but do little for the state pension, that needs a significant hike in government income or some reduction in payments.