UK state pension going same way as Australian ?

[superal]

13 minutes ago, sandyf said:

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. 

digressing slightly but that is one of the reasons that Thais quite often have children , so as when the parents are of old age their grown up dependents then support them as there is no decent pension in Thailand nor a safety net .

 

With the UK State Pension were you aware that when there was the new uplift for all who qualified it was deemed unfair for the people who had made a lifetime contribution and so they would be paid a top up . I inquired about it and was means tested on the phone and because my personal assets exceeded the limit I was excluded . Would have been another 14 pounds a week .  

[soalbundy]

25 minutes ago, sandyf said:

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. 

or high immigration to keep the system rolling, if Western Europeans don't produce enough kids there is no other alternative.

[mommysboy]

2 hours ago, sandyf said:

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. 

What I mean is if the economy is in a bad state that the government has to default on pension payments, then it's a fair bet the general economy is in a heck of a state.  As it is, we regularly see companies going in to administration and leaving a wreck of a pension plan.  The government would not be able to bail them out as it does now, and indeed might have to renege on current agreements  Also, historical performance would be no indicator of growth should the economy have sunk so low.

 

Yes, the state pension fund is different from private pensions.  But it is still a pension scheme, and as far as I can tell there is still a notional pot.  The main difference is that the private pension holder has a definite pot that he owns.  But that doesn't mean he'll be paid if things go belly up.

 

Long term the problem can only be solved by an increase in national insurance contributions, probably mainly aimed at employers and the well off, since the poor simply don't have the money.  In fact if Labour get in to power- as seems likely if only because they are due a turn- then I imagine that would be the first thing on the agenda.  

 

What needs to be taken in to account is that the state pension is a relative pittance, and without it millions of old folk will starve!  I take it nobody wants that?

 

 

[Stevemercer]

1 hour ago, mommysboy said:

What needs to be taken in to account is that the state pension is a relative pittance, and without it millions of old folk will starve!  I take it nobody wants that?

 

Maybe if all the pensioners in the UK moved to Thailand where the cost of living is cheaper?

[mommysboy]

1 hour ago, Stevemercer said:

 

Maybe if all the pensioners in the UK moved to Thailand where the cost of living is cheaper?

Not sure of your point Steve?

[Stevemercer]

Sorry, it was meant to be ironic. The topic discussion is going around in circles now.

[soalbundy]

18 hours ago, mommysboy said:

What I mean is if the economy is in a bad state that the government has to default on pension payments, then it's a fair bet the general economy is in a heck of a state.  As it is, we regularly see companies going in to administration and leaving a wreck of a pension plan.  The government would not be able to bail them out as it does now, and indeed might have to renege on current agreements  Also, historical performance would be no indicator of growth should the economy have sunk so low.

 

Yes, the state pension fund is different from private pensions.  But it is still a pension scheme, and as far as I can tell there is still a notional pot.  The main difference is that the private pension holder has a definite pot that he owns.  But that doesn't mean he'll be paid if things go belly up.

 

Long term the problem can only be solved by an increase in national insurance contributions, probably mainly aimed at employers and the well off, since the poor simply don't have the money.  In fact if Labour get in to power- as seems likely if only because they are due a turn- then I imagine that would be the first thing on the agenda.  

 

What needs to be taken in to account is that the state pension is a relative pittance, and without it millions of old folk will starve!  I take it nobody wants that?

 

 

I can imagine that the government wouldn't mind as long as it's done quickly, indeed it may come as a positive relief for millions of pensioners who have to live in the UK.

[mommysboy]

21 hours ago, soalbundy said:

or high immigration to keep the system rolling, if Western Europeans don't produce enough kids there is no other alternative.

not politically expedient given the main reason for Brexit.  Perhaps in a decade when all this nonsense has calmed.

[mommysboy]

1 hour ago, Stevemercer said:

Sorry, it was meant to be ironic. The topic discussion is going around in circles now.

Ah, sorry.

[mommysboy]

1 hour ago, soalbundy said:

I can imagine that the government wouldn't mind as long as it's done quickly, indeed it may come as a positive relief for millions of pensioners who have to live in the UK.

quicker death being the best alternative on offer.

[sandyf]

21 hours ago, mommysboy said:

What I mean is if the economy is in a bad state that the government has to default on pension payments, then it's a fair bet the general economy is in a heck of a state.  As it is, we regularly see companies going in to administration and leaving a wreck of a pension plan.  The government would not be able to bail them out as it does now, and indeed might have to renege on current agreements  Also, historical performance would be no indicator of growth should the economy have sunk so low.

 

Yes, the state pension fund is different from private pensions.  But it is still a pension scheme, and as far as I can tell there is still a notional pot.  The main difference is that the private pension holder has a definite pot that he owns.  But that doesn't mean he'll be paid if things go belly up.

 

Long term the problem can only be solved by an increase in national insurance contributions, probably mainly aimed at employers and the well off, since the poor simply don't have the money.  In fact if Labour get in to power- as seems likely if only because they are due a turn- then I imagine that would be the first thing on the agenda.  

 

What needs to be taken in to account is that the state pension is a relative pittance, and without it millions of old folk will starve!  I take it nobody wants that?

 

 

"But that doesn't mean he'll be paid if things go belly up."

You appear to be trying to avoid the issue, the state pension will be reformed even if things do not go belly up. The inherent problem is not going to go away other than something really drastic like limiting family size.

 

"Long term the problem can only be solved by an increase in national insurance contributions,"

Not going to happen. They are already discussing merging NI into income tax. Income tax is already in the firing line to prop up the NHS, to try and factor in the state pension would be political suicide.

[mommysboy]

27 minutes ago, sandyf said:

"But that doesn't mean he'll be paid if things go belly up."

You appear to be trying to avoid the issue, the state pension will be reformed even if things do not go belly up. The inherent problem is not going to go away other than something really drastic like limiting family size.

 

"Long term the problem can only be solved by an increase in national insurance contributions,"

Not going to happen. They are already discussing merging NI into income tax. Income tax is already in the firing line to prop up the NHS, to try and factor in the state pension would be political suicide.

Honestly, I'm not trying to avoid the issue- can you restate what that is- perhaps I'm not reading it right?  More importantly: what point are you making?

 

If it's simply the argument that things can't go on like they are, then I would certainly agree.  I have already said what those solutions are.  IMO a tax hike is almost inevitable, and sticks out like the proverbial elephant.

 

https://www.ifs.org.uk/economic_review/fp184.pdf  This is a good read about different types of pensions, but they are both schemes.  They both have to pay out!  And are both bound by law.

Edited April 13, 2018 by mommysboy

[The manic]

On 4/6/2018 at 10:54 PM, HauptmannUK said:

This thread is about pensions, not politics. However expat pensioners are in the main are not 'poor' by most folk's definition.  And I don't wear Brogues - mostly Ecco or Rieker casuals....

 

I would not support the move to reduce/restrict pensions for expats but I think it will come. Its being successfully applied by other countries with similar pension systems to the UK (Aus, NZ?).  And the savings to the government would substantial.  Moreover it could even be a vote winner since most UK voters seem to display negativity toward expats.  There is certainly support for the current strategy of charging expats for NHS care (150% of the cost I believe).

Always keep a UK address.

[Laza 45]

13 hours ago, The manic said:

Always keep a UK address.

Where does the idea that Australia is restricting its pensions come from?   Australia has a very generous old age pension that is portable. Once you have it you can live anywhere you want.  There are some losses of supplements if you are living outside the country but this doesn't amount to much of a loss.  ...and you can loose medi-care if they decide you are a non-resident after 5 years away.  Those from the UK would be much better off if the UK moved to the Australian system.   Disability pensions have become restricted but that is a different story.. 

[soalbundy]

20 hours ago, mommysboy said:

not politically expedient given the main reason for Brexit.  Perhaps in a decade when all this nonsense has calmed.

It's either 'get our country back' or 'keep our pensions rolling' I rather think that the true blue flag wavers would prefer the pensions. 

[mommysboy]

8 hours ago, Laza 45 said:

Where does the idea that Australia is restricting its pensions come from?   Australia has a very generous old age pension that is portable. Once you have it you can live anywhere you want.  There are some losses of supplements if you are living outside the country but this doesn't amount to much of a loss.  ...and you can loose medi-care if they decide you are a non-resident after 5 years away.  Those from the UK would be much better off if the UK moved to the Australian system.   Disability pensions have become restricted but that is a different story.. 

I don't know where these scare stories come from, but they spread like wildfire.  Thanks for a good posting.

[Stevemercer]

On 4/14/2018 at 8:43 AM, Laza 45 said:

Where does the idea that Australia is restricting its pensions come from?   Australia has a very generous old age pension that is portable. Once you have it you can live anywhere you want.  There are some losses of supplements if you are living outside the country but this doesn't amount to much of a loss.  ...and you can loose medi-care if they decide you are a non-resident after 5 years away.  Those from the UK would be much better off if the UK moved to the Australian system.   Disability pensions have become restricted but that is a different story.. 

 

The OP noted that the UK could look at means testing the English old age person, like Australia does for all its citizens. At present, the UK pension is not means tested. It would cause a political stink to introduce means testing in the UK, but a first step could be to target expats

[mommysboy]

3 hours ago, Stevemercer said:

 

The OP noted that the UK could look at means testing the English old age person, like Australia does for all its citizens. At present, the UK pension is not means tested. It would cause a political stink to introduce means testing in the UK, but a first step could be to target expats

It was about the suggestion that it could be stopped on residency grounds.  But actually I think it was a bit of gossip misconstrued by a bunch of ravenous local Tories.  Still, it has provoked quite a conversation and I'm certainly much the wiser.

[Cashboy]

I haven't read the posts yet but will tell you my thoughts:

 

First the History:

State pension used to be based on the amount of NI contributions you paid so if you were on a million GB pounds a year as the CEO of large UK company, you received a huge state pension on top of any company pension you had.  That stopped and everyone is entitled to the basic state pension if paid enough qualifying NI years.

Qualifying years for the full state pension increased from 30 years to 35 years a few years back.

Retirement age for women increased from 60 to 65 years old and now state pension is increasing to 67 years old for both sexes.

 

Most western governments are skint regarding funds for pensions and this is going to get worse.

I remember that most people (grandparents) started work at 15, retired at 65 and died at 70.

This meant that they paid 50 years of contributions and received 5 years of pensions.  A ratio of 1 to 10 years.

Now people have been conned into higher education and university ( another topic) and don't start work until they are 23 years old.

If they retire at 67 will have paid only 44 years of contributions.

If the average age of death is 82 years old then they will have had (67 to 82) 15 years of pensions.

That is a ratio of 1 to 3 years  (15 to 44 years).

 

The situation is actually worse because so many people are on mimimum wage and on zero hour contracts and actually dependent on government benefits to subsidise a living.

We also have low interest rates and returns on investment.

So the governments are skint and going to be even more skint.

The result is that the state pension in the UK will be means tested within 10 years.  I believe that if you have a private pension fund the income from the pension annuity will only reduce your state pension entitlement.  I am an accountant and advised my clients not to take perosonal pension plans out or endowmnet mortgages since 1995 on the advise of an actuary.  I am also advising (off record) for clients to cash in their pensions at 55 years old and make the money disappear off what I term their personal balance sheet.

The reason I advise this is because I think that in the future, state pensions will be treated like nursing homes where the government pays for the nursing home while you are alive but it is taken back from your estate on death.  I am pretty sure that this will happen to state pensions.

I actually expect the UK government to be promoting euthanasia in the future on the basis that it is sociably unacceptable to be a burden to society, as opposed to as now, where it is criminal to aid suicide.  I actually believe that life will become so crap in the UK that a lot of people will be quite keen on euthanasia for themselves.

 

Just my outspoken thoughts.

 

 

 

[mommysboy]

3 hours ago, Cashboy said:

I haven't read the posts yet but will tell you my thoughts:

 

First the History:

State pension used to be based on the amount of NI contributions you paid so if you were on a million GB pounds a year as the CEO of large UK company, you received a huge state pension on top of any company pension you had.  That stopped and everyone is entitled to the basic state pension if paid enough qualifying NI years.

Qualifying years for the full state pension increased from 30 years to 35 years a few years back.

Retirement age for women increased from 60 to 65 years old and now state pension is increasing to 67 years old for both sexes.

 

Most western governments are skint regarding funds for pensions and this is going to get worse.

I remember that most people (grandparents) started work at 15, retired at 65 and died at 70.

This meant that they paid 50 years of contributions and received 5 years of pensions.  A ratio of 1 to 10 years.

Now people have been conned into higher education and university ( another topic) and don't start work until they are 23 years old.

If they retire at 67 will have paid only 44 years of contributions.

If the average age of death is 82 years old then they will have had (67 to 82) 15 years of pensions.

That is a ratio of 1 to 3 years  (15 to 44 years).

 

The situation is actually worse because so many people are on mimimum wage and on zero hour contracts and actually dependent on government benefits to subsidise a living.

We also have low interest rates and returns on investment.

So the governments are skint and going to be even more skint.

The result is that the state pension in the UK will be means tested within 10 years.  I believe that if you have a private pension fund the income from the pension annuity will only reduce your state pension entitlement.  I am an accountant and advised my clients not to take perosonal pension plans out or endowmnet mortgages since 1995 on the advise of an actuary.  I am also advising (off record) for clients to cash in their pensions at 55 years old and make the money disappear off what I term their personal balance sheet.

The reason I advise this is because I think that in the future, state pensions will be treated like nursing homes where the government pays for the nursing home while you are alive but it is taken back from your estate on death.  I am pretty sure that this will happen to state pensions.

I actually expect the UK government to be promoting euthanasia in the future on the basis that it is sociably unacceptable to be a burden to society, as opposed to as now, where it is criminal to aid suicide.  I actually believe that life will become so crap in the UK that a lot of people will be quite keen on euthanasia for themselves.

 

Just my outspoken thoughts.

 

 

 

 

The situation is actually worse because so many people are on mimimum wage and on zero hour contracts and actually dependent on government benefits to subsidise a living.

We also have low interest rates and returns on investment.

 

 

That was a good bit:  in some ways the health of a fund, any fund, is bound by macro-economic conditions, which are crap.  That's what governments are failing to address.

[Chomper Higgot]

On 18 April 2018 at 5:29 PM, Cashboy said:

Most western governments are skint regarding funds for pensions and this is going to get worse.

I remember that most people (grandparents) started work at 15, retired at 65 and died at 70.

This meant that they paid 50 years of contributions and received 5 years of pensions.  A ratio of 1 to 10 years.

Now people have been conned into higher education and university ( another topic) and don't start work until they are 23 years old.

If they retire at 67 will have paid only 44 years of contributions.

If the average age of death is 82 years old then they will have had (67 to 82) 15 years of pensions.

That is a ratio of 1 to 3 years  (15 to 44 years).

 

 

 

You are forgetting, most women in our grandparent's generation did not work, or certainly did not work a full 35 years. Hence pensions for married couples were tied to the husband's contributions.

 

You are also forgetting that the UK has a continual rotation of foreign workers who do not remain long enough to build pension rights but who nevertheless contribute taxes to national coffers.

 

There is no 'national fund' for pensions, rather pensions are paid out of general taxation as an 'overhead' cost. Provided the economy can support the 'overhead' there is no problem paying pensions.

 

Anything that reduces the size of the economy and/or growth in the economy is of course problematic to a policy of paying pensions from taxation..... not that anything in particular comes to mind.

[gaviny]

The Australian Govt pays expat pensioners the base rate, which is around AU$400 a week.
 
If we were in Australia, we would also be entitled to rent assistance, power subsidy,  free bus transport, reduced train and tram fares, free medical consultations, free flu and other 'old age' immunisations, free hospital treatment, free pathology tests and fixed price prescriptions.  Optician tests are also free, and prescription spectacles are subsidised.
We also get "Seniors' Discounts" on goods in stores, but that's up to the stores, and cheaper admissions to parks where a charge is made.
The other side of the coin is that dentists charge like wounded buffaloes!
 
 
 

So why isn't dental not subsidized ? Maybe they assumed pensioners are toothless.[emoji12]

Sent from my SM-N9200 using Thailand Forum - Thaivisa mobile app

[masuk]

Just now, gaviny said:

So why isn't dental not subsidized ? Maybe they assumed pensioners are toothless.

Sent from my SM-N9200 using Thailand Forum - Thaivisa mobile app
 

WE often are by age 67!

[mommysboy]

9 hours ago, Chomper Higgot said:

You are forgetting, most women in our grandparent's generation did not work, or certainly did not work a full 35 years. Hence pensions for married couples were tied to the husband's contributions.

 

You are also forgetting that the UK has a continual rotation of foreign workers who do not remain long enough to build pension rights but who nevertheless contribute taxes to national coffers.

 

There is no 'national fund' for pensions, rather pensions are paid out of general taxation as an 'overhead' cost. Provided the economy can support the 'overhead' there is no problem paying pensions.

 

Anything that reduces the size of the economy and/or growth in the economy is of course problematic to a policy of paying pensions from taxation..... not that anything in particular comes to mind.

 

Interesting reading.  Just one thing which is rather wrong in relation to general taxation:

 

There is no 'national fund' for pensions, rather pensions are paid out of general taxation as an 'overhead' cost. Provided the economy can support the 'overhead' there is no problem paying pensions.

 

There is a pension fund, and until recently NI contributions have fully supported the fund. It is a stand alone pension scheme governed by the Pensions Act (2014).

[Chomper Higgot]

10 hours ago, mommysboy said:

 

There is a pension fund, and until recently NI contributions have fully supported the fund. It is a stand alone pension scheme governed by the Pensions Act (2014).

You are correct, but in truth the 'UK State Pension Fund' is little more than a current account funded from NI payments but underwritten by General Taxation.

 

 

[mommysboy]

6 hours ago, Chomper Higgot said:

You are correct, but in truth the 'UK State Pension Fund' is little more than a current account funded from NI payments but underwritten by General Taxation.

 

 

It still has quite a substantial fund.  Ultimately, it is under written by the government, and lately it has been getting treasury grants.

[LongTimeLurker]

On 4/15/2018 at 2:43 PM, Stevemercer said:

 

The OP noted that the UK could look at means testing the English old age person, like Australia does for all its citizens. At present, the UK pension is not means tested. It would cause a political stink to introduce means testing in the UK, but a first step could be to target expats

If they'd have tried to introduce a means testing some years ago there would have been an uproar from the then pensioners of my parents age (born in the 1920's).

 

Such pensioners had lived through the horrors of means testing of all social benefits right through to the 60's and just the words were enough to strike fear into their hearts.

 

But now the younger generation of pensioners, or near pensioners, born in the 60's have no such fears, having been brought up on entitlement (or near enough) and can probably relate to having a limited pension pot limited to those that really need it. After all, why should David Beckham get the same pension as me? Or Wayne Rooney the same heating allowances?

[mommysboy]

2 minutes ago, LongTimeLurker said:

If they'd have tried to introduce a means testing some years ago there would have been an uproar from the then pensioners of my parents age (born in the 1920's).

 

Such pensioners had lived through the horrors of means testing of all social benefits right through to the 60's and just the words were enough to strike fear into their hearts.

 

But now the younger generation of pensioners, or near pensioners, born in the 60's have no such fears, having been brought up on entitlement (or near enough) and can probably relate to having a limited pension pot limited to those that really need it. After all, why should David Beckham get the same pension as me? Or Wayne Rooney the same heating allowances?

Because they paid for it!  And probably are paying quite a bit more than most people in NI contributions.

 

Morally, of course you are right.....why indeed!

 

But legally means testing is currently an absolute non-starter because it is not a welfare benefit- it's a pension scheme.  Can you imagine a private pension deciding not to pay out because you are already rich?  Or an insurance policy not covering a house break-in because you can afford to fix things yourself?  No different!

[LongTimeLurker]

1 minute ago, mommysboy said:

Because they paid for it!  And probably are paying quite a bit more than most people in NI contributions

I agree with you.

 

But it's just the way some people would be thinking.

[JAG]

On 06/04/2018 at 11:50 AM, HauptmannUK said:

I'm a long standing member of the Conservative Party and when in the UK I regularly attend events at my local Conservative Association.

We frequently get sent policy proposals from CCO to discuss and obtain feedback from members.

A hot topic over the last year has been the suggestion that expats should have their state pension rights restricted. Somebody in CCO has obviously looked at what the Aussies are doing because the proposed changes appear very similar to how I understand the Australian system to work.

How very interesting. I recall you made a similar post a few months ago - back in October 2017 in fact. Perhaps you will allow me to quote you:

" snip - I think TVF members from the UK need to be aware that there is growing hostility in the UK toward returning expats. Probably partly fuelled by fears that, post Brexit, there could be sizeable numbers of older expats returning to the UK from Europe.

I am a member of the Conservative Party and at a recent constituency meeting that I attended we had a government minister as a guest speaker. The topic was immigration and Brexit. There were a lot of comments about returning expats and some discussion about stopping pensions to expats after one year overseas. We were told that NZ and Aus do something similar and its being looked at by DWP.

Certainly there are big shifts in public opinion going on right now."

 

So, six months ago it was an unnamed government minister, now it is a policy document from Conservative Central Office which has been sent to your branch for consultation?

 

If you are going to post these stories, (and frankly I think it is just that, stories) you really ought to get the details consistent "Herr Hauptman". I am not a member of The Conservative Party (I very much doubt whether they would have me) nor indeed of any other political party, but I don't think a minister would announce proposals on such a sensitive national topic as pension reform during a visit to a local branch; nor frankly can I imagine Conservative Central Office sending documents on such reform, as a consultative exercise, to a local party. 

 

I think that you are trolling, "Herr Hauptman".

 

Anyway, I am minded to Email the Conservative Party, and ask them to confirm whether they have been discussing these proposals with their local parties, either during ministerial visits or by issuing consultative documents. The reply might be quite interesting. I don't suppose that you could let me know which branch of the party you are a member of? It would make your Central Office's task in formulating a reply so much easier!

 

No? I didn't think so...