Brexit Retirement Pension Effect

[Oxx]

Finally as bitter icing to this cake, annuity rates have fallen since last week - and these loses are locked in once the pension/annuity starts.

Sorry, but that's nonsense. There's no requirement to buy an annuity at any stage, so there's no reason for any losses to be locked in if the pensioner doesn't want to do so.

Incidentally, my pension investments (a well diversified mixture of funds and investment trusts) rose 4% during June in Sterling terms. The markets have survived the Brexit vote shock. No particular reason to think they likely to fall further as a result of the Europe situation.

[MissAndry]

One group who will really suffer are those who will retire in the near future and have a money purchase pension scheme. Not only do they loose out from the fall of the value in the pound, but also as usually invested in stocks and shares, the final value is vulnerable to to falls in the market. Finally as bitter icing to this cake, annuity rates have fallen since last week - and these loses are locked in once the pension/annuity starts. So a triple whammy for soon to be pensioners.

Annuity's have been gone for a couple of years now in the UK.

Nobody in their right mind would buy one.

If you know nothing about UK pensions, why post?

[Jip99]

One group who will really suffer are those who will retire in the near future and have a money purchase pension scheme. Not only do they loose out from the fall of the value in the pound, but also as usually invested in stocks and shares, the final value is vulnerable to to falls in the market. Finally as bitter icing to this cake, annuity rates have fallen since last week - and these loses are locked in once the pension/annuity starts. So a triple whammy for soon to be pensioners.

my feeling on the future GBP and economy? The pound and stock market will recover slightly, but towards the end of the year when the realisation hits that there is no plan, both will slowly fall until some positive news on the economy comes up (but that will probably not happen until the 2020's).

I am assuming that you don't get paid for the advice you give!

[Oxx]

Annuity's have been gone for a couple of years now in the UK.

Nobody in their right mind would buy one.

(1) They haven't gone. They're still available.

(2) They remain a good investment for people who are very risk averse and require a guaranteed income for life. So, some people in their right mind would buy one.

If you know nothing about UK pensions, why post?

Et tu quoque?

[rickudon]

I am well aware that you don't HAVE to buy an annuity any more with your pension pot. But your average employee at retirement has little experience and knowledge of the pension options open to them, or how to manage their pension pot to provide an income for the rest of their lives. They just want to start their retirement with a nice secure income. I bet many still take out annuities.

Most employees never manage to save enough to have to seriously consider investment options. They just live from month to month. My ex-wife was like that. She had a small private pension she paid into for 20 plus years, and thought it would nicely top-up her final salary pension when she retired. She got 600 pounds a year from it ..... 1 year after retirement she had to go back to work. The typical pensioner gets less than a 1000 pounds a month including state pension (as pensions). one study put pension income as 8774 pounds a year in 2014. They cannot afford to make a mistake. For them, Brexit is a mistake.

[dick dasterdly]

Getting back to the OP's question. (wrt UK state pensions).

Clearly the exchange rate is an issue, but there are other concerns you need to consider.

Prior to the referendum there was growing consensus that expat British pensioners ought to be treated fairly and receive annual pension increase, that the injustice of frozen pensions should be removed. I believe it fair to say that even disregarding the inward looking turn the UK has taken, there will be neither an appetite or time on the parliamentary calendar to address fair pensions - I think we can now say goodbye to any chance of pension injustice being addressed anytime soon, if ever.

The second issue only really effects pensioners if they are actually receiving annual increases, there is growing disquiet amongst people who are not pensioners regarding the triple lock that provides for very generous annual pension increases. I strongly suspect this is now under threat and I would not be at all surprised if the triple lock is abandoned.

You seem to imply that there was a chance that if we had stayed in the EU. We may/ would have seen the end of the unfair frozen pensions.unfortunately you could not have been further from the truth.

There has also been some talk of pensions held by pensioners in the more prosperous parts of the EU going to support those pensioners in the rest of the EU. If that does happen,then that is one more bonus for leaving the undemocratic EU.

The growing consensus for fair pensions is a matter of record (yoll find it discussed on the TVF UK pensions thread).

The lack of time to even consider the matter post Brexit is a matter of logic - parliament is going to be rather busy.

You offer no evidence of your claimed EU plans or indeed that the EU is undemocratic.

Unfreezing pensions of the tiny minority in countries like Thailand is not going to happen, in the same way that reducing pensions in the UK is not going to happen.

IIRC the EU supported this stance (freezing of pensions in some non-EU countries), and the Brit. govt. certainly has no interest in changing things.

[Henryford]

Don't worry we will never leave the EUSSR. Once Boris gets to be PM he will do a 'deal' and say we don't need to leave after all. You didn't really think they would allow the people to vote did you?

"Once Boris gets to be PM"

He's just announced that he won't be standing !

http://www.bbc.com/news/uk-politics-36674275

Amazing Thailand Britain !

Theresa May will do the same. She has already said she won't trigger Article 50 or leave the ECHR. A stitch up.

[Oxx]

I am well aware that you don't HAVE to buy an annuity any more with your pension pot.

I presume that that comment is in response to what I wrote. However, my comment was not directed at you, but at MissAndry, as was clear from the quoted text.

[OJAS]

Unfreezing pensions of the tiny minority in countries like Thailand is not going to happen, in the same way that reducing pensions in the UK is not going to happen.

IIRC the EU supported this stance (freezing of pensions in some non-EU countries), and the Brit. govt. certainly has no interest in changing things.

But the day may eventually come when only state pensioners living in England and Wales (outside London, of course, were it also to decide to go its own sweet way post Brexit as well as Scotland and N Ireland) will receive the annual increases.

That would, of course, level the playing field somewhat from the point of view of those of us living in Thailand who are already denied these increases.

[MissAndry]

I am well aware that you don't HAVE to buy an annuity any more with your pension pot. But your average employee at retirement has little experience and knowledge of the pension options open to them, or how to manage their pension pot to provide an income for the rest of their lives. They just want to start their retirement with a nice secure income. I bet many still take out annuities.

Most employees never manage to save enough to have to seriously consider investment options. They just live from month to month. My ex-wife was like that. She had a small private pension she paid into for 20 plus years, and thought it would nicely top-up her final salary pension when she retired. She got 600 pounds a year from it ..... 1 year after retirement she had to go back to work. The typical pensioner gets less than a 1000 pounds a month including state pension (as pensions). one study put pension income as 8774 pounds a year in 2014. They cannot afford to make a mistake. For them, Brexit is a mistake.

If you have a company pension and a Money purchase pension.

You take the 10k5 a year (tax free) out of the Money purchase pension (as drawdown) to live on until it's gone.

Then defer your company pension (which is usually index linked and gains 5-10% deferment bonus for every year you defer)

How easy is that?

(600gpb/year let's say purchased with around 16k, live for two years on that as (tax free) drawdown and have 20% more from your company pension)

Edited July 1, 2016 by MissAndry

[billd766]

Getting back to the OP's question. (wrt UK state pensions).

Clearly the exchange rate is an issue, but there are other concerns you need to consider.

Prior to the referendum there was growing consensus that expat British pensioners ought to be treated fairly and receive annual pension increase, that the injustice of frozen pensions should be removed. I believe it fair to say that even disregarding the inward looking turn the UK has taken, there will be neither an appetite or time on the parliamentary calendar to address fair pensions - I think we can now say goodbye to any chance of pension injustice being addressed anytime soon, if ever.

The second issue only really effects pensioners if they are actually receiving annual increases, there is growing disquiet amongst people who are not pensioners regarding the triple lock that provides for very generous annual pension increases. I strongly suspect this is now under threat and I would not be at all surprised if the triple lock is abandoned.

You seem to imply that there was a chance that if we had stayed in the EU. We may/ would have seen the end of the unfair frozen pensions.unfortunately you could not have been further from the truth.

There has also been some talk of pensions held by pensioners in the more prosperous parts of the EU going to support those pensioners in the rest of the EU. If that does happen,then that is one more bonus for leaving the undemocratic EU.

The growing consensus for fair pensions is a matter of record (yoll find it discussed on the TVF UK pensions thread).

The lack of time to even consider the matter post Brexit is a matter of logic - parliament is going to be rather busy.

You offer no evidence of your claimed EU plans or indeed that the EU is undemocratic.

Unfreezing pensions of the tiny minority in countries like Thailand is not going to happen, in the same way that reducing pensions in the UK is not going to happen.

IIRC the EU supported this stance (freezing of pensions in some non-EU countries), and the Brit. govt. certainly has no interest in changing things.

The tiny minority is actually over 560,000 people.

It is around that figure because more people are being affected but also more of the older ones are sadly dying off.

[rickudon]

If you have a company pension and a Money purchase pension.

You take the 10k5 a year (tax free) out of the Money purchase pension (as drawdown) to live on until it's gone.

Then defer your company pension (which is usually index linked and gains 5-10% deferment bonus for every year you defer)

How easy is that?

(600gpb/year let's say purchased with around 16k, live for two years on that as (tax free) drawdown and have 20% more from your company pension)

My ex-wife retired just before the new rules so only had the annuity option. Also retired early and got less also. And of course, never asked for advice on what to do, as far as i know.

We should remember that many retirees (and voters)DO NOT have the experience to make an informed decision.

I agree at Annuity rates these days you would be a lucky to get your pension pot back before you die.

You will be lucky to get a 10% deferment bonus per year these days. The new state pension can be deferred but you get just over 5%, this offers no advantage on an actuarial basis (for a man).

As for taking financial advice, when i was made redundant in 2007 i was advised to invest it in a share based unit trust. I was intelligent enough to decline...... if i had i would still be looking at a small loss now. I dropped out of the market earlier this year as too volatile. Currently i am still making between 3-5% on my cash BUT it was in the UK and time based..... didn't have enough for offshore banking.

So i have to live on a pension now worth 10% less in Thailand - and will still qualify for my marriage extension, but a retirement visa looks very fragile on my income. I guess more British retirees are going to find there next extension problematic.

[MissAndry]

My ex-wife retired just before the new rules so only had the annuity option.

You will be lucky to get a 10% deferment bonus per year these days. The new state pension can be deferred but you get just over 5%, this offers no advantage on an actuarial basis (for a man).

So i have to live on a pension now worth 10% less in Thailand - and will still qualify for my marriage extension, but a retirement visa looks very fragile on my income. I guess more British retirees are going to find there next extension problematic.

You have been able to use drawdown for at least 8 years, although not as much as now. There was no need to buy an annuity.

My (former) husbands company pension offers me 9% (+RPI) deferment bonus per year.

And my potential income is also 10% less now, I say potential as I changed 1 years spending into baht last month, a drop in the GBP wasn't all that hard to predict.

If you're married to a Thai lady, and living in Thailand, you can always take a trip to Savannakhet in Laos for your VISA, 15 months for 5,000bht. No income evidence required. There was a load of married guys doing that last month when I visited Laos. If you needed to renew RIGHT NOW, it might be a better bet than transferring money over at the current exchange rate.

Edited July 2, 2016 by MissAndry

[rickudon]

Well, as i said ex-wife not that financially savvy and always thinks she knows best ..... guess that is why she is the ex-wife. Cannot say i was up to date about drawdown in the past, as not something that concerned me.

I had to take early retirement as after redundancy no decent job offers came up (start of financial crisis) and health issues precluded any heavy work. so pension was smaller than it would have been if i could have kept working. Fortunately my occupational pensions were index linked - so have kept up reasonably with the cost of living. Don't remember there being any deferment plan for them (and i did read the literature carefully). I also brought across a lump sum last week but only enough for a few months. I use the marriage visa extension and was only considering the retirement as an option post 65, but no point if there is even a small risk that you will not qualify in subsequent years. Main issue with Marriage extension is the forest of photocopies required and getting cramp countersigning them!

[sandyf]

Brexit Retirement Pension Effect = Large reduction in pension income.

My pension is now well below the 65K level and net week will be at the mercy of immigration as to wether the funds in my bank account will meet the combination criteria for the retirement extension.

[Oxx]

Brexit Retirement Pension Effect = Large reduction in pension income. My pension is now well below the 65K level and net week will be at the mercy of immigration as to wether the funds in my bank account will meet the combination criteria for the retirement extension.

What precisely is your problem? Exchange rates vary. Investment income varies. Capital values vary. All this is entirely predictable. If you were foolish enough to retire without taking these effects into account and allow a sufficiently large buffer against such changes, then you have no one to blame but yourself. Don't blame British people wanting to be free of the EU's pernicious influence for your folly.

On the plus side, you can go back to the UK and experience an uprated state pension, free medical treatment, and all the wonders of living in a multicultural society where immigrants (both legal and illegal) are considered a higher priority for state handouts than you are.

[MissAndry]

Living on the edge, never a good idea!

[HauptmannUK]

For exchange rate predictions I have always looked at Julius Baer - they are consistently rated most accurate in Bloomberg's rankings (http://washpost.bloomberg.com/Story?docId=1376-O9S9SM6K50XS01-6T98AQ6AH8S6ASF7EUAQK1B07J)

JB are predicting £1 = US$1.16 by September 30th, with the GBP continuing to fall to reach £1 = US$1 sometime in 2018. This will mean c. £1 = THB 36

I see no reason to disbelieve this prediction. The UK may have been the World's fifth largest economy - but it is running large current account and fiscal deficits, with a relatively inefficient economy (e.g. the French economy is roughly 30% more productive per hour of employed labour - Germany even more so - largely through lack of investment in UK infrastructure - now no chance of that being corrected in my lifetime). UK has already slipped from 5th to 6th in the space of a week. The BoE will have very little wriggle room on interest rates once the country enters recession. Prices for UK commercial property are collapsing right now - several property funds have suspended trading - a huge 'flashing red' warning sign. The negative effects of Brexit are appearing much more quickly than almost anybody predicted and Osborne's plan to slash corporation tax has been interpreted as a panic measure to stem a likely hemorrhaging of industrial investment (which it most certainly is).

The World does not owe the UK a living. Life is going to become very very tough for ordinary Brits. Like a certain lady once said,' You can't buck the market'.

Following some very good advice I received last September, I moved almost all my funds out of Sterling and into US$ and THB. At that time £1 = THB55. Was a good move and I am happy to have escaped the coming train-wreck.

A lot of chumps voted to have their necks wrung. Maybe they should complain to the people who got them into this mess and vote them out of office.... Oh, wait a minute ......

Edited July 6, 2016 by HauptmannUK

[kanderson]

I am not on retirement extentions, but surely this is something Thai authorities could take into consideration over the Brexit issue.

Thailand could easily instruct all their IOs to allow for this. But they won't and that's another reason why we are not "guests" in this country.

Why should Thailand change or ignore its rules specifically to accommodate one country.

Do citizens of the USA have to prove their earnings, or can they just simple write a letter stateing they do receive ex-amount?

[kanderson]

Americans are believed because we pay Social Security. I consider it my money - I paid in since I was 15. I hope I live long enough to get it all back. The average Social Security benefit is well above the 65,000 Bt needed for reirement visa.

I Know nothing about UK or other retirement schemes.

[pegman]

Brexit Retirement Pension Effect = Large reduction in pension income.

On the plus side, you can go back to the UK and experience an uprated state pension, free medical treatment, and all the wonders of living in a multicultural society where immigrants (both legal and illegal) are considered a higher priority for state handouts than you are.

But how about access to hot woman?

[Naam]

Americans are believed because we pay Social Security. I consider it my money - I paid in since I was 15. I hope I live long enough to get it all back. The average Social Security benefit is well above the 65,000 Bt needed for reirement visa.

I Know nothing about UK or other retirement schemes.

Social Security benefits, May 2016

Average monthly benefit (dollars) 1,233.18 = 43,155 Baht

https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/

[Jingthing]

Americans are believed because we pay Social Security. I consider it my money - I paid in since I was 15. I hope I live long enough to get it all back. The average Social Security benefit is well above the 65,000 Bt needed for reirement visa.

I Know nothing about UK or other retirement schemes.

Average is 65K per month? Where did you get that silly idea?

[rickudon]

Most of the UK pensioners i know here have pensions around the 1000-1500 pound mark. If the direst predictions come true, and we see dollar or euro parity, then retirement extensions will be a struggle, even marriage extensions for some. But, when we did a poll locally in Udon, over 80% said they supported Brexit?????

I wonder how many did seriously considered the financial implications before they voted. I suspect we will not see 50 baht to the pound again in our lifetimes (well, most pensioners lifetimes).

Anyway back to the UK for a last holiday, after that maybe it will be called little England......

[Jip99]

Most of the UK pensioners i know here have pensions around the 1000-1500 pound mark. If the direst predictions come true, and we see dollar or euro parity, then retirement extensions will be a struggle, even marriage extensions for some. But, when we did a poll locally in Udon, over 80% said they supported Brexit?????

I wonder how many did seriously considered the financial implications before they voted. I suspect we will not see 50 baht to the pound again in our lifetimes (well, most pensioners lifetimes).

Anyway back to the UK for a last holiday, after that maybe it will be called little England......

Rick, I disagree with you.

The reason for GBP/THB trading around 50 was because of sound economic fundamentals.

In the long run they will not change.

What we are seeing now is a knee-jerk, anti-risk sentiment from markets that are controlled by speculators and financial pimps serving their big money masters. All these things are cyclical and my money is on GBP/THB being 50 before the end of the year.

When I moved money over just before the vote (at a false spike of 52) I moved enough for 5 months.

If you are visit the UK bring back hard cash if you want to improve on the short-term rate of exchange.

The 80% in your pre-poll survey opted for Brexit knowing that there would short-term turmoil in the markets - that was no secret, or surprise. Markets settle down - they always do.

[Oxx]

Markets settle down - they always do.

If you were talking about stock markets, I'd agree. However, FX is different. Looking at THB/GBP

In 2007/8 the rate fell from 72 to 48. Since then it has only ever got back to 57 in 2009 and 56 in 2015. Seismic shift in FX rate do occur. Things are far too unclear at the moment to say whether another permanent change in the value of Sterling has taken place or not. I certainly wouldn't be betting on the "bounce back" argument just yet.

[rwdrwdrwd]

'Settle down' != 'bounce back'

I think 50 by the end of the year unlikely myself, time will tell.

Edited July 7, 2016 by rwdrwdrwd

[Jip99]

Markets settle down - they always do.

If you were talking about stock markets, I'd agree. However, FX is different. Looking at THB/GBP

In 2007/8 the rate fell from 72 to 48. Since then it has only ever got back to 57 in 2009 and 56 in 2015. Seismic shift in FX rate do occur. Things are far too unclear at the moment to say whether another permanent change in the value of Sterling has taken place or not. I certainly wouldn't be betting on the "bounce back" argument just yet.

I certainly wouldn't go as far as putting my hard-earned cash into a wager.

However, if I believe (and I do) in the reasons for voting LEAVE, and if I believe that the UK will come through this in decent shape (which I do) then I have to believe that the current drop is due to short-term sentiment - and GBP/THB will bounce back before the end of the year.

I rarely bet on things I cant control (apart from a Saturday football flutter) and too many vested interests are at play in this volatile market.

[rickudon]

I certainly wouldn't go as far as putting my hard-earned cash into a wager.

However, if I believe (and I do) in the reasons for voting LEAVE, and if I believe that the UK will come through this in decent shape (which I do) then I have to believe that the current drop is due to short-term sentiment - and GBP/THB will bounce back before the end of the year.

I rarely bet on things I cant control (apart from a Saturday football flutter) and too many vested interests are at play in this volatile market.

Well Jip, I do disagree with Leave, and as their is a political leadership vacuum in the parties and the leave campaigners, and no plans, it is hard to see the pound recovering this year. Until their are some concrete proposals as to what will happen after exit (from both the UK and the EU), I cannot see any significant recovery in the pound. So i would say 50 baht to the pound is years away. Under 40 baht to the pound is what some analysts predict for 2018, I know they can be wrong, but before the vote most were predicting 6-8% fall in GDP by 2020. WE will see, but no way will we see any benefits of leave before then, unless the EU implodes first.

[Naam]

Well Jip, I do disagree with Leave, and as their is a political leadership vacuum in the parties and the leave campaigners, and no plans, it is hard to see the pound recovering this year. Until their are some concrete proposals as to what will happen after exit (from both the UK and the EU), I cannot see any significant recovery in the pound. So i would say 50 baht to the pound is years away. Under 40 baht to the pound is what some analysts predict for 2018, I know they can be wrong, but before the vote most were predicting 6-8% fall in GDP by 2020. WE will see, but no way will we see any benefits of leave before then, unless the EU implodes first.

this is getting interesting! and because i'm always eager to learn i ask

"in what way would the UK benefit if the EU implodes, assuming the country has left before the implosion?"