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NHANORAK

British Pension Changes

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spooks

Yeah I am in a similar situation... if I read it right they (HMRC) are going to allow you six years after you reach retirement age to put right the contributions from the years they introduced all the changes... which means it's probably worth you (and me) putting it right etc.

It is if they will allow my wife and kids to benefit in event of my death. If the remove the benefit as proposed then i see little point in adding anything. I think as I have been out 12 years I am excluded anyway!!

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sperry

even at class 3, buying extra years in the Uk is no brainer.

 

assume you no years at all; a full pension will (with single tier) cost you 35 * 700 = 24500 (if my mental arithmetic is correct.

 

this will get a pension of around 150 a week, or 7800 a year.

 

an annuity that gets you index linked pension of 7800 would  cost you over 100k

 

and at class 2, the ratio is around 4 times better

 

do the math...... then get out your cheque book

Edited by sperry

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spooks

even at class 3, buying extra years in the Uk is no brainer.

 

assume you no years at all; a full pension will (with single tier) cost you 35 * 700 = 24500 (if my mental arithmetic is correct.

 

this will get a pension of around 150 a week, or 7800 a year.

 

an annuity that gets you index linked pension of 7800 would  cost you over 100k

 

and at class 2, the ratio is around 4 times better

 

do the math...... then get out your cheque book

 

even at class 3, buying extra years in the Uk is no brainer.

 

assume you no years at all; a full pension will (with single tier) cost you 35 * 700 = 24500 (if my mental arithmetic is correct.

 

this will get a pension of around 150 a week, or 7800 a year.

 

an annuity that gets you index linked pension of 7800 would  cost you over 100k

 

and at class 2, the ratio is around 4 times better

 

do the math...... then get out your cheque book

and 100% of nothing is still nothing.

 

Some of us who can do the math have calculated that IF the proposal currently going through the debate procedure is carried our wives will get nothing. Wives already in receipt will not be affected.  The no-brainer then is to invest the 24,500 into an alternative rather than see it lost.

 

Single guys who have no such considerations will of course see it differently, no argument.

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NHANORAK

and 100% of nothing is still nothing.

 

Some of us who can do the math have calculated that IF the proposal currently going through the debate procedure is carried our wives will get nothing. Wives already in receipt will not be affected.  The no-brainer then is to invest the 24,500 into an alternative rather than see it lost.

 

Single guys who have no such considerations will of course see it differently, no argument.

If I'm understanding this correctly though Sperry is making a recommendation based on Financial sense, while you may be basing yours on "principle"? In Sperry's example a person would get £7800 per annum for the rest of their life from an outlay of £24500. Assuming you could pay the money just before retirement and you didn't have a less than average life expectancy, you would get the investment back many times over. That means your wife would benefit, because there would be more in your estate on your death than otherwise. The £24500 (if it was available) could also be invested and growing in the measntime.

 

All hypothetical though, as you say they limit what years you're be able to buy anyway at present.

 

 

 

do the math...... then get out your cheque book

 

How long you been out of the UK Sperry? We still say Maths. :)

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spooks

"If I'm understanding this correctly though Sperry is making a recommendation based on Financial sense,"

 

For a single person who has nothing to lose yes it makes sense

 

For a person with more than 10 years to wait for a pension that may be deemed as of no use to their spiuse and children it makes no sesne. the review of what makes sense or not will be out sometime this year. The sensible thing would be to wait and see

 

Would you really want tp invest in any investment the sume of 24.500 after being told there will be noting for your family on death. yet if you invest the same amount for the next 10 plus years and die the money comes back plus the proceeds of the investment

 

Different folks different strokes according to needs and timelines there is no one size fits all especially if there is a case of 'medical history involved'

 

A detailed "Know your customer fact find" will be needed for each case prior to making any claims that are decided as No brainers when in fact the brain says otherwise.

 

 

I must have been out the Uk too long as well as it was always a case of ' do the math' not the maths as it would be a single calculation.

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JohnSurrey

 

 

even at class 3, buying extra years in the Uk is no brainer. assume you no years at all; a full pension will (with single tier) cost you 35 * 700 = 24500 (if my mental arithmetic is correct. this will get a pension of around 150 a week, or 7800 a year. an annuity that gets you index linked pension of 7800 would cost you over 100k

 

 

In order to compare your options you need to be comparing like with like... sperry is comparing paying 35x700 with buying an annuity today...

 

In reality you pay your first £700 35 years before you draw your pension so you need to allow for that and the fact that you'll pay your second £700 34 years before you draw your pension... by saying I could put that £700 in the bank or on the stock market and earn x% for 35, 34, 33, 32, 31 years etc

 

Assuming the Gov increases the contributions by 1% each year and you could earn 5% interest per annum you'd be paying out about £75,000 to get a pension that then returned you £7,500

 

Assuming the Gov increases the contributions by 1% each year and you could earn 7% interest per annum you'd be paying out about £115,000 to get a pension that then returned you £7,500

 

The other problem you have with pensions is guessing what the annuity rate will be when you retire... these go up and down etc... so that makes it hard to compare too... you don't know what annuity rates are going to be when you draw your pension - you can only guess.

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sperry

In order to compare your options you need to be comparing like with like... sperry is comparing paying 35x700 with buying an annuity today...

 

In reality you pay your first £700 35 years before you draw your pension so you need to allow for that and the fact that you'll pay your second £700 34 years before you draw your pension... by saying I could put that £700 in the bank or on the stock market and earn x% for 35, 34, 33, 32, 31 years etc

 

Assuming the Gov increases the contributions by 1% each year and you could earn 5% interest per annum you'd be paying out about £75,000 to get a pension that then returned you £7,500

 

Assuming the Gov increases the contributions by 1% each year and you could earn 7% interest per annum you'd be paying out about £115,000 to get a pension that then returned you £7,500

 

The other problem you have with pensions is guessing what the annuity rate will be when you retire... these go up and down etc... so that makes it hard to compare too... you don't know what annuity rates are going to be when you draw your pension - you can only guess.

 

sure but you would be doing well to get 5% interest over that period (after tax) in a "rock solid" hahaha investment

anf of course you cant buy the 35 years in a oner......you can only go back about 5 years.. though i think at the moment the government is extending that period to allow women to catch up their backlog. so for 15% of your required input you would have earned nothing.

 

also the trouible is as government run out of money they will simply steal your pension.  in your second example in cyprus you would lost all/most in the recent grab of bank accounts

 

and anyway, most of my voluntary contributions have been class 2; which means for every 150 i invest, i get 200 a year back.  those are the sort of odds i can handle.

Edited by sperry

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NHANORAK

 

 

In reality you pay your first £700 35 years before you draw your pension so you need to allow for that and the fact that you'll pay your second £700 34 years before you draw your pension... by saying I could put that £700 in the bank or on the stock market and earn x% for 35, 34, 33, 32, 31 years etc

 

Adding extra years 35 years ago would have cost a fraction of todays cost of £700. So you wouldn't be compounding £700 as in your example.

 

I haven't checked lately, but I think you'll find the cost to buy an index linked pension of £7500 now would be significantly more than £115k.

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JohnSurrey

 

 

Adding extra years 35 years ago would have cost a fraction of todays cost of £700. So you wouldn't be compounding £700 as in your example.

 

Yes that's right - that's why in my example I simply compounded £700 a year assuming an increase of 1% per annum... i.e. first year £700 last year £980 as it was only intended to highlight sperry's poor comparison...

 

You could find out what the contributions would have cost 30 years ago going forward and then add real interest rates (starting with say 16% for 1980) to bring everything up to now 2014... and then project forward the remainder at your preferred rate for a better comparison.

 

I don't know what the cost of buying a £7,500 annuity is either but you'll get a different quote if you want to include benefits for your wife etc... so again it's not a "no brainer" ... as I said above the problem with buying annuities is the rates change... you have to guess what rate you're going to get when you cash in your chips and draw your pension.

 

Having said that - for me it is actually a no brainer because I cannot turn the clock back now - I've left it too late!

 

I cannot start saving now and match it - it would be too expensive.... which is one of the reasons I'm thinking of going back to the UK and working for a few more years. 

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NHANORAK

Yes that's right - that's why in my example I simply compounded £700 a year assuming an increase of 1% per annum... i.e. first year £700 last year £980 as it was only intended to highlight sperry's poor comparison...

 

You could find out what the contributions would have cost 30 years ago going forward and then add real interest rates (starting with say 16% for 1980) to bring everything up to now 2014... and then project forward the remainder at your preferred rate for a better comparison.

 

I don't know what the cost of buying a £7,500 annuity is either but you'll get a different quote if you want to include benefits for your wife etc... so again it's not a "no brainer" ... as I said above the problem with buying annuities is the rates change... you have to guess what rate you're going to get when you cash in your chips and draw your pension.

 

Having said that - for me it is actually a no brainer because I cannot turn the clock back now - I've left it too late!

 

I cannot start saving now and match it - it would be too expensive.... which is one of the reasons I'm thinking of going back to the UK and working for a few more years. 

 

It's just me not getting it, coz you and Sperry obviously do! I'm going have a long cool drink. :beer2:

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spooks

if your contributions are entirely about you and not your family if married to a foreigner then it is probably good to go

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sperry

Yes that's right - that's why in my example I simply compounded £700 a year assuming an increase of 1% per annum... i.e. first year £700 last year £980 as it was only intended to highlight sperry's poor comparison...

 

You could find out what the contributions would have cost 30 years ago going forward and then add real interest rates (starting with say 16% for 1980) to bring everything up to now 2014... and then project forward the remainder at your preferred rate for a better comparison.

 

I don't know what the cost of buying a £7,500 annuity is either but you'll get a different quote if you want to include benefits for your wife etc... so again it's not a "no brainer" ... as I said above the problem with buying annuities is the rates change... you have to guess what rate you're going to get when you cash in your chips and draw your pension.

 

Having said that - for me it is actually a no brainer because I cannot turn the clock back now - I've left it too late!

 

I cannot start saving now and match it - it would be too expensive.... which is one of the reasons I'm thinking of going back to the UK and working for a few more years. 

 

well trouble is you are not comparing the right stuff.

 

when annuity rates are high, interest rates are high which tends to mean high inflation..... so ur UK state pension will be increasing rapidly too.

 

and you are not thinking this through correctly.

 

the correct course of action for you is to buy as much uk state pension as you can, borrowing the money from the bank if necessary. uk single tier will be linear, every year you pay gets you 1/35 of the full pension. the maximum backlog you can pay just now is about 3.5K.  if u invest that in a widows pension fund, the return will barely cover the bank chages of sending you the money, while in the UK state pension it will get you over 1k gbp a year.

 

if you want a widows pension as well, then you will need to do buy that as well. the worst thing you can do is put all your eggs in one basket, that is one pension that gives a widows benefit. and thats before you consider that the more you centralise your pension payemenst the more risk you have of losing everything if the fund goes belly up...... ot it makes it easier for the government to steal when they need to buy some more votes.

 

i doubt if you can get a single better pension investment anywhere in the world than uk voluntary contributions. it is a no brainer.

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fivestarph

Does anyone know what are the advantages/disadvantages of having one's UK Pension paid into one's UK Bank account vs your Philippine Bank Account.

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spritsail

Does anyone know what are the advantages/disadvantages of having one's UK Pension paid into one's UK Bank account vs your Philippine Bank Account.

I get a UK cccupational pension thats paid to the Philippines. I do not have a UK bank account so it has to go through an intermediary bank that has a link up with the Philippine Bank here. It usually takes around 2 to 3 days except when there is a weekend or a bank holiday or Easter etc.  In a couple of years time I qualify for my UK state pension (assured by Newcastle Pensions office) so I am hoping they will send it directly to the Philippines. I think one of the disadvantages is the number of currency conversation that it may go through  i.e pounds to dollars to peso.

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Durham

Your state pension can be paid into a Philippine bank a/c either GBP or Pesos and the conversion to pesos is based on the GBP. The disadvantage of having it paid into a UK bank a/c could be the transfer charges when you transfer to your Philippine a/c.

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philuk

The government will reduce your state pension if you are living outside the EU, so don't expect the full amount to be deposited into your bank in the Philippines

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Skywalker

 

 

The government will reduce your state pension if you are living outside the EU, so don't expect the full amount to be deposited into your bank in the Philippines

 

Very Country specific, for instance in Thailand your UK state pension is frozen at the rate it was when you went to live there, or received your pension.

 

http://www.pensionsadvisoryservice.org.uk/state-pensions/living-overseas

 

However the Philippines has a reciprocal arrangement which means your state pension remains index linked and is subject to annual increases in line with UK recipients.

 

The only issue really is the prevailing exchange rate.

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fivestarph

Many thanks seems half of one and the other. As I believe my pension will be less than the tax threshold and I still maintain a UK bank account I will have it paid there  to minimise Foreign exchange losses and charges and have some beer money if and when I pay the UK a visit.

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Skywalker

If you reach UK state pension age, with full minimum contributions of 30 years, for example, your actual weekly cash pension is a meagre £113 a week.

 

Beer money is about all it is!

 

I am 55, and just got a letter from the DWP telling me I can't get my state pension until I am 66 (previously 65).  I do have the minimum 30 years contributions, and will continue to add to that through my UK salary.  I expect that the pension age will go up even further, before I collect it.

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GoHuk

If you reach UK state pension age, with full minimum contributions of 30 years, for example, your actual weekly cash pension is a meagre £113 a week.

 

I hear a lot of different figures and often wonder why there is a difference.  I receive a full pension with no additional benefits and as of this month it equates to 129.6 GBP per week - not a lot, I grant you but a little better than the 113 GBP you quote.

 

I was interested in philuk's comment about receiving less if you live outside the EU.  The way he wrote it implied that there is a deduction from the capital amount.  Is that true?  Surely not.  Most of us are aware of the reciprocal agreement that increases the UK State Pension here in PH in line with the increases in the UK.  I believe the rule is that the State Pension shall increase by the cost of living index (presumably UK) or 2.5% whichever is greater.  The increases are applied each April which means that the it shows in the May payment if you elect to have your pension paid every four weeks.

 

Recent changes to the rules are causing confusion and proposed changes are compounding that confusion.  Yes, the pensionable age has increased from 65 to 66 for men and will also become 66 for women in quite soon.  The married man's allowance - or whatever it became to be called - was abolished for people born after 1944 (about).  For us youngsters it was promised that our wives would receive a full pension in their own right once they reached pensionable age.   This was to counter the practice of paying for young wives of senior Britishers (and the other way around if I am to be politically correct).  I couldn't fault this change as it seemed much fairer.

 

Now, in the last Queen's Speech those of us who live abroad are threatened,  The government proposes to introduce law whereby foreign wives who are not resident in the UK do not qualify for a pension.  I can't say more than this because as far as I know draft legislation has not been put before the House.  Hopefully the House will continue to be busy on other matters and this change will be deferred.

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Skywalker
I hear a lot of different figures and often wonder why there is a difference.  I receive a full pension with no additional benefits and as of this month it equates to 129.6 GBP per week - not a lot, I grant you but a little better than the 113 GBP you quote.

 

This is because you worked longer than the 30 year minimum, which equates to the £113 I quoted.  

 

Each qualifying year adds about £3.77 a week to your basic pension which is currently £113.10 a week.  I have my State Pension Statement Breakdown in front of me.  I'm not making this up.

 

For UK personnel, you can request a state pension forecast from the DWP, details are at www.direct.gov.uk

 

As I previously mentioned, the UK State Pension is not affected if you live in the Philippines.  The annual increases will be applied as if you were still living in the UK.

Edited by Skywalker
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spooks

"Now, in the last Queen's Speech those of us who live abroad are threatened,  The government proposes to introduce law whereby foreign wives who are not resident in the UK do not qualify for a pension.  I can't say more than this because as far as I know draft legislation has not been put before the House.  Hopefully the House will continue to be busy on other matters and this change will be deferred"

 

Yes this is the one that pisses me off, in effect it has very little to do with my wife it hurts my two kids who are British with UK passports.

 

I think the proposal will get sanitized as the spectre of British children being  dumped at emabassy gates the world over for repatriation and the state to cover their care costs would be a vote killer. let alone the arithmatic makes it a clear no brainer that it would be a very dumb, dull witted move

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Kuting

Thanks for this information x

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Salty Dog

Sounds like your system is a lot different than ours in the US.

 

How hard is it to sign up to start getting your payments?

 

With me, all I did was sign into the Social Security website and supply some information so they could verify I was who I said I was. I provided my bank info so they could direct deposit my payment and that was it.

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spooks

Sounds like your system is a lot different than ours in the US.

 

How hard is it to sign up to start getting your payments?

 

With me, all I did was sign into the Social Security website and supply some information so they could verify I was who I said I was. I provided my bank info so they could direct deposit my payment and that was it.

Similar, if overseas we get an annual sign off by third party to confirm we still alive and not in the freezer

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