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NHANORAK

British Pension Changes

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NHANORAK

 

 

panther, on 25 Jan 2014 - 8:43 PM, said: I know a guy who paid into a company pension scheme for 17 years and lost the lot .reason his company raided their pension pot to try and keep the company afloat but went bust in the end so he has no pension and you wonder why so many people are reluctant to enter one .robert maxwell is another case spent all the pension money .The thing is its alright for people to go on about saving and putting money into pensions etc etc thanks to the goverment opening up the borders and letting in any european who wants to come which in turn drove down peoples wages because the europeans would work for less money .many people are now working for minimum wages and due to the high cost of living find it just about enough to get by let alone save money .I have no pension myself but plan to rent out rooms in my house to help my living costs when I reach pension age or should I say if I reach pension age which for me is now 67.

Thats very true some people would like to save for a pension, but their wages mean they have insufficient income to enable that. I feel great sympathy for those people. However, there are some who generate a surplus income and choose to spend that on booze down the pub and the latest trainers, etc. Its those that need to recognise they can make minor adjustments to their lifestyle now to help them live an easier retirement. I actually had a very good paying BT managerial job, but decided I wanted to retire from work earlier. So in addition to that job I actually took on a part time gardening job and for a while I delivered food for a Chinese Takeaway. All of that income I invested in pensions and ISAs to ensure I could retire early. Put on a couple of lbs with all the Chinese food though.

 

The same thing happened to me. A massive pension fund with a major company was transferred to a subsidiary (for whom I worked) who then spent the money and went bust. As for changes in the Government scheme, they have plenty of money from the contributions, if only they had spent it on pensions etc and not squanderd it on their pet projects.

I'm really sorry to read that, and I really feel for you to be in that situation through no fault of your own.. I've a friend too that suffered the same thing.  Doesn't the Government Pension compensation scheme cover that? I've read about companies being taken over and the existing schemes being really drstically changed, but at least they end up with something.

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Alan S

Doesn't the Government Pension compensation scheme cover that?

 

 

Only in some cases. When the company is foreign owned (as was the subsidiary in my case) you get nothing.

 

Back then, working for a major concern, one didnt question the actual ownership of the minor companies they "owned" nor look at the fine points of law governeing pensions.

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sperry

The same thing happened to me.

 

A massive pension fund with a major company was transferred to a subsidiary (for whom I worked) who then spent the money and went bust.

 

As for changes in the Government scheme, they have plenty of money from the contributions, if only they had spent it on pensions etc and not squanderd it on their pet projects.

 

i cant be bothered looking it up but that satement is false.

 

the 3 main pillars of social security in uk (health, pensions, unemployment) consume all of NI, Income tax and VAT in the UK.

 

the internal accounting in the government is a complete joke. im pretty sure the UK doesnt even publish what perecentage of NI contributions is supposed to cover pensions.

 

and on a side topic, pensions age in the UK will start dropping soon as lie expectancy will start to drop soon.

 

LE going up now as the people living long went through wartime rationing, food shoratges etc and are relatively healthy.

 

once the fat diabetic slobs start getting old they will die much much younger.

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Britishandproud

I work for ASDA ( Walmart) in UK and they automatically take money every month for my pension. I'm only 23 now and do you lot think it's best to keep in? Or opt out and save on my own for when I retire?

 

It's a lot of years away yet and I don't reckon I would even hit retirement age. Then there's a chance I would or it will be left for a wife if I was to marry.

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NHANORAK

I work for ASDA ( Walmart) in UK and they automatically take money every month for my pension. I'm only 23 now and do you lot think it's best to keep in? Or opt out and save on my own for when I retire?

 

It's a lot of years away yet and I don't reckon I would even hit retirement age. Then there's a chance I would or it will be left for a wife if I was to marry.

 

I know it's not always easy to think about retirement at your age, but the biggest mistake you could make would be to leave the scheme. I cashed in 2 years of a scheme when I was your age and I regret that decision now.

 

I assume ASDA make contributions to the scheme, so in effect you're getting a real boost to your contributions. Presumably its what they call a money purchase scheme and your money goes into a pension plan that buys units each month. By starting the scheme now you will really give the money a chance to grow until you retire. Can't remember the figures now, but for each 10 years you put off retirement saving you would need to something like double your savings to end up with the same pot. i.e. if you're saving £20 a month now, it would need to be £40 a month to get the same amount if you only started when you're 33 (compounding effect).

 

Also company schemes usually offer better compensation packages for your future wife, including a death benefit.

 

If you opt out and save on your own, you will only be entitled to tax relief on the contributions. These will not be anywhere as near as much as the amount ASDA contribute.

Edited by NHANORAK
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Britishandproud

I know it's not always easy to think about retirement at your age, but the biggest mistake you could make would be to leave the scheme. I cashed in 2 years of a scheme when I was your age and I regret that decision now.

 

I assume ASDA make contributions to the scheme, so in effect you're getting a real boost to your contributions. Presumably its what they call a money purchase scheme and your money goes into a pension plan that buys units each month. By starting the scheme now you will really give the money a chance to grow until you retire. Can't remember the figures now, but for each 10 years you put off retirement saving you would need to something like double your savings to end up with the same pot. i.e. if you're saving £20 a month now, it would need to be £40 a month to get the same amount if you only started when you're 33 (compounding effect).

 

Also company schemes usually offer better compensation packages for your future wife, including a death benefit.

 

If you opt out and save on your own, you will only be entitled to tax relief on the contributions. These will not be anywhere as near as much as the amount ASDA contribute.

Thanks for the reply, what ever ASDA take from me every month, They match it. I guess the best thing to do is, keep in and also save myself.

 

I don't plan to stay in ASDA all my life, But that's just a plan. We will see what the future holds.

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spooks

Thanks for the reply, what ever ASDA take from me every month, They match it. I guess the best thing to do is, keep in and also save myself.

 

I don't plan to stay in ASDA all my life, But that's just a plan. We will see what the future holds.

For flexibility and in ADDITION and NOT instead of your pension scheme you may wish to consider surplus funds going to an ISA, stock holding. If I was your age the flexibility and ability to buy into AIM would make me very enthusiastic to do this 

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JohnSurrey

I've just been looking at all this from my own point of view... I will get my pension when I'm 66... and I have gaps in my NIC record which I need to decide how to make up...

 

First of all if you move abroad and you want to continue paying in to the UK scheme you can - you pay a Class 2 NIC which is about £3/week - so for £150 pounds a year it's a good deal as they've now clarified what you're going to get £144/week - to do it properly you should register before you go abroad.

 

 

I currently have 27 years contributions in the UK... and I have a 5 of years which I could make good ... 2009/10 to 2013/14... In my case I can pay HMRC Class 3 NIC which is about £13/week and make those years good... that's about £700 year - not something I'm in a hurry to do...

 

However if you don't pay the earlier years within 2 years then you'll be hit for the new rate - i.e. it might go up from £13/week to £14/week...

 

Why am I bothering to tell you all this...

 

Well the good news is because the UK Gov is changing everything you're now going to get extra time to make good gaps in your pension record fixed at the 2012/13 rate.... up until 2019

 

So don't rush out and make good your gap without checking out how long you have to make it good...

 

One other thing related to this topic is what they call Widows Parent Allowance

 

Given that your wife is not going to be able to get the 60% of your UK Pension that the "Thai Brides" used to be marrying guys for... those of you who have children might be comforted to know that your wife might still be able to claim WPA - if that is you have 44 years of National Insurance contributions and dependent children (or even one in the womb)... apparently this is payable in the Philippines because the UK have Social Security agreement with RP. There's also a one off payment too called Widows

 

I'll finish this later

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spooks

"Given that your wife is not going to be able to get the 60% of your UK Pension that the "Thai Brides" used to be marrying guys for... those of you who have children might be comforted to know that your wife might still be able to claim WPA - if that is you have 44 years of National Insurance contributions and dependent children (or even one in the womb)... apparently this is payable in the Philippines because the UK have Social Security agreement with RP. There's also a one off payment too called Widows"

 

Yes please as i am sure very few if any have that number of years(44) of NI even if they worked all their lives in the UK

 

My understanding was that you could make up years but not if you had been out of the system for more than 5 years, ie an expat.

 

My reluctance on buying more years to take it up to 30(am 7 years short )has been the threat of not allowing my non Thai bride and children to collect any benefit.

Edited by spooks

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JohnSurrey

 

 

My reluctance on buying more years to take it up to 30(am 7 years short )has been the threat of not allowing my non Thai bride and children to collect any benefit.

 

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.

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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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