Finally Britain begins pension reform

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harmonyudon
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Finally Britain begins pension reform

Post by harmonyudon » October 5, 2012, 10:38 am

Britain's biggest firms were from Monday required to pay into pension schemes aimed at benefiting millions of workers, as the government struggles to finance the cost of retirement.

"The biggest change in pensions for over a hundred years _ automatic enrollment _ starts today,'' the Department for Work and Pensions said in a statement.

read more : http://www.bangkokpost.com/breakingnews ... ion-reform


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Finally Britain begins pension reform

Post by rick » October 5, 2012, 4:28 pm

It will have little affect to start with, as most of these larger companies have reasonable pension schemes and to be honest anyone who opted out was pretty dumb unless they had some really unusual reason not to do so. The crunch will come when smaller firms have to comply and cough up pension contributions towards their employees - in my last job in the UK my employers refused to fund a pension - i felt sorry for the employees who could work for 50 years there and where then retired and were completely dependant on the state pension for support - which is barely enough to pay the rent let alone anything else.

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Finally Britain begins pension reform

Post by rreddin » October 5, 2012, 7:35 pm

For the present, it only applies to companies with more than 120,000 employees, but by February 2014 all the larger employers, that is those with more than 250 employees, will be included. These companies already have a pension scheme in place. SME's are phased in from April 2014 to February 2018. Many of the larger and medium sized SME's also have pension schemes in place.

As rick says, it will not make much difference until all the small employers are included, but that is more than 5 years away assuming the timetable is not extended.

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Finally Britain begins pension reform

Post by harmonyudon » October 6, 2012, 11:08 am

Why only huge companies are obliged??

In the long term its, I think for the UK, better if its obliged by law that every employee build up pension
via their employers, also those who works for an agency (temporarily workers).
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Finally Britain begins pension reform

Post by rick » October 7, 2012, 12:38 pm

Well, that's the idea of this legislation, the delay for smaller employers is to give them time to decide if they want to setup their own scheme or pay into a 'commercial' one run by an existing private pension provider. The problem with private pensions setup by individuals is that the overheads paid to the provider can totally wipe out any growth in value of the money paid in - certainly in the investment market available now.; the only advantage was some tax relief. The new compulsory pensions should have lower overhead costs AND the employer has to pay in as well.

The reality of 'money purchase' pensions as compared to final salary schemes is that the pensions they provide have declined dramatically in recent years - typically by over 50%. This means that the yardstick of a pension of about half your salary (as provided by a typical final salary scheme after 30-40 years) now becomes typically 25% or less when money from a pension pot is used to buy an annuity - it has been suggested that you would need to pay in 20% of your income to a money purchase scheme to ensure a 'good' pension. Many young people just cannot see the benefit of that when cost of living in the UK is so high.

I'm glad I have already paid for my pension, and it was based on final salary. But i do wonder what it will be like for my children.

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Finally Britain begins pension reform

Post by rick » October 7, 2012, 12:58 pm

As an example of money purchase, if i was to start getting my pension now, i would need a pension pot worth £450,000 to get what i am already getting. I cannot see how i could ever have accumulated that much if i had been paying it in myself to buy an annuity.

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Finally Britain begins pension reform

Post by harmonyudon » April 15, 2013, 12:26 pm

rick wrote: I'm glad I have already paid for my pension, and it was based on final salary. But i do wonder what it will be like for my children.
Hard to maintain a pension based on final salary nowadays. Problably they will follow the corporate pension systems like in NL, now more based on the average salary or a system of the available premium. Rick, you are very fortunate with your final salary based pension :)
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Finally Britain begins pension reform

Post by rick » April 15, 2013, 9:35 pm

Yes, I am fortunate. 10 years ago majority of pensions were final salary i think. Now less than 20% and most closed to new applicants. However, my final salary pension is still peanuts - just enough to qualify for marriage visa if and when i decide to go for it. Many Fat cat bankers get bonuses in one year bigger than all the pension i will ever collect.

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Finally Britain begins pension reform

Post by harmonyudon » April 15, 2013, 11:03 pm

rick wrote:...my final salary pension is still peanuts - just enough to qualify for marriage visa if and when i decide to go for it. Many Fat cat bankers get bonuses in one year bigger than all the pension i will ever collect.
If your work related (company) pension is enough to qualify for a retirement visa its I think not peanuts. Or, do you mean your company pension + government pension?
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Finally Britain begins pension reform

Post by rick » April 16, 2013, 1:44 pm

Work related pension - about 40,000 baht a month. After tax, about 37,500 baht. Pretty hard to live on here without some compromises (have car loan etc. out of that and children to support). When i get state pension as well, will be comfortable, but still probably below 65,000 baht a month. So not enough for retirement visa, only marriage visa (and that is borderline at current exchange rates). So i do not think my final salary pension is that wonderful. I could probably get more on benefits if i took the wife and daughter back to UK.

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Finally Britain begins pension reform

Post by harmonyudon » April 16, 2013, 1:49 pm

I'm sorry I've mixed up marriage and retirement visa requirements. Its indeed not so much. Did you work for 1 employer in your active life?
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Finally Britain begins pension reform

Post by rick » April 17, 2013, 9:48 pm

Only one job which had a pension - for 25 years. Made redundant and due to health issues and lack of available work had to go into early retirement. 25 years may sound like a lot but meant a pension of just over 25% of earnings. Enough to survive, but not enjoy, life in the UK. At current exchange rates, Thailand is not much cheaper but somewhat more enjoyable....

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Finally Britain begins pension reform

Post by harmonyudon » April 18, 2013, 8:06 am

rick wrote:Only one job which had a pension - for 25 years. Made redundant and due to health issues and lack of available work had to go into early retirement. 25 years may sound like a lot but meant a pension of just over 25% of earnings. Enough to survive, but not enjoy, life in the UK. At current exchange rates, Thailand is not much cheaper but somewhat more enjoyable....
Build up in 25 years and get a life time pension of around 40000 baht (with current exchange rate) as from an early retirement age and government old age pension expected on top is I think a good pension which many who lives in TH will envy you. :)

Enjoy.

George
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Finally Britain begins pension reform

Post by rick » April 18, 2013, 10:40 am

Oh, i am sure there are many worse off and many better off; probably once i hit 65 i will just be in the top 50%, but that's all. After all, theoretically no one should be here as a retired/married person if they do not have 40,000 a month (i know there are a few exceptions). Anyway, compared to the UK (which is the most sensible, as that is where my pensions come from), the average pension was approximately £1500 month - with the state pension i will still probably be below that.

However, 10 years ago i was expecting to have 20% more than this, and work until i was 60. So have had to make some adjustments. I guess my career has been downhill for the last 30 years - prior to that i had already bought and paid for my first house, which i then had to sell at a loss, but that's another story.

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Finally Britain begins pension reform

Post by harmonyudon » April 18, 2013, 11:38 am

rick wrote:...Anyway, compared to the UK (which is the most sensible, as that is where my pensions come from), the average pension was approximately £1500 month
Problably build up in 40 years of active duty and starts at pension age. Relatively your pension, started earlier, is a then good pension.
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Finally Britain begins pension reform

Post by rick » April 18, 2013, 4:50 pm

Well, 'Good' is a vague term. To me, that would mean better than normal. Also as per my comment that it was peanuts, that is compared to as i said the bonuses that some thousands get paid in the financial sector. And very few actually save into a pension for 40 years - one who did, and worked for me for many years in my main job, retired with around £1500 a month from his pension (and state pension still to come). But the average pension paid by my employer was £780 a month - because most have less than 25 years service. But many have several small pensions. But 25% of the UK workforce do not have an occupational pension. So, those with no pension (other than state pension) drag the average pension down.

I understand that Dutch pensions are 50% better than the UK.... Do you have one George?

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Finally Britain begins pension reform

Post by harmonyudon » April 18, 2013, 6:09 pm

rick wrote: I understand that Dutch pensions are 50% better than the UK.... Do you have one George?
Yes, the Dutch overall pension system in the best in the world for many years. Now the 2nd best. A lot of Dutch living in TH are officially declared 100% disable and some, like Jack, many know him with his 2 wooden legs, received more +/- 1million baht per year when the baht was 49 to the Euro. This is only government disable pension under the old regime.

Me, in NL I've worked for large companies and of course build up some pension. The last 22 years in NL I had my own companies and you can build up pension as full shareholder. One company was sold and you can put that in a specially formed limited pension co. (Stamrecht bv)

Actually I am not officially retired yet. Perhaps I look old but I'm younger than most expats in Udon I think...hehehe
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Finally Britain begins pension reform

Post by rick » April 18, 2013, 11:24 pm

Well, never met you so you could be 25 or 90. If i was relying only on pension from UK i would never have made it to Thailand - but had some redundancy and over the years managed to accumulate some property - enough to buy off the ex-wife anyway.

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