More bad news for UK pensioners

Post by **arjay** » March 22, 2012, 12:42 pm

Things are not going too well for UK subjects living in Thailand.

I recently learned that if I live in Thailand when applying for the UK state pension I won't receive the annual cost of living increases. My state pension will thus effectively be frozen at its starting figure.

Now in yesterday's UK budget the Chancellor announced that from next year (2013-14) the normal tax free "Personal Allowance" will be increased from £8105 to £9205, but that the higher Age Allowance relief of £10570 (applicable to those over 65 years of age) will be phased out: In fact, frozen at that level (£10570) for those already receiving it, and those who might shortly have expected to receive it, they simply won't get it. Instead they will just get the normal Personal Allowance (of £9205 wef April 2013). Well thank you Mr Chancellor.

(I did note the intention to increase the state pension to £140 from some unspecified point in the future).

Let's hope I won't get sick in my old age and return to the UK for treatment, (that I've paid NI contributions towards) as it would seem that I won't qualify for medical treatment on the NHS because I live in LOS.

It all sounds a bit like: "Heads they win and tails I lose"!

Some details on the UK Budget and Age Allowance here:

http://www.guardian.co.uk/uk/2012/mar/2 ... tax-breaks

http://collinssarristatham.com/wp-conte ... DGET12.pdf

Post by **FCBasel1967** » March 22, 2012, 2:18 pm

Unfortunately this is just a start. Defrauding and hence impoverishing pensioners is an important part of the grand game which is called financial repression.

Although all pensioners from all countries will be affected in the future, the UK is kind of a worst case because the country is leveraged like no other and its government is totally bankrupt. The currency only survives temporarily because the BOE is printing new GBP and buys up worthless gilts. The problem is that you can run such a criminal scheme only for a certain time. Once the defrauded populace realizes what is going on, the consequences are enormous and the sudden fall of the GBP will unprecedented. Probably only comparable to the Mark in Weimar Republic (Germany) in 1922/23). This is simple mathematics of compounding money printing rates and the necessity to increase the rate of printing just to keep the ponzi scheme afloat.

Post by **Prenders88** » March 22, 2012, 3:28 pm

"Probably only comparable to the Mark in Weimar Republic (Germany) in 1922/23). This is simple mathematics of compounding money printing rates and the necessity to increase the rate of printing just to keep the ponzi scheme afloat".

Yes which was one of the causes that led to the rise of the Nazi Party and World War 2.

Gordon Brown of the Labour party has done more damage to pensions, when he taxed pension divided payments into oblivion in 1997. Which has killed off final salary pension schemes in the UK.

Post by **trubrit** » March 22, 2012, 3:50 pm

Arjay. I don't know if you are aware that if you defer taking your OAP at retirement age you will not only get an enhanced pension but you will also get the annual cost of living increases added to it every year until you do.Then it will be frozen at the rate you start drawing it .So if you have alternative income enough to survive on its a consideration .

I am now resident abroad. Can I take the option to defer my State Pension?

Yes you can defer your state pension once you get to pension age, even if you are non-resident. You can read our overview on state pension deferral here.

In these circumstances the DWP Pension Service will continue to add annual increases to your pension even if you do not live in one of the reciprocal agreements countries referred to earlier. For those who live in a country where annual increases are not normally awarded their pension will be flat rated from the point that they start to collect it. This may seem a strange approach but the DWP Pension Service has confirmed that those not normally entitled to annual increases will receive them if their pension is in deferment for the period of that deferment.

If you live outside the UK and have already claimed your State Pension, you will not normally be able to stop your pension and opt for deferment. You may however have this option if you live in one of the EEA countries listed above. You should speak to the International Pension Centre for more details.

Post by **trubrit** » March 22, 2012, 4:11 pm

For anyone wanting to know at what age they can start getting the state pension.
State pension age for men

If you were born before 6 December 1953, your state pension age is 65.

If you were born on or after 6 December 1953 but before 6 April 1978, your state pension age will be somewhere between 65 and 68 depending on your date of birth.

If you were born on or after 6 April 1978, your state pension age will be 68.

You can work out the exact date of your state pension age by using the state pension age calculator on the Directgov website. Go to: http://www.directgov.uk.
The additional problem for those already over 65 but under 75 is that the increased amount of tax relief due at 75 has now been cancelled, but those already over 75 will continue to receive it .

Post by **arjay** » March 22, 2012, 4:54 pm

Trubrit, thank you for your on topic reply and very useful suggestion. (I didn't want to discuss BOE, QE, or stagflation).

Ironically, I did have the very thought that you were suggesting, - i.e. to defer taking/starting my state pension until at least the big step up to the new £140 takes place, if not later, and then accept/cope with it being fixed at that level thereafter.

In the Budget the Chancellor spoke of the simplification of pensions and cutting out the (costly to administer) variations, and I wonder therefore if that means that the additional "Graduated" pension I am due to receive from my "Graduated contributions" might get scrapped or assimilated into the single new pension of £140 which he spoke of, (whenever that actually comes into force!).

I don't suppose having it paid into a UK bank account is sufficient to qualify for the annual increases?! :-"

Post by **arjay** » March 22, 2012, 5:13 pm

Here's an article from the BBC today on the subject:

http://www.bbc.co.uk/news/uk-politics-17469252

A friend in Thailand has just reached age 65 and received confirmation of his UK state pension. The wording of the accompanying letter seems to say that if he returns to the UK he will get any increase paid to him for as long as he is in the UK, but if he then returns to Thailand, his pension would revert to what it was before his stay in the UK. I had previously thought/understood that it would be re-frozen but at the newer increased amount. So I'll have to check that one out carefully.

Post by **trubrit** » March 22, 2012, 5:23 pm

arjay wrote:

In the Budget the Chancellor spoke of the simplification of pensions and cutting out the (costly to administer) variations, and I wonder therefore if that means that the additional "Graduated" pension I am due to receive from my "Graduated contributions" might get scrapped or assimilated into the single new pension of £140 which he spoke of, (whenever that actually comes into force!).

I don't suppose having it paid into a UK bank account is sufficient to qualify for the annual increases?! :-"

Arjay.I can answer both questions with some certainty but for the life of me can't find the relevant paragraph in the Tax guide my accountant has sent me but I will , eventually .
The graduated pension previously known as SERPs will be amalgamated into the single pension of 140 pounds. That's it mate. Sorry .So it could be you are already due that amount if you paid enough contributions .
The cost of living increases are based purely on where you reside, not where your money is paid to. Wish it was.There is no way that you can legitimately avoid that .With these biometric passports all will be revealed eventually.However if you live long enough and you feel the amount you are losing justifies it, you can return to the UK to live and after 6 months you will be entitled to have the pension upgraded to the then current figure, then you could emigrate again at the enhanced rate .Worth it? :-"Just read your later post and if that is correct it must be a budget change this time.

Post by **arjay** » March 22, 2012, 5:47 pm

Trubrit, I'll check that last piece out again later, when I can get to see him and his letter. I suspect it could be that the example in his letter was referring to a short term return (of a few weeks) rather than one of 6 months or more.

It's really not good when you "contribute" for something for most of your working life, on a specific and set understanding of what you will be getting, only to find they change the rules when you get there, so you don't get it. A bit like breach of contract really. Same thing with the switch from RPI to CPI, that will affect so many public service workers in the UK. I wonder what would happen if at some time in the future the CPI calculation starts showing a higher figure than the RPI calculation! No doubt another change of the rules/move of the goal posts.

Post by **trubrit** » March 22, 2012, 7:05 pm

Arjay. As I have been considering the possibility of retuning to upgrade my pension I have undertaken considerable research on the subject and no where can I find a law that will enable them to reduce a pension once given , unless it was fraudulently obtained. They are entitled to freeze but not reduce the amount .I might further add that in my research I discovered you don't even have to go back to the UK, going to one of the qualifying countries for the required 6 months. IE EU etc, will enable you to claim an update on the pension .I was particularly excited about that as I had no desire to go back home for six months, but as I have Italian relatives on my fathers side, a trip to Tuscany with my wife would be a pleasure .The plus would be , not only would I be entitled to medical care on the health service, but so would my wife on my insurance number .A win, win situation. In one more year our Thai son should start college and that is then a serious consideration for us.

Post by **JimboPSM** » March 22, 2012, 7:29 pm

These pages from The Pensions Advisory Service (TPAS) on UK State Pensions may help:

Main State Pension index page - http://www.pensionsadvisoryservice.org. ... e-pensions

Some selected topics based on comments in posts above (Note: all are accessible from the TPAS index page above):

1. How Does It Work? - http://www.pensionsadvisoryservice.org. ... es-it-work

2. How Do You Claim? - http://www.pensionsadvisoryservice.org. ... -you-claim

3. How Much Will You Get? – http://www.pensionsadvisoryservice.org. ... ll-you-get

4. How Will It Be Paid? - http://www.pensionsadvisoryservice.org. ... it-be-paid

5. Living Overseas - http://www.pensionsadvisoryservice.org. ... g-overseas

6. Deferring Your State Pension - http://www.pensionsadvisoryservice.org. ... /deferring

7. Taxing The State Pension - http://www.pensionsadvisoryservice.org. ... te-pension

A note about The Pensions Advisory Service (by them, not me):

We are an independent voluntary organisation that is grant-aided by the Department for Work and Pensions (DWP).

We provide information and guidance to members of the public on all pension matters, covering state, company, personal and stakeholder schemes.

We also help any member of the public who has a problem, complaint or dispute with their occupational or private pension arrangement. We do not deal with problems, complaints or disputes relating to state pensions.

Our service is free and is provided by a nationwide network of volunteer advisers who are supported and augmented by technical and administrative staff based in London.

We are very proud of the calibre of our personnel. Our volunteers and pensions technical staff have many years experience working in the pensions industry and have a wide range of professional qualifications.

http://www.pensionsadvisoryservice.org.uk/about-us.aspx

Post by **trubrit** » March 22, 2012, 8:00 pm

Thanks for that Jimbo. It more or less confirms my posts. One thing to take into consideration though. If you elect to take a lump sum payment it is considered income in the tax year it is paid, your not allowed to spread it over other years. So you may get an unpleasant surprise when the tax is deducted .

Post by **arjay** » March 22, 2012, 8:12 pm

Trubrit, my recollections were on the right track. My friend's letter refers to those living abroad (in the non-qualifying countries) being able to receive increases whilst on VISITS to the UK (or the EU or the other qualifying countries), and that the pension then returns to the lower figure when they leave, - i.e. short visits.

So I think we were mixing up two different situations, in that they were referring to short term visits, whereas your sources, (which I have also seen and indeed the consultative document on UK Residency also confirms) applies to those returning to live in the UK (EU or other qualifying countries) for a minimum of 183 days (6 months) and thus qualifying for UK resident status.

I now need to check when the £140 figure takes effect, and have a read through Jimbo's links. Thanks.

Post by **arjay** » March 22, 2012, 8:45 pm

Yes, that was interesting about the deferral options. Noted that the subsequent increase or lump sum is taxable income.

http://www.pensionsadvisoryservice.org. ... /deferring

Which leads me to another bone of contention. If/when one becomes non-UK resident for tax purposes, one still has to pay UK tax on income and pensions sourced from the UK. Thus both my occupational pension which I currently receive and later my state pension will be subject to UK income tax.

I note your thought Trubrit about moving to somewhere not necessarily in the UK, but in the EU such as Italy. That might work if one had accommodation available there, and the cost of living was lower than here, but otherwise there is a danger (certainly for me) that it would cost more than one would gain/recover. Noted that the San Miguel is cheaper in Spain than here!! Maybe you could switch to Chianti.

Post by **arjay** » March 22, 2012, 11:29 pm

I'm not the only one who is unhappy about this then:

http://uk.finance.yahoo.com/news/budget ... 3QD;_ylv=3

Post by **rick** » March 23, 2012, 3:08 am

Also, apart from loosing age related allowances and at an unspecified date your Graduated pension/SSP when the flat rate approx. £150 pension is introduced, there was a mention of combining NI and Income Tax (just a plan, no date). Although such a move generally is a good thing for simplicity, potentially this could mean pensioners having to pay NI again (as part of Income Tax) - Ho Ho Ho, another nice present for the treasury at pensioners expense. There will undoubtedly be some offset if this happens (like an even bigger state pension) but those who get private pensions could be hit hard.

Also i noted that 'contracting out' of secondary state pensions will end, so those in such schemes will have to pay 1.4% approx. extra - this will include all civil servants who are also currently on a pay freeze as well. What with the other pension changes/redundancies being forced upon all public sector workers, they are also among the big losers of this recession.

Wish i had been an investment banker.

Post by **trubrit** » March 23, 2012, 6:46 am

arjay wrote:Trubrit, my recollections were on the right track. My friend's letter refers to those living abroad (in the non-qualifying countries) being able to receive increases whilst on VISITS to the UK (or the EU or the other qualifying countries), and that the pension then returns to the lower figure when they leave, - i.e. short visits.

So I think we were mixing up two different situations, in that they were referring to short term visits, whereas your sources, (which I have also seen and indeed the consultative document on UK Residency also confirms) applies to those returning to live in the UK (EU or other qualifying countries) for a minimum of 183 days (6 months) and thus qualifying for UK resident status.

I now need to check when the £140 figure takes effect, and have a read through Jimbo's links. Thanks.

Arjay. Yes indeed these are two different circumstances both with different answers .If you go back to the UK temporarily and your income is insufficient with the reduced pension you are receiving you may be entitled to have it made up by further social security payments. These are totally separate from the pension and naturally will cease when you leave the UK. Your pension has not been altered , neither increased or decreased .They are of course related to income and expenditure so if you also have a private pension you are unlikely to get it .Think this is where your friend may be getting confused.

Post by **read** » March 23, 2012, 7:12 am

Some really really good info here, thanks to those who have posted it. I took early retirement from teaching in 2002 and in September 2011 reached 65. I decided to defer claiming for the foreseeable future and since October last, have survived here, on my teachers pension quite comfortably after having lived and taught in China for 8 or so years.

Post by **arjay** » March 23, 2012, 9:06 am

Trubrit wrote: Arjay. Yes indeed these are two different circumstances both with different answers .If you go back to the UK temporarily and your income is insufficient with the reduced pension you are receiving you may be entitled to have it made up by further social security payments. These are totally separate from the pension and naturally will cease when you leave the UK. Your pension has not been altered , neither increased or decreased .They are of course related to income and expenditure so if you also have a private pension you are unlikely to get it .Think this is where your friend may be getting confused.

Trubrit, You're misrepresenting what I said and the situation referred to. To clarify, my friend didn't get confused, nor did I. Nor did either I or the letter mention people returning to the UK having insufficient income or qualifying for social security payments. I merely commented that his letter spoke of one being able to receive the increase when on VISITS back to the UK, but upon leaving the UK at the end of the visit, the pension would revert to the lower figure again. I would suggest that it was you who read into that, that I or the letter was talking of returning to the UK to stay (i.e. to reside there again where the minimum stay had to be 183 days) a situation which was currently in your mind.

If I may quote part of my original post and subsequent clarification on the point:

A friend in Thailand has just reached age 65 and received confirmation of his UK state pension. The wording of the accompanying letter seems to say that if he returns to the UK he will get any increase paid to him for as long as he is in the UK, but if he then returns to Thailand, his pension would revert to what it was before his stay in the UK.

Trubrit, I'll check that last piece out again later, when I can get to see him and his letter. I suspect it could be that the example in his letter was referring to a short term return (of a few weeks) rather than one of 6 months or more.

Trubrit, my recollections were on the right track. My friend's letter refers to those living abroad (in the non-qualifying countries) being able to receive increases whilst on VISITS to the UK (or the EU or the other qualifying countries), and that the pension then returns to the lower figure when they leave, - i.e. short visits.

That had nothing to do with Social security payments.

Post by **trubrit** » March 23, 2012, 9:24 am

Richard . I was merely clarifying the likelihood that the top up to the pension would be considered as a social security payment, subject to a means test and not a reinstatement of his full pension, therefore can be withdrawn when the circumstances change, as in leaving the UK again .Once a pension has been upgraded there is no provision in law to lower it again. Only if the information given was found to be fraudulent or if a change in personal circumstances such as the death or divorce of a dependent .I was not commenting on the particular case you mentioned, just the circumstances you outlined and the applicable law .