UK Pensions - Question

[Nifty29]

Hey Gang

I've often wondered if UK Pensions (e.g. child payments, disability, etc) are far more generous than other countries.

Reason I ask is that, over my years here at CM, I've seen people mention casually that they live on a pension of some kind.....and these same people are depositing quite large amounts and betting big.

Its not about judgements. I'm just wondering if things work differently in the UK. Over here, there is NO way one could afford to bet/deposit very much at all if they were living on disability (for example). I guess the exceptions would be those who work for cash and still claim full pensions....so maybe I've answered some of my own question there...?

Also, over here, if you have money in the bank etc or assets, you are not allowed to claim payments until these are used (excluding the primary residence), to prevent those who can afford to support themselves from draining the Government coffers.

Is it all different in the UK? Comments?


Anyone?

 

[anniemac]

Nifty,

Folks receiving only Social Security benefits, Disability benefits or SSI in the US don't receive all that much. If you have kids and are on any of these, then you get a whole lot more.

If that's all you are living on, it's not all that much.

.

 

[vinylweatherman]

The state pension here isn't very big, but if you have earned a pension through work, these can be much bigger. The best of all are the dying breed of "final salary" based schemes, such as offered by the Civil service and a few other big employers. MPs, along with members of the board of big companies, can get some huge pensions.

In the past, pensions were not taken into account when assessing benefits for things such as disability, but things are changing, and there are fewer things being disregarded when it comes to calculating such payments. Some benefits also take into account any savings, and this is being spread to more and more benefits.

Pensioners are now getting off lightly, because the balance of the population has changed, leading to more elderly. This has meant that pensioners are mostly being left alone because unlike the past, the pensioners' voting power is now big enough to unseat the party in power. The young on the other hand, seem to have an attitude of "can't be arsed" when it comes to voting, so are not feared by those in power.

We are very lucky if we get a 50% turnout for a major election.

Isn't it a legal requirement to cast a vote in Australia?

 

[Nifty29]

The state pension here isn't very big, but if you have earned a pension through work, these can be much bigger. The best of all are the dying breed of "final salary" based schemes, such as offered by the Civil service and a few other big employers. MPs, along with members of the board of big companies, can get some huge pensions.

In the past, pensions were not taken into account when assessing benefits for things such as disability, but things are changing, and there are fewer things being disregarded when it comes to calculating such payments. Some benefits also take into account any savings, and this is being spread to more and more benefits.

Pensioners are now getting off lightly, because the balance of the population has changed, leading to more elderly. This has meant that pensioners are mostly being left alone because unlike the past, the pensioners' voting power is now big enough to unseat the party in power. The young on the other hand, seem to have an attitude of "can't be arsed" when it comes to voting, so are not feared by those in power.

We are very lucky if we get a 50% turnout for a major election.

Isn't it a legal requirement to cast a vote in Australia?

So, basically, one can be getting a HUGE pension from a former employee etc, but still be eligible for a state disability pension? If so, that's disgraceful. State pensions should be for those who are without other means. It shouldn't matter whether one qualifies under disability rules....if they don't NEED the money they shouldn't get it.

Voting is compulsory here, with an actual turnout of over 90%. Well, in reality, it is compulsory to have your name marked off as having voted.....whether you actually cast a valid vote or ANY vote is up to you.

I am an area manager for elections here and its not uncommon to see people walk in, get their name crossed off, and just walk out refusing to even take the ballot papers from the issuing officer. The fine for not voting varies according to election type, but can be over $100 in some cases.

 

[dunover]

Right. As VWM said, if you are lucky enough to retire on a final salary scheme, you can get a maximum of 40/60ths of the salary you retire on, usually index-linked. Govt. employees usually have these, and still do although new people are now being barred from the schemes due to cost. Private firms have all but stopped them now, and paid people lump sums to switch to SIPPs (self invested pension plans) which depend solely on investment/stock exchange rises. Many firms cannot afford these pensions and have large fund deficits.
Now, the basic state pension is yours by right if you have paid the National Insurance contributions. So, you could have £30k a year income if you retired on a £45k salary AND you get the basic state pension of 6k-ish a year. If you've paid NI for 40 years you could be a multi-millionaire and get the basic state pension. Many richer retired people cash the state pension once a year to buy a holiday or something else.
If you are a habitual skiver and avoided work, you still get a state pension but it is means tested.
Disability pensions are state benefits differing from standard pensions, You can work while claiming a state pension, and you still pay tax. Private pensions can be deferred, so you could claim your state pension, defer your private one and carry on working. Your SIPP pension is only as good as the day the fund is used to purchase an income bond - if interest rates are low and the stock market is crap, you could get 2/3 say of what you could have had if you had retired just one year earlier, or what you may have got taking it one year later.

 

[vinylweatherman]

So, basically, one can be getting a HUGE pension from a former employee etc, but still be eligible for a state disability pension? If so, that's disgraceful. State pensions should be for those who are without other means. It shouldn't matter whether one qualifies under disability rules....if they don't NEED the money they shouldn't get it.

Voting is compulsory here, with an actual turnout of over 90%. Well, in reality, it is compulsory to have your name marked off as having voted.....whether you actually cast a valid vote or ANY vote is up to you.

I am an area manager for elections here and its not uncommon to see people walk in, get their name crossed off, and just walk out refusing to even take the ballot papers from the issuing officer. The fine for not voting varies according to election type, but can be over $100 in some cases.

It all depends on whether it's "means tested".

There is an argument over the current "winter fuel allowance", a payment to help pensioners cope with the higher cost of heating their homes in winter. ALL pensioners get this, even the richest of all. Peter Stringfellow gets a winter fuel allowance, and he is pretty damn rich.

Some very rich pensioners have been so embarrassed at receiving this state handout that they asked about giving it back, and were told there was no means to do so, and they were told to just give it away if they didn't want it.

The MPs are not exactly examples of virtue, having REPEATEDLY abused the expenses system via a number of creative schemes. After every scandal, the rules get changed, and instead of accepting that the good times are over, they dig up and exploit another loophole.

After misusing the allowances for keeping a second home, which is needed as they have to live partly in their constituency, and partly in London, the rules were tightened so that they could not manipulate the system in order to get the taxpayer to pay off a second mortgage, and then allow the MP to make a handsome profit on the sale of the second home. Now they can only claim for renting a temporary second home near Parliament, but the latest wheeze is that MPs no longer live in the second home they have bought, but pair up and rent each other's home, an exploit that allows them to go back to effectively having the taxpayer pay their mortgage, whilst the MP benefits from the capital growth in the property.

By setting this example of "grab what you can, while you can", they are encouraging others to take the same attitude, so we have those who don't need any extra money still claiming it because they have "paid in" to the state and so have earned it.

In fact, they HAVE earned it, but governments have spent the money instead of investing it wisely in order to fund these claims, and this is why the whole pension system is at risk of collapse, even bringing the state down with it, because now there are so many claimants compared to those paying in (the employed below retirement age).

 

[bigjohn]

Here in the US your social security benefits have been earned over the years you have worked and everyone is entitled to them regardless of personal wealth. Social security payments come from the Federal Government.

A pension comes from a specific company or companies that you have worked for and varies greatly from $0 to hundreds of thousands per year.

I believe in the UK government-provided old age benefits and company provided benefits are both called pensions. Is that correct?

 

[dunover]

Here in the US your social security benefits have been earned over the years you have worked and everyone is entitled to them regardless of personal wealth. Social security payments come from the Federal Government.

A pension comes from a specific company or companies that you have worked for and varies greatly from $0 to hundreds of thousands per year.

I believe in the UK government-provided old age benefits and company provided benefits are both called pensions. Is that correct?

Yes, you are. State pension, and private pension are the respective terms.

 

[vinylweatherman]

Here in the US your social security benefits have been earned over the years you have worked and everyone is entitled to them regardless of personal wealth. Social security payments come from the Federal Government.

A pension comes from a specific company or companies that you have worked for and varies greatly from $0 to hundreds of thousands per year.

I believe in the UK government-provided old age benefits and company provided benefits are both called pensions. Is that correct?

The "state pension" is earned through working and paying contributions. You need to have worked and paid in for 30 years to get a full state pension. You still get the same whether rich or poor. Company pensions are earned on top, and both you and the company pay in, and the pot you produce together is what provides the pension when you retire. These can be very large indeed, and until recently could be unlimited. Now there is an overall limit of £1.4 million which can be saved over a lifetime. Anything above this is taxed pretty harshly at retirement as it moves from the pension pot and into a vehicle which produces the pension, which in most cases is an annuity.

Part of the problem is due to people having been paying in all their lives, and knowing that their money has been funding some pretty generous benefits, and then when it's "their turn", the rules change and they are told they will not get what others have been getting when funded by their money when it was being paid in. This makes it very hard to make changes If governments had been investing the money being paid in instead of spending it and writing IOUs for the eventual claims, we would not have the problem we do now of the state coffers no longer having enough coming in to pay all the "earned" benefits. The state should not have been in this position, as they should by now have had a very large fund available to pay these benefits, which would have had no impact on day to day state funding, nor would austerity have affected the payouts, as they would have been independently funded.

Those in charge realise this now, but it's too late, FAR too late.

 

[dunover]

It all depends on whether it's "means tested".

There is an argument over the current "winter fuel allowance", a payment to help pensioners cope with the higher cost of heating their homes in winter. ALL pensioners get this, even the richest of all. Peter Stringfellow gets a winter fuel allowance, and he is pretty damn rich.

Some very rich pensioners have been so embarrassed at receiving this state handout that they asked about giving it back, and were told there was no means to do so, and they were told to just give it away if they didn't want it.

The MPs are not exactly examples of virtue, having REPEATEDLY abused the expenses system via a number of creative schemes. After every scandal, the rules get changed, and instead of accepting that the good times are over, they dig up and exploit another loophole.

After misusing the allowances for keeping a second home, which is needed as they have to live partly in their constituency, and partly in London, the rules were tightened so that they could not manipulate the system in order to get the taxpayer to pay off a second mortgage, and then allow the MP to make a handsome profit on the sale of the second home. Now they can only claim for renting a temporary second home near Parliament, but the latest wheeze is that MPs no longer live in the second home they have bought, but pair up and rent each other's home, an exploit that allows them to go back to effectively having the taxpayer pay their mortgage, whilst the MP benefits from the capital growth in the property.
By setting this example of "grab what you can, while you can", they are encouraging others to take the same attitude, so we have those who don't need any extra money still claiming it because they have "paid in" to the state and so have earned it.

In fact, they HAVE earned it, but governments have spent the money instead of investing it wisely in order to fund these claims, and this is why the whole pension system is at risk of collapse, even bringing the state down with it, because now there are so many claimants compared to those paying in (the employed below retirement age).

What on earth has that to do with the original topic?

All he needs to know is that if you have 'paid your stamps' you get a basic state pension not means tested. Yours by right. And quite right too.
The national insurance fund was originally meant to be just that - a 'fund' in which your contributions were stored and invested to pay your pension. Of course that's not how it worked, and this week's taxes we pay pay for next weeks state pension. Or the government borrow to pay next week's pensions.
The UK pension is about mid-table in Europe, because the UK stopped SERPs (state earnings-related pension) unlike Germany and others. As from this year though it's back under the title 'state second pension' so my state pension will be higher as it will be related to the taxes/NI I've paid. This means I cannot be as bad off as the habitual skivers who exist on benefits.

 

[vinylweatherman]

What on earth has that to do with the original topic?

All he needs to know is that if you have 'paid your stamps' you get a basic state pension not means tested. Yours by right. And quite right too.
The national insurance fund was originally meant to be just that - a 'fund' in which your contributions were stored and invested to pay your pension. Of course that's not how it worked, and this week's taxes we pay pay for next weeks state pension. Or the government borrow to pay next week's pensions.
The UK pension is about mid-table in Europe, because the UK stopped SERPs (state earnings-related pension) unlike Germany and others. As from this year though it's back under the title 'state second pension' so my state pension will be higher as it will be related to the taxes/NI I've paid. This means I cannot be as bad off as the habitual skivers who exist on benefits.

That's on the way out now, to be replaced by yet another variant, which is a higher across the board state pension, rather than it being made up from the basic state pension, the second pension, and pension credit.

It means that those who paid in to the state second pension will not get any more than those who don't. This has happened before, to my dad, who's extra payments didn't get him any more than those who didn't pay got by the time he retired.

 

[rockycatt]

the united states is a GOLD MINE OF A FIND, for imagrints that come wiyh just the idea to milk our system [its like hitting a lottery of there dreams ] if they concentrate on milking it

don't jump on me we also have citizens that get into the wealth fair cycle , and the math just dosent make sense to them to get out once they figure out the inroads to get all the benny's some just have a tribe of kids and a boyfriend and they do great


proviso politicians are the blame for this that's what we pay to secure there votes to prolong the cycle

 

[Nifty29]

Wow.

Our system is totally different it seems.

Every citizen has the right to receive a state pension regardless of whether they worked for 40 years or 40 minutes.

All pensions and payments are means and income tested. If you receive a superannuation pension from your private super fund, this affects your state pension and quite often cancels it out.

The system is a true "welfare" system I.e. all the pensions are set amounts across the board, and how much you get or your entitlement does not depend on your past "contributions". So, it is a case of not necessarily getting the full benefit of the taxes you paid, but rather them being redistributed amongst the less wealthy and/or sick and disabled.

The UK system sounds like just one big superannuation fund.....unless I'm getting the wrong impression. Almost like a "user pays". What happens if you didn't work much I.e. a house spouse, or sick/disabled etc come retirement age? Do you just get bugger all?

IMPO....and that's all it is....state benefits and pensions should not be given to those who don't need them. If you already get a HUGE private pension, why should the Government provide you with "vacation money" etc? I don't see my taxes as being an "investment" upon which I will draw when I'm older. I see it as a contribution to the welfare of the nation to facilitate a compassionate form of society where the less fortunate can have a decent life as well.

Anyway, I guess my original question has been answered I.e. in the UK, one can be receiving a disability pension from the state AND a nice fat pension from a private source, AND have millions of bucks in the bank and/or assets. It just doesn't make sense to me....it seems like "double dipping" of sorts. IMO the extra money would be better spent on hospitals and education and law and order.

 

[vinylweatherman]

Wow.

Our system is totally different it seems.

Every citizen has the right to receive a state pension regardless of whether they worked for 40 years or 40 minutes.

All pensions and payments are means and income tested. If you receive a superannuation pension from your private super fund, this affects your state pension and quite often cancels it out.

The system is a true "welfare" system I.e. all the pensions are set amounts across the board, and how much you get or your entitlement does not depend on your past "contributions". So, it is a case of not necessarily getting the full benefit of the taxes you paid, but rather them being redistributed amongst the less wealthy and/or sick and disabled.

The UK system sounds like just one big superannuation fund.....unless I'm getting the wrong impression. Almost like a "user pays". What happens if you didn't work much I.e. a house spouse, or sick/disabled etc come retirement age? Do you just get bugger all?

IMPO....and that's all it is....state benefits and pensions should not be given to those who don't need them. If you already get a HUGE private pension, why should the Government provide you with "vacation money" etc? I don't see my taxes as being an "investment" upon which I will draw when I'm older. I see it as a contribution to the welfare of the nation to facilitate a compassionate form of society where the less fortunate can have a decent life as well.

Anyway, I guess my original question has been answered I.e. in the UK, one can be receiving a disability pension from the state AND a nice fat pension from a private source, AND have millions of bucks in the bank and/or assets. It just doesn't make sense to me....it seems like "double dipping" of sorts. IMO the extra money would be better spent on hospitals and education and law and order.

Not quite, you get no state pension in your own right due to not having any "Contributions", but you can then claim means tested welfare benefits that make up the shortfall.

The state pension, along with the health service and welfare systems, were launched after the war, and described as an "insurance fund" that we all paid in to, and in return would receive set benefits under set circumstances. This has lead to the understanding that we have all paid, and that it's an absolute right to take whatever benefit proscribed by the terms of the "insurance policy". It's the government that decided that rather than ring fencing this money to pay ONLY for the things covered, they decided to place it into the central treasury coffers, and pay claims from the central treasury too. This worked fine because for a long time the payments exceeded the claims being made. It started to go wrong as advanced in medicine meant people living longer, and thus drawing far more than expected. It was made worse because the surplus in the early days got spent, rather than being invested to build up a buffer for the future.

 

[dunover]

Wow.

Our system is totally different it seems.

Every citizen has the right to receive a state pension regardless of whether they worked for 40 years or 40 minutes.

All pensions and payments are means and income tested. If you receive a superannuation pension from your private super fund, this affects your state pension and quite often cancels it out.

The system is a true "welfare" system I.e. all the pensions are set amounts across the board, and how much you get or your entitlement does not depend on your past "contributions". So, it is a case of not necessarily getting the full benefit of the taxes you paid, but rather them being redistributed amongst the less wealthy and/or sick and disabled.

The UK system sounds like just one big superannuation fund.....unless I'm getting the wrong impression. Almost like a "user pays". What happens if you didn't work much I.e. a house spouse, or sick/disabled etc come retirement age? Do you just get bugger all?

IMPO....and that's all it is....state benefits and pensions should not be given to those who don't need them. If you already get a HUGE private pension, why should the Government provide you with "vacation money" etc? I don't see my taxes as being an "investment" upon which I will draw when I'm older. I see it as a contribution to the welfare of the nation to facilitate a compassionate form of society where the less fortunate can have a decent life as well.

Anyway, I guess my original question has been answered I.e. in the UK, one can be receiving a disability pension from the state AND a nice fat pension from a private source, AND have millions of bucks in the bank and/or assets. It just doesn't make sense to me....it seems like "double dipping" of sorts. IMO the extra money would be better spent on hospitals and education and law and order.

Yes, I see your point, but it is a massive concern among the electorate that skivers are getting too much, and often MORE than those who work or have done. If you were a housewife/husband and your spouse paid full stamp, you get the married couples' state pension the same as a couple who both worked - bringing up children is considered 'work' for pension income as a contribution to the nation has been made.
The UK system is rife with abuse and instead of providing EMERGENCY help which was the original intention, it now provides some with an alternative lifestyle funded by the taxpaying workers. Understandably, this pisses people off (including myself) immensely. You chuck nothing in the pot for 40 years then expect nothing to eat. I refer to those who could have put in the kitty but chose not to, as opposed to those that couldn't.
If the UK chose to remove the basic SP from rich pensioners there would be an outcry as they are deemed to have 'bought' it already. What you and VWM haven't mentioned is the fact that a 'rich' pensioner will be paying tax. Pensioners get another few thousand a year tax-free allowance more than working people, but their incomes ARE taxed - a rich pensioner will probably pay more tax a year than he/she gets from the basic state pension anyway. Also interest on their savings is taxed.

 

[Andy Walker]

....and just when it all seems cut and dried with the regulations then comes along this.

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These civil servants sure have a lot of time on their hands and complicated imaginations.

 

[LaurieJim]

the united states is a GOLD MINE OF A FIND, for imagrints that come wiyh just the idea to milk our system [its like hitting a lottery of there dreams ] if they concentrate on milking it

don't jump on me we also have citizens that get into the wealth fair cycle , and the math just dosent make sense to them to get out once they figure out the inroads to get all the benny's some just have a tribe of kids and a boyfriend and they do great


proviso politicians are the blame for this that's what we pay to secure there votes to prolong the cycle

You are correct Rocky , our SS system may not exist in 17 years when I can retire at 67 , damn I'm getting old This goverment of ours is hell bent on making sure all the illegals are getting any freebies they can whilst our seniors on SS are suffering financially, our SS system is a joke !

Laurie

 

[GrandMaster]

Anyway, I guess my original question has been answered I.e. in the UK, one can be receiving a disability pension from the state AND a nice fat pension from a private source, AND have millions of bucks in the bank and/or assets. It just doesn't make sense to me....it seems like "double dipping" of sorts. IMO the extra money would be better spent on hospitals and education and law and order.

A private pension is an investment with some tax benefits and some restrictions. The basic state pension is based on the number of years you have paid or are deeemed to have paid national insurance contributions. Disability benefits are not means tested either. There are other benefits which are means tested.

 

[vinylweatherman]

....and just when it all seems cut and dried with the regulations then comes along this.

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These civil servants sure have a lot of time on their hands and complicated imaginations.

This is an attempt to force some private provision for retirement. Where employers are not forced to provide a workplace scheme, it means more strain on the state when their workers retire.

The other issue is that even those who work the maximum allowed 48 hours per week still can't earn enough to live on, and need to claim benefits from the state. This is down to employers paying too low a wage, and expecting the state to subsidise their business by making up their employees wages to a level they can live off. The reason the wages are not enough to live on are these very same businesses who jack up their prices when given half a chance, especially those with a near monopoly on a product or service.

Low wages also lead to the situation where one is better off on benefits than working 48 hours a week.

There has been a big fuss over the energy companies, who on the one hand claim they are forced to jack up prices due to the costs of buying in the gas and electricity, and the cost of supply, and then declare yet another new company record profit, paying huge bonuses to top bosses for the achievements, and higher dividends to shareholders. What angers people even more is that despite numerous investigations, no evidence has been found that these companies are making an excessive level of profit, the thought being that this is because they have been too clever to get caught, rather than that they are innocent.

Pensions are taxable, but this only claws back part of the tax free benefits enjoyed when paying in to a scheme. Big bosses get around the rules that the rest of us have to stick to by being granted access to "unapproved" pension schemes, which is where these "insane" £1 million + per year pensions come from. Most people were limited by law to a pension of no more than two thirds of their final salary, and if their scheme had made them more money than this, it was simply confiscated by the state, yet when a scheme collapsed, the state said "not our problem", and some penniless pensioners had to fight all the way to the house of lords for justice, and others just didn't get it and now exist on benefits despite having contributed for 40+ years to a company scheme.

The welfare system has now become a means for businesses to get a government subsidy through the back door, rather than being an emergency safety net.

Things are now changing, but they are screwing some things up, and leaving too many expensive "sacred cows" untouched. There is to be an absolute cap of £26,000 on what any one household can receive from the welfare system as a whole. The intention is to prevent a household from qualifying for more than they could ever hope to get through working. Unfortunately, this intention has been around for ages, yet incompetence and bureauocracy has prevented many from moving from benefits to work as often the move involves them needing a "float" to bridge a gap of up to 2 months with absolutely no money coming in between the ending of their benefits and their first end of month salary payment. This can push them into deep debt that can be impossible to get out of because for this time they can't pay any bills, and thus have charges added, services cut off, and stress levels through the roof. This is a very strong deterrent to making the move from benefits to work, even if they will ultimately be much better off. Those who try often get fired because the stress makes them too ill to perform, and they can't afford to eat well, nor even the cost of getting to work each day. Having suffered this once, they are not going to be so keen when another chance to move into work comes along.

We have been told that from 2015, this "benefit trap" will be no more, and the system will be redesigned to properly support this transition period, and also that changes in circumstances will also be a smooth transition. Currently, a change in circumstances means the old benefit stops completely, and it's then 11 weeks with no money, and then the new benefit kicks in with 11 week's back pay. This is no good when service companies expect their bills to be paid monthly, in full, and on time, else they add charges, cut services, or take customers to court.

Some now predict that 2015 will actually be a monumental cock up, as the proposals will not actually work as intended, and we will have a fiasco similar to what we had when tax credits were brought in to make work more attractive than staying on benefits.

Much of this grand plan will not work, because the jobs simply aren't there. What we are seeing is "job creation", creating posts to fill that are not really of that much benefit to the economy, and simply paying the same money as before from state coffers, but calling it "salary subsidy" rather than "welfare".

One key thing needs to be addressed, the idea that we need a set level of inflation forever for the economy to prosper. This suits the rich, but the low paid just get left further and further behind because they can't command a regular inflation busting pay increase for the same work that the bosses can.

We don't need to tax the rich harder, we just need to make sure they pay what is currently due by taking away all the loopholes they currently exploit with the help of clever and expensive lawyers and accountants. In theory, the low paid can exploit the same loopholes, but it's not cost effective as some schemes cost over 10K just to set up, and are no good if all you can save is the tax on the minimum wage. If you are clever enough to do it yourself, WTF are you doing on minimum wage in any case!!