If you have a UK pension, from a company or private scheme then this site will be a useful resource for you, to learn more about the UK pension system, what opportunities you have as an expatriate living in Thailand, and how future pension changes may affect you.
Leaving that pension in a UK scheme could be very costly to your future income, tax position and restrict the income which your family can enjoy when the inevitable happens.
Rishi Sunak’s move in spending review could result in pension holders receiving thousands of pounds less in income
The government will stop using the retail prices index measure of inflation in 2030, the chancellor has announced, in a move that will spell bad news for investors and retirees with payouts linked to it.
The RPI has not been used as an official national statistic since 2013 but it is still the figure used for returns on index-linked gilts issued by the UK government. It is also used when calculating annual increases in rail fares and student loan interest.
However, the rate has been discredited as a measure of price rises as it frequently overstates them. Instead, after a consultation that started in March, the government said it would switch to a measure in line with the current consumer prices index plus housing costs (CPIH). This stands 0.4 percentage points lower than RPI, but the gap is often wider.
The state pension age has risen to 66 and is set to increase up to 68, depending on the year you were born.
The qualifying age at which people in the UK can start to receive the state pension has been steadily increasing in recent years.
As recently as a decade ago, women could claim their state pension when they turned 60, and men could do so at 65.
Now, however, recent changes have brought the qualifying age for both sexes in line with one another.
As the state pension age officially increases, here’s everything you need to know about what’s changed.
The state pension is as a regular payment from the government that most UK citizens can claim when they reach State Pension age.
However, not everyone receives the same amount. How much you do receive depends on your National Insurance record.
Savers are nursing losses approaching 10% in their pension schemes since the start of the coronavirus market panic, while holders of share Isas have lost as much as a quarter of all their money in some funds.
The stock market rout means someone who had accumulated £250,000 in their pension scheme at the start of this year will have seen it shrivel to about £225,000 on Monday.
Holders of final salary-style pensions, mostly in the public sector, lose nothing as their payouts are guaranteed. However, further falls in the market will mean these schemes will drop further into deficit, requiring employers (such as local authorities and universities ) to somehow find the cash to top them up.
SAVERS could be set for a cash-strapped retirement as a large chunk of Britons have no idea or are dramatically underestimating the size of pension pot needed for their golden years. The UK’s future pensioners are way out in their estimates for retiring, with one in five adults (21 percent) predicting they only need up to £50,000 for their pension pot – £210,000 less than the minimum recommended amount.
This is according to the research from Finder.com, which says the recommended pension pot is sat at £260,000 to £445,000, depending on accommodation costs in retirement and based on the current state pension of just £8,767.20 per year.
Britons on average believe just £100,000 is enough for them to live comfortably in old age, according to the research, while the younger generation are the least prepared for retirement.
Millennials are expected to have the highest cost of living in retirement than any previous generations due to the house price epidemic.
They are more likely to still be paying for a mortgage in later life or forking out on rental accommodation.
Many people are making a poor financial decision by taking some of their pension pot in cash, a regulator says.
Some pensioners could receive 37% more retirement income every year by investing rather than cashing in, the Financial Conduct Authority (FCA) said.
Workers should be given more guidance about what to do with their pension, and could be sent “wake up” information packs from the age of 50.
Savers can cash in their pension from the age of 55.
The reforms were introduced by the chancellor at the time, George Osborne, in April 2015. By September 2017, some 1.5 million pension pots had been accessed.
Previously, people would have bought an annuity – a financial product that provides a guaranteed retirement income – with their pension pot, although this is an option that remains open to them.
FINAL salary pension savers have been warned many schemes could collapse if Britain were to be hit by an economy downturn.
Up to one in five FTSE 100 so-called defined benefit schemes would be at risk in a recession, according to research by Cardano and Lincoln Pensions.
And consumer goods and services firms are the biggest worry, the study found.
The group estimated pension deficits of firms on the bluechip index would surge by around £100billion if the economy took a hit.
A fifth of the schemes would then be at risk of failure, as pension risk soars to 30 per cent or more of the firm’s value.
Thousands of pensioners face the prospect of sharply reduced retirement incomes as major British companies attempt to alter the terms of ruinously expensive pension pledges.
Telecoms giant BT has written to current and former workers informing them it is going to court to determine whether it can reduce the annual increases applying to pensions paid to its employees.
BT is far from the only business seeking to argue that previous promises made to staff are today unaffordable, and that they should be allowed to “water down” some of the benefits.
On Wednesday, data showed that as many as three million workers with “final salary” type pensions had a 50:50 chance of losing a fifth of their promised income – because companies could not afford to pay.
The figures, from the Pensions and Lifetime Savings Association, are the latest in a series of reports highlighting a crisis in company pensions.
In the case of BT, the proposed move would mean many of the 80,000 current and former staff needing to find other sources of income to bridge the gap.
The combined pension deficit of UK companies climbed by £12bn last year, according to research released today.
Research by Barnett Waddingham has found the aggregate pension deficit of FTSE 350 firms is now £62bn, which amounts to 70 per cent of pre-tax profits for the year (£88.9bn).
The firm said deficit levels were now higher than they were immediately after the financial crisis.
The pension deficits of UK companies have been rising since 2011, when the total deficit stood at £54.5bn, and represented 25.4 per cent of total profits.
However, Steve Webb, director of policy at Royal London, said that in the context of deficit movements, £12bn represented a “fairly modest change”, and said firms should “not panic”.
Not only are the chances of a UK recession rising, it may be the rare recession in which bond owners get badly beaten up.
Coming at a time of critical underfunding among UK pension funds, who have been among the biggest buyers of otherwise poor-value gilts, a bond-punishing recession would further undermine Britain’s retirement system.
With a fragile Conservative-led government engaged in fraught Brexit negotiations in which they are the weak hand, bad economic news continues to rain down on Britain.
A survey from credit-card company Visa released Monday showed consumer spending falling by 0.3 percent in the three months to June compared to a year ago. Another from accountants Deloitte showed 72 percent of CFOs gloomy about post-Brexit business prospects. Companies expect a fall in hiring, capital expenditure and discretionary spending, Deloitte said.
Not only are they not spending, British consumers are spending the smallest proportion of disposable income in more than 50 years, as below-inflation wage growth hits home. This is in an economy which was already at something close to a stall: first-quarter GDP growth, released in late June, showed the economy expanding at just 0.2 percent a year.
Those looking to move a UK pension offshore face a 25 per cent tax charge under a dramatic crackdown on pension transfers.
The tax charge, announced in the Budget, will apply to individuals requesting transfers to qualifying recognised overseas pension schemes (Qrops) on or after March 9 2017, the government said.
However, the 25 per cent tax charge will not apply if, from the point of transfer, both the individual and the offshore pension scheme are in the same country, both are within the European Economic Area (EEA), or the Qrops is provided by the individual’s employer.
“If this is not the case, there will be a 25 per cent tax charge on the transfer and the charge will be deducted before the transfer by the administrator or manager of the pension scheme making the transfer,” the government said.
Payments out of funds transferred to a Qrops on or after April 6 2017 will be subject to UK tax rules for five tax years after the date of transfer, regardless of where the individual is resident, the government also announced.
Continue reading (Financial Times) →