Delaying pension

[Wales4rugbyWC23]

Personally this is not a purely financial decision for me. I am not looking to maximise the amount of money I can wring from nenkin, but instead to treat it as a kind of longevity or dementia insurance.

If I happen to die early and 'waste' the pension I could have had, I don't really care (I'll be dead). But if I end up living to 130 for some reason I may be glad to have the larger base pension.

For us I don't think it is going to make much difference (unless something goes terribly wrong we aren't likely to need nenkin either way) but that is how I think about it. If you can afford to take nenkin/pensions late, it might be a good way to diversify, simplify, and insure against living for a long time or becoming unable to manage your finances.

Unlike investments, no one can take your pension away from you (well, the most they can take is two months' worth, then you get more two months later).

Robert Maxwell took away the Mirror workers' pensions. This had a pretty profound effect upon British legislation related to pensions, it led to pension providers having to invest a lot more in gilts than equites in the UK.

Don't get me started on Equitable Life.....

[goodandbadjapan]

You could select to take the Pension, pay the tax, and set up a parallel Tsumitate NISA to sweep it up and continue DCA Tax Free forever...




The Canadian Discussion of the Early vs Late Debate I mentioned above is here:

https://youtu.be/m9PXPjAQVeg

@ 44:00:00 According to the featured Canadian Financial Planner, due to the different Indexing Values actually used for annual increases to Canadian Pensions vs the annual increase to the monthly amount if the pensioner delays receiving his/her Canadian Pension, Canadian Pensioners should take their Pension earlier, and NOT delay taking benefits until later, as the break-even on delaying taking the Canadian Pension would not be achieved until the pensioner reached 105...

Do the two different indexing values also apply to Japanese Pension?

The 0.7% increase Per Year from 65 is the approximately the same... so 142% at age 70... 184% at age 75 or over...

Would it be even more beneficial to take the 0.6 hit to accelerate to 60 ???
In Japan, if you pull the trigger at 60 you get 76% of the Full 100% 65 amount (discounted at approximately 0.6% per year).

We cannot ignore longevity as predicted by age, gender and health. If your spouse is a Japanese women, they may have a significantly longer expected lifespan than a western male.

You need to adjust for this, and make a plan suitable for each party.

I was serious when I said those of use who are obese/diabetic etc should consider taking it early.

This makes me think I should take the UK pension when I am eligible and invest it, because, as I understand it, were I to die my wife doesn't get any of it and the pension would stop right there. She is likely to live longer than me, and at least I could be saving some up for her but were I to die before I started taking the delayed pension, she would get no benefit from it at all.

[RetireJapan]

This makes me think I should take the UK pension when I am eligible and invest it, because, as I understand it, were I to die my wife doesn't get any of it and the pension would stop right there. She is likely to live longer than me, and at least I could be saving some up for her but were I to die before I started taking the delayed pension, she would get no benefit from it at all.

That is an excellent point. My wife is a bit older than me, so I predict we'll have similar lifespans from now on, but for people with same age or younger partners that is something worth considering.

[RetireJapan]

Robert Maxwell took away the Mirror workers' pensions.

I was referring to state pensions there, which was the topic of this thread.

[Deep Blue]

It is entirely possible for a state pension to be taken away. It can be done explicitly (reducing the amount, means testing eligibility requirements) or by stealth by keeping the amount the same and running inflation hot. I wouldn’t rely on it as an integral part of retirement planning, especially if you’re young.

Both the UK and Japanese Governments absolutely can not afford to run their pension schemes forever. The UK scheme is unfunded and current pension payouts are being paid from current
tax receipts. I’ve been unable to find good quality information about the Japanese NPI funding status (if anyone has please point me in the right direction).

I’m fully aware of the UK triple lock, and how unpopular any changes would be. If you’re in your 50’s or older I’d think there is a good chance you’ll get your current projection.

If you’re in your 20’s I’d be a bit less sanguine.

[beanhead]

I’ve been unable to find good quality information about the Japanese NPI funding status (if anyone has please point me in the right direction).

https://www.gpif.go.jp/en/

[Deep Blue]

I’ve been unable to find good quality information about the Japanese NPI funding status (if anyone has please point me in the right direction).

https://www.gpif.go.jp/en/

i've looked through that before - I could not find out any information on how funded the scheme is. For corporate pensions, they look at how much money is in the scheme vs. projections on how much they will pay out to members, based on actuarial assumptions on longevity etc. As such the pension schemes publish if they are 70% funded or 120% funded etc.

I can not find this informatiom for the Japanese state pension system.

[beanhead]

i've looked through that before - I could not find out any information on how funded the scheme is. For corporate pensions, they look at how much money is in the scheme vs. projections on how much they will pay out to members, based on actuarial assumptions on longevity etc. As such the pension schemes publish if they are 70% funded or 120% funded etc.

I can not find this informatiom for the Japanese state pension system.

Ah, I see. Good point.
That doc tell us how much cash is invested, but as you said, does not compare that to the projected amount required.
Don likes delving into the details of Japanese documents. Maybe he has found this info somewhere?

[Deep Blue]

At least we know there is a fund here in Japan, and that it will meet some of the liabilities promised by the Government for those of us contributing to the state pension scheme.

In the UK, there is no fund and all the money comes out of current taxation....... so when people start living longer and the ratio of taxpayer:retiree declines it's not a sustainable situation....

https://www.ons.gov.uk/aboutus/transpar ... D%20(PAYG).

The UK State Pension is unfunded, which means that its obligations are not underpinned by an actual fund or funds. Such schemes are often referred to as “Pay As You Go” (PAYG)

If you want to get an idea of how horrifying this is... just a four trillion pound sterling black hole. (4,000 billion sterling). Another number for context - annual UK Government tax receipts are approx 800 billion, so this black hole is 5 years worth of total income. Of course, the UK Government is spending more than it is receiving so it's not like it is even starting to defuse this four trillion pound ticking time bomb.

The numbers don't bear thinking about. This is why I don't think we can 100% rely on a UK state pension, no matter if we're making voluntary contributions or not.

At the end of 2015, the estimate of the accrued-to-date State Pension obligations, as recorded in Column H of the table, was approximately £4,027 billion. It should be noted that pension obligations are valued with a time lag, and we have not yet published more recent estimates.

[Bubblegun]

If you reach 60, you can go to the Pension Office and apply to pay voluntary contributions to get your number of contributions up by another 60 months... You cannot pay voluntary contributions past age 65.

Sorry to jump in here.
So we’ve back paid the 10 years. So I think that will give me a total of 30 years. Does this mean I can go and pay another 5 years when I’m 60,putting me at about the 35 year worth of contribution mark?