How worthwhile is a frozen UK state pension???!!!
Posted: Mon Jan 08, 2018 3:00 pm
Hello guys, wishing everyone a Happy New Year!
Regarding the UK’s famous frozen pension, which unfortunately affects UK expatriates in many countries incl. Japan, I would like to ask a simple, naive question: Just how worthwhile is it contributing to such a pension? I am committed to living in Japan permanently.
I understand that most people on this site think it is worthwhile contributing, but is that so even if it is frozen??? I mean, the main purpose of such a pension should be to insure against longevity risk, and if people live 20-30 years after retiring, those payments will be greatly inflated away. And of course, predicting what will happen to the pound in future is Russian Roulette given Brexit.
I am in a dilemma myself, because I understand that pensions are important in old age. However, the information on the 2016 changes, that I found on government/financial sites, suggest they are a real game-changer. I have the impression that:
A) Pensions can no longer be inherited by spouses if you retire after a certain date
B) You can no longer have the deferral leading to lump sum option if you retire after 2016 (I mention the lump sum option because it would have been beneficial to use given the frozen pension issue)
Also, back around 2013 I think, changes were made so that spouses can no longer receive any pension based on your contributions. In other words, they must have contributed themselves. This is very bad news for foreign spouses that have not lived in the UK.
And other possible future changes, of course, include means testing.
So I would really like to know other peoples’ opinions about how worthwhile the UK state pension really is?
The other thing is, so many people when they apply to HMRC to set up these NI contributions, have to wait several months or longer. So that means that even if I applied now I would not be able to do the cheap Class 2 contributions?
And if people start contributions, are they allowed to stop or do they have to continue?
Also, I noticed the P38 form asks for past employment history. Is it just history for the past 3 years, or for all the time I have been in Japan? (I have been here for decades). And what sort of employment details are required, for that matter? The form looks very unclear on these issues, and even when I called HMRC to ask, I got a range of different answers depending on the person I spoke to!!!
Their call center appears set up to confuse people, not guide them!
I would welcome any feedback from you guys.
Regarding the UK’s famous frozen pension, which unfortunately affects UK expatriates in many countries incl. Japan, I would like to ask a simple, naive question: Just how worthwhile is it contributing to such a pension? I am committed to living in Japan permanently.
I understand that most people on this site think it is worthwhile contributing, but is that so even if it is frozen??? I mean, the main purpose of such a pension should be to insure against longevity risk, and if people live 20-30 years after retiring, those payments will be greatly inflated away. And of course, predicting what will happen to the pound in future is Russian Roulette given Brexit.
I am in a dilemma myself, because I understand that pensions are important in old age. However, the information on the 2016 changes, that I found on government/financial sites, suggest they are a real game-changer. I have the impression that:
A) Pensions can no longer be inherited by spouses if you retire after a certain date
B) You can no longer have the deferral leading to lump sum option if you retire after 2016 (I mention the lump sum option because it would have been beneficial to use given the frozen pension issue)
Also, back around 2013 I think, changes were made so that spouses can no longer receive any pension based on your contributions. In other words, they must have contributed themselves. This is very bad news for foreign spouses that have not lived in the UK.
And other possible future changes, of course, include means testing.
So I would really like to know other peoples’ opinions about how worthwhile the UK state pension really is?
The other thing is, so many people when they apply to HMRC to set up these NI contributions, have to wait several months or longer. So that means that even if I applied now I would not be able to do the cheap Class 2 contributions?
And if people start contributions, are they allowed to stop or do they have to continue?
Also, I noticed the P38 form asks for past employment history. Is it just history for the past 3 years, or for all the time I have been in Japan? (I have been here for decades). And what sort of employment details are required, for that matter? The form looks very unclear on these issues, and even when I called HMRC to ask, I got a range of different answers depending on the person I spoke to!!!
Their call center appears set up to confuse people, not guide them!
I would welcome any feedback from you guys.