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pension system
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savier
Posts: 73 Forumite
hello
I am soon to start a career in UK and I would like to ask you to outline me the UK pension system in few lines
in my country we have this system:
every employee pays a percentage of his salary to the state and his employer contributes also with another percentage
after gathering a specific number of years of work, he is entintled in a basic pension and if he gathers additional years his pension is proportionally increased
in case an employee works in an unhealthy profession (eg. factory worker), he can retire in less years than the other employees, getting the same basic salary
is the system the same in UK?
can you tell me how is it and how I should plan my career to take full advantage of it?
thanks
I am soon to start a career in UK and I would like to ask you to outline me the UK pension system in few lines
in my country we have this system:
every employee pays a percentage of his salary to the state and his employer contributes also with another percentage
after gathering a specific number of years of work, he is entintled in a basic pension and if he gathers additional years his pension is proportionally increased
in case an employee works in an unhealthy profession (eg. factory worker), he can retire in less years than the other employees, getting the same basic salary
is the system the same in UK?
can you tell me how is it and how I should plan my career to take full advantage of it?
thanks
0
Comments
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In UK there is a state pension as well. The employee and the employer must pay a certain percentage of the salary, called "NI" (National insurance) contributions (it is basically a tax).
The state pension system is undergoing a reform right now. If this is approved, if you have paid 35 full years of NI contributions you will get the full state pension which will be a flat rate of £144/week (about £7500/year) at the age of 67.
Note that will be a flat rate, independently of the fact that you may have paid more or less NI contributions compared to someone else.
If you have payed NI contributions for less than 35 years you will get a pro-rata pension.
Beside the state pension, most employers pay also in a company or personal pension for you (if you pay in as well).
For instance your contract might say something like: if you pay 5% of your salary in the pension, your employer will pay 7%.
In fact is now mandatory for employers to offer you something like this.0 -
thanks for your reply
the "NI" (National insurance) contributions are included in the tax that is being deducted from our salary? (ie. the 20% for salaries up to 35,000pa)
also the £144/week pension seems extremely low to me, as in my country if you work for 35 years you can easily get 2,000/month (depending on the profession). How can I plan my career to get more pension?
as for the professions that are unhealthy and can retire sooner, is there any legislation in UK?0 -
thanks for your reply
the "NI" (National insurance) contributions are included in the tax that is being deducted from our salary? (ie. the 20% for salaries up to 35,000pa) No, NI is payable in addition to Income Tax.
also the £144/week pension seems extremely low to me, as in my country if you work for 35 years you can easily get 2,000/month (depending on the profession). How can I plan my career to get more pension? You cannot within the state system. If you want to increase your income in retirement you must make additional contributions to either an individual or work-based pension scheme. Or, alternatively, make other investments to fund your retirement.
as for the professions that are unhealthy and can retire sooner, is there any legislation in UK? You can retire anytime that you can afford to. However, the pension age in respect of the Government pension is the same regardless of your occupation.
In the UK, your personal financial arrangements in respect of retirement are the deciding factors. Do not rely on what you may or may not get from the state.0 -
In the UK, your personal financial arrangements in respect of retirement are the deciding factors.
these arrangements are the individual or work-based pension scheme?
what are my options for an individual pension scheme? I have to go to a private insurance company? will my contributions be safe in order to get a pension after many years?
EDIT: something else important that I forgot for the pension system of my country: at the time one gets retired, he receives a large amount (can be 30,000 or more) in addition to his pension, is there anything like that in UK?0 -
Which country are you talking about? Are you sure you're not getting private and state pensions mixed up?
£2k per month is not far off the average salary in the UK, giving this to every individual plus a £30k upfront payment sounds like financial suicide but not unreasonable for someone that saves all of their working life into a works pension (as well as getting a state pension).Thinking critically since 1996....0 -
Well in Italy (were I come from), until not very long ago, you were expecting to get a state pension in the order of 70% or more of your final salary.
No one had private/company pensions.
This might look like stereotypical Latin country government profligacy, but it was achieved by employer paying something like 30% of salary in contribution plus 9% from employee.
Anyhow, going back to the original poster you can look for some information on the web: search for a site named 'candidmoney' and click on the 'Retirement' tab.
Or on this very site, click on the 'Banking/Saving' tab at the top and then "Pension need-to-know".
(Sorry but I am a new poster and I am not allowed yet to post links)0 -
To get 80% of your final salary you will need to pay a lot in.
I pay around 20% of my salary into my pension (including employer contribution) and I will end up with around 50% of my salary when I retire excluding state pension.
I had heard Italy were particularly generous with their state pensions but I believe this "generosity" will likely be unsustainable in the long term
Thinking critically since 1996....0 -
somethingcorporate how much does your employer pay? (percentage)0
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I see in Ireland the state pension is 219 euro per week, which means 185 pounds per week, well above the 110 pounds per week of the UK state pension
moreover, you can live fairly well with 900 euro per month in Ireland (given that you rent), but you cannot live with 450 pounds per month in UK
do I miss something?0
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