Private pensions popular in UK but not in France, Germany, Spain

nigelbb

bhjm wrote: »

as far I can speak for Germany, the income is taxed higher compared to UK.Higher for Income Tax, health insurance as well as the pension deductions / contributions.

You get what you pay for. The Tory obsession with reducing personal taxation has ensured underfunding of the NHS & inferior pensions.

nigelbb

michaels wrote: »

Is the monolithic NHS really the best way to provide publicly funded healthcare? I care much more about the quality of treatment and the wait times than whether the Doctor, nurse, cleaner etc are paid for by the govt or a private company. Don't forget that GPs in the UK are all private sector employees paid for by public funding.

The NHS is great value because it doesn't have a large overhead of billing administration or private companies siphoning off profits from healthcare expenditure. There has in fact been a creeping privatisation of the NHS over the last nine years as Tory policy & nearly 10% of NHS spending now goes to private companies like Virgin Health or Care UK providing services.

nigelbb

Terron wrote: »

The systems are very different. Both provide a safety net. Both allow for more with differeing degrees of compulsion/ flexibility. It is not easy to say that one is better than the other. My feeling is that I prefer the greater freedom in the UK's system, but I only have a superficial knowledge of the French one.

Having worked & earned pensions in both UK & France I do know about both systems & I think the French system is vastly superior. In the UK employers can no longer be trusted to provide DB pensions & these are now mainly only available to public sector employees. In France DB pensions are the norm either provided by the state public sector employees as in the UK or by large industry wide compulsory schemes that ensure all employees get a decent pension.

Optional auto-enrolment DC pensions are a poor substitute & too little too late. DB pensions are sustainable but they need to be paid for & making them compulsory & industry wide as they have in France seems a practical & sensible way of doing it.

ex-pat_scot

nigelbb wrote: »

Having worked & earned pensions in both UK & France I do know about both systems & I think the French system is vastly superior. In the UK employers can no longer be trusted to provide DB pensions & these are now mainly only available to public sector employees. In France DB pensions are the norm either provided by the state public sector employees as in the UK or by large industry wide compulsory schemes that ensure all employees get a decent pension.

Optional auto-enrolment DC pensions are a poor substitute & too little too late. DB pensions are sustainable but they need to be paid for & making them compulsory & industry wide as they have in France seems a practical & sensible way of doing it.

it's not a question of trust - more a question of cost and risk.
WHy would you choose to pay 30-40% of your salary bill in pension cost, with possibility of huge additional cost further down the line? Compare that with providing a DC scheme where the total cost can be 10% and with no future liability.
What would any rational business do?

michaels

nigelbb wrote: »

Having worked & earned pensions in both UK & France I do know about both systems & I think the French system is vastly superior. In the UK employers can no longer be trusted to provide DB pensions & these are now mainly only available to public sector employees. In France DB pensions are the norm either provided by the state public sector employees as in the UK or by large industry wide compulsory schemes that ensure all employees get a decent pension.

Optional auto-enrolment DC pensions are a poor substitute & too little too late. DB pensions are sustainable but they need to be paid for & making them compulsory & industry wide as they have in France seems a practical & sensible way of doing it.

Do you happen to know if the French scheme is funded or pay as you go - and if the latter, what is required in terms of demographics for current promises to actually be supported?

If current payments are supporting current payments and the dependency ratio is increasing then by definition either future payments can not be met or contribution rates will have to go even higher.

[Deleted User]

The one and only minor problem with the French pension system is that it’s not sustainable https://www.thelocal.fr/20191024/frances-pension-system-has-major-weaknesses-and-shortcomings.

The other country with a great pension system is Venezuela. Starts at 60 for men and 55 for women. Also one minor problem, although they are now dealing with it by bringing life expectancy down and pushing the value of money to zero.

nigelbb

Deleted_User wrote: »

The one and only minor problem with the French pension system is that it’s not sustainable https://www.thelocal.fr/20191024/frances-pension-system-has-major-weaknesses-and-shortcomings.

Except it is sustainable. The necessary reforms to the private employee's complementary AGIRC-ARRCO schemes have been put in place with efficiencies in management & simplification of regimes plus increased contributions. The books were balanced in 2019 which was two years ahead of schedule. The same process is going on with pensions for state employees.

BTW in the Mercer Index linked to in that article France gets the same C+ rating as the UK & USA. This is described as :-

"A system that has some good features, but also has major risks and/or shortcomings that should be addressed. Without these improvements, its efficacy and/or long-term sustainability can be questioned." https://info.mercer.com/rs/521-DEV-513/images/MMGPI%202019%20Full%20Report.pdf

The recommendations for the UK are:-

• raising the minimum pension for low-income pensioners
• further increasing the coverage of employees and the self-employed in pension schemes
• increasing the level of contributions to occupational pension schemes
• raising the level of household saving and reducing the level of household debt

The recommendations for France are:-

• increasing the level of funded contributions thereby increasing the level of assets over time
• increasing the state pension age
• increasing the labour force participation rate at older ages as life expectancies rise.
• improving the regulatory requirements for the private pension system

michaels

nigelbb wrote: »

Except it is sustainable. The necessary reforms to the private employee's complementary AGIRC-ARRCO schemes have been put in place with efficiencies in management & simplification of regimes plus increased contributions. The books were balanced in 2019 which was two years ahead of schedule. The same process is going on with pensions for state employees.

BTW in the Mercer Index linked to in that article France gets the same C+ rating as the UK & USA. This is described as :-

"A system that has some good features, but also has major risks and/or shortcomings that should be addressed. Without these improvements, its efficacy and/or long-term sustainability can be questioned." https://info.mercer.com/rs/521-DEV-513/images/MMGPI%202019%20Full%20Report.pdf

The recommendations for the UK are:-

• raising the minimum pension for low-income pensioners
• further increasing the coverage of employees and the self-employed in pension schemes
• increasing the level of contributions to occupational pension schemes
• raising the level of household saving and reducing the level of household debt

The recommendations for France are:-

• increasing the level of funded contributions thereby increasing the level of assets over time
• increasing the state pension age
• increasing the labour force participation rate at older ages as life expectancies rise.
• improving the regulatory requirements for the private pension system

So in other words it isn't funded so those paying now are paying the pensions of the smaller generation wo are currently retired and in the future those paying will be paying pensions of a larger cohort than themselves and thus have to pay much higher contributions which will push overall withdrawal rates of income earned to what - 70+% for average earners?

Sustainable?

[Deleted User]

nigelbb wrote: »

Except it is sustainable. The necessary reforms to the private employee's complementary AGIRC-ARRCO schemes have been put in place with efficiencies in management & simplification of regimes plus increased contributions. The books were balanced in 2019 which was two years ahead of schedule.

The French Prime Minister begs to differ:

“The government is aiming for a “financially balanced system by 2025, to restore confidence to the French in its sustainability and ensure a sufficient level of retirement for future generations”, said Edouard Philippe, prime minister.”

We are yet to see if the reforms will be implemented.

Terron

nigelbb wrote: »

Except it is sustainable. The necessary reforms to the private employee's complementary AGIRC-ARRCO schemes have been put in place with efficiencies in management & simplification of regimes plus increased contributions. The books were balanced in 2019 which was two years ahead of schedule. The same process is going on with pensions for state employees.

BTW in the Mercer Index linked to in that article France gets the same C+ rating as the UK & USA. This is described as :-

"A system that has some good features, but also has major risks and/or shortcomings that should be addressed. Without these improvements, its efficacy and/or long-term sustainability can be questioned." https://info.mercer.com/rs/521-DEV-513/images/MMGPI%202019%20Full%20Report.pdf

The recommendations for the UK are:-

• raising the minimum pension for low-income pensioners
• further increasing the coverage of employees and the self-employed in pension schemes
• increasing the level of contributions to occupational pension schemes
• raising the level of household saving and reducing the level of household debt

The recommendations for France are:-

• increasing the level of funded contributions thereby increasing the level of assets over time
• increasing the state pension age
• increasing the labour force participation rate at older ages as life expectancies rise.
• improving the regulatory requirements for the private pension system

Those are wierd recommendations given that the UK actual has a (slightly) higher minimum income for pensioners than France. So why recommend increasing it for the UK and not France? Looking at the scores on this issue for France Germany and the UK they are 7.3, 6.7 and 5.7. The minimum income is very similar for all three (£150 to £155) but the score is based on that as a percentage of average wage wage and how it is increased over time. The rating for increases gets a maximum score if increases are linked to wage growth. The UK's triple lock is obviously even better but can not score higher on their system.


You missed the first recommendation - restoring the requirement to take some of retirement savings as an income stream. I.e, reducing pension freedom which I would not consider and improvement. The adequacy score is also affected by the authors' preference for compulsion. This may be correct when considering only pensions, but freedom has a value too.



France has the second highest rating for adequacy (behind Ireland), but is rated lower than the UK for sustainability and integrity.