What are the best Pension Options both UK and Worldwide?

[Deleted User]

dunstonh said:

The 2019 OECD report confirmed that the UK is at the bottom when it comes to pension provision. The state pension is also low when compared to other OECD countries.

The median disposable income in the OECD data wouldn't include ISAs, GIAs or investment bonds or personal savings.  It is purely pension.  A lot of people use those other wrappers/methods for income provision in retirement.

Plus, the UK has pension credits and other benefits to top up the state pension. So, its not quite as low as it looks when you look at ALL things rather than a selected sample.

Other countries have their versions of ISAs, at least both US and Canada do.  And while I don’t know what exactly is included under “disposable income”, I would assume that investment income is part of it, net of tax. 

bostonerimus

dunstonh said:

The 2019 OECD report confirmed that the UK is at the bottom when it comes to pension provision. The state pension is also low when compared to other OECD countries.

The median disposable income in the OECD data wouldn't include ISAs, GIAs or investment bonds or personal savings.  It is purely pension.  A lot of people use those other wrappers/methods for income provision in retirement.

Plus, the UK has pension credits and other benefits to top up the state pension. So, its not quite as low as it looks when you look at ALL things rather than a selected sample.

The UK state pension is definitely one of the lowest of the OECD countries. I know that my US social security payment will be far higher than my UK flat rate state pension. Of course that's just one aspect of things. In the US I will pay around $300/month for my retirement health insurance and in the UK you have the NHS which is free at point of service...at least for now. Other countries also have benefits over and above the state pension for those on low incomes so I don't think that's a particular advantage for the UK and they obviously also have DC and DB pensions and other tax advantaged ways of savings - I believe the DC pension actually started in the US with the 401k profit sharing schemes. However, the UK ISA is pretty amazing, but you need to have substantial spare income to take full advantage. It's similar to the US ROTH account, but the ISA contribution limits are far higher.

[Deleted User]

I think US state pensions are particularly generous. Canadian and UK government pensions are similar. 

For many of us the state pension is a very welcome but small part of our retirement income.  UK has a nasty lifetime allowance on private pensions and an unpleasant stamp duty on share trading but other than that, a massive ISA allowance and non-registered taxation rules are very favourable. 

So, I am not sure why retirement income is lower in the UK.  Perhaps its the pre-retirement wages or higher investment costs and/or risk aversion  that are driving that.  

bostonerimus

Deleted_User said:

I think US state pensions are particularly generous. Canadian and UK government pensions are similar. 

For many of us the state pension is a very welcome but small part of our retirement income.  UK has a nasty lifetime allowance on private pensions and an unpleasant stamp duty on share trading but other than that, a massive ISA allowance and non-registered taxation rules are very favourable. 

So, I am not sure why retirement income is lower in the UK.  Perhaps its the pre-retirement wages or higher investment costs and/or risk aversion  that are driving that.  

My parents had a very comfortable UK retirement because they had the state pension, a classic non-contributory DB pension from my father's 32 years working for the same company and a year's salary lump sum for taking early retirement. They paid the mortgage and saved money in the bank and had some company shares that were paid as bonuses, but they never had to bother with SIPPs, ISAs or global equity funds. Now much of the burden of retirement saving has been shifted from the employer to the employee and many employees don't have enough spare income to save what's required for a secure retirement and even more make foolish financial decisions because they get confusing information from a financial and pension industry that is often working against them.

nigelbb

Take job in the Public Sector in the UK as this will give you the best value defined benefit pension. The schemes aren't as generous as the old final salary schemes but the career average schemes are still very worthwhile. The NHS scheme accumulates at 1/54 of salary which given average life expectancy at retirement is worth another 35-50% of index linked salary paid in retirement. Contributions vary between 5% & 13% (high earners pay more). Get a high earning job in the Public Sector & pay the balance of your £40K Annual Allowance into a SIPP.

Take retirement in a more tax friendly jurisdiction. Liquidating your SIPP will only be taxed at 7.5% in France for example.

JoeCrystal

nigelbb said:

Take job in the Public Sector in the UK as this will give you the best value defined benefit pension. .

This. That is certainly my plan for my next job in case if I lost my current job. I just hope that the local council is the one that is willing to take the transfers in from DC pension schemes with LGPS! 

Malthusian

Deleted_User said:

So, I am not sure why retirement income is lower in the UK.  Perhaps its the pre-retirement wages or higher investment costs and/or risk aversion  that are driving that.  

The US is nearly 50% richer than us - it would be a surprise if our retirees were better off.

Plus US retirees have higher costs and therefore need higher income thanks to healthcare provision.

bostonerimus

Malthusian said:

Deleted_User said:

So, I am not sure why retirement income is lower in the UK.  Perhaps its the pre-retirement wages or higher investment costs and/or risk aversion  that are driving that.  

The US is nearly 50% richer than us - it would be a surprise if our retirees were better off.

Plus US retirees have higher costs and therefore need higher income thanks to healthcare provision.

The comparisons are usually of the amount of median income that's replaced. On that basis the UK state pension is the worst in the OECD. It's particularly bad for high earners as the UK pension is the same for everyone whereas US social security is calculated with a factor dependent on the size of the lifetime contributions. 

[Deleted User]

Malthusian said:

Deleted_User said:

So, I am not sure why retirement income is lower in the UK.  Perhaps its the pre-retirement wages or higher investment costs and/or risk aversion  that are driving that.  

The US is nearly 50% richer than us - it would be a surprise if our retirees were better off.

Plus US retirees have higher costs and therefore need higher income thanks to healthcare provision.

I am more surprised by how UK retirees do in terms of disposable income against countries with similar level of life. Like Canada. Assuming the data are accurate. And Canadian state pensions are if anything lower than British. 

[Deleted User]

bostonerimus said:

Malthusian said:

Deleted_User said:

So, I am not sure why retirement income is lower in the UK.  Perhaps its the pre-retirement wages or higher investment costs and/or risk aversion  that are driving that.  

The US is nearly 50% richer than us - it would be a surprise if our retirees were better off.

Plus US retirees have higher costs and therefore need higher income thanks to healthcare provision.

The comparisons are usually of the amount of median income that's replaced. On that basis the UK state pension is the worst in the OECD. It's particularly bad for high earners as the UK pension is the same for everyone whereas US social security is calculated with a factor dependent on the size of the lifetime contributions. 

Do you have a reference?  In Canada maximum state pension is around 8K (GBP). And you have to earn this maximum.   There are other sources of income, but if we are talking about state pensions, I am pretty sure UK pays more.