What are the best Pension Options both UK and Worldwide?

bostonerimus

Deleted_User said:

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. 

I was looking at the 2017 OECD study, here is an article with a summary.

https://www.choose.co.uk/news/uk-state-pension-lowest-of-all-oecd-nations.html

As far as levels of payments in today's money, after 35 years of contributions I now qualify for a UK flat rate pension at age 67 which is currently 9.1k GBP/year. In the US I have 20 years of FICA payments and my current US SS payment (also starting at age 67) would be $29.5k/year or 21.4k GBP/year. If Canada is 8kGBP then that's very low.

The US payment is larger the higher your earned income and you will pay 6.3% up to around $137k. The calculation is biased towards lower earners so that a larger proportion of their income is replaced by social security and maxes out at about $37k/year. UK NI is around 12% but gets reduced at a lower earnings threshold than in the US. I like the idea of a flat rate as a way to redistribute wealth, but the basic level of the UK flat state pension is just very low and to get it to be mid table with other OECD countries it would have to be around 14k GBP/year.

[Deleted User]

bostonerimus said:

Deleted_User said:

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. 

I was looking at the 2017 OECD study, here is an article with a summary.

https://www.choose.co.uk/news/uk-state-pension-lowest-of-all-oecd-nations.html

As far as levels of payments in today's money, after 35 years of contributions I now qualify for a UK flat rate pension at age 67 which is currently 9.1k GBP/year. In the US I have 20 years of FICA payments and my current US SS payment (also starting at age 67) would be $29.5k/year or 21.4k GBP/year. If Canada is 8kGBP then that's very low.

Yep, Canada Pension Plan is 8k a year max (in GBP), starting at 65. You need to earn over $60k a year  in todays money for 40 years to get this maximum.  Unlike UK or US, this pension isn’t funded out of taxes but from investments so its very well funded and isnt going bankrupt. If you delay past 65 then it goes up by something like 6% a year plus inflation. 

You then get old age benefits, depending on your income, like old age security (if your annual income is less than 120k a year) but thats a benefit rather than a pension. That you get regardless of how much you contributed, just based on years in the country. And there are additional top ups for low income retirees.  

I don’t know what OECD counted as “pension” but it looks like they included Old Age Security, which is a benefit/handout and has an income threshold. 

BuildTheWall

bostonerimus said:

Deleted_User said:

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. 

I was looking at the 2017 OECD study, here is an article with a summary.

https://www.choose.co.uk/news/uk-state-pension-lowest-of-all-oecd-nations.html

As far as levels of payments in today's money, after 35 years of contributions I now qualify for a UK flat rate pension at age 67 which is currently 9.1k GBP/year. In the US I have 20 years of FICA payments and my current US SS payment (also starting at age 67) would be $29.5k/year or 21.4k GBP/year. If Canada is 8kGBP then that's very low.

The US payment is larger the higher your earned income and you will pay 6.3% up to around $137k. The calculation is biased towards lower earners so that a larger proportion of their income is replaced by social security and maxes out at about $37k/year. UK NI is around 12% but gets reduced at a lower earnings threshold than in the US. I like the idea of a flat rate as a way to redistribute wealth, but the basic level of the UK flat state pension is just very low and to get it to be mid table with other OECD countries it would have to be around 14k GBP/year.

Things like these are not comparable directly. Uk residents have also received healthcare free for lifetime. Imagine the cost in US. 

[Deleted User]

I would keep the healthcare out of it. Many Brits pay for the healthcare. A lot of people in the US get healthcare “free” or “almost free” at the point of use.  With GPs serving to control access, Brits don’t tend to use it as much. The system is different. State actually subsidizes healthcare more than in the UK. The costs in the US are higher but so is the quality (usually).  Its complicated. 

bostonerimus

BuildTheWall said:

bostonerimus said:

Deleted_User said:

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. 

I was looking at the 2017 OECD study, here is an article with a summary.

https://www.choose.co.uk/news/uk-state-pension-lowest-of-all-oecd-nations.html

As far as levels of payments in today's money, after 35 years of contributions I now qualify for a UK flat rate pension at age 67 which is currently 9.1k GBP/year. In the US I have 20 years of FICA payments and my current US SS payment (also starting at age 67) would be $29.5k/year or 21.4k GBP/year. If Canada is 8kGBP then that's very low.

The US payment is larger the higher your earned income and you will pay 6.3% up to around $137k. The calculation is biased towards lower earners so that a larger proportion of their income is replaced by social security and maxes out at about $37k/year. UK NI is around 12% but gets reduced at a lower earnings threshold than in the US. I like the idea of a flat rate as a way to redistribute wealth, but the basic level of the UK flat state pension is just very low and to get it to be mid table with other OECD countries it would have to be around 14k GBP/year.

Things like these are not comparable directly. Uk residents have also received healthcare free for lifetime. Imagine the cost in US. 

Well the cost for US Medicare and some top up insurance might be $3000/ year. The US state pension payment is still twice that of the UK after that cost is taken off. So you have to budget for healthcare insurance in the US, but travel, food, energy, taxes etc would also need to be considered, you shouldn't stop at the cost of healthcare. That's why the OECD chose to look at the fraction of average income that a state pension replaces and on that basis the UK is near the bottom of the table.