State pensions around the world

Flugelhorn

Suhusa said:

Flugelhorn said:

MattMattMattUK said:

I would far rather the Germany system than the low quality pensions we have in the UK, their unemployment benefits system, which for the first year scales with previous average income and contributions also makes far more sense than ours. In the UK compared to Scandinavia, Germany, The Netherlands, Australia, Canada etc. high earners pay in a lot and get comparatively very little back, combined with poor public services, whilst low earners pay in little but comparatively get much much more, less than a third of adults make a net contribution in the UK in any one year, over a lifetime it is less than 5%, 50% of households receive more in direct cash benefits than they pay in tax.

It is interesting - I was surprised how little could be considered to be a "full year" for NI. I quit work about 5 weeks into a financial year and what a paid in that time seems to b enough for the whole year ie I get the same addition to my pension paying 5 weeks worth as I did paying 52 weeks 

That's an effect of the UK state pension not being linked to the contributions as such but just to the fact that you've made any contributions as long as you're over the minimum amount.

absolutely - just means that the rest is more tax, though fair enough they used to send me some back if I paid too much 

Malthusian

MattMattMattUK said:

I would far rather the Germany system than the low quality pensions we have in the UK, their unemployment benefits system, which for the first year scales with previous average income and contributions also makes far more sense than ours.

I am guessing you are imagining yourself as a West German with a nice fat pension built up from your engineering career, rather than an East German who spent half their working life with no job under communism and the second half in the rat race of kapitalismus. A race you only started when the rest of the field was already half-finished.
All alternative systems are always brilliant because you always imagine that you'll be the one on top.

Suhusa

Malthusian said:

MattMattMattUK said:

I would far rather the Germany system than the low quality pensions we have in the UK, their unemployment benefits system, which for the first year scales with previous average income and contributions also makes far more sense than ours.

I am guessing you are imagining yourself as a West German with a nice fat pension built up from your engineering career, rather than an East German who spent half their working life with no job under communism and the second half in the rat race of kapitalismus. A race you only started when the rest of the field was already half-finished.
All alternative systems are always brilliant because you always imagine that you'll be the one on top.

That was actually the other way round - unless you had applied to move to the West (which practically meant insrant job loss) you had a job under communism, although in some cases that job may have amounted to sitting around doing nothing. When people actually had no jobs was the first 10 or 15 years after reunification.

MattMattMattUK

Malthusian said:

MattMattMattUK said:

I would far rather the Germany system than the low quality pensions we have in the UK, their unemployment benefits system, which for the first year scales with previous average income and contributions also makes far more sense than ours.

I am guessing you are imagining yourself as a West German with a nice fat pension built up from your engineering career, rather than an East German who spent half their working life with no job under communism and the second half in the rat race of kapitalismus. A race you only started when the rest of the field was already half-finished.

I am imagining the Germany pensions scheme implemented here in the UK, which would improve the situation for almost everyone, not moving myself back in time thirty years, to a specific part of another country. 

Malthusian said:

All alternative systems are always brilliant because you always imagine that you'll be the one on top.

How about alternative systems, but based on the circumstances we have in the UK, that is how most people "imagine" those systems. I would spend the next thirty or more years paying into the new scheme. Ultimately I would personally be better off under a US style system of ultra-low tax, but that does not mean that I think that is what would be best for the country, hence thinking the UK should reform into something along the lines of the models that works well in the many European countries that get it right. 

sammyjammy

GunJack said:

I think MMMUK has some good points there, I think we as a nation should pay more in tax (and not all biased toward high earners) to pay for the public services that "people" want/need. Looking back to the late 70s/early 80s some rebalancing was required, but Thatcher took it too far the other way. 

We the UK need to find the sensible middle ground between needs, expectations and how to pay for it all.  

Many people would be more than willing to pay higher taxes, me included, if we thought we would see something for it other than more waste and more money spent on projects that never come to fruition.

I work in the Civil service and the waste and over staffing is a disgrace (in some areas)

zagfles

hoc said:

No, most in the West are not means tested. The UK pension is low, but it's not an easy topic where numbers can be directly compared. You need to normalise costs, factor payments in, consider typical life expectancy, etc. to compare the value from the different systems. On a pure £ basis many countries pay out far more for less paid in but they may not provide other benefits that pensioners can enjoy for free. For example the American system pays out 2-3 times for half the UK contribution, but don't offer NHS. I would personally rather get £600 pw after paying only 6% instead of 12% national insurance and do without NHS. Developed, large European countries like France are probably the best to compare against, not far away ones like Australia, USA, or the smaller, culturally different Mediterranean or richer Nordics. The UK has one of the highest poverty rates for pensioners in Europe and is in the minority where pensioner poverty is above the national average.

You need to take "poverty" figures with a large pinch of salt, the usual measure for "poverty" is purely income based and based on 60% of equivalised household income. So a pensioner whose only income is £10k state pension but living mortgage free in a house worth half a million with £200k in savings/ISAs would be classed as being "in poverty" despite being worth the best part of a million!

zagfles

MattMattMattUK said:

I would far rather the Germany system than the low quality pensions we have in the UK, their unemployment benefits system, which for the first year scales with previous average income and contributions also makes far more sense than ours. In the UK compared to Scandinavia, Germany, The Netherlands, Australia, Canada etc. high earners pay in a lot and get comparatively very little back, combined with poor public services, whilst low earners pay in little but comparatively get much much more, less than a third of adults make a net contribution in the UK in any one year, over a lifetime it is less than 5%, 50% of households receive more in direct cash benefits than they pay in tax.

The UK for some reason seems to have gone down the route of relying on an ever shrinking number of high earners to pay more and more of the tax bill, whilst reducing the tax lower earners pay. The rest of the world either recognises that you can spread the burden and have decent public services for all (most of Europe), funded by all, or you have poor public services but pay little tax (USA). I would rather that we took a choice that everyone pays more, but we use that to fund society, decent healthcare, decent pensions, well funded schools and childcare provisions, sensible unemployment and disability benefits, roads that are not filled with potholes etc. however too many people seem to think that "someone else" should pay for everything and they should benefit. I am prepared to pay more tax if everyone does, combine IC and NI into a single income tax, increase the rates charged, abolish the personal allowance, re-cap the lifetime pensions pot (although higher than it was previously capped) and we might have the money to make the country better, or we could carry on with the failed policies of the last fifty years and nothing will improve. 

When you look at tax rates for lower earners in other countries you need to account for tax allowances they get which we don't, such as allowing non earners (spouse, children) to use their personal allowances against the family income. In many countries couples or familiies are taxed jointly rather than (mostly) independant taxation we have here.

We also have a social security system that is far more means tested than other countries like Germany where it's more contribution based. We also have massively more people on long term disability benefits.

MattMattMattUK

zagfles said:

MattMattMattUK said:

I would far rather the Germany system than the low quality pensions we have in the UK, their unemployment benefits system, which for the first year scales with previous average income and contributions also makes far more sense than ours. In the UK compared to Scandinavia, Germany, The Netherlands, Australia, Canada etc. high earners pay in a lot and get comparatively very little back, combined with poor public services, whilst low earners pay in little but comparatively get much much more, less than a third of adults make a net contribution in the UK in any one year, over a lifetime it is less than 5%, 50% of households receive more in direct cash benefits than they pay in tax.

The UK for some reason seems to have gone down the route of relying on an ever shrinking number of high earners to pay more and more of the tax bill, whilst reducing the tax lower earners pay. The rest of the world either recognises that you can spread the burden and have decent public services for all (most of Europe), funded by all, or you have poor public services but pay little tax (USA). I would rather that we took a choice that everyone pays more, but we use that to fund society, decent healthcare, decent pensions, well funded schools and childcare provisions, sensible unemployment and disability benefits, roads that are not filled with potholes etc. however too many people seem to think that "someone else" should pay for everything and they should benefit. I am prepared to pay more tax if everyone does, combine IC and NI into a single income tax, increase the rates charged, abolish the personal allowance, re-cap the lifetime pensions pot (although higher than it was previously capped) and we might have the money to make the country better, or we could carry on with the failed policies of the last fifty years and nothing will improve. 

When you look at tax rates for lower earners in other countries you need to account for tax allowances they get which we don't, such as allowing non earners (spouse, children) to use their personal allowances against the family income. In many countries couples or familiies are taxed jointly rather than (mostly) independant taxation we have here.

I agree that there are differences in taxation policies, but they key is that most people just do not pay enough in taxes. In the UK 54% (at least measure) of households receive more in cash benefits than they pay in taxes, in Germany that figure is only 28%. In the UK less than 25% of working age adults make a net contribution in any one year, that represents only 17.75% of the total population, around 4-4.2% make a net lifetime contribution, in Germany those figures are 46% and 18%. In Norway it is over 50% and the latter is closer to 30%. 

In the UK we only collect 33.4% of GDP as tax, in Germany that figure is 37.5%, Norway 38.2% and France 46.2%, the USA for comparison is 27.1%. The UK runs a deficit (and has done since 1999) and spends less on public services per head and as a percentage of GDP than any other advanced economy other than the USA which of course has no universal healthcare and weak social security provisions. 

zagfles said:

We also have a social security system that is far more means tested than other countries like Germany where it's more contribution based.

Our system is incredibly poor compared to most international systems, a model on those such as Germany, most Scandinavian countries and most of Northern Europe are far better than what we have. 

zagfles said:
We also have massively more people on long term disability benefits.

That has unfortunately been an issue for decades, an convenient way to keep the unemployment rate down. 

atush

I think, when i last checked, the US So sec was higher than UK state pension.  But at the time you retired later than the UK.  Also, at the time you needed 10 years or 40 quarters to receive any pension, and you got it at 67.  You can elect to receive it at 62, reduced.

Now, they are more in alignment than before.

I have 44 quarters/11 years in the US SS, and my monthly payment is $478.  Many people would have 4-5 times that, or more.

arnoldy

The UK state pension is incredibly generous - because you continue to qualify for raising kids, being unemployed, on benefits, being grandparents looking after kids etc so it really is semi - contributory. In fact you could have contributed next to nothing in NI and still get the best part of £10k pa index linked. 

The other unusual factor with the UK state pension compared to many European schemes is its not linked to earnings - you get the same if you earn and pay NI on £12k pa or £1.2m pa.

The UK is also incredibly generous pension savings allowance of up to £60k pa (with full tax relief) , the high personal allowance of £12.57k pa before you pay tax, and no insurance (NI) to pay on retirement, a totally free healthcare with no co payments - all unheard of in Europe.

The UK truly is the land of milk and honey in terms of pensions and retirement, it is hard to understand otherwise when you tot it all up.