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NIC Changes
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slapntickle



Joined: 07 Sep 2010
Posts: 147

PostPosted: Sun Aug 18, 2013 11:09 am    Post subject: Reply with quote

scot47 wrote:
https://www.gov.uk/voluntary-national-insurance-contributions/deadlines


I've recently been in touch with the NI people and they told me that you can pay contributions dating back 5 years, although I notice in the link posted above it says 6. Anyway, here are a few things to think about:
1. You'll be paying inflated rates, ie, today's rates, if you pay back the year 2007-8, 2008-9, etc.
2. If you pay back what you missed because you were overseas, the lump sum payment you'd make may turn out to be more than you'd get back in pension payments upon retirement. For example, you may be asked to pay back around £800 for the year 2007-8, but that may only translate into a few additional pounds per week on your pension.
3. As people have already noted: rules change(for the worse), governments shift the goalposts, and pension firms go bankrupt and you lose all your contributions.

Think carefully before handing over what little disposable income you may have to dodgy pension schemes. It may simply be better to make hay while the sun shines and take the money and run.
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scot47



Joined: 10 Jan 2003
Posts: 12203
Location: Ultima Thule

PostPosted: Mon Aug 19, 2013 10:36 am    Post subject: Reply with quote

Pay it. Then, when, aged 70 you are sitting in the corner of some bar in SE Asia drinking away your pension you can mock those who were foolish and made no provision for their dotage !

https://www.gov.uk/voluntary-national-insurance-contributions/deadlines
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Stomper



Joined: 15 Sep 2013
Posts: 13

PostPosted: Mon Sep 23, 2013 6:08 pm    Post subject: Reply with quote

Interesting to note. Even if you do pay your NICs and can go through the rigmaroll of claiming from abroad, what about the age shortfall?

For example - China, no RPs for those over 60 (55 in Guangdong, I've heard) so no work (legal)
Therefore 7 years of nothing before you could claim the state pension.

So what do you do in that situation?

KSA no new Iqamas around 57 - 58, so stay in your current post as long as possible.

Plus I'm pretty sure we'll be seeing a UK retirement age at 70 before too long.

But if I stay in the UK I'll be up the swanny anyway.
Pay is terrible, cost of living sky-high, bills, rent, house prices?
Oh....and by the way you still need to save in some dodgy pension scheme that may or may not pay out a pittance.
I fear for all our futures.....
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slapntickle



Joined: 07 Sep 2010
Posts: 147

PostPosted: Mon Sep 23, 2013 7:23 pm    Post subject: Reply with quote

Stomper wrote:
Oh....and by the way you still need to save in some dodgy pension scheme that may or may not pay out a pittance. I fear for all our futures.....


Your fears are justified. This appeared in The Telegraph just 3 days ago:

http://www.telegraph.co.uk/finance/personalfinance/pensions/10322543/Rip-off-pension-fees-cost-savers-27bn.html

Best thing to do is just keep paying your NIC's and bank the rest in a big bank that is safe and plan on retiring to a third world country where the money will go farther.
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Hod



Joined: 28 Apr 2003
Posts: 916
Location: Home

PostPosted: Mon Sep 23, 2013 10:41 pm    Post subject: Reply with quote

You are right about UK NICs, but the rest of your post is terrible advice. If you plant cash now into a bank account, you'll get about 2% interest at best for years and years, which means your money will be decimated by inflation, and you’ll always be poor.

The Telegraph article is scaremongery, but it is partly correct in saying that many pension (and other saving) schemes charge a lot in fees. The important message is not to invest in anything (and starting a pension is an investment) you don’t understand. If some pension company tries to sell you a scheme, ask about the fees (TER, Total Expense Ratio, is what you need to know). Fees are unavoidable, but you want to pay fees for a worthwhile reason, i.e. profit for you.

Assuming you’re not retiring in the next two or three years, a degree of financial risk is essential to make your money work for you. Even final salary pension schemes have to take risks or their funds wouldn’t grow at all, and their pensioners would starve. Only pension schemes in their final years, i.e. people who will retire imminently, will take the very low-risk strategy of moving the funds heavily into cash or similar.

But to take the lazy approach of banking huge sums of cash and let its value plummet is the riskiest and just about the worst strategy of all. Even a rubbish pension scheme is way better than that.
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scot47



Joined: 10 Jan 2003
Posts: 12203
Location: Ultima Thule

PostPosted: Tue Sep 24, 2013 7:43 am    Post subject: Reply with quote

I know several EFLers who went in for "investment in property". They got a few buy to rent mortgages for properties in UK and Ireland. After the collapse of 2008, they are now in negative equity (Property is worth less than their mortgage) and they are in a great swamp of doodoo !
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Perilla



Joined: 09 Jul 2010
Posts: 783
Location: Hong Kong

PostPosted: Tue Sep 24, 2013 8:52 am    Post subject: Reply with quote

Hod wrote:
Even a rubbish pension scheme is way better than that.


This is debatable. Or at least, it depends what you mean by pension scheme, or who you save with ...

I've been paying a monthly sum into an AIA savings plan, effectively the same as a private pension, since 2006. As things stand the account is worth considerably less than the sums I've paid into it. I fully understand that this is in large part down to the fact that the stock markets have been generally dreadful during this period. Still, I'm not expecting much of a return on these payments the way things are looking. Nothing, it seems, is guaranteed.

That said, I totally agree with keeping up UK pension payments - and I wish I had a company pension coming my way.
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slapntickle



Joined: 07 Sep 2010
Posts: 147

PostPosted: Tue Sep 24, 2013 12:45 pm    Post subject: Reply with quote

Hod wrote:
You are right about UK NICs, but the rest of your post is terrible advice. If you plant cash now into a bank account, you'll get about 2% interest at best for years and years, which means your money will be decimated by inflation, and you’ll always be poor.


Yes you would if you remain in the UK, but I'm planning to retire to SE Asia, so my money will go a lot further there. I suppose I'm happy to leave my money in the bank because I feel it's safe there, whereas pension schemes are risky. Moreover, even the NIC won't be enough to live on time you get to 67. I think the max payout, assuming you've been contributing for 30 years, would be around £144 per week, which is obviously not enough to live on in the UK. This shortfall in pensions is a disaster waiting to happen.
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Hod



Joined: 28 Apr 2003
Posts: 916
Location: Home

PostPosted: Tue Sep 24, 2013 10:46 pm    Post subject: Reply with quote

slapntickle wrote:
Yes you would if you remain in the UK, but I'm planning to retire to SE Asia, so my money will go a lot further there.


And I hope that goes well. It's something I may well do as my wife is from SE Asia. Unfortunately, glossing over that SE Asia isn’t even cheap any more, you'd then be entirely at the mercy of currency misbehaviour.
I wouldn't retire to Thailand, but a lot of people do, so I'll use the Thai Baht as an example.

http://www.xe.com/currencycharts/?from=GBP&to=THB&view=10Y

The chart shows £1 being worth 75 Baht in 2005 and 50 Baht since 2010. Imagine taking a 33% pay cut. That’s what expat pensioners in Thailand have had to do. It’s not just Thailand; look at Singapore and Malaysia below.

http://www.xe.com/currencycharts/?from=GBP&to=SGD&view=10Y
http://www.xe.com/currencycharts/?from=GBP&to=MYR&view=10Y

Whilst you can mitigate risks, diversify and all those good things, you can’t control the behaviour seen in the graphs above. All you can do is look after your savings now to make sure you have as much as possible come retirement, and putting it all into a low-risk low-interest cash savings account now – assuming you don’t plan to retire within the next five years - is just about the worst strategy.
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Hod



Joined: 28 Apr 2003
Posts: 916
Location: Home

PostPosted: Tue Sep 24, 2013 10:59 pm    Post subject: Reply with quote

scot47 wrote:
I know several EFLers who went in for "investment in property". They got a few buy to rent mortgages for properties in UK and Ireland. After the collapse of 2008, they are now in negative equity (Property is worth less than their mortgage) and they are in a great swamp of doodoo !


I nearly complained to the moderators about this.

Not everyone wants to live in a UK council house upon retirement or even be eligible to do so. If you are happy to live this way, good for you.

For others, it is very dangerous to ignore your financial futures based on someone on an internet forum who has retired recently and, in his perception, struck lucky with seemingly very little planning. Times will change in the future when you retire in ten or twenty years’ time.

I know plenty of people who never need to work again having bought a couple of houses. For the rest of us, property is still one of the best long-term investments. For someone who lives in a council house to try and offer such advice as above is just wrong (and best ignored), and I really wonder his rationale for doing so.
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Perilla



Joined: 09 Jul 2010
Posts: 783
Location: Hong Kong

PostPosted: Wed Sep 25, 2013 3:17 am    Post subject: Reply with quote

Hod wrote:
I know plenty of people who never need to work again having bought a couple of houses.


Your comments, including this one, are just as anecdotal as those made by anyone else on the forum. And for what it's worth, I know plenty of people who own two properties (me included!) who are nowhere near retiring.

Sure, some people get lucky and buy before a major surge in prices; and with some it goes the other way. Winners and losers, swings and roundabouts.

I would agree that in general buying a property turns out well in the long term, partly because, irrespective of what happens with property prices, you are no longer at the mercy of landlords and can enjoy doing things with it.

As for saving for retirement etc., the best possible advice is probably not to put all your eggs in one basket.
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PC Parrot



Joined: 11 Dec 2009
Posts: 382
Location: Moral Police Station

PostPosted: Wed Sep 25, 2013 3:53 am    Post subject: Reply with quote

Most TEFLers have no eggs and can't afford a basket.
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slapntickle



Joined: 07 Sep 2010
Posts: 147

PostPosted: Wed Sep 25, 2013 10:04 am    Post subject: Reply with quote

Hod wrote:
. . . SE Asia isn’t even cheap any more . . .


Yes, right again, but there's no doubt that it is cheaper than living in London. If you are careful in countries in SE Asia, for example, you rent and don't buy, eat local food, stay out of the bars, etc, a little money will actually go a long way. In the UK, especially London, everything is expensive so you'e basically living hand to mouth.
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