Job Discussion Forums

[Guiza]

Something that has been on my mind recently.

I am 24 and intend of carrying on teaching abroad for another few years, possibly until 30ish then evaluating my options but I'd imagine getting out of the tefl game around then.

Teaching is a way to see the world and live in foreign places whilst earning money and I am very excited about the next few years's possibilities in this regard.

However I started thinking when I was in Spain last year that I am paying taxes but probably won't stick around in any country to begin to build a pension. The fact that I started to even consider pensions was troubling to my young mind to begin with but I presume that people my age in the UK or any other country will now already be paying taxes in order to pick up a pension later on.

Is this something that others worry about? Do tefl teachers save on their own accord money that they will need at retirement age? Or have to live really frugal lives in retirement with the dong, pesos and yen they managed to save during their tefl career?

I suppose most teachers who do it as a long term career settle down somewhere and gain entitlement to a pension fund... nevertheless it could take a long time to find that place.

I know next to nothing about pensions in the UK let alone abroad. From this position of ignorance it does seem to be a major drawback of teaching abroad.

Can anyone enlighten or have some experience on this?

[Guiza]

Just found this very relevant discussion:

http://forums.eslcafe.com/job/viewtopic.php?t=83625

[naturegirl321]

I've given up on pension. I could get a little from the US and a little from Peru. So that's something. BUt working on passive income through proprety.

We have one apartment in the city and are working on the papers for beach property. WE figure if we can buy something every five years, we should be ok. Live off the rent.

WE-ve also thought about opening a couple businesses. We have some ideas geared towards tourists and expats that would work. One has little start up costs, the other would be a bit more expensive to start.

I-m 29 (arg, yesterday!) and have been teaching for 9 years now. I would like to get out of teaching eventually, but don't see that happening anytime soon.

AS far as pensions go, sometimes you can get them back. I got mine back from Korea, but can-t get mine back from peru due to citizenship. I mean, I could, but I have to wait another 3 years.

Some countries, not sure about the UK, allow you to pay voluntarily. YOu could see if the UK will allow you to do that.

We figure it-d best to do a variety of things.
Pay pension in the US
Pay pension in Peru
Pay pension in Korea, which I-ll get back when I leave here, in cash
Buy proeprty in Peru.
Budget like crazy.

[MotherF]

Happy Birthday Naturegirl!
Don't say Arg, I'm near the end of my 30s and I have to say--they've been great!

As for pensions--some banks also have a service that allows you to consolidate various pension plans from different countries. I once listened to a BBV employee talk at length on the issue. I also recently learned that Mexico does have a way to get what you paid into their plan back if you permanently leave the country. But if you are here for a year or less, processing fees will eat up most of the money.

[Teacher in Rome]

Hi Guiza

Well, I'm a few years down the line from you, and have amassed various pension "credits" along the way. The theory is that if you pay into different EU member state pensions, you get a bit from each when you retire. This is what I'm hoping, seeing as I've paid about 10 years into the Italian state pension system. At 20% of my gross salary, I'm really hoping this is the case.

However, realistically speaking, the pensions might get pulled before I retire. So what I'm thinking of doing is putting some �� aside somewhere. If you're still a UK resident you might be able to do this via ISA / TESSA (can't remember the name). You might also have the guts to do sth on the stock market. Though from what I can see, this is probably better via tracking funds. Or take out a private pension from the UK.

Alternatively, you can do nothing for a few years, save up, and maybe buy property or something. I'm the proud owner of an unsellable house (at least for the time being) so take this advice with a huge pinch of salt. In my experience, if you're buying a house to live in that's one thing: if it's an investment thing you better make sure it's relatively "liquid" - i.e. you could sell it at a decent price when you want to.

[opilec894]

I am not sure if you know this, but UK citizens can still make national health contributions even if they are outside the UK. These will obviously become part of your pension later (if there is still a state pension in 40 years' time).

I am not sure of the details, but any financial adviser will know more than me.

I hope this helps.

Charlie Warth

[fladude]

If you check the debt figures of the US and the EU nations it seems improbable that anyone under 50 will ever receive a pension. I am 39 and when I am 67 (age for social security), assuming our current debt levels remain in tact and don't increase (I don't believe for a second they will decrease) we would owe over 45 trillion dollars in debt (and that is very conservative). The UK is just as bad off. The whole thing is a ponzi scheme and a sad joke. So try to avoid paying state pensions whenever you can, focus on dividend paying stocks and real property (like NatureGirl is doing).

Oh and that 45 trillion figure assumes that interest rates stay at around 0 percent.....

[Guiza]

Well thanks for the replies, sorry I'd left them without response, i just started teaching funnily enough and was tunnel visioned on planning.

I spoke to someone else about this today and they shared some of the thoughts here in that there is a distinct possibilty that there will be no state pension for anyone in the future. If that's true what will all the civil servants do when they retire? Won't everyone be outraged if this happens? If someone took away my hard earned and expected pension i'd be totally livid.

Or is this common knowledge so people will be putting away money for retirement as they age, in an ISA for example as mentioned?

A job with a private company who organise a pension fund for you is a way to secure a pension...?

I'm not getting worried yet but I can't really see myself being able to save much if any money for retirement at this stage, as long as i am teaching (what with student loan to chip into and desires to enjoy being abroad). Unless if I went to Korea or the Middle East, but going somewhere to teach with the primary objective being to start saving for a pension is ridiculously frugal. May be the answer though at some point.

The idea of making some national health contributions whilst abroad with a view to picking up a pension later on becomes difficult when paying �xxx per year to the SLC combined with earning cheap foreign currency and the pessimism regarding the very existence of state pensions in 40 years.

So it comes to property and the stock market. It's a romantic idea, owning properties and earning money by gambling. Nature Girl you seem to have sorted yourself out in this respect so kudos to you.

I clearly need to make some contacts in the City or face a monk like existence in old age.

Or just smash my way into Curries and steal my retirement fund

[HLJHLJ]

The pensions that civil servants get are not the same as the state pension. It's a contributory pension scheme, just as you would get working for a private company (except for those who are lucky enough to still be in a final salary scheme, though even the last few of those are likely to be phased out). There's no reason to believe that stopping state pensions, or more likely, making them means tested, would have any effect on civil servants.

Personally, I am continuing to make voluntary NI contributions in the UK. However, I don't really expect to ever receive a state pension, I'm sure it will have been abolished one way or another by then. Either that, or they'll have put the retirement age up so high I'll be getting my telegram off the queen before my first pension payment. But the amount is so small it seems daft not to pay it, just in case.

You don't need an employer to have a private pension, but if you aren't earning in the UK you don't get the tax benefits. However, we also made the decision to invest in property rather than traditional share based pension schemes, it's not guaranteed, but it feels safer than the other options.

[Teacher in Rome]

[askiptochina]

[elliot_spencer]

Hey, I have started paying NI contributions (class 3), works out about 600 quid a year or 13 quid a week.

I was told yesterday that I need to make 30 years of contributions to get the max state pension (I am 27 so is doable).

I only started a stakeholder pension with Virgin Money and paying 100 quid a month with a 10% yearly rise. If you go on the website u can read about it. It's a new gov scheme to help you save and if u r a citizen they will add to your contributions.

I can't speak about the USA but in Europe there will always be pensions for those of us who are resident and born there, so make sure you always keep a European bank account and address, I looked at this issue during my dissertation in European Studies (and TESOL) and Europe has a duty to provide, and they will.. it might not be a lot but we will get something, even if it's 10 quid a week or food tokens something will be given. And, healthcare will be free for OAPs etc.

So, yes you need to save and think ahead but we won't be left stranded.

Just remember to keep your residency in the UK. I heard that those who claim residency (permanent) out side of the EU will be the first not to get anything.

[Guiza]

[HLJHLJ]

I do agree with Elliot_Spencer that there will always be something, I just don't think it will be the state pension, or anything like it. Perhaps there will be some token payment to tick a box and keep things legal, but I am not expecting any more than that.

The gap left could easily be filled with means tested benefits, and it would have little effect on people who had no other income in old age. (Pension credit benefit was created for people who weren't getting the minimum needed through their pension alone).

Don't forget that the state pension is only a small part of what NI contributions pay for. It also pays for unemployment benefit, sickness and disability benefits, and perhaps most importantly, the NHS.

I am far more interested in health care in old age than I am in the state pension. Then NHS isn't perfect by any means, but there are very few countries that can provide me with an equivalent standard of health care, and even fewer where I will realistically be able to pay for that care, or the relevant insurance. That alone is enough to ensure I keep paying my NI stamps.

Also, bear in mind that the amount you need to contribute can go up. I recently had the option to pay up some old years that I had missed. The total for 3 years' contributions was less than I pay now for 1. NI rates are likely to continue to increase over the next few years, as it's a safer bet for governments than increasing headline income tax. So if you are going to pay, try to do it now, it'll save you money in the long run.

As for the comments about living for now and not planning your demise that's the sort of thing you hear from teenagers who still want to believe they are immortal. If you are big enough to be out in the wide world on your own you are big enough to take responsibility for your future.

Pension planning isn't about your demise, it's about your retirement and about planning it well so that you have as many options open to you at 50/60/70 as you do at 20/30/40. Different options naturally, but options all the same. Start planning now and you could easily be looking at semi retirement by 50. Maybe you'll hit 50 and want to keep working full-time, great, it just means there will be more in the pot when you do want to slow down.

You say "Unless if I went to Korea or the Middle East, but going somewhere to teach with the primary objective being to start saving for a pension is ridiculously frugal."

But is it really? Would you baulk at taking a less than perfect job for a while to fund another major event? A big holiday, a year off travelling, a wedding? This is the same deal, just on a bigger scale.

For example, if you could save �45k that'll give you a 33% downpayment on a �120k house plus a �5k emergency fund. In the UK rental areas I am familiar with that'll bring you in about �500 a month after fees. At current interest rates the extra �80k will cost you a little less than that a month on a repayment, or an interest only mortgage less than �300 a month. So you go for the latter (to give yourself breathing space for things like repairs, voids and interest rates going up), and then save the rest of the income and pay a chunk off each year so the debt goes down.

If you are disciplined enough not to dip into the rent money, you won't make a penny off it now, but in 20 years you'll own the place outright, and you have a safety net. All for the sake of working a few years in a job that wouldn't otherwise be your first choice, most people do that their whole lives! Maybe 10 years down the line you'll decide it wasn't so ridiculously frugal after all and do it all again, once the first mortgage is paid off you use both rents on the second and then in 25 years you'll own 2 houses, that's pretty much a pension. A small one, but enough to get by on in the UK or to live well on in some other parts of the world. But you are only 50, and not ready to hang up your boots just yet, the income off the 2 will pay for a 3rd in 10 years. By the time you hit 60 you have the equivalent of �18k a year coming in.

If all else fails, at least you have somewhere to live, and it's a lot easier to get by on a much reduced income if you don't have to worry about your housing costs.

It's not actually as simple as that, there are all sorts of factors that can affect things, but with a little research and forethought, and taking care not to overstretch yourself, it's not impossibly complicated either.

In the meantime you have 30 years to do what you want, where you want, as long as you are earning enough to pay your way at the time. Is it really ridiculously frugal?

[Teacher in Rome]