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Re: How to talk to pension non-believers

Posted: Sat Dec 16, 2023 12:47 am
by RetireJapan
Deep Blue wrote: Fri Dec 15, 2023 1:54 pm Sorry, not sure what you mean - conditions on them?
Yeah, "I'll give you a million yen, but you need to put x of it into iDeCo and NISA and not sell it"

Then it's a win win.

Re: How to talk to pension non-believers

Posted: Sat Dec 16, 2023 12:56 am
by Deep Blue
Ahh sure - yes I would definitely talk to and encourage this thinking but I would be worried the lure of having fun at/affer university would be too much... but by then I guess they are adults and it's their life so swim or sink :)

Given the timescale, putting it in a cheap global equity tracker is definitely better than leaving it in cash too.

Re: How to talk to pension non-believers

Posted: Sat Dec 16, 2023 1:56 am
by AreTheyTheLemmings?
RetireJapan wrote: Fri Dec 15, 2023 8:20 amonce we reach escape velocity (net worth growing by far more than we need annually on a regular basis)
I am awed by your nonchalant confidence that this is going to happen. Good on you.

Re: How to talk to pension non-believers

Posted: Sat Dec 16, 2023 2:57 am
by RetireJapan
AreTheyTheLemmings? wrote: Sat Dec 16, 2023 1:56 am I am awed by your nonchalant confidence that this is going to happen. Good on you.
It already has (last three years) 😅

I don't quite trust it yet though.

Would like to see another few years/+50% or so and then I'll believe it.

Or not. That's what everyone says, apparently: if I had twice the money I have now I'll be happy 😉

Re: How to talk to pension non-believers

Posted: Sat Dec 16, 2023 5:10 pm
by IloveJapan
Hmm, I guess I’m likely a non-believer when it comes to the UK pension. Especially in its current frozen form.
I once read an article about a guy living in Australia who was receiving just 6 pounds a week, despite paying into the UK state pension all his life! Poor guy.

One of the reasons the UK government won its court case against the frozen pensioners in European Court a few years back, is based on it’s claim that it is officially only a state benefit, NOT a pension. That is a sign to me that they want a free hand to decide on its future, esp. for those living outside the UK.

Don’t know if you can still apply for class 2 before April.

Oh and then I’d have to write down my employment history for the past 30 years, and I’ve had so many different employers!

Re: How to talk to pension non-believers

Posted: Sat Dec 16, 2023 5:21 pm
by Tkydon
IloveJapan wrote: Sat Dec 16, 2023 5:10 pm Hmm, I guess I’m likely a non-believer when it comes to the UK pension. Especially in its current frozen form.
I once read an article about a guy living in Australia who was receiving just 6 pounds a week, despite paying into the UK state pension all his life! Poor guy.

One of the reasons the UK government won its court case against the frozen pensioners in European Court a few years back, is based on it’s claim that it is officially only a state benefit, NOT a pension. That is a sign to me that they want a free hand to decide on its future, esp. for those living outside the UK.

Don’t know if you can still apply for class 2 before April.

Oh and then I’d have to write down my employment history for the past 30 years, and I’ve had so many different employers!
It is a State Pension, so in Japan at least, 6 pounds a week of a State Pension is worth maybe 10 pounds a week of any other type of pension or annuity, due to the Public Pension Deduction, where you get an additional Y1.2M (variable based on several factors) Tax Deduction against all pensions that fall into the classification of Public pensions.

See:

https://www.tax.metro.tokyo.lg.jp/book/ ... k2023e.pdf

Page 8 (Page 12 of the PDF) - 'Calculating the Public Pension Plan Deduction (Calculation Table)' refers.


Chips make a pile... A little bit from here, and a little bit from there...

Re: How to talk to pension non-believers

Posted: Sun Dec 17, 2023 1:18 am
by beanhead
IloveJapan wrote: Sat Dec 16, 2023 5:10 pm Hmm, I guess I’m likely a non-believer when it comes to the UK pension. Especially in its current frozen form.
I think everyone here paying in to it voluntarily knows there is some political risk.
I did the calculations and it makes sense for me to pay in. Others will disagree.

The situation for many posters here is that they did not make a lot of NI contributions while in the UK, and their contributions will primarily be voluntary ones. Doing this, while understanding that there is no increase with inflation once you start drawing the pension, is quite a unique scenario.

The British person working until 60 or 65 and paying contributions all their life, and then retiring overseas only to get a frozen state pension, is in a completely different situation (and quite right to be livid about the unfairness of it all.)

Re: How to talk to pension non-believers

Posted: Sun Dec 17, 2023 1:44 am
by Yossarian
hana wrote: Thu Dec 14, 2023 12:03 pm I think there are many possible reasons why people don’t “invest”.

Regarding voluntary NI contributions in the UK, I don’t pay them because I think the UK government would tax at 40% the inheritance my Japanese wife would receive (given I’m likely to die before her).

In short, any assets in my name worldwide, including property, exceeding the nil rate band (325,000 pounds?), would be taxed at 40%, because the assets are passing from a UK domiciled person to a non-UK domiciled person.

Domicile = domicile for tax purposes, nothing to do with where you live. If born British, then UK IR treat you as UK domiciled, unless you can prove you have effectively cut links with the UK.

* I think paying into and claiming a UK government pension is quite a strong link. *

Years ago, I sought legal advice and had a document drawn up effectively renouncing UK domicile, ashes to be scattered in Japan, etc.

I am NOT an expert, don’t understand half the stuff on this forum, and may be completely wrong. But I guess that many readers are not aware of this potential trap of paying NI contributions. Of course, if you die in Japan, your spouse/partner inherits, and the UK never knows about it, then …

Reference:
https://assets.publishing.service.gov.u ... uk.pdf.pdf

https://taxscape.deloitte.com/article/i ... ouses.aspx
Forgive me for the stupid question, but if you died in Japan how would the UK government know how much of your Japan-based assets you left to your wife? Is this only an issue for people who have assets in the UK and Japan?

Re: How to talk to pension non-believers

Posted: Sun Dec 17, 2023 8:00 am
by Wales4rugbyWC23
IloveJapan wrote: Sat Dec 16, 2023 5:10 pm Hmm, I guess I’m likely a non-believer when it comes to the UK pension. Especially in its current frozen form.
I once read an article about a guy living in Australia who was receiving just 6 pounds a week, despite paying into the UK state pension all his life! Poor guy.

One of the reasons the UK government won its court case against the frozen pensioners in European Court a few years back, is based on it’s claim that it is officially only a state benefit, NOT a pension. That is a sign to me that they want a free hand to decide on its future, esp. for those living outside the UK.

Don’t know if you can still apply for class 2 before April.

Oh and then I’d have to write down my employment history for the past 30 years, and I’ve had so many different employers!
I am born again believer in the British state pension, and I have a missionary zeal to tell any Brit expats what an unbelievable deal it is, and I pay class 3 voluntary NICS not the even better class 2. Even with it being frozen and the currency volatility, it is such a great deal when you compare it to the miserly Japanese state pension.

Re: How to talk to pension non-believers

Posted: Sun Dec 17, 2023 1:17 pm
by IloveJapan
Hi again, and thanks to the people who gave me feedback and comments.

The tax comments: Yes, thank you for reminding me about the Japanese tax deduction applying to foreign state pensions too. That is certainly a worthwhile benefit. In the same context of course, nobody gives you deductions when you make voluntary contributions to the UK state pension, whereas in Japan I have had generous deductions for making Japanese pension contributions, just like everybody else here who pays into the system!

A big advantage of the Japanese system is that it is far more sustainable, given the gigantic investment fund Japan puts aside and ringfences for making those payments. Conversely, in the UK the last time I checked, the state pension payouts account for 17% of the entire budget (correct me if I’m wrong, of course!), and there is NO Japan-style megafund to pay for it! Given the triple lock and the UK’s financial dire straits, this is completely unsustainable!

Regarding the issue of inheritance, a Japanese spouse can longer inherit a UK state pension from their UK spouse. This follows 2016 law changes. It is another reason I don’t like the UK pension system. And with regard to domicile issues, keep good records of what belongs to who! Take care.