UK Gov offer: Work till 70, get $45k lump sum

Financial Independence/Retire Early -- Learn How!
Post Reply
peteyperson
**** Heavy Hitter
Posts: 525
Joined: Tue Nov 26, 2002 6:46 am

UK Gov offer: Work till 70, get $45k lump sum

Post by peteyperson »

My only question is, will you live long enough to collect it after continuing on the grind until you're 70?

UK Gov pension held from age 65 to 70 in a 'high interest' account to pay for the lump sum if at 65 you agree to defer payment. High interest may not match UK base rate however. It is also unclear whether it is taxable or not.

Petey
WiseNLucky
** Regular
Posts: 84
Joined: Tue Nov 26, 2002 3:59 am
Location: Florida

Post by WiseNLucky »

Hey petey,

Interesting concept. And creative.

What factors are driving this offer? Is it a deferral of payment with the hope that the person will die before the govt. has to pay off? Or are you guys facing a similar demographic problem to ours here in the US (baby boomers retiring all at once with no one coming behind to pay govt. obligations to them)?
WiseNLucky

I just wish everyone could step back and get less car and less house then they want, and realize they don't NEED more. -- NeuroFool
peteyperson
**** Heavy Hitter
Posts: 525
Joined: Tue Nov 26, 2002 6:46 am

Post by peteyperson »

Well the govt advises that you invest yourself because we cannot guarantee the pension per se. Basically, it won't be there or it will be substantially reduced but it would be political suicide to spell it out quite that clearly. I think the payoff is people paying into the system for longer. Taxes collected over the same period are likely to be more or after they are invested they will be, I figure they've done their sums.

Most people I think will adopt for this because they will realise they cannot live off the state pension and what little else they have saved. Most will reverse mortgage the home to get some spending money and pay a payment or give it to the bank upon death. That will become more and more popular I think. There will be a huge shortfall basically.

Petey
WiseNLucky wrote: Hey petey,

Interesting concept. And creative.

What factors are driving this offer? Is it a deferral of payment with the hope that the person will die before the govt. has to pay off? Or are you guys facing a similar demographic problem to ours here in the US (baby boomers retiring all at once with no one coming behind to pay govt. obligations to them)?
Mike
*** Veteran
Posts: 278
Joined: Sun Jul 06, 2003 4:00 am

Post by Mike »

Here in the United States we can defer Social Security until age 70, and get a larger inflation adjusted monthly check in return. If the laws are still the same in 24 years when I reach 70, I may opt for this myself. I wish to bet on a long life expectency. That way SS will act as a back up plan in case something goes wrong elsewhere. Of course, its still to far away make the decision now, as our laws mutate every year.
peteyperson
**** Heavy Hitter
Posts: 525
Joined: Tue Nov 26, 2002 6:46 am

Post by peteyperson »

I indeed would likely do the same. This would be done on the same basis, enough money already, this is a backup plan. Only if I retired on a bare bones FIRE based on being age 65 and not wanting to continue working more would I take the pension right away.

I'm planning that a govt pension is a myth for people who are 30 years away from it. Reports have previously said that the SS system will be bankrupt in 20 years anyway. They'll either have to slash the payments or massively raise taxes in order to fund it, in which case we'll be where Germany is now where social services from unemployment to pension is killing the country with a govt having committed to more than they realistically afford. Such taxes could certainly impact planning and likely wouldn't kick in till after retirement when it was too late to plan for them. It is a tricky situation and could have some serious pitfalls for the FIre early retiree.

Petey
Mike wrote: Here in the United States we can defer Social Security until age 70, and get a larger inflation adjusted monthly check in return. If the laws are still the same in 24 years when I reach 70, I may opt for this myself. I wish to bet on a long life expectency. That way SS will act as a back up plan in case something goes wrong elsewhere. Of course, its still to far away make the decision now, as our laws mutate every year.
Post Reply