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What to do about your Pension? State and Personal.

Discussion in 'Teaching abroad' started by Darthteacher, May 8, 2016.

  1. Darthteacher

    Darthteacher New commenter

    I've been teaching abroad for a number of years now......it was only supposed to be a short trip but it's a while.

    What have people working abroad done about their pensions? I'm wondering a few points.

    a. Did you continue to pay UK-State Pension contributions while you work aboard. If you do or do not what informed your decision? If you do, how much is it per month?

    b. Did you take out a UK based private pension plan? Which one did you take out?

    c. Besides the UK State Pension website, what other good pension websites or podcasts are there out there to help me make an informed decision - time is ticking and I need to start making some forms of contributions.

    Thank you kindly for any help received.

  2. Helen-Back

    Helen-Back Occasional commenter

    I didn't pay NI for several years, but then restarted, just in time to be able to pay my full 35 years in without having to top it up. It costs about £13 a month and should get me around $8,000 a year on retirement. I also have a partial pension from another previous job.

    Private pensions are a rip-off, don't touch them. Legal scams.

    For me, the UK pensions provide a fixed monthly income, so in addition I am trying to amass a lump sum that I can draw down on in retirement at a rate of about 4% a year.

    I would suggest you read the following books.



    Avoid any schemes pushed by sales people who are invited to your school.
  3. the hippo

    the hippo Lead commenter Community helper

    The most important thing is to avoid retiring in the UK because it is too expensive. That is why you should buy a cheaper property somewhere else and not in the UK. A lot of things in the UK are the same inflated price, whether you are currently working or whether you are an OAP.

    In the UK, there is also something called "Council Tax", I believe, but you can avoid paying this by not living in the UK. (Recently a friend of mine who is currently teaching in the UK told me that you do not have to pay so much Council Tax if you are retired, but the reduced rate only comes in when you are over 65. Is this correct?)

    Another thing to avoid in Rip Off Brtain is paying excessive heating bills in the winter. When I asked a Bulgarian friend of mine how he keeps warm in the winter, he replied, "I go up into the woods with my chainsaw."

    In Bulgaria, you can receive your teacher's pension and your UK state pension, assuming that the current government in the UK has not already scrapped them.
  4. stopwatch

    stopwatch Lead commenter

    As Helen says, you can pay your NI contributions from abroad. £13 a month (but I can see the government changing that at some point as there seems to be an 'expat bashing' approach to many things financial recently).

    Depending on your age (you don't mention this?) you can also backpay months and years.

    I am lucky to a point as I had paid 21 years teachers pension before I left, but that will only pay around £10,000 a year.

    I bought an expensive house in UK and have paid the mortgage on this. Worth about £400,000 now. I have also just moved back to the ME for a 2 to 3 year stint. I can fairly easily save £100,000 in 3 years here and buy 1 or 2 properties (either 1 outright or 2 with a 50% mortgage) and use these for some extra rental income.

    In around 8 years I will likely sell my main house, buy something for the current equivalent of £200 - £250k for my own use and then use the balance to buy another property to rent and enjoy my retirement.

    if you do want to start a private pension plan I know of a very honest and reliable adviser who is in Dubai. [This comment/image/section has been removed for breaching our Community Guidelines/Terms and conditions]

    She spent 2 hours with me reviewing my situation and gave me some very useful advice but did not try to sell me anything as she said I was pretty much sorted. She also didn't charge for the 2 hours consultation. [This comment/image/section has been removed for breaching our Community Guidelines/Terms and conditions]
    Last edited by a moderator: May 9, 2016
  5. Helen-Back

    Helen-Back Occasional commenter

    The thing is about the state pension is, they can only really change the conditions for those with 15 years plus until retirement. They have to allow time for people to financially adjust. As a major overhaul is already underway I would imagine anyone over 45 can pretty much rely on a full pension at the new rate (assuming they paid in for 35 years). For £13 a month I'm willing to take the risk.

    The great thing is, as pensions are now individual, your spouse can also pay in and receive maximum benefit. So, for a couple, having paid in for the full amount of years, their pension at today's (or at least next year's) rate would be 2 x £8000 = £16,000 a year state pension. Once again, if you're over 45 it would be difficult for the government to screw around with those numbers.

    I say the above with some confidence, but if anyone disagrees with what I'm saying, please say so. Interested in other people's thoughts.
  6. clovispoint

    clovispoint Occasional commenter

    Helen-Back's advise is sound! Stepping away from a teacher's pension and going solo with retirement investing is riddled with charlatans and sharks. I've met some and they seem like nice people who are looking out for you. They aren't. I was almost sold one of the very worst pension schemes. Teachers I worked with did sign up and will probably get little or no return on their money.

    Andrew Hallam's books are very useful, also worth signing up for his newsletter. And watch his video here. Get a pen and paper and a calculator. Don't panic when you see the numbers - just start saving and investing (index trackers, ETFs, buy-to-let... whatever there is no magic bullet and a spread is the way to go!) Start saving now and investing when you can- time is the crucial factor.

    I agree with Helen Back about National Insurance too. Contributions are about £13 a month if you qualify for Class II, Class III are more expensive at around £60 a month but still offer excellent value in the long run. You can pay back a few years worth of contributions.

    More about the new state pension here: https://www.gov.uk/new-state-pension
    You need to read this form, fill in the bit at the back, then send a cheque when you hear back.
  7. Darthteacher

    Darthteacher New commenter

    Thanks for the advice advice everyone. It's a minefield huh? I go back every summer to the UK see my parents, I also work the odd day on supply. They put my into a Teachers Pension Scheme, can I pay into that scheme while working abroad? Is it worth paying into? Any thoughts.
    Again thank you so much for the advice.
  8. the hippo

    the hippo Lead commenter Community helper

    Yes, every single teacher in the UK should buy-to-let. That would have several important advantages. (1) It will push up the UK's absurd house prices to even crazier levels. (2) It will make even more money for those poor estate agents, banks and mortgage-lenders. (3) It will make it totally impossible for any young person to get even the tiniest toehold on the UK housing ladder. (4) It will worsen current teacher shortages, as no one will want to become a teacher because they will not be able to afford the cost of housing.

    How wonderful that we have so many kind, altruistic and public-spirited teachers here on the TES!
  9. Helen-Back

    Helen-Back Occasional commenter

    When you leave the UK you give up the right to be protected by the state. You lose benefits, you lose access to medical. You lose access to a teacher's pension. International teachers need to be self-protective, you need to invest. That might be through real estate. I don't have any real estate, but I certainly don't think that buying and letting a property for the purposes of being able to retire is selfishly motivated. You gotta do what you gotta do. Could you not be accused of buying up dirt cheap property in Bulgaria at the expense of impoverished Bulgarians? It might not have pushed prices up so far (I have no idea), but if there were an army of Hippos all extolling the virtues of the place, surely it could, thus, forcing young Bulgarians into substandard rental accommodation.

    All most of us are trying to do is provide for our families. Interestingly, I'm moving to a country with some beautiful properties at excellent prices. Unfortunately, as a foreigner and due to government restrictions, I am not able to buy one, which is almost certainly why they are so reasonably priced. Perhaps if the UK had a similar policy, the UK real estate market wouldn't be in the mess it is in. When looking for someone to blame I often find it worthwhile to look up, not down or sideways.
    Last edited: May 10, 2016
  10. the hippo

    the hippo Lead commenter Community helper

    Hmm. Well, Helen-Back, house prices in Bulgaria have probably gone down, in real terms, since we bought our villa about ten years ago. As for forcing impoverished Bulgarians onto the streets, all I can say to that is there are many unoccupied properties in our village. Young Bulgarians want to live in Sofia, as there is not much work in the countryside, alas. The overall population of Bulgaria has in fact gone down significantly, from about 11 million to 7 today. Some experts think that it will fall as low as 5 or even 4 million over the next ten years or so. All of which means that there is going to be plenty of super-cheap properties for sale in Bulgaria for a long time to come. As for the UK, prices seem to be going up faster than inflation. With teachers' incomes more or less static, one wonders how long this crazy situation can continue.
  11. clovispoint

    clovispoint Occasional commenter

    Helen-Back seems like a very sensible person! I don't think teachers can be blamed for driving up property prices in the UK. I would imagine years of government policy (and overseas investors in London particularly) have contributed much more than us high rollers living it large and blowing our cash on property... A whole of pensioners have just jumped onto the bandwagon and joined the ranks of the capitalist oppressors. I don't buy-to-let either, I'm not comfortable with managing a property from afar, dealing with tenants or with foisting the responsibility onto relatives. It looks like the glory days are over for buy-to-let for now anyway. Investing in the stock market is not as scary as it sounds- the ups and downs seem dramatic but over the long-term it should work out. No guarantees but there aren't any with property either.
  12. MrDirector

    MrDirector New commenter

    Thanks for the tip, Hippo. Just checked and the first website there's 'cottages' there from EUR4000 to 70000, mostly around 20K. Now if I can persuade my wife she doesn't need the Merc she's been eyeing up for this summer, I can afford two places there. One for living and one for renting for holidays. I could sell my UK house and buy a whole village...do they have good internet in Bulgaria?
  13. Helen-Back

    Helen-Back Occasional commenter

    I am, in fact, a very sensible person. Thank you for noticing :)
    clovispoint likes this.
  14. the hippo

    the hippo Lead commenter Community helper

    The inflated prices (by Bulgarian standards) you see on Bulgarian property internet websites are for foreigners, of course. With a bit of luck, good timing and persuasion, you could buy that 20K property for 15 or even 10. Of course these prices seem absurdly low by UK standards.

    Yes, you can get a good internet connection, MrDirector, but rents are usually low (if you can find someone to rent it at all!) You might be okay in Sofia, if you were to buy an apartment there and let it out. Veliko Tarnovo might also be a good place for buy-to-let, but property in the Bulgarian countryside is cheap as chips.
  15. stopwatch

    stopwatch Lead commenter

    I do think that trying to imply that any teacher buying a BTL property is selfish and a primary contributor to the rising property market and first time buyer crisis is a bit over the top and more than slightly unfair.

    From a personal perspective I need to create my own income as my pension pot is limited. If I consider a BTL or even, God forbid, 2 BTL as being the best option then I will do this. I don't see this as selfish on a grand scale.

    At least I am solving my own problem rather than expecting someone else to do this for me.

    I am not altruistic enough to go for a less favourable option in the hope it might part resolve the housing crisis as it stands. I doubt many people would go for altruism over income on such a relatively minor scale such as this.
  16. the hippo

    the hippo Lead commenter Community helper

    Well, yes, of course there are probably many other factors that are pushing up house prices in the UK.
    stopwatch likes this.
  17. clovispoint

    clovispoint Occasional commenter

    Hey Hippo. If you aren't into buy to let, how are you investing? Most teachers seem to be going down the BTL route. I'm just curious as I'm not a believer in BTL either. I have a UK trading account and have purchased Vanguard stock market trackers as recommended in the Andrew Hallam books (and many other places). I am looking to set something up outside of the UK. How are you managing? It is a scary business being in charge of your future and a lot of people just bury their heads in the sand and think it'll be okay but from what I have read...

    1. Start young
    2. Don't stop
    3. Buy and hold
    4. Don't try and beat the market because you can't (and don't buy into an insurance linked scheme)
    5. Stick with your strategy and don't give in to fear

    I'm hoping I'll be okay- definitely paying my NI contributions as a fall back.
    Darthteacher and Helen-Back like this.
  18. Helen-Back

    Helen-Back Occasional commenter

    I dare say a buy to let on top of what Clovis Point has already mentioned wouldn't hurt, but I'm not sure I want the hassle and worry of it (I've done it before). Perhaps throwing 10% in a real estate index fund / ETF would have the same financial effect and I wouldn't have to run down to IKEA every summer to buy a new coffee table and dinner set.
    Darthteacher and clovispoint like this.
  19. clovispoint

    clovispoint Occasional commenter

    The (dis?)advantage of BTL is that is leveraged i.e. you are making money on borrowed money. I would never borrow money to invest in the stock market but it is essentially what people are doing with buy to let. The "reality" of a building makes it seem safer. The stock market is also a real asset that produces dividends as well as growth, it is just perceived as riskier. The long-term track record has the stock market ahead of property but these are strange times we live in so, who knows?

    I have some very sensible friends who are fully invested in BTL and have done all the homework- they describe being a BTL landlord as a second job!
    Darthteacher likes this.
  20. miketribe

    miketribe Established commenter

    I'm really lucky to have been in Spain so long... I've qualified for a full Spanish pension which comes in at around 2000 euros a month net. At the moment, since I'm over 65, I'm on "active retirement" which means I get 50% of my pension and all my salary... But you do have to work here for 35 years to qualify for the full pension and for active retirement and this may not appeal to all. Also, who knows whether the government will run out of money to pay the pensions before I op my clogs?
    Darthteacher likes this.

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