Last week we posted an article titled “If the UK has a State Pension, why are there so many Private Pension funds?” In it we talk about middle and high earners who are forced to rely on private pensions to ensure they don’t experience a drop in their standard of living post retirement. In this article, however, we’re talking about how many believe the UK state pension is unsustainable and why if you live and work in the UK, private pensions are your best option. To begin with, the UK currently has over £5 trillion in pension liabilities that will need to be paid in the future, out of which approximately £3.8 trillion are State Pensions. Now the interesting bit here is that the current government isn’t putting any money aside in order to fulfill these liabilities and hence they come under the category of “unfunded” liabilities.
In other words, the proverbial “buck” is being passed to future governments who will have to raise the money through taxation and other means in order to pay these State Pensions. Another problem is a dwindling workforce and an increase in people reaching their retirement age. The UK government has tried to address this by slowly raising the retirement age a year at a time with plans to raise it to 68 in the near future. Others suggest that the only way to keep the State Pension sustainable is to raise the retirement age to 70. Raising the retirement age in order to pay people what has been promised sounds wrong for a number of reasons. Imagine you work your whole life and when it’s time to retire someone tells you that you have a few more years to go. What a total mind job!
The triple lock also adds to burden on taxpayers by ensuring the State Pension goes up every year based on inflation, increase in earnings, or 2.5%, whichever is higher. Some believe the triple lock costs taxpayers an additional £10 billion every year and it would be cheaper if the increase in State Pension indexed either inflation or increase in earning, not both. Another problem threatening the future of the State Pension is health which is directly affecting the working population. According to recent studies, around 2.8 million adults of working age are unable to work due to disabilities including mental health issues like anxiety and depression. This number went up significantly after covid (prior to which it was around 2 million). In conclusion, many experts believe the State Pension and Triple Lock may not be sustainable past 2035 and if you plan to retire past that time you should focus on building up your private pension pots.
If you’re working in the UK but are from India, maybe consider moving your pension pots to an economy on the rise where your pension could grow along with one of the world’s fastest growing economies.
How much does it cost to transfer my pension from the UK to India?
Not only is the transfer of pension funds to approved pension schemes in India tax-free, but you also save money that would otherwise be spent on currency exchange rates and similar complications if you were to leave your pension in the UK.
How long does the process take?
While most websites and “agencies” claim it can take up to six months to complete the transfer, at QROPSdirect.in we can get the job done in a matter of 30 days.