State pensions not enough for comfortable expat retirement

Published:  20 Oct at 6 PM
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New research reveals state pensions worldwide don’t provide enough for a comfortable retirement in any country.

A study by the Swiss bank UBS has made it crystal clear that relying on a state pension anywhere in the world makes no sense, as all pay the minimum amount necessary to cover basic expenses. The bank’s research identified a pension gap in all major world countries’ state pensions large enough to make even the necessities of life difficult to cover.

The widest gap is found in Hong Kong, one of the world’s most expensive places to live, with state provisions falling 153 per cent short of the amount needed for a reasonable retirement. The smallest gap between state pension payments and the actual cost of living is found in Switzerland, coming out at just 11 per cent. One of the least generous state pensions on the planet is the UK’s meagre amount of around £155 per week, 47 per cent below British retirees’ average weekly spend.

It’s no surprise ever increasing numbers of British pensioners are opting to emigrate to warmer countries with lower costs of living, but those few longing to live in Japan will face differentials of a massive 148 per cent. Moving to the USA opens up a pension gap of 49 per cent, even if it’s still possible to get into the country. For Brit pensioners desperate to leave, choosing your destination country carefully will include checking the list of state worldwide where UK pensions are frozen, meaning an abrupt end to the annual cost of living increases granted to retirees remaining in the UK.

The reasons for the worldwide attack on pensioners’ finances include the effect of less money being available for social care due to the shaky state of public finances and the world economy in general. Other excuses include people living longer and not saving enough, as well as low interest rates affecting savings growth.

According to UBS’s report, people should invest in private pensions by allocating a monthly percentage of their incomes in plans available from – guess where – the banks and their financial subsidiaries, who will earn well from thier services. Presumably, should lower wage earners not be able to save due to regular rises in the cost of living, they'll be content to choose between eating and heating for the length of their retirements.
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