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Pensions: Can't save or won't save?

One of the few good things about raising the State pension age to 66 is that it might finally concentrate minds on the necessity to save for retirement – especially women. 

Pensions: Can't save or won't save?

One of the few good things about raising the State pension age to 66 is that it might finally concentrate minds on the necessity to save for retirement – especially women.  They will be the big losers from the changes.  With marriage no longer a secure lifestyle and relying on a husband’s pension a dangerous option, more may be encouraged to make their own provision for retirement.

Any woman born after April 6th 1953 will have to wait until she is 66 to draw the basic State pension, currently £97.65 a week for a single person or a married woman who has paid the full NI contribution, or £156.15 for a couple where one person is claiming on their spouse’s contributions.

This presupposes, of course, that women – and men for that matter – can afford to save in order to supplement the state pension.  Most need every penny they earn to bring up a family and pay the mortgage.  One of the major reasons given for not saving - in every survey asking why half the population has made no pension provision at all – is that people on average incomes and below cannot afford to save.  A recent survey from Scottish Widows shows that younger women don’t even think about saving for retirement while half the over 50s save inadequately compared with men.

There are two main reasons why women don't save as much as men.  The first is that they don't earn as much as men.  A recent inequality survey showed that even in top jobs they earn, on average 16% less than men. 

Don’t bank on marriage being your pension

The second reason is that many still expect to marry and that their husband will provide for them – not least of all because many men earn substantially more than women.  Given the high incidence of divorce this is a dangerous approach.  In 2008 there were 232,000 marriages - and 136,000 divorces. 

And you only have to look at the high incidence of men purchasing single life annuities - the income a pension buys, in this case, covering just one person - to realise that men take the view that when they are gone, someone else can look after their wife - probably a new husband, which is also one of the major reasons why men avoid buying life assurance too! 

Figures from Standard Life show that half of all married men purchase a single-life annuity, despite the fact that men’s life expectancy is shorter than women’s and there is a high risk that they will leave their widow without a pension.  There is a two-thirds likelihood that a female reaching retirement age will outlive her male companion and a 40% probability that she will do so by 10 years or more.  Opting for an inflation linked pension and joint life cover will reduce a 65 year old man’s income from an annuity by more than 40%, so it’s easy to see why men don’t buy joint life annuities.

Attitudes need to change

The Scottish Widows report uncovered a disparity between pension provision and attitudes to long term savings amongst both older women and younger women compared with men of the same ages.  It shows that young women aged 18 to 29 have typically accumulated just over half of that achieved by young men – an average of £4,816.50 compared with men’s savings averaging £7,709.  They are saving just £49 per month, compared to £111 per month for men.  This is hardly surprising given the 16% disparity between men and women’s earnings.

Older women don’t seem to be doing much better.  Women aged 51 to 59 have accrued on average just £37,642 in retirement savings, compared with the £54,345 saved by men.  Ian Naismith, head of pensions market development at Scottish Widows, said, ‘we believe that auto enrolment, coupled with better pension and long term savings education, are the key elements to improving retirement provision in the UK.'

The contrasting experiences of my daughters

None of this is surprising but it does highlight the need for a major educational job - as well as a change in women’s attitudes.  My two daughters, born only eighteen months apart, illustrate the two extremes.

The older one left university, became a highly paid money broker with a good occupational pension scheme – and married another high earning broker with an equally good pension entitlement.  When they divorced after 18 years of marriage the settlement included a lump sum from her husband’s pension scheme as she hadn’t worked for the last eight years of the marriage. 

This she duly invested in a personal pension along with paying up back National Insurance contributions.  Currently she is entitled to NI credits as she has a young child.  When she returns to work she will, no doubt, make full contributions to an occupational pension scheme and she is a good saver.  Having retrained as a teacher she should be able to work until age 66.  She will be relatively comfortable even if she doesn’t remarry.

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27 comments so far. Why not have your say?

Dislexic Landlord

Oct 24, 2010 at 09:58

What needs to change is the pension companys charges

Pension companys are the biggest crooks

I invested 10% of my salary for 15 years in an AVC alongside my LGPS and i now have the wounderfull sum of just over £20.00 per moth which is taxed ???

Im lucky my final salary scheme was great value for money

why did i bother i should have done what the rest of my freinds did and had good holidays ect ect

Personal pensions are a rubbish

you would be better with an Isa or invest in shares

Im very glad i saw the light and bought property

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Patrick Moore

Oct 24, 2010 at 10:14

Your youngest daughter, and mine, have the same problem and of course they have their degree costs to pay, mine has a degree in equine studies that barely pays a living wage. Had she not been politically driven towards a degree she would at least not have the debt - which will default to the state at 65 unless she gets her economic head above water before then - most unlikely.

Brown's pension robbery has not helped as defined contribution schemes have no credibility because of the state of the stockmarket under the previous Government. This has driven a lot of those on good salaries into property and we know what a bubble that can be.

One part answer, don't try and help your child pay off student debt put the money into a pension scheme.

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Tony Peterson

Oct 24, 2010 at 10:20

In the present economic climate personal pensions are a swindle.

Take the tax break, and save in a fund, then the fund managers are likely to get the lion's share of your savings (did you watch Panorama on Who Stole My Pension?).

Then, if you turn 65 this week and want to retire, the VERY BEST annuity you can get (Canada Life) pays under 4.2% (male) , under 3.9% (female) annually of what is left of your savings. Taxed. And then your capital dies with you! The insurers strike again.

You would be worth far more, and have a bigger retirement income, if you had acquired your own equity or property portfolio with savings during your working life. You could be getting 7% of its present value, easily, the income probably growing over time, and have it all to leave the kids when you die.

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Anonymous 1 needed this 'off the record'

Oct 24, 2010 at 10:23


I noticed how high the pension company charges were back in 1992, when the provider for our AVC scheme was Equitable life. They were robbing nearly 10% of the monthly subscriptions to AVC's when I read the small print so I did go down the Unit and Investment Trust route making monthly payments in PEP's and ISA's, these had much smaller charges.

Glad you done well with your final salary scheme and property, watch out for all the envious posters ready to slate you for your FS Pension like they do your property, Best of British mate

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Jeremy Bosk

Oct 24, 2010 at 10:25

We need decent wages for all - which must mean both better education and redistributive taxes. We also need affordable childcare so that staying at home to look after young children is a life style choice and not an economic necessity. As per usual the Scandinavians do it better and have happier and more prosperous societies.

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Dislexic Landlord

Oct 24, 2010 at 10:26

Peter you have hit the nail on the head Thank you

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Dislexic Landlord

Oct 24, 2010 at 10:34

Thanks Anon

Landlords always get called names so im used to it

I cant wait when the name callers catch on the I have a Good Final Salary Local govt Pension too

sour grapes one thinks but thanks for the advice I wish I had know you 15 Years ago

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Oct 24, 2010 at 11:11

I am lucky - I was made redundant and so received early retirement from the NHS at age 51. My final salary scheme pension was enhanced so that I get the pension I would have received if I had worked to 60. In my time in the NHS the system was reorganised 16 times - each time people in their 50s were paid off and got enhanced pensions. The waste of money is mind blowing - the loss of skills and talent just as bad.

My husband is self employed and now aged 66. he saved for a pension all his working life, but the financial crises (more than one) eroded his pension (payable at age 60) so that he now gets nearly £2000 per annum. This means that if he was retired he would not get enough to have a comfortable retirement but too much to get any of the additional allowances.

My father worked abroad for most of his life but invested money so that my mother (who had no pension) would have capital enough to give her an income. This capital means that she too cannot get any allowances even though the money invested now only pays a pittance.

Stop reorganising things, let people who would like to work on do so, let people who HAVE saved have some benefit from their savings, and find some way of protecting the pension investment of those who try to do the right thing. Do this, and my daughter (who owes £15,000 from her student costs) might see some point in seeking a job in the private sector and investing in her own retirement. At present she must wonder about the wisdom of putting money aside now to go down the drain in the future!

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Paul Farrow

Oct 24, 2010 at 11:24

So the NHS waive 9 years of pension contribution, provide 9 years more benefit and charge this to the pension fund and then don't pay this money back as restructuring costs?

Did I get that right, or am i missing something here? Can the pensions scheme administrators agree this, or do they require large cash injections to cover it? When businesses do the same - does the pension fund pay? This seems an oddly generous arrangement and it's not clear to me who is paying.

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Paul Farrow

Oct 24, 2010 at 11:26

And the NHS did it 16 times?

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Dislexic Landlord

Oct 24, 2010 at 11:39

Paul Govt pension arrangements are not paid from a fund they are paid by the Tax payer

in other words you pay income tax council tax and its given to ex employees of govt pensions

a third of all council tax pays Local Govt pensions

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Oct 24, 2010 at 11:48

I think a lot of men purchase a single life annuity for the following reasons:

1. More often than not the man is older than the woman and added to this women's annuity rates are very low. So to guarantee an income that is livable on they have to get a single life annuity.

2. They figure when they are dead that the assets of the house can be cashed in for the woman to live on.

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Paul Farrow

Oct 24, 2010 at 12:02

So when Chilton1199 describes the waste of money as mind-blowing, this is no exaggeration? we are still paying 2/3 salary even once people are gone. And people with useful skills are lost to the economy. I'm only just starting to get the point. Waste indeed. And such an unintelligent use of resource. Just think what services we could have had for the marginal cost. Where can you get such good value?

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patricia ryan

Oct 24, 2010 at 12:02

Dont forget the people, like myself, who dont save in a pension scheme but put their money away in missold isas, only to then have it stolen by unscrupulous finance companies, then the government body who is supposed to help out in these cases makes pathetic excuses why youre not eligible for compensation.

People have no faith whatsoever in the financial institutions of this country. Its better under the bed, at least then its yours to do with what you

want. Or better still, spend it all and when the time comes let the state look after you.

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Jeremy Bosk

Oct 24, 2010 at 13:06

Chilton and Patricia Ryan both make excellent points. Confiscatory means testing makes saving almost pointless. Constant redundancies in both public and private sectors mean savings get spent on the many rainy days we all now experience before retirement. The finance industry is full of commission corrupted incompetents. If you beat the odds to save any money the lawyers will steal it.

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Chris B (Slough UK)

Oct 24, 2010 at 13:11

I believe pensions face many problems in the future some of which are likely to be:

1) Lack of funds to sustain the schemes

2) Government's Inflating away debt thereby seriously devaluing any accumulated pools of money.

3) Governement's will grab any cash they feel is 'lying about' as did Brown.

4) Pensions have to subscribe to Bonds and it is only a matter of time before this bubble crashes, once again devastating pension pots. You can only sell so much debt before it all turns into a black hole melt down.

5) If governments keep raising the retirement age, who is going to bother spending their life saving for a pension they may never get or at best a couple of years out it? Might as well party like its 1999?

6) There is no guarantee that the pension you are saving into will even exist when you reach retirement. As the world falls into Depression many things will fall and be lost.

7) Further QE will suck the life blood out of this (and many) country(ies) leading to a deeper down turn in the economy, ultimately leaving many people poorer and even more so unable to save for a pension. It is not clear yet how much civil unrest we will see from this, but I would suggest that Banks, Council Properties and Councillors and Politicians better have good fire suppressing systems in their homes, if France is anything to go by, so far that is.

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Manilal Shah

Oct 24, 2010 at 13:30

All of them are here to take their share from your Investment. When my wife died before her retirement, state said that I cannot have anything from her

contribution even she apid for 25 Years and projected Pension due to her

was app £5500.00 P.A. My private Pension I found that Company was deducting 10/15% P.A. and during the last ten years average return was less then what I would have received from Fixed term Deposit Account with Bank/Building Society paying 20% Tax. SIPP was introduced, Brown

removed Residential Property out from this investment. Only choice

you have is to save for Pension in Equity based investment and you do not have any control over this.There is no Pension Investment which will gurantee

Principal Amount.Since Labour was elected they have taken app 5/6 Billion Pounds from Pension Funds.I do not know on what basis Media/Government and so call Expert in Pension are advising People to save for their retirement. It does not make any sense as I cannot trust any one of them.


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Chris B (Slough UK)

Oct 24, 2010 at 14:26

Just noticed this:

8) Billions in Tax relief to go on Private Pension Plans.

Also, there are no plans to cut government spending either, which apparently plans to spend £692.7 Billion for 2014-2015. This is another hugely vast some, which governments are very blasé about wasting. Remember we never even talked in Billions just a few years ago. Last month the Government spent the highest amount on record. A recipe for stability and success ... I think not! Sure they have the people over a barrel, we are powerless to stop these rogue governments from destroying our futures, but in the end make no mistake, all will suffer. When people get hungry for food, it won't be long before it all turns nasty and crime and violence become commonplace.

We will see a rapid growth in protectionism, regardless of the spiel, it is already happening. Every nation will try to raise their economies at the expense of others and in so doing will provide each others mutual destruction. There is no avoiding it. Perhaps WW3 is in fact a financial war, at least, thats how it starts to begin with! Sure hope that I and others that think this may happen are wrong? Time will tell.

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Anonymous 2 needed this 'off the record'

Oct 24, 2010 at 17:16

What chilton 1199 talks about is very common in the public sector and I have personaly witnessed it in the civil service, armed forces and teaching. Take the following 2 examples:

1. My mother in law was a deputy head teacher and at 55 left on 'early release' with a 'release' lump sum and on a full pension - her pension contributions until age 60 having been made up for her by the taxpayer. She has not worked a single day since and spends her life on holiday and lunching - she is now 74.

2. My Boss, on the other hand, has built a group of 5 small companies from scratch and employs over 30 people. He worked over 12 hours per day until aged 65 and now, at 66, still has to work 3 days per week.

How can what goes on with these 'early release' schemes in the public sector be fair or justiifed on cost or the loss of skills ??? The rest of us are too busy working to pay for their lump sums and pensions to have any form of decent retirement !!!

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Oct 24, 2010 at 17:32

Well, my early retirement was from the NHS. It is a contributory scheme, so I paid my share just as i would have done to a private employer.

But the early retirement arangements don't come out of the pension scheme, or out of the government. I understand that each NHS employer (Primary Care Trust, Hospital etc) has to 'carry' the cost of people like me until I reach the age when the pension fund would have started to pay out. Oh and by the way, I could go back to work for the NHS and still get the pension. Doctors (GPs) can (or at least used to be able to) retire on Friday, get the pension and lump sum and then start work again on the Monday in the same job at the old rate of pay + the pension

And yes, I started in the NHS in 1978 just after it had been reorganised in 1974. I was reorganised in 1982, left in 1984 to have my daughter, rejoined in 1988 (It had been reorganised again in the meantime) was reorganised twice before being made redundant in 1994 in a third reorganisation. I Managed three years in Scotland and a year in a local authority/NHS partnership where there was a reorganisation during the year I was there, before coming back into the 'proper' NHS in 1999. Between 1999 and 2007 there were more reorganisations. In amongst these 'top level' reorganisations were some local reorganisations and mergers which add up to 16.

Every re-organisation and merger leads to some redundancies and many early retirements. Each is intended to save money and streamline services. Every time it costs money in printing new signage, letterheads and all the paraphernalia of 're-branding'. Every time, skills are lost. And more worrying, every re-organisation leads to a phase while the new people in the re-shuffled posts try to work out who is now doing the work that used to be done by those who have gone (retired,redundant or just plain reshuffled). During this time there is much waste of effort in ringing around and trying to sort out who to contact to get things agreed. Newly appointed CEs and Exec boards often don't have a clue about what is falling between stools, or being done twice. And nobody can tell doctors what to do - they have a magical autonomy known as 'clinical'.

It is Lunacy on a grandiose scale. And the politicians think that the answer to all the chaos and inefficiency is to announce another re-organisation to introduce their own stamp onto the system. At the bottom of the pyramid poor nursing staff have learned to have no confidence at all in their managers, who - lets face it - are quite likely to disappear in less than two years, discarded in the next upheaval. And to have no faith in new ways of doing things because they too wil be replaced by another grand vision before the ink is dry on the new letterheads.

I defy anyone to offer leadership in such a climate.

And somehow, despite the numbers of people who 'leave' in the drive for efficiency, every year the numbers grow.

I offer to you all this insight into why costs escalate and the whole bloody shambles seems out of control.

And I remind you, my husband is self employed. He has worked 10-12 hours a day, 6 days a week since 1976. He takes two weeks holiday every other year. I can see how rigourous cost management has held his business together through all the recessions and troubles. It apalls me that there is not enough 'management' of the NHS (and presumably other services in the public sector) because they keep making managers redundant. I have met very few Doctors or nurses who want to spend their time doing anything but doctoring and nursing. And they shouldn't have to waste their time doing anything but what they arre trained to do. A doctor in a management role costs 3 times as much as a non-medically qualified person so the logic of the latest plans to hand over the management of the NHS to GPs (who don't work for the NHS by the way - they are self employed contractors) makes neither structural or financial sense.

And I will continue to rant until someone up there sees sense! Thanks for listening

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Jeremy Bosk

Oct 24, 2010 at 19:38


I have every sympathy with your "rant". Pointless reorganisations are not a public sector monopoly - ask anyone who has ever been swapped between private equity companies or worked for a conglomerate like the late lamented ICI or BT as they were first built and then split into component parts. Sometimes there is industrial or commercial logic but just as often it is management fashion or the diktat of bureaucrats like OFTEL.

My father worked for three employers in almost fifty years, all in the same city. I have so far had nine employers in 44 years in seven towns and cities including three house purchases and sales. The human and economic costs of upheaval, moving house, between jobs unemployment and so on are only partially borne by the employer who gets tax relief. The tax payer, individuals and families bear the brunt. So this is yet another example of a dubious private benefit, in this case to employers, being paid for by the public. Economists call this the tragedy of the commons.

Tragedy of the Commons: The Concise Encyclopedia of Economics ...

by G Hardin - Cited by 13206 - Related articles

In 1974 the general public got a graphic illustration of the “tragedy of the commons” in satellite photos of the earth. Pictures of northern Africa showed ...

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Oct 24, 2010 at 21:07


More rubbish from you I'm afraid. If you increase how much people like your youngest daughter are paid, they will just spend it rather than save it. You can see from her attitude to life that she has been financially irresponsible and giving her a high wage won't have made any difference at all.

Get real. People need to be financially responsible at a very early age - when they are still at school - and they have to learn that they can't just do what they want, when they want.

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James O'Donnell

Oct 24, 2010 at 21:57



When will the powers that be grasp the nettle (or more correctly perhaps when will ordinary working people thrust the nettle into the the hands of employers and politicians).









BUT membership of these schemes must be COMPULSORY and the Government must endorse them with statutory minimum standards and provide a safety net, funded from a levy on employers, in the event of bankruptcy.

What about costs?

Employee contributions of about 5% and employer contributions of about 12% will certainly be adequate to provide at least 66% of final salary (with RPI protection) after 40 years of contributions, BUT THERE MUST BE NO CONTRIBUTION 'HOLIDAYS' and tax relief should be given for both sets of contributions. Additionally, the pension must be transferable between employers.


I have deliberately made no mention of STATE PENSIONS with everyone on 66% of final salary, and something similar for the self-employed, State provision will be very much less relevant.

Finally, Lord Hutton, you really must start thinking outside the box!

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Jeremy Bosk

Oct 24, 2010 at 22:46


Man does not live by bread alone (nor do daughters). What is life worth without beauty and the ability to appreciate it?

Someone else said it better a long time ago:

25Therefore I say unto you, Take no thought for your life, what ye shall eat, or what ye shall drink; nor yet for your body, what ye shall put on. Is not the life more than meat, and the body than raiment? 26Behold the fowls of the air: for they sow not, neither do they reap, nor gather into barns; yet your heavenly Father feedeth them. Are ye not much better than they? 27Which of you by taking thought can add one cubit unto his stature? 28And why take ye thought for raiment? Consider the lilies of the field, how they grow; they toil not, neither do they spin: 29And yet I say unto you, That even Solomon in all his glory was not arrayed like one of these. 30Wherefore, if God so clothe the grass of the field, which to day is, and to morrow is cast into the oven, shall he not much more clothe you, O ye of little faith? 31Therefore take no thought, saying, What shall we eat? or, What shall we drink? or, Wherewithal shall we be clothed? 32(For after all these things do the Gentiles seek:) for your heavenly Father knoweth that ye have need of all these things. 33But seek ye first the kingdom of God, and his righteousness; and all these things shall be added unto you.

34Take therefore no thought for the morrow: for the morrow shall take thought for the things of itself. Sufficient unto the day is the evil thereof.

Matthew 6

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Tony Peterson

Oct 25, 2010 at 06:34

Once the shouting and the preaching start, it is probably to time to call the thread a day.

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Atul Patel

Oct 25, 2010 at 07:22

Pensions = Annuity

When one reaches retirement we usually tend to look at perhaps moving to a country that has warm weather or better facilities. Lets assume that you decide to retire abroad and spend 6 to 9 months of your time in that country. In this case say Goa (India).

If that is your objective to enjoy a better standard of living in your old age. You can scale down your house to a 2 bed flat in UK and with the savings buy a 2 bed flat in Goa or similar place of your choice (cost would be fraction of that in UK and yes there wont be any snakes in the flat or such as private developers have come a long way since). Once you house/flat is fully paid the monthly cost for a couple including eating out twice a week etc should cost no more then £400 - £600 per month taking care of every bill including creating employment here by having a house maid. Similar lifestyle in UK would cost £2000 per month.

Pension. Transfer your pension to an Indian Pension provider (yes Revenue approved and most life offices in India have tied hands with those in UK). You will find that your annuity though in Rupees will be more than double and death benefits much better in the event of death after taking annuity (money goes to the estate). Rupee will eventually (has to) be convertible hence within a few years you can take rupees and convert them to £s for your income needs in UK or whilst you are in India or similar country with same pension/annuity benefits you can rent your flat out for the time you are abroad and when you do return that money will be in your bank for you spend when back home (yes, I do appreciate that there will be some costs for the upkeep of the flat but even after that you should be quids in).

In addition to this emerging countries now tend to have better private medical care etc. and your money goes a lot further and more importantly you have a property that in the long run will appreciate much better than back home.

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Anonymous 1 needed this 'off the record'

Oct 25, 2010 at 07:56


I have tried what you have mentioned but living in another part of Asia. Only thing I did different was not retain a property in the UK.

Yes we have a nice climate, but a tad too hot sometimes and too many mosquitoes and other insects to deal with. Also medical problems abound here until you get used to food and poor hygiene (in both good & bad restaurants).

Theoretically we could live on 600 quid a month here but we couldn't live a full life which brings me to another point, Boredom.

First year or two are okay but then get tired of lack of places to go or things to do, it gets too hot to stay out in the sun for more than an hour and apart from shopping malls, cinemas and restaurants there is a big lack of airconditioned places to visit.

Good points that you raise on Pension though, there has to be better deals than we can get in England. Also medical care in Asia is good if you get an honest doctor who doesn't want to carve you up to rocket up your medical bills. Too many Expats do get ripped off when they are in need of medical care but if you have the right contacts here you are on a winner with same day hospital treatment if needed, no waiting lists. Just pray you get no chronic illnesses like cancer or kidney failure if your bank balance is not huge though. Better to book a trip to Dignitas in that case, lol

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