I don’t know exactly how pensions work in the US or elsewhere. Pensions in the UK and Europe vary a lot. France, for example, still currently provides good levels of retirment income to people who’ve paid into state pensions. Although they vary widely according to trade or profession and years worked, there are many retired French people living reasonably comfortably on their pensions.
The UK pension scene, on the other hand, is a disaster for millions of retired people and people facing retirement before long. The Labour government – while it was busy recklessly bankrupting the country by running up trillions of pounds worth of debt – also saw fit to abolish pension providers’ obligation to provide the pensions they’d been promising their clients for decades. Workers who’d paid into pension funds year after year, decade after decade, on the promise of a pension which would be a percentage of their final salary were suddenly told the rules had changed.
The pension contributions had been pocketed all right – that is, we all kept our side of the deal – but the pension providers were released from their side of it. Gleefully, they recalculated the pension payouts they could now get away with and in many cases people’s predicted pensions fell from the promised thousands of pounds each year to mere hundreds. Since many retired people have only their pensions to live on, the financial change was truly scandalous.
It was a very direct transfer of wealth from the poor – responsibly funding their pensions throughout their working lives – to the wealthy finance companies. All orchestrated by the “labour” government.
For many people it’s too late to put other financial provision in place for their later years. The snatching away of their pensions is made more problematic because information on the provision of annuities is pretty opaque. UK pensions are difficult to understand – until pensioners find themselves receiving very little each month….
You may have built up a pension fund and you know it won’t now pay out what was promised but you may also find it hard to discover what the fund will pay out when you use it to buy an annuity. The pension companies – just my opinion – do their level best to confuse clients who ask for straight answers about the income they can expect.
The online calculator here works in sterling and is for a range of UK annuities. It can give you some idea of the different annuities available and the monthly rate of income each would be likely to generate after you reach 60 or 65. The calculator here works with dollars. It can be scary to see how little retirement income annuities generate – but forewarned is forearmed.That’s the theory anyway.