I\’m sure that among the readership here there are one or two who really understand about the state pension system. Across Europe that is.
My basic starting point is that if you\’ve not got a state pension then buying one is a very, very, effective use of money. It is, essentially, an inflation proofed annuity in exchange for national insurance payments. And it is a much better deal than anything you can get on the private market. Simply because those pensions are not paid from the earnings on investments, not even from the premiums being paid, but subsidised out of general tax revenues.
Further, you can, in the UK at least, purchase back years of pension contributions. I think it used to be you could purchase two blocks of 7 years in a lifetime. Now only one block of 10 years maybe.
The NI rates required to just make these pension contributions (which you can regard really as the capital sum purchasing that annuity) make doing so, if you haven\’t already got a full UK pension, a very attractive deal.
OK, here\’s where I now go off into areas I know nothing about.
I would assume that most such state pension schemes across Europe (more importantly, the EU, where they\’re not allowed to discriminate against EU furriners) have similar arrangements. So that mothers who took years out of the workforce, as an example, can top up their pension rights.
So, what\’s to stop someone purchasing pensions in all 27 such EU countries? Not Estonia, obviously, as pensions there are based upon real investment returns.
But is, and I repeat if, other state pension schemes are better than private annuities, and if, I repeat if, it is possible to back purchase years of eligibility, then what\’s to stop someone purchasing 5 or 10 or 20 different state pensions from across the continent?