Pensions, politics and tax

baby_boomer

The Lib Dem manifesto follows Ros Altmann's proposal to abolish higher rate tax relief on pensions.

I personally think this is just a matter of time given the next government's desperate need for revenue over and above what all the parties are claiming they will need. None of their figures are going to add up which is why it seems a "phoney" election.

Unfortunately I doubt the proceeds will ever be used to further subsidise the pensions of basic rate taxpayers - as Altmann would like.

The money saved will just go into general tax revenues.

Abolition of higher rate tax relief on pensions will feature as a big issue should there be a hung parliament and one the LibDems will push hard with their chosen governing partner given their "fairness" election agenda in order to position themselves for any subsequent election as there was in 1974 after a hung parliament.

What is the situation in other countries? If this proposal came in, would it make the UK a less attractive place for top executives considering working for a British company because the UK was out on a limb on this issue?

baby_boomer

Fair or what?

"State pension to rise in line with earnings, by 2.5% per year or in line with the Retail Price Index measure of inflation - whichever is highest"

I'd love to know the LibDem costings for this largesse to my generation.

zygurat789

baby_boomer wrote: »

Fair or what?

"State pension to rise in line with earnings, by 2.5% per year or in line with the Retail Price Index measure of inflation - whichever is highest"

I'd love to know the LibDem costings for this largesse to my generation.

Higher

Earnings has always been the higher which explains why we get more prosperous and why the state pays out only on RPI

chris_m

zygurat789 wrote: »

Higher

Earnings has always been the higher which explains why we get more prosperous and why the state pays out only on RPI

Nope - highest.
There were three "options", not two - earnings, 2.5% or inflation.

CLAPTON

I believe both Labour and Conservatives have committed to re-establishing the link between the state pension and earnings although I can't remember when its due to happen.

CLAPTON

it would seem that labour will restore the earnings link in 2012; the torys were going to match that but are now saying 2015

so thats all three parties then

http://www.telegraph.co.uk/finance/personalfinance/pensions/6221915/State-pension-will-be-linked-to-earnings-despite-cuts-Tories-say.html

zygurat789

CLAPTON wrote: »

it would seem that labour will restore the earnings link in 2012; the torys were going to match that but are now saying 2015
so thats all three parties then

this is what they are saying before an election

zygurat789

chris_m wrote: »

Nope - highest.
There were three "options", not two - earnings, 2.5% or inflation.

Yep I shouldn't try doing three things at once

DavidLaGuardia

baby_boomer wrote: »

The Lib Dem manifesto follows Ros Altmann's proposal to abolish higher rate tax relief on pensions.

I still haven't seen what the politicians like to call "joined up thinking" on this one. If an individual on gets basic relief but then is taxed at a higher rate in retirement on 75% of the fund, its a waste of time.
If the relief is capped, then so must the tax be on benefits.

hugheskevi

If the relief is capped, then so must the tax be on benefits.

Wouldn't be enough for me to continue using pensions to invest - I wouldn't believe that the 'unfair, overly generous tax breaks given to the wealthiest who need them least' (or whatever political rhetoric is the order of the day) wouldn't be taken away at some point before I reached retirement.

I'd be moving pensions well down the list of options, behind SSISAs, VCTs and full use of CGT allowance.

dunstonh

At the moment in politics, its fashionable to bash those that are higher earners. Especially the way they justify increases in taxation on higher earners as it hits the bankers. In reality, the vast majority of bankers are low paid and the changes will actually hit middle management and professionals more than bankers.