The Chancellor

stevebananer

Isn't it satisfying when the headline says it all?

http://uk.news.yahoo.com/31032007/325/chancellor-acted-best-advice-balls.html

peterg1965

stevebananer wrote: »

Isn't it satisfying when the headline says it all?

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He knew exactly what he was doing, if he didnt he is not the type ever to say sorry. I wonder if he ponders on the public bill for the hundreds of thousands of extra public sector pensions he has created over the last ten years. He is a man NOT to be trusted.

dealornodeal_3

I think Brown will go down in history, for robbing pensioners of the state pension, and private pensions! Another stealth tax from labour, and labour are supposed to be the party for the working class! I dont think so, and I never have!

It will take a good Conservative Goverment to sort this mess out!

dunstonh

It was a shame that the Conservatives were in a shambles at the time and he was able to get away with it without any real opposition or media coverage.

exil

dealornodeal wrote: »

I think Brown will go down in history, for robbing pensioners of the state pension, and private pensions! Another stealth tax from labour, and labour are supposed to be the party for the working class! I dont think so, and I never have!

It will take a good Conservative Goverment to sort this mess out!

Well that deserves the response - I can't remember a GOOD Conservative government in the past, so we may have a long wait. And since the Treasury (which tends to rule governments of either party) was thinking about this in the early 90s I challenge you to say that the Tories wouldn't have done the same.

I don't know what you mean by the 1st paragraph either. How has Brown robbed either state or private pensioners of their pensions?

Anyway, to the point:-

I have to admit that the taxation of dividends hasn't helped the company pension situation. However we need to take into account the recent tax changes which now allow 100% of income to be put into pensions tax free, and have allowed people on low incomes to contribute £3600 tax free. I suspect that will cost the treasury far more over the long term than it gets from taxing dividends.

Final salary schemes have been hit by this tax - but to claim, as some have, that this is why they're closing is nonsense. British companies are merely following the trend started in the US a few years ago (nearly all US pension funds are now defined contribution) resulting from a realistic assessment by auditors of the future liabilities arising from such schemes.

And - let's face it, pensions (other than state or SERPS) have always been a middle class - or public sector - perk, and worth more the higher your salary is. Only about 50% of the population get them, and many who do get fairly derisory amounts.

dealornodeal_3

Well in 1997 when he scrapped tax relief on dividends, it wiped billions of pounds off the value of pensions. Thats what I said, it will take a Conservative Goverment to put this right for pensioners!

exil

Some confusion here. It had an effect on the way pension funds are valued. It did not reduce the value of pensions in payment.

And I haven't noticed the Tories promising they'll reverse this. You may not remember they slapped taxes on pension fund surpluses (which of course weren't really surpluses since they were based on what subsequently turned out to be an overoptimistic valuation of pension funds). And you have ignored my point about the changes in the tax relief rules. And the recent introduction of (still inadequate, but better than nothing) schemes to safeguard pensions when the employer goes bust.

I'm prepared to discuss this in a reasonable and balanced way if you will take your party political hat off.

Andy_L

dealornodeal wrote: »

Well in 1997 when he scrapped tax relief on dividends, it wiped billions of pounds off the value of pensions. Thats what I said, it will take a Conservative Goverment to put this right for pensioners!

That'll be the same sort of conservative government that started so slice away at advanced corporation tax then? (Lamont, early 90's IIRC)

jamesd

Just in case it changes later, the headline reads "Chancellor acted on best advice -Balls". Mr. Balls is economic secretary to the Treasury.

exil

Must admit I liked the speech by Heseltine where he said that
the Treasury policy wasn't Brown's - it was Balls'.

cheerfulcat

exil wrote: »

Some confusion here. It had an effect on the way pension funds are valued. It did not reduce the value of pensions in payment.

No, it had a real effect on the actual capital available in pension funds, both company and personal pensions. Pension funds ( and PEPs and then ISAs ) were able to reclaim the 25% tax paid on dividends - this was real, not notional, money which has now been lost.

And - let's face it, pensions (other than state or SERPS) have always been a middle class - or public sector - perk, and worth more the higher your salary is. Only about 50% of the population get them, and many who do get fairly derisory amounts.

Would you call everyone who worked for BT, or Tesco, or Boots, or any of the car makers " middle class or public sector"? The divide would run more along gender than class divides - many more men than women have company or personal pension plans. And company pensions are not a perk, they are deferred salary.

Leaving party politics out of it, the problem with the system as it stands is that those who make and implement the rules - the politicians and civil servants - don't have to live with the consequences, featherbedded as they are with nice fat taxpayer-funded pensions.