The Chancellor

Bean_Counter

dealornodeal wrote: »

IFAs will go along with my previous post. I advised a friend of mine, and he put it it to his IFA - And he agreed with me!

Apologies for any confusion. I didn't mean you to speak to IFA, I just meant it as a general piece.

dealornodeal_3

Bean_Counter wrote: »

Apologies for any confusion. I didn't mean you to speak to IFA, I just meant it as a general piece.

Thats ok, Ive never myself spoken to an IFA, Soz about the confusion. I gave some advice to an old workmate of mine regarding so much into a Pension Fund, and so much into an ISA. My ex workmate checked with his IFA, and he agreed with my plans for retirement!

Dont forget if there is a FTSE crash, the Company are quick with the fall of the units, but they take longer to go up once the FTSE recovers, as they have to build up the funds + their profits!

dunstonh

ISAs and pensions have the same investment funds and the same tax treatment of the investments once invested.

However, if you are looking at bottom line gross income, then the pension would beat the ISA for those retiring at 65 or over.

dealornodeal_3

Well you can only have so much pension, and its taxed!

Im talking about Lump Sums for Pension, you can only withdraw so much from your pension plan. Where as you have a lump sum ISA to withdraw when you like!

derrick

Fulham_Mark wrote: »

From next week your tax relief on private pensions drops by 10% - because of the 2p tax "cut" in the budget.

IIRC this does not come in until April 2008

Fulham_Mark

Apologies to all for being so stupid and not understanding how pensions work.

I had read the article on the motleyfool site entitled "Another Blow For Pensions"

http://www.fool.co.uk/news/retirement-pensions/2007/03/22/another-blow-for-pensions.aspx

which says
"Therefore, in order to maintain your gross pension contributions (including tax relief) at the same level, you'll need to increase them by a few percent. To be precise, you'll have to lift them by 3.21 divided by 125, or 2.6%,"

The overall income tax I pay will be roughly the same when the 10% band disappears and the 20% rate comes in as I understand it, yet my tax relief on pension contributions is reduced. Yes everything is fine if the tax rate is still 20% in 35 years when I retire - which is something of an assumption.

wotsthat

The overall income tax I pay will be roughly the same when the 10% band disappears and the 20% rate comes in as I understand it, yet my tax relief on pension contributions is reduced. Yes everything is fine if the tax rate is still 20% in 35 years when I retire - which is something of an assumption.

Yes it's some assumption to make but no different to assuming 22% relief now and 22% tax liability later. If you accept the argument that tax is not a 'relief' but rather a deferral the actual rate of tax will make no difference to your net retirement income.

However, as your total contributions will be less so will the final fund value and therefore the 25% tax free lump sum. Who knows what will happen in 35 years but I'd be willing to bet that, by then, tax free lump sums will be a distant memory.

pefwin

I believe that the National Association of Pension Funds view is that that Brown was 'unhelpful'.

To be honest some factors are due to the evolving market such as increasing longevity and the fall in equity markets. However, others could have been avoided or more thoroughly considered such as the introduction of new accounting rules (FRS17) and the increase in pension regulation. I do believe though that the DWP have just issued a consultation paper titled "the Deregulation of Private Pension Provision".

In essence all these factors are leading to the reduction in decent pension provision in the UK and the flight from DB arrangements to DC. We should stop pointing fingers and apportioning blame and start thinking about how we get out of the hole we find ourselves in.

StevieJ

Bean_Counter wrote: »

No it's not. What is more tax efficient?

Probably not saving at all, there must be a point where people on low incomes are contributing to a pension that will cancel out benefits that they would have received anyway.

wotsthat

We should stop pointing fingers and apportioning blame and start thinking about how we get out of the hole we find ourselves in.

I actually think the answer is staring everyone in the face. If people want a decent standard of living in retirement they need to save for it. The best laid plans can be affected by changes in legislation, tax and so on but there's nothing like a decent lump of savings to provide a few options.

The alternative, i.e. not saving, doesn't bear thinking about because the individual will be at the complete mercy of whatever Government may be in power at the time.

These 'scandals' are most unhelpful since, I suspect, they deter those who are not saving from starting.

People need to wake up and get a grip. Apathy and denial won't pay the shopping bill.