What are good strategies folr avoiding the LTA limit

gadgetmind

Neverland wrote: »

I would like to make a bet that the LTA will down to less then £1m in the next parliament

You could be right as MPs seem to be determined to wage a war on pensions, even those that people fund themselves.

Neverland

gadgetmind wrote: »

You could be right as MPs seem to be determined to wage a war on pensions, even those that people fund themselves.

Pension schemes are essentially a tax defferal mechanism

Could you explain why one tax tax payer should be allowed to defer income tax on more £1m of income funded by other, poorer, tax payers?

I'm actually with the government on this one....in fact I'm running in front of them singing L'Internationale :A

gadgetmind

Neverland wrote: »

Could you explain why one tax tax payer should be allowed to defer income tax on more £1m of income funded by other, poorer, tax payers?

I'm talking about those who fund their own pensions from their own money and who'd quite like to do this without being taxed twice.

In reality it's the "poorer" tax payers who will want/need subsidising.

I'm actually with the government on this one....in fact I'm running in front of them singing L'Internationale :A

That is your right but you do need to be careful what you wish for.

grey_gym_sock

what i have a problem with isn't that the government is limiting how much can be filtered through this tax deferral mechanism, is that they keep on changing the rules, in a sense retrospectively (in that ppl may have put money in, which they wouldn't have done if they'd known about the coming rule changes), and that there's no clear direction of future policy.

if there were a plan of what will happen to the LTA over future years and decades, ppl could plan based on that.

or (getting into the realm of complete fantasy here) the major political parties could disagree on the plan, and we could vote for the 1 with the plan we prefer!

Neverland

gadgetmind wrote: »

I'm talking about those who fund their own pensions from their own money and who'd quite like to do this without being taxed twice.

The idea behind pension tax relief is that you build up some funds so as not to be a burden on the state in later life

If the average worker in the UK makes £24k a year before tax and survives, isn't a pension more than twice that enough?

gadgetmind

I think the need a clear statement from HMG regards the inviolable rules for pension. I'd start by getting rid of all annual and lifetime allowances and guaranteeing that the PCLS would always be tax free. At a stroke, many of people's doubts would be greatly eased and people might start putting money into pensions again.

This constant nickle-and-diming is giving pensions a really bad reputation.

gadgetmind

Neverland wrote: »

The idea behind pension tax relief is that you build up some funds so as not to be a burden on the state in later life

That's part of it, but it's also so that people don't have to live out their years at the subsistence level of state pensions, and so they can retire earlier if they choose to do so.

If the average worker in the UK makes £24k a year before tax and survives, isn't a pension more than twice that enough?

It's not down to you, me or the government to dictate to someone how much is enough to meet their needs.

I'm starting to get the idea that you're not entirely happy with capitalism.

Neverland

gadgetmind wrote: »

I think the need a clear statement from HMG regards the inviolable rules for pension. I'd start by getting rid of all annual and lifetime allowances and guaranteeing that the PCLS would always be tax free. At a stroke, many of people's doubts would be greatly eased and people might start putting money into pensions again.

This constant nickle-and-diming is giving pensions a really bad reputation.

Given the state of country's finances I think thats a bit unrealistic. The current system concentrates all the tax relief on the well-off

Better to encourage everyone to save something towards their retirement: e.g. matching contributions for the first £2,500 of pension contributions by every worker, state or private sector regardless of slary

That way there would be a good chance that many workers could have £200,000-£250,000 saved in today's money for their retirement and wouldn't need as much state help

I expect that would cost a good bit more than the current system though

fizio

I agree that the state shouldn't be subsidising the 'wealthy' with tons of tax relief but a £1.25m pot is not really going to deliver much more than around £50k per year and thats at retirement age versus a reduction for any kind of early retirement.
I think the previous 1.5-1.8m was a decent limit and if it comes down again to £1m then it just means people need to have other investements as well as a pension if they want a decent standard of living.
Early retirement at £50k would suit me but not looking likely at the minute

Neverland

gadgetmind wrote: »

It's not down to you, me or the government to dictate to someone how much is enough to meet their needs.

I'm starting to get the idea that you're not entirely happy with capitalism.

I agree with you actually, one of the options I would prefer is eliminating all tax relief for pension and taking the saving off higher rate income taxes

It makes no sense to tax corporattions at nearly 20% and people at 47%

If you do want to have pension tax relief it should be clearly targeted at the purpose it was set up for