Balls on Pensions

CLAPTON

during the 80s there was a raid on final salary schemes which forced companies to stop contributing to them as the government of the day deemed them over subscribed

the government of the day obviously benefited from the additional company taxes.

so in the good times they were forbidden by that government from building up reserves

when the bad times came then they started closing final salary schemes

zagfles

ukcarper wrote: »

As less than 20% of workers earn more than £40k not middle earners I would suggest.

But it would interesting to see how they deal with pension schemes, this was always the big problem with not giving full marginal tax relief on pension contributions. It's easy with employee contributions, it's not too hard with employer contributions to money purchase schemes, but how would they deal with final salary schemes?

If you earn £36k say, but your pension contributions are worth £6k, then you are getting some higher rate tax relief at the moment even if you don't pay any HRT.

lvader

Linton wrote: »

According to the bastion of truth, the Daily Mail, higher rate tax is paid by 1 in 6 taxpayers. So the claim that middle income earners would be affected seems to be stretching the definition of "middle" a bit.

I consider middle income earners from around £30-£60k, I realise that isn't an average but any lower and you could well be on benefits.

ukcarper

zagfles wrote: »

But it would interesting to see how they deal with pension schemes, this was always the big problem with not giving full marginal tax relief on pension contributions. It's easy with employee contributions, it's not too hard with employer contributions to money purchase schemes, but how would they deal with final salary schemes?

If you earn £36k say, but your pension contributions are worth £6k, then you are getting some higher rate tax relief at the moment even if you don't pay any HRT.

As the 80 percentile was £36k in 2012 I can't see how you can say people earning more than that are middle earners median salary was £21.5k.

ukcarper

lvader wrote: »

I consider middle income earners from around £30-£60k, I realise that isn't an average but any lower and you could well be on benefits.

So you consider people in the top 30% of earners to be middle earners.

michaels

Discouraging pension saving is very good for the govt books in the short term as unless the marginal tax rate you get relief on when making the contributions exceeds the rate you will pay when you receive the pension you are better off taking the money as salary now and being free to invest it as you wish...and of course if you take the money now you pay all the tax now rather than when you take the pension...

Thrugelmir

Linton wrote: »

He starts off by saying that the removal of the refund of the (non-existant) tax paid on dividends caused the demise of the final salary pension. Do you think he really believes that?

Well it did cost UK pensions £5 billion a year. Not only did it impact final salary schemes but personal pensions as well. Resulting in the crisis we have today. Where there's a generation heading towards retirement with insufficient provision.

Like Mrs T. Brown will be remembered for all the wrong reasons when history reflects and judges him.

CLAPTON

presumably if brown hadn't made that 5 billion raid on pension starting in 1977 then the national debt would be 80 billion higher and the deficit would also be 80 billion extra too.

funny how the current lot haven't reversed that raid... they have been in power three + years

Loughton_Monkey

zagfles wrote: »

But it would interesting to see how they deal with pension schemes, this was always the big problem with not giving full marginal tax relief on pension contributions. It's easy with employee contributions, it's not too hard with employer contributions to money purchase schemes, but how would they deal with final salary schemes?

If you earn £36k say, but your pension contributions are worth £6k, then you are getting some higher rate tax relief at the moment even if you don't pay any HRT.

As you say, not giving the 'marginal' rate does create problems.

But for final salary schemes, there is a 'formula'. Something about 16 times your annual increase in entitlement. This is well understood and already dealt with in 'policing' the £50K limit etc. so I don't think it makes FS schemes any more complicated.

But capping relief at 20% will probably only take, say, another 10,000 HMRC staff. All.. er... on Final Salary schemes!

lvader

ukcarper wrote: »

So you consider people in the top 30% of earners to be middle earners.

Yes. You are confusing average income with middle income.