Balls on Pensions

ukcarper

lvader wrote: »

The same as most people would, middle of the range of incomes, not the average.

Middle of what range I've already said that less 10% of people earn more than £50k so I don't see how you can include £60k in the middle range.

lvader

Again you are looking at the average, I'm not, If most people earn between 5k and 100k, what is the middle income?

chewmylegoff

ukcarper wrote: »

Middle of what range I've already said that less 10% of people earn more than £50k so I don't see how you can include £60k in the middle range.

It's all relative isn't it. I expect £40k in Barrow in Furness will buy you a pretty decent quality of life. £40k in London will not.

£30-50k is very average in London and it is reasonable to call someone on that sort of salary in that location a middle earner. It is not reasonable to call someone in Barrow in Furness on £50k a middle earner.

ukcarper

chewmylegoff wrote: »

It's all relative isn't it. I expect £40k in Barrow in Furness will buy you a pretty decent quality of life. £40k in London will not.

£30-50k is very average in London and it is reasonable to call someone on that sort of salary in that location a middle earner. It is not reasonable to call someone in Barrow in Furness on £50k a middle earner.

I agree it's all relative but median earnings in London is about £28k and the 80% percentile is only about £46k.

chewmylegoff

ukcarper wrote: »

I agree it's all relative but median earnings in London is about £28k and the 80% percentile is only about £46k.

What is the basis of that calculation?

ukcarper

chewmylegoff wrote: »

What is the basis of that calculation?

The figures are from ONS ASHE 2011

Actual figs are median £27,560 80% £45,549 I rounded it up figure probably a bit higher now.

zagfles

chewmylegoff wrote: »

What is the basis of that calculation?

http://www.ons.gov.uk/ons/rel/ashe/annual-survey-of-hours-and-earnings/2012-provisional-results/2012-provisional-table-8.zip

chewmylegoff

ukcarper wrote: »

The figures are from ONS ASHE 2011

Actual figs are median £27,560 80% £45,549 I rounded it up figure probably a bit higher now.

ONS ASHE for 2012 has London median gross weekly earnings for full time employees at £34k which seems pretty low to me really. That figure excludes overtime and bonuses so is understated (admittedly not by much). Further, it is only drawn from PAYE employees so not actually an accurate reflection of median gross earnings for everyone who is actually working.

http://www.ons.gov.uk/ons/dcp171778_286243.pdf

zagfles

Loughton_Monkey wrote: »

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!

The main problem is people suddenly getting a massive tax bill if they get a pay rise.

Say someone on £30k with 30 years service in a 1/60th final salary scheme gets a promotion and a £5k pay rise. So an annual pension accrued of £15k changes to £18k in a year, inc the extra year's service.

If a factor of 16 is used, the value of the pension goes up from £240k to £288k, ie a £48k increase! So their income that year including the pension increase would be £83,000 - way over the HRT threshold.

If they only get basic rate relief on the "pension contribution", they'll have to pay 20% tax on about £42,000, ie a tax bill of £8,400 !! For getting a £5k pay rise!

ukcarper

chewmylegoff wrote: »

ONS ASHE for 2012 has London median gross weekly earnings for full time employees at £34k which seems pretty low to me really. That figure excludes overtime and bonuses so is understated (admittedly not by much). Further, it is only drawn from PAYE employees so not actually an accurate reflection of median gross earnings for everyone who is actually working.

http://www.ons.gov.uk/ons/dcp171778_286243.pdf

I think the problem we all have is we judge things by what we and our peers earn.