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At what point could DC pensions become pointless?

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  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Linton wrote: »
    Changes over the past 10 years have certainly been much more of an encouragement than the reverse.

    Yes, all that fiddling with annual allowances, lifetime caps, age at which you can crystallise, drawdown rules, GAD rates, and the ever present threat of an attack on PCLS, must really be encouraging people.

    Money in pensions is subject to random politically-motivated attacks and raids no matter who is in power. It's little wonder that many people treat them with caution bordering on paranoia.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • pip895
    pip895 Posts: 1,178 Forumite
    Tenth Anniversary 1,000 Posts Combo Breaker
    Thrugelmir wrote: »
    My personal view is that ISA's will suffer before pensions. There's a crisis looming as it is. Governments need to encourage long term saving. A culture which has been lost. In an age of short termism and spend today, pay tomorrow.


    I agree - if they start meddling with pensions that way Don't expect your ISA to remain in-tact.
  • mania112
    mania112 Posts: 1,981 Forumite
    Part of the Furniture Combo Breaker
    Any change to pensions will be negative (i.e a move to save the Gov money), so you won't hear anything for a while because it won't be a vote-winning announcement.

    Long term though, I can see them reducing (but not removing) the max PCLS from 25% to 20%.

    I can also see them only allowing 20% tax relief on contributions for HRT and ART's.

    I can also see things staying as they are for a good few years.
  • bigadaj
    bigadaj Posts: 11,531 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper
    mania112 wrote: »
    Any change to pensions will be negative (i.e a move to save the Gov money), so you won't hear anything for a while because it won't be a vote-winning announcement.

    Long term though, I can see them reducing (but not removing) the max PCLS from 25% to 20%.

    I can also see them only allowing 20% tax relief on contributions for HRT and ART's.

    I can also see things staying as they are for a good few years.

    Agree with most of your points but there's also the fact that the only form of growth that we seem to be able to generate in the uk is from consumer consumption. Therefore for the richest part of the population it doesn't make much sense to give them tax breaks when they won't be claiming much from the state I old age anyway, far better to get them to spend more now to make the GDP figures look better.
  • jamesd
    jamesd Posts: 26,103 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    gadgetmind wrote: »
    Yes, all that fiddling with annual allowances, lifetime caps, age at which you can crystallise, drawdown rules, GAD rates, and the ever present threat of an attack on PCLS, must really be encouraging people.
    It's worth remembering in the last ten years:

    1. Pension Protection Fund introduced in 2005.
    2. A-Day in April 2006 that eliminated the requirement to buy an annuity by age 75 through the introduction of Alternatively Secured Pensions, as well as a broad range of other improvements.

    As well as the constant changes you mention, the thing that most inhibits my use of pensions for retirement income is the GAD limit between retirement and state or work pension ages. That forces the use of non-pension investing to allow an adequate capital drawdown rate between age 55 and say 68. An ability to drain say GAD+5% between those ages might be sufficient to eliminate this drawback and allow the money to be prudently placed in a pension instead of having to go elsewhere.

    Something like that would add perhaps 100% to the amount of money that I'm putting into pensions, which at the moment doesn't go into them because of the drawing rate limit.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    There have been some improvements over the years (though pensions "simplification" gave us Pension Input Periods!) but the overall message is one of government dislike of private pensions and constant meddling that slowly erodes their value.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
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