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Telegraph - 25% Under threat.
Comments
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I'd limit it purely to an annual allowance of say £15k pa (which is about what a 1/60th accrual on £30k is worth for a worker near retirement). Scrap the lifetime limit which currently makes pension planning such a lottery for anyone in danger of hitting it.
That way you also encourage people to start contributing early.
So you wouldn't allow people to catchup if they miss some years? The currently lifetime and annual limits allow flexibility to vary pension contributions based on circumstances and needs.0 -
The currently lifetime and annual limits allow flexibility to vary pension contributions based on circumstances and needs.
And then change part way through a tax year to chop you off at the knees.
That we're even having this discussion shows that the rules are changing too often, and usually in cruel and unusual ways, which means that no-one trusts HMG to not impose further onerous rules including crippling the 25% PCLS with caps.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.0 -
gadgetmind wrote: »And then change part way through a tax year to chop you off at the knees.
That we're even having this discussion shows that the rules are changing too often, and usually in cruel and unusual ways, which means that no-one trusts HMG to not impose further onerous rules including crippling the 25% PCLS with caps.
I couldn't agree more. If we only had a simple and stable regime where we all knew where we stood, then whilst we might grumble about tax overall we wouldn't spend our time lurching between fear, panic and outrage every time they threaten to change the rules halfway through the game.0 -
So you wouldn't allow people to catchup if they miss some years? The currently lifetime and annual limits allow flexibility to vary pension contributions based on circumstances and needs.
There's a trade off between allowing the flexibility and encouraging people to get saving early on a 'use it or lose it' basis. Having said that, I'd agree that some limited carry forward of input allowances makes sense, but I would be vehemently against any lifetime limit based on the amount IN the funds as opposed to the amounts CONTRIBUTED to the funds. The latter you can control, the former is so exposed to the vagaries of the markets that planning becomes impossible.0 -
I'd limit it purely to an annual allowance of say £15k pa (which is about what a 1/60th accrual on £30k is worth for a worker near retirement). Scrap the lifetime limit which currently makes pension planning such a lottery for anyone in danger of hitting it.
That way you also encourage people to start contributing early.
All this would achieve would be to reduce still further the pension that those on DC, or private, schemes could realistically achieve. How many people on these schemes can afford £15k every year of their working lives? Certainly nobody earning £30k/year.
Early on, I can't imagine that many would want to put that limit away- agreed. But later on in your career, when you're closer to retirement and can afford to save more that's too strict a limit.
The gap between DB and DC schemes would open wider.0 -
I couldn't agree more. If we only had a simple and stable regime where we all knew where we stood, then whilst we might grumble about tax overall we wouldn't spend our time lurching between fear, panic and outrage every time they threaten to change the rules halfway through the game.
You agree that the constant changes are unproductive while proposing even more drastic changes that make investing in DC pensions less appealing? i don't get it.0 -
Perelandra wrote: »All this would achieve would be to reduce still further the pension that those on DC, or private, schemes could realistically achieve. How many people on these schemes can afford £15k every year of their working lives? Certainly nobody earning £30k/year.
Early on, I can't imagine that many would want to put that limit away- agreed. But later on in your career, when you're closer to retirement and can afford to save more that's too strict a limit.
The gap between DB and DC schemes would open wider.
The gap between DB and DC is down to the different amount of employer contributions rather than to any tax limits.
I've already said that some carry forward of allowances make sense and you can argue about the extent of that, but the real key thing is to base any lifetime limit on the amount contributed, not on the fund value.0 -
The gap between DB and DC is down to the different amount of employer contributions rather than to any tax limits.
This isn't what I'm saying. I'm aware of that differential- but that doesn't respond to my post.
Anyone who's currently earning enough to be able to afford £15k a year into their pension (and so who might be affected by this limit) will have a higher base salary than the £30k figure. If they had an equivalently paid job, but on a DB scheme, then the value of the contributions on a DB scheme would exceed this £15k limit.
If you want to impose a limit to private pensions, or DC schemes, of £15k/year, you need to do the same for DB schemes or the gap opens still further.
This need to limit further what goes into private pensions, to limit tax relief, completely misses the point that the majority of the income when taken from the scheme is taxed. So it's not tax relief, it's tax postponement.0 -
The main difference isn't the amount contributed by the employer, it's who takes the risk on investments and income provision.
Absolutely. DB kicks the can down the road for future workers to foot the bill with zero risk taken by those making plans now. DC means we all make investments now in capital/companies that will generate future income. If investments don't go as planned, we tighten our belts rather than expecting someone else to bail us out.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.0
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