Telegraph - 25% Under threat.

Triumph13

Perelandra wrote: »

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.

The whole point of my original post was that the tax relief should be focussed on getting people to the level where they are independent of the state and I was therefore suggesting that if you were designing a system from scratch you would limit the base salary for DB schemes to a figure that would yield that independant pension level. I suggested £30k as a possible figure, but that was just a suggestion. There is no point levying high taxes on high earners to pay for giving them big tax breaks.

I also stated that I did not believe there was any practical way of getting from the mess we have now to a sensibly designed policy.

Triumph13

lvader wrote: »

The main difference isn't the amount contributed by the employer, it's who takes the risk on investments and income provision.

That accounts for the volatility. The contribution amount is what drives the difference in the average.

Thrugelmir

Abolish higher rate relief. Retain the 25% tax free cash. Pension savings should be adequate to provide a decent retirement that's all.

lvader

Triumph13 wrote: »

That accounts for the volatility. The contribution amount is what drives the difference in the average.

Sorry I don't agree, their are plenty of good DC pensions in employer contribution terms. Even those don't come close to a DB pension because the risk is all on the employee. Assuming you get lucky and the markets don't nose dive just before retirement, if you want a guaranteed income for the rest of your life that is protected against inflation you have to pay for a very expensive insurance policy (annuity) that further reduces the pension value.

lvader

Thrugelmir wrote: »

Abolish higher rate relief. Retain the 25% tax free cash. Pension savings should be adequate to provide a decent retirement that's all.

I would stop making any further contributions other that what I need for employer matching.

gadgetmind

Thrugelmir wrote: »

Abolish higher rate relief.

And will the last higher rate tax payer please turn off the lights as they leave the country. Or maybe there's no need as they'll be off soon afterwards either way/

zagfles

Thrugelmir wrote: »

Abolish higher rate relief. Retain the 25% tax free cash. Pension savings should be adequate to provide a decent retirement that's all.

Abolishing higher rate relief would cause problems with final salary schemes, you'd either get people getting massive tax bills when they get a promotion or you'd have to devise some new way of valuing final salary schemes. Possible, but would be complicated.

Triumph13

zagfles wrote: »

Abolishing higher rate relief would cause problems with final salary schemes, you'd either get people getting massive tax bills when they get a promotion or you'd have to devise some new way of valuing final salary schemes. Possible, but would be complicated.

And if it's complicated a) people won't understand it; and b) politicians will keep fiddling with it

atush

You have already curtailed HRTax relief for the Very high earners by both the limit to contribs reducing from 255K just a few years back to 40K next year and the lifetime limit reducing as well.

I think that is a good enough slap in the face.

What I do see is those TFLS mainly being spent reducing debt or into the economy. So I can't see the govt (well any one that wants to be re-elected) reducing it, taxing it, or taking it away.

Perelandra

lvader wrote: »

I would stop making any further contributions other that what I need for employer matching.

Same.


Otherwise you end up being taxed twice- once on the way in, once on the way out, and that is not at all enticing an offer.