What does the Chancellors pension revolution mean for us?

paul5046

Exist, not live.

Triumph13

paul5046 wrote: »

If your state pension is your only other income, then that will be around 5k per year. Can you live on 10k a year.

You're missing the whole point of Ivader's plan. He is creating a specific pot to be drawn down in the period between his wife retiring and when her pension comes into payment. I'm sure he also has significant pension savings in his own name which he will use to give an income for the whole of his retirement so no question of subsisting on the state pension.

He has identified that in his situation his wife has a 6 year gap with no earnings before her pension kicks in, which would enable her to take a pot of up to £84,000 entirely tax free.

I will be taking very similar steps myself

danielanthony

Isn't there a 20% on your pot if you take the whole lot out?

With housing benefit, pension tax credits, attendance allowance, council tax benefit, winter fuel allowance and state pension it doesn't make sense for those with modest pension pots not to either give it to their families or blow it on a holiday of a lifetime.

dunstonh

Isn't there a 20% on your pot if you take the whole lot out?

Potentially more as its based on your income.

With housing benefit, pension tax credits, attendance allowance, council tax benefit, winter fuel allowance and state pension it doesn't make sense for those with modest pension pots not to either give it to their families or blow it on a holiday of a lifetime.

Apart from the fact that the means test takes into account deprivation of assets and you cant hide a pension as details are recorded under your NI number.

Truthseeker_2

danielanthony wrote: »

Isn't there a 20% on your pot if you take the whole lot out?

With housing benefit, pension tax credits, attendance allowance, council tax benefit, winter fuel allowance and state pension it doesn't make sense for those with modest pension pots not to either give it to their families or blow it on a holiday of a lifetime.

You can do that if you have a small pot - that is your choice. This government move is all about giving people more choice - but it is not a giveaway.

cepheus

Alternative version of what many of us have been saying!

Most people going to blow hell out of pension pot within 20 minutes

MOST Britons will spend their pension pot on stupid, crazy stuff the very moment they get their hands on it.

In yesterday’s Budget, chancellor George Osborne changed the pension rules so that everyone can be ‘as !!!!less as they bloody well want’.

He said: “It’s your money, what the hell’s it got to do with me?

“I’m sure some of you will spunk it away within 20 minutes. I really don’t care. All I would say is make sure that by then your children have enough room for you and all your box sets.

Truthseeker_2

dunstonh wrote: »

Potentially more as its based on your income.



Apart from the fact that the means test takes into account deprivation of assets and you cant hide a pension as details are recorded under your NI number.

I'm not sure that spending your pension pot money would necessarily count as 'deprivation of assets'. I think a lawyer would be best placed to answer that question.

dunstonh

Truthseeker wrote: »

I'm not sure that spending your pension pot money would necessarily count as 'deprivation of assets'. I think a lawyer would be best placed to answer that question.

And i am sure that someone applying for benefits is welcome to pay for a lawyer to take the case on. Remember that taking the pension as a lump sum places the money into your bank account. It is no longer a pension at that point. So you would be spending your "savings".

What is deprivation of capital?
The term deprivation covers a broad range of ways in which the owner of an
asset might transfer it out of his or her possession. CRAG gives the following
examples:

- a lump-sum payment such as a gift or to pay off a debt
- transferring the title deeds of a property to someone else
- putting money into a trust that cannot be revoked
- converting money into another form that has to be disregarded from the means test, eg personal possessions, investment bonds with life insurance
- reducing capital through substantial expenditure on items such as expensive holidays or by extravagant living.
-Other courses of action, such as selling an asset for less than its true value, may also be seen as deprivation.

Linton

Having been out of out contact for a day or so...

Looking through this thread it seems I had come to a different conclusion to many of the posters with respect to full access to the funds in a pension pot. I thought what he was proposing was that at the moment when you crystallise your pension you now have the option of drawdown or an annuity. He could simply be adding the third choice of taking the pot as a taxed cash lump sum. This is rather different to putting everyone into flexible drawdown.

The other lack of clarity would seem to be whether the the lump sum is really taxed at the current marginal rate or simply treated as income. I havent found anything on the net where what the chancellor said is clearly, fully and definitively explained.

ISTM that the complete free for all that people are assuming gives far too much opportunity to the use of pensions for tax avoidance rather than as saving for ones old age.

Another question occurred to me - one of the reasons for the high cost of IFA advice is I believe the enormous liability borne by IFAs for incorrect advice. If you are getting your advice "free" do you have any recourse should the advice prove to be inappropriate? However, did he say the advice was free? What I heard was that people would have the right to access advice, which of course they have now.

My final thought was that greater access to the money in a pension may not be as big a deal as people think, at least for those of us who have pension pots well above the new levels for triviality. One's investments held in a pension are in a perfectly good tax protected environment. What is the point of taking them out of that environment purely (presumably) to drip feed them into another tax-protected environment?

Does anyone have any authoritative reference to indicate my interpretations are wrong?

TBC15

Triumph13 wrote: »

You're missing the whole point of Ivader's plan. He is creating a specific pot to be drawn down in the period between his wife retiring and when her pension comes into payment. I'm sure he also has significant pension savings in his own name which he will use to give an income for the whole of his retirement so no question of subsisting on the state pension.

He has identified that in his situation his wife has a 6 year gap with no earnings before her pension kicks in, which would enable her to take a pot of up to £84,000 entirely tax free.

I will be taking very similar steps myself

I was working on a similar ploy under the thread Wife’spension. It would appear that with the new rules it’s going to be a no brainer.