Will Releasing Pensions lead to a lot more BTL

Thrugelmir

CLAPTON wrote: »

There is no relationship between building more houses and more immigration.

Immigration is putting pressure on housing demand.

CLAPTON

Thrugelmir wrote: »

Immigration is putting pressure on housing demand.

you confuse cause and effect

chucknorris

Apologies if this has already been posted, it has some useful data:

In Australia, where this approach to pensions has been the norm, the experience is that only one in 25 Australians now buy an annuity. 33% of their savers used their pension cash to buy a home, pay off a mortgage or improve their homes at this new stage of their lives - for example by putting in new kitchens or conservatories. 20% splashed out on a new car, and 14% spent at least some of their pension on a holiday.
In America, most take their pension money as cash rather than buying an annuity with it.
PWC’s global pensions leader, Marc Hommel, said: ‘Where people have a choice, about 70% choose to take the cash. I’m personally not overly worried about it; you can see insurers lobbying against it, but in practice, people are going to learn to be more responsible with how their handle their retirement money.’


http://forargyll.com/2014/03/chancellors-liberation-of-pensions-the-most-radical-popular-empowerment-for-decades/


EDIT: The 33% will probably include people who spend a small part of their pension on a kitchen or conservatory (not necessarily blowing everything). Also I don't see anything wrong with 14% spending some on a holday, why not, if you can afford it.

Generali

Don't forget that there will be plenty of women who have never really worked and so have very little in their super funds.

In such a case it makes pretty good sense to use the money to bring the house up to scratch.

chucknorris

Generali wrote: »

Don't forget that there will be plenty of women who have never really worked and so have very little in their super funds.

In such a case it makes pretty good sense to use the money to bring the house up to scratch.

Obviously there will be some that spend too much of their pension, but I don't think that you should penalize everyone because some can't handle their money. So I am a strong supporter of the recent annuity changes (but I do benefit, so I would say that).

wotsthat

chucknorris wrote: »

Obviously there will be some that spend too much of their pension, but I don't think that you should penalize everyone because some can't handle their money. So I am a strong supporter of the recent annuity changes (but I do benefit, so I would say that).

I'll benefit greatly from the changes too. However, the changes haven't fundamentally changed my plan as it has always been to maximise the lump sum and reduce taxation at 40%. Rather the changes make the management of the process easier.

If people decide to blow their own money and/ or end up paying more tax as a result - that's their choice. If they want to live on the flat rate state pension I couldn't really care less. I suspect the people that choose to do this won't have made adequate provision anyway so we're talking about a 'splurge' on a holiday or new kitchen rather than buying a Ferrari.

Likewise if people decide to take their pots and buy a BTL that's their choice too. A poor one IMO as I can't see it making sense from a tax perspective. A more common-sense approach would be to use the tax free lump sum as a deposit and borrow the rest - as that's already entirely possible I don't see how these changes will lead to much of an increase in the popularity of BTL.

cepheus

Boris J thrilled that UK pension moves'll puff up ridiculous UK housing circus even more http://www.economist.com/blogs/blighty/2014/03/house-prices-and-pension-pots?fsrc=nlw%7Cnewe%7C3-24-2014%7C8126945%7C124338943%7CE … also http://www.theguardian.com/commentisfree/2014/mar/22/osborne-budget-annuities-decision-disaster …

chucknorris

wotsthat wrote: »

I'll benefit greatly from the changes too. However, the changes haven't fundamentally changed my plan as it has always been to maximise the lump sum and reduce taxation at 40%. Rather the changes make the management of the process easier.

Me too, I had already invested up to the max allowance this tax year and it was my intention to continue doing that. The recent changes have merely reinforced that decision.

gadgetmind

chewmylegoff wrote: »

In order to extract enough money from your pension to buy or put down a significant deposit on a house you're going to incur lots of tax on the withdrawal so probably not.

A professional married couple could easily have £500k of PCLS between them, which would cover a fair few 40% deposits.

Thrugelmir

chucknorris wrote: »

Apologies if this has already been posted, it has some useful data:

In Australia, where this approach to pensions has been the norm, the experience is that only one in 25 Australians now buy an annuity.

I believe pension saving in Australia is compulsory. So a totally different scenario to that of the UK where there is a potential crisis looming anyway.