MSE News: Pension inheritance tax to be axed

zagfles

dunstonh wrote: »

And how does that compare with a savings account which would have capital erosion or an investment that could have capital erosion.

Investments don't claim to provide "a guaranteed income for life". My point is that annuities don't either, in real terms. So the main selling point of annuities, the "guarantee", is no guarantee that your income won't fall significantly in real terms.

Search this forum for "inflation risk". A lot has been written about it. Much by you

Aegis

zagfles wrote: »

Investments don't claim to provide "a guaranteed income for life". My point is that annuities don't either, in real terms. So the main selling point of annuities, the "guarantee", is no guarantee that your income won't fall significantly in real terms.

Search this forum for "inflation risk". A lot has been written about it. Much by you

Well, you can buy an annuity with inflation-proofing if you like. It costs (of course), but it's doable.

zagfles

Aegis wrote: »

Well, you can buy an annuity with inflation-proofing if you like. It costs (of course), but it's doable.

Indeed. But you wouldn't get it at 6%. Well, not unless you waited till 75+ to buy it. At 60 you'd be doing well to get 3%. Unless you have short life expectancy etc.

Aegis

zagfles wrote: »

Indeed. But you wouldn't get it at 6%. Well, not unless you waited till 75+ to buy it. At 60 you'd be doing well to get 3%. Unless you have short life expectancy etc.

True, annuities are still suffering because of the current bond yields.

bmm78

People concerned about inflation risk on annuities should probably be looking at asset-backed annuities first, and weighing up the risks/volatility along with capacity for loss.

It's very difficult to get value on escalating annuities.

System

If a pension pot can now be paid out under drawdown in any amounts you wish, from monthly payments spread over a lifetime to cashing in the lot in one go, then what exactly is a "lump sum" ?

99.99% of the pot would be drawdown at the marginal rate, but 100% would be taxed at 45% ?

Your_Hero

Clifford_Pope wrote: »

If a pension pot can now be paid out under drawdown in any amounts you wish, from monthly payments spread over a lifetime to cashing in the lot in one go, then what exactly is a "lump sum" ?

99.99% of the pot would be drawdown at the marginal rate, but 100% would be taxed at 45% ?

25% of your pot is tax-free.

Pincher

zagfles wrote: »

Investments don't claim to provide "a guaranteed income for life". My point is that annuities don't either, in real terms. So the main selling point of annuities, the "guarantee", is no guarantee that your income won't fall significantly in real terms.

Search this forum for "inflation risk". A lot has been written about it. Much by you

I wonder how smug people were when they bought an Equitable Life pension with a 13% guaranteed annuity rate?


There is now a new way to enforce their Terms & Condition. Find the crazy American judge who says Argentina should pay full value to the hedge fund(s) who bought Argentinian bonds on the cheap when Argentina economy went pop.


Amusingly, around that time, I actually bumped into somebody who was virtually homeless, but was working in a rent-a-office, working on commission only. He insists that he could easily make £10k on a deal, if he manages to find somebody who will buy Argentinian bonds. Apparently, he did make £5k several months ago, hence his inability to pay rent and has to crash with friends.


Another believer in impossible dreams.

MRMX9

Sterlingtimes wrote: »

The socialist will always be upset that individuals are permitted to keep their own savings.

Just an observation - but in this instance the individual will be dead. Its their kids and grandkids that will get their savings pot - potentially tax free.

By contrast someone leaving a house or cash in a savings account pays inheritance tax on the full amount over the IHT limits.

I merely ask why pension pots should be treated differently - is it because the sons and daughters of the mega wealthy tend to have big pension pots whereas ordinary joes tend not to?

PS Not sure why the kids and grandkids of pension savers should be more deserving of keeping their parents/grandparents pension pots tax free than a cleaner on £15k is of her earnings?

mgdavid

The cleaner on 15k will not pay any income tax at all by the end of the next Parliament - unless Milliband / Balls are in charge.