can future gov destroy your plan

Thrugelmir

stu12345 wrote: »

that wont help me as i need a higher income between 55 and 67, till state pension and small db pension.
if i use drawdown instead of annuity of dc pension at 55 i can take larger amount to fill the gap years between 55 and 67.
if it was a annuity i couldnt retire early as it pays not enough spread over too long,

if i did annuity for life id be too poor at 55 and too wealthly at 67. due to state pension, db pension, need to programme funds to pay required amount that i need, not too little when 55,

In drawdown your capital is at risk. There's no guarantee it will last. I suspect you've never invested through periods of market volatility.

stu12345_2

may convert it to 100% money market, thus cant lose apart from inflation.so need a magic number to reach, get 100000 spend 10000 a year. rather 5000 with annuity.

unless you know of an annuity arrangement that will pay 10000 a year for 12 yrs, at 55, then say 1000 a year for life then at 65, that what i need from a 100000 fund

hugheskevi

but they couldnt steal your savings tho to pay for state pensions. withdraw it from bank.

What would be stopping a Government from legislating for a mandatory tax on bank deposits, with effect from a particular retrospective date?

It would be quite easy to envisage - a severe downturn, a left-leaning Government proposes a compulsory wealth tax, only affecting those with deposits of more than say £100,000. Mandatory tax of 10% on all deposits above that. A bit of popularist banker-bashing to provide the political cover whilst highlighting the alternative is that other taxes will be applied to garner majority support through fear that the alternative would affect them.

Or perhaps something like what the Irish did in 2009, which could be easily applied to other forms of investment besides pensions:

Levy on private pension funds
There is a levy of 0.6% on the market value of assets which are managed in pension funds and pension plans approved under Irish tax legislation. (These include occupational pension schemes, Retirement Annuity Contracts and Personal Retirement Savings Accounts). This levy applies until the end of 2014. In 2014 an extra levy of 0.15% was introduced. This will continue to apply. This means that the total pension levy in 2014 is 0.75% and the levy from 2015 on will be 0.15%. You can find out more about the pension levy from the Pensions Authority.

Article 1, Protocol 1 of the European Human Rights Act could stop some Govt. interference (roughly, it prevents Governments from interfering with property rights unfairly). Which I think at least one political party wants to stop having application to British laws.

stu12345_2

i meant physically steal it, they cant take whats under your mattress.

hugheskevi

they cant take whats under your mattress

Hopefully the mattress support is in gold bars, with a diversification into guns, ammunition and baked beans, as if it is cash it can be taken via inflation

Notfarfromtheborder

jamesd wrote: »

Yes, governments can put your plans at risk. You've considered one case but consider another when in 20 years the dependency ratio is a lot higher - people getting state pension divided by people of working age - and a "youth party" gets elected and adds higher tax rate on "old people who don't need it because they will die soon anyway". Or a government that says "we believe in sharing for all and so we are confiscating all private pensions to provide the same higher state pension for all".

The benefits of employer matching and tax relief still make pensions a good deal for long term retirement income.

Stu's position is similar to mine, and I share his concern's. James' comments above are my driving thoughts at the moment, 40% tax relief is too good to ignore at present which is why I am maxing out on pension contributions at the expense of other investments. May be folly, however, I need my retirement pot to increase by £250K over the next 10 years to get to £355K at 55.


If I have another good few years (four) I should be able to get £34K in per year, couple with my current DC pot of £105K and growth hopefully this will do it.


All depending on tax relief, growth and changes in government / legislation......


Edit, forgot, son attending university may delay this 4 year plan....

atush

stu12345 wrote: »

i have a workmate aged 24 i told him to autoenrol, but hes worried about the rules when hes 57, he prefers to use banks

He can prefer banks all he likes, but saving in cash, not equities, over decades w/o tax relief will mean a far worse outcome than any political tinkering might do.

atush

There is always future govt legislative risk, but if you elect/vote for a party that would do such a thing, more fool you.

In any case, I am certain any govt who 'took' your pension would not be long in power. Pensioners vote more afterall.

dunstonh

what if say a few weeks before i retire a future chancellor or gov says sorry folks, its back to annuities for you

Annuities have not been compulsory for many years. The recent changes improve flexibility but did not remove annuity compulsion. That was removed by the Labour Govt. So, both the two main parties have acted to reduce the likelihood of buying an annuity.

Whilst the media has focused on drawdown, it seems to have ignored the changes to annuities that will be allowed from next year. So, dont expect annuities to go away. They are still considered the most suitable option for most people. They will just have new features and options that they couldnt have under the old rules.

Linton

In practice when implementing changes governments have gone out of their way to minimise retrospective effects. See for example the complications of the transfer from the old to the new state pension arrangements. If you start worrying about protection against all things a government in principle could do (confiscation of all assets, execution of the first-born, mass imprisonment without trial etc etc) you end up in la-la land with bars of gold, guns and baked bean tins propping up your bed.

Your investment planning is much more usefully focussed on the more likely risks that prudent financial management can mitigate such as inflation, running out of money before you die, and disastrous loss of wealth due to market downturns.