The Times - Labour Plans Pension Raid

spartacus173500

I've seen the headline in The Times but cannot read the article (subscriber only content)

I am 59 and, after being encouraged by many threads in this forum, planning to 'retire' end March 15 and was considering 25% cash free sum sometime later in year. Savings and maybe some part time working making access not an immediate priority.

Do I need to act now and before election to manage any risk?

zagfles

spartacus173500 wrote: »

I've seen the headline in The Times but cannot read the article (subscriber only content)

I am 59 and, after being encouraged by many threads in this forum, planning to 'retire' end March 15 and was considering 25% cash free sum sometime later in year. Savings and maybe some part time working making access not an immediate priority.

Do I need to act now and before election to manage any risk?

Here's the Mail's version http://www.dailymail.co.uk/news/article-2962493/Labour-party-raid-pensions-pay-3-000-reduction-university-tuition-fees.html

Journalists like a scare story, any change is very unlikely to apply retrospectively. Options might be lower the annual/lifetime allowance, abolish higher rate relief on pension contributions, no TFLS on new contributions, curbs on salary sacrifice etc.

Even if the LTA is reduced there'll almost certainly be protection for people over the new limit already, as there was when they reduced it in the past. If they get rid of the TFLS it will almost certainly not apply to past contributions, certainly not for people close to pension age anyway.

I would wager it's safer to get as much into pensions as possible before any changes, because relief on contributions is more likely to be affected than the tax status of what's already in there.

le_loup

Oh dear the Daily Mail has a scare story about the Labour Party.
Now that is surprising - must be true - let's all panic.

kidmugsy

The DM reports: "More money could be saved by lowering the £40,000 ceiling on the amount savers can put aside each year tax-free or cutting the lifetime tax-free limit of £1.25million per pension, The Times reported last night." So it doesn't seem likely to affect the OP. One thing that would worry me if I had lots in a money purchase pension is the possibility that they'll increase the tax rebate for contributions to 30% or 33% and at the same time cut the Tax Tree Lump Sum from 25% to, say, 20%. The bigger rebate is no use if you've largely finished contributing, but the cut in the TFLS by 20% would be nasty. I'd be tempted to get my TFLS out before the first Labour budget in, say, July 2015.

Cyberman60

One thing is for sure, they couldn't do any more damage than GB did in 1997 by removal of the dividend tax credit that has taken almost 140 Billion pounds out of pension schemes since then. To Labour a pension is tax evasion !! :rotfl:

BEWARE of Labour !!

MARTYM8`

Its no scare story - Labour will have to find savings and tax relief on pension contributions and tax free lump sums are an easy target.

I fully expect if we have a Lab/Lib/SNP/Green combo in government relief may be granted at a flat percentage rather than your marginal rate on contributions, annual allowances may be cut further and the 25% tax free lump sum may be capped. While I support them - pension tax reliefs costs the governent £25billion a year so are an obvious target for savings even if its a short termist approach!

Cos whoever wins is going to have to make some tough choices - and cutting payouts to the well off may be easier than cutting public services or benefits. Their voters benefit more from the latter!

All this was shadowed in an IPPR report last summer - they are Labour's top think tank. Cue a link to that well known right wing paper the Independent.:D

http://www.independent.co.uk/news/uk/politics/labour-plans-fairer-society-by-reducing-tax-relief-on-pensions-9550071.html

hugheskevi

One thing is for sure, they couldn't do any more damage than GB did in 1997 by removal of the dividend tax credit that has taken almost 140 Billion pounds out of pension schemes since then. To Labour a pension is tax evasion !!

BEWARE of Labour !!

Studies showed the impact was much lower than the original £5bn a year, more like £2-£3bn p/a. So that is something like £50bn, not including compounding.

In comparison the RPI/CPI legislation change took £200bn out of pensions, so surely the message should be BEWARE of a Con/Lib Dem coalition?

kidmugsy

hugheskevi wrote: »

In comparison the RPI/CPI legislation change took £200bn out of pensions, so surely the message should be BEWARE of a Con/Lib Dem coalition?

They'd probably reply that they had to do it to cope with the aftermath of Brown. I don't plan to vote Conservative, but it seems to me that such a reply would be well justified.

CLAPTON

of course, Thatcher smashed final salary schemes in the 80s by stopping companies from funding them (to increase government tax take), so the roof wasn't repaired in the good times so most had to shut down when times became hard.

zagfles

CLAPTON wrote: »

of course, Thatcher smashed final salary schemes in the 80s by stopping companies from funding them (to increase government tax take), so the roof wasn't repaired in the good times so most had to shut down when times became hard.

Really? How come many pension funds were in "substantial surplus" in 1997 then? According to Gordon Brown at least, in his 1997 budget speech.

zagfles

MARTYM8` wrote: »

Its no scare story - Labour will have to find savings and tax relief on pension contributions and tax free lump sums are an easy target.

I fully expect if we have a Lab/Lib/SNP/Green combo in government relief may be granted at a flat percentage rather than your marginal rate on contributions, annual allowances may be cut further and the 25% tax free lump sum may be capped. While I support them - pension tax reliefs costs the governent £25billion a year so are an obvious target for savings even if its a short termist approach!

Cos whoever wins is going to have to make some tough choices - and cutting payouts to the well off may be easier than cutting public services or benefits. Their voters benefit more from the latter!

All this was shadowed in an IPPR report last summer - they are Labour's top think tank. Cue a link to that well known right wing paper the Independent.:D

http://www.independent.co.uk/news/uk/politics/labour-plans-fairer-society-by-reducing-tax-relief-on-pensions-9550071.html

I still doubt they'd do it without transitional protection, similar to when the LTA was reduced. Some people still have transitional lump sum >25% protection from the A-day change in 2006, I believe.