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Two Eds are worse than one.
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Yes. And? Or are you assuming the only point in posting is to make party political points? The point I was making concerned policy - the policy of reducing the AA can affect those on normal incomes. Whichever party does it.Well your "friends wife" should realise that the annual allowance was ~£250k and the LTA was £1.8m when Labour left office. So all her problems are due to the coalition.
The assertion in the OP was plain wrong as it assumed the proposal was to ditch the 40% relief. The discussion has moved on since then.And the assertion in the OP that Labour are sinister or idiotic for maintaining a Tory party policy is clearly absurd.0 -
Agreed, I was thinking of the long term effect rather than the next 5 years.hugheskevi wrote: »They will, but not for a long time.
Many of those in danger of breaching the Annual Allowance due to promotion are those with many years of past service. This group will tend to be older, and many will be protected from the 2015 changes and remain in their existing final salary schemes.
Even amongst those who move to the new career average schemes, members will retain a final salary link on past service so they will be affected.
By about 2022 the Annual Allowance and promotion effects should start to be dying away, although by then who knows what the system will look like. In terms of the next 5 years or so, the change to the 2015 career average schemes will have little impact on promotions and Annual Allowance breaches.0 -
That is my limited understanding of the consequences, too. Other than people who get a higher tax relief on the way in that they pay tax on the way out (or people who get some tax relief on the way in but don't pay any tax on the way out), it seems that as I think someone else said, it isn't really tax relief but tax deferral.
From my perspective (cash poor and no capital or savings until I was in my late 30's and now finding myself able to contribute substantially to pensions), a liberal annual allowance gives regular people the opportunity to fluctuate their pensions contributions. A liberal annual allowance, plus carry-over would allow people to invest in pensions in this way while a sensible LTA would limit the potential for *perceived* fat cats to simply not pay tax on their *perceived* unfairly high income..
Yep that's pretty much it. I was in a similar situation, few contributions until late 30s upon which point I could throw in 6 figures a year if I wished and was allowed.
As a small business owner, my business can contribute a pound to my SIPP, and I pull it out at 80p in future (my SIPP is already sufficient to exceed the tax free threshold, but not enter higher rate tax), on the assumption that in a decade or two time income tax will still be at 20%. Or I can allow the pound to incur 20% corporation tax now, and subject it in future to a further 10% cgt tax with entrepreneurs relief (ER) totalling 72p, and I only need to make the assumption ER will be around at 10% for a while. It wouldn't take much of a reduction in relief for me not to bother taking the risk that contributing to a pension entails for someone in my circumstances. The mythical 40% relief may apply in PAYE world, but to myself it is 28%, with 20% deferred and 8% relief at best (it may be less if I retire overseas, and the SIPP is just part of my retirement). That's why I already feel it fairly balanced, and would probably stop contributing altogether if relief dropped.
The biggest problem with these political discussions is removing confidence, already low, that if you put money in a pension now you won't be screwed over by future governments.0 -
Yawn. Go back to reading the Mirror. My friend's wife is a nurse - she went over the current annual allowance last year because she got a promotion. Of course the financially illiterate wouldn't understand how. They're stupid enough to think this just affects the "rich".
In fact, cutting the AA could even reduce some students' income while at uni! See https://forums.moneysavingexpert.com/discussion/5183615
Have a rant about that!!!!!!!!
I fully understand how someone getting a promotion could go over the current annual allowance, even a fairly lowly-paid nurse - although it would need to be a combination of an unusually hefty rise and being a long way down the path of service in an ongoing final salary scheme to breach the allowance, with an incremental pension outcome in the year way beyond what many people would achieve in a working lifetime - so my heart isn't bleeding too much in this particular example.
However, if she has not suffered any financial loss at all as a consequence of breaching the annual allowance ( due to the availability of previously unused annual allowances ), then it is a purely win-win situation for her - and would most likely continue to be so even if the annual allowance was to be reduced.
Even if there was a potential tax consequence, any company that was not "financially illiterate" should be able to structure an unusually large pay rise for an existing lower-paid employee with long pension service in such a way as to ensure that future annual allowances were more efficiently used, instead of bumping up pensionable salary all in one go. This is one reason why the argument about annual allowances potentially being a disadvantage for relatively low-paid workers is more a political soundbite than a business reality.
So, she has gone over her annual allowance for one year. If she has only a hugely positive financial outcome as a result, with no negatives at all, then what exactly is your point?0 -
That is personalising it. And even presumptuous - not many have declared their income level in this thread - you haven't got a clue about mine. .............
When I said I do not want to personalise it, that was a response to the question about Martin.
My more general comment was not personalising it - more a case of if the cap fits wear it! I was also thinking more widely than this forum, such as journalists.Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
The rise was about £5k or so (I think she had an inflation rise as well). And yes she had a lot of years.Financial_Saddler wrote: »I fully understand how someone getting a promotion could go over the current annual allowance, even a fairly lowly-paid nurse - although it would need to be a combination of an unusually hefty rise and being a long way down the path of service in an ongoing final salary scheme to breach the allowance, with an incremental pension outcome in the year way beyond what many people would achieve in a working lifetime - so my heart isn't bleeding too much in this particular example.
It was a close call, because she'd made some significant AVC contributions in previous years, as she wants to retire early. Had the AA been £30k, she'd have probably got stung with a tax charge.However, if she has not suffered any financial loss at all as a consequence of breaching the annual allowance ( due to the availability of previously unused annual allowances ), then it is a purely win-win situation for her - and would most likely continue to be so even if the annual allowance was to be reduced.
Do you really think employers think about this sort of thing? Especially public sector employers?Even if there was a potential tax consequence, any company that was not "financially illiterate" should be able to structure an unusually large pay rise for an existing lower-paid employee with long pension service in such a way as to ensure that future annual allowances were more efficiently used, instead of bumping up pensionable salary all in one go.
See above.This is one reason why the argument about annual allowances potentially being a disadvantage for relatively low-paid workers is more a political soundbite than a business reality.
So, she has gone over her annual allowance for one year. If she has only a hugely positive financial outcome as a result, with no negatives at all, then what exactly is your point?0 -
You seemed to be assuming the objections were based on vested interests rather than an analysis of the facts. It's all to easy to retort to a detailed analysis with an implication that the poster is biased because they have a vested interest. They might or might not, but so what, the way to counter them is to prove them wrong by challenging their facts and figures, giving substative counter arguments, like I do with IFAs here. Not to just accuse them of having a vested interest and therefore what they write is invalid.When I said I do not want to personalise it, that was a response to the question about Martin.
My more general comment was not personalising it - more a case of if the cap fits wear it! I was also thinking more widely than this forum, such as journalists.0 -
Are you implying we're cultivating cannabis? :rotfl:That could be a good alternative to a pension!Is there a drug theme to this post?No. Like us really, Martin decides on individual policies. Some of the coalition's policies are financially illiterate, and are designed to win votes from stupid people rather that make financial sense. Like the benefits cap, the child benefit withdrawal for high earners, and like this Labour policy.It's an open forum. They are free to reply.Ooh, that's never been done before. I don't think this board is for you, try DT, you'll find loads of xenophobic simpletons who haven't got the knowledge or intelligence to judge politicians by their policies, so they judge them on stuff like which school they went to as a child.
Just a final comment (from me) i do agree that this should be about pensions, however the OP politicised the thread by his language, i responded in kind.
I accept that the vast majority on here are of a different political persuasion and that's fine.
However who the hell are you to say that this board is not for me? it's this type of arrogance that brings threads like this down.
Just because someone disagrees with you it does not make them a xenophobe or a simpleton.
If i had to choose a comment that does reflect that sentiment, then i would go for the ridiculous notion that UKIP's stance on Grammar schools could be the way forward. and then add a smiley clapping caption, priceless.0 -
No you didn't, you responded with a sanctimonious judgemental rant aimed at the posters in this thread.Just a final comment (from me) i do agree that this should be about pensions, however the OP politicised the thread by his language, i responded in kind.
Not necessarily. We're discussing this particular policy - discuss another policy and I and others have been critical of Tory/LibDem/coalition policy.I accept that the vast majority on here are of a different political persuasion and that's fine.
It was a suggestion for a board more in keeping with your style of argument.However who the hell are you to say that this board is not for me?
Nor does it make them "selfish", "self serving", or a member of the "Daily Mail Brigade". If you don't want to be insulted, don't insult others! Simples!it's this type of arrogance that brings threads like this down.
Just because someone disagrees with you it does not make them a xenophobe or a simpleton.
Well I would have to agree with you there. Oh dear...If i had to choose a comment that does reflect that sentiment, then i would go for the ridiculous notion that UKIP's stance on Grammar schools could be the way forward. and then add a smiley clapping caption, priceless.0 -
including some relatively modest DB pensions breaching annual allowance because of promotions
Hmm, your definition of 'relatively modest' is probably broader than mine... got an example?I'm a qualified and practising pensions professional.
I shall hold your opinions to a high standard then!As far as I can tell, the majority of pension decisions from all parties are poorly thought-out
Although, whether you agree with his conclusions or not, the present pensions minister has been ruminating on the topics he's been legislating on for a long time - first as a policy wonk, then as an academic (http://en.wikipedia.org/wiki/Steve_Webb). He's a Lib Dem version of the current Greek finance minister - spent years pontificating in the abstract to a half-empty seminar room, then boom, found himself actually in the driving seat.At this point, the single best policy that could positively impact pensions would be to simply leave them alone for at least three years
Amen!Every political party makes stupid decisions, but pensions are the constant playground for any new ideas.
Although, not uniquely. I raise you education, or even the NHS...I think that the Labour proposals are a pure "politics of envy"
Rubbish - it's witless pandering to the student vote, which as this thread has witnessed, it is a uniquely stupid sector of the population.0
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