Two Eds are worse than one.

jamesd

BobQ wrote: »

The question is at which point does the tax subsidy become too generous?

At present labours proposed lifetime allowance cap is enough to buy an inflation-linked annuity paying about £27,000. That's not too generous.

BobQ wrote: »

Most people are very lucky if they can afford to put £30K a year into their pensions so giving them tax relief makes sense. But should we be giving 45% tax relief on pensions to those earning £150K+ when (as JamesD points out) there are other tax free options available?

Yes, we should, relying on a sensible lifetime allowance cap to limit the total tax relief gains that can be obtained. I don't consider an inflation-linked annuity of just £27,000 to be the sensible maximum.

£30k a year isn't necessarily £30k every year. It's also what someone might do when made redundant or close to retiring or catching up on years of low or no pension contributions before they started to plan for retirement. The lifetime allowance is the better way to handle this, not annual caps that catch out people doing things that aren't common in their working lives.

BobQ wrote: »

There is also an argument as to whether there should be tax free lump sums.

If there isn't that would eliminate most of the pension value for basic rate tax payers. Except for employer matching contributions I'd stop recommending pensions for basic rate income tax payers who were not liable to rely on means tested benefits.

BobQ wrote: »

why should they get any tax relief on contributions or tax free lump sums?

Because they are already paying far more than an equal share of all income tax.

chucknorris

BobQ wrote: »

Aside from the specifics it seems to me the argument being put forward is very simple. It makes sense to use tax relief as a means of incentivising people to save for a pension. The question is at which point does the tax subsidy become too generous?

Most people are very lucky if they can afford to put £30K a year into their pensions so giving them tax relief makes sense. But should we be giving 45% tax relief on pensions to those earning £150K+ when (as JamesD points out) there are other tax free options available? Of course the pensions industry has a vested interest in objecting to such a measures.

There is also an argument as to whether there should be tax free lump sums.

Ultimately, this is about fairness and there is no absolute right to get tax relief on a pension. While I agree that some tax reliefs are very desirable, when people are building up a £50K+ pension why should they get any tax relief on contributions or tax free lump sums?

Politicians clearly have to make a political judgement on how far to go but this outrage from those of us with large pension pots and those who make a good living from the industry is somewhat bizarre.

I agree with what you are saying about the size of pensions, but not the tax free lump sum. What the Gov should be doing is creating an incentive for people to invest for a decent pension, not providing tax subsidies for people to build up very large pensions. I think the sensible way forward would be to decrease the lifetime allowance, the problem with decreasing the annual allowance is that it hits people who haven't much of a pension and are attempting to build it up in the last few years before retirement.

I think kidmugsy made a good point about the multiplier applied to DB schemes, I'm in the teachers pension fund and the (annual) multiplier is 16. If I was the chancellor I would:

Increase the multiplier in DB pension schemes to 25 (both AA and LTA)
Decrease the lifetime allowance to £1m
Increase the annual allowance to £50k

Cyberman60

robin61 wrote: »

I am a big fan of apprenticeships and vocational training. I'd far rather see the money spent on that.
Labour introduced tuition fees in the first place and then encouraged kids to study mickey mouse subjects with no hope of a relevant job.
Typically sanctimonious of them to now belly ache about the kids not getting a fair deal when the roots of the problem are of their own making.

Labour also ruined education by lowering everybody to the lowest common denominator by abolishing grammar schools in the 70s. Then when they took power in 1997 they abolished assisted places that was helping bright children from poor families go to private school.

UKIP want to bring back grammar schools so that we can aim for excellence once again, after all of these 'lost' years. :T

TheTracker

chucknorris wrote: »

I agree with what you are saying about the size of pensions, but not the tax free lump sum. What the Gov should be doing is creating an incentive for people to invest for a decent pension, not providing tax subsidies for people to build up very large pensions. I think the sensible way forward would be to decrease the lifetime allowance, the problem with decreasing the annual allowance is that it hits people who haven't much of a pension and are attempting to build it up in the last few years before retirement.

I think kidmugsy made a good point about the multiplier applied to DB schemes, I'm in the teachers pension fund and the multiplier is 16. If I was the chancellor I would:

Increase the multiplier in DB pension schemes to 25
Decrease the lifetime allowance to £1m
Increase the annual allowance to £50k

Makes sense to me. A LTA makes sense, though I personally wish it was higher I respect it to be set at a value 90% of people wouldn't hit anyway. But I don't see much point in any annual allowance limits. It slows contributions from those on 150k, but once it is gone it is gone. I would make the LTA contribution based, not value based, encouraging earlier contributions.

Spidernick

Cyberman60 wrote: »

Labour also ruined education by lowering everybody to the lowest common denominator by abolishing grammar schools in the 70s. Then when they took power in 1997 they abolished assisted places that was helping bright children from poor families go to private school.

UKIP want to bring back grammar schools so that we can aim for excellence once again, after all of these 'lost' years. :T

I think you'll find that more grammar schools were closed under Thatcher than beforehand. Having gone to a grammar school I wouldn't wish them on anyone (but that is probably a debate for another thread).

Linton

Cyberman60 wrote: »

Labour also ruined education by lowering everybody to the lowest common denominator by abolishing grammar schools in the 70s. Then when they took power in 1997 they abolished assisted places that was helping bright children from poor families go to private school.

UKIP want to bring back grammar schools so that we can aim for excellence once again, after all of these 'lost' years. :T

The majority of children in the 1960s and previously never went to grammar schools. The objective of grammar schools was to educate a largely middle class elite on the basis that the rest would go into unskilled/semiskilled labouring jobs where education beyond the very basics was irrelevent. If you failed your 11+ your chances of getting to university were pretty close to zero.

Bringing back grammar schools means bring back secondary moderns - I wonder why we dont hear UKIP advocating that?

Triumph13

chucknorris wrote: »

I agree with what you are saying about the size of pensions, but not the tax free lump sum. What the Gov should be doing is creating an incentive for people to invest for a decent pension, not providing tax subsidies for people to build up very large pensions. I think the sensible way forward would be to decrease the lifetime allowance, the problem with decreasing the annual allowance is that it hits people who haven't much of a pension and are attempting to build it up in the last few years before retirement.

I think kidmugsy made a good point about the multiplier applied to DB schemes, I'm in the teachers pension fund and the multiplier is 16. If I was the chancellor I would:

Increase the multiplier in DB pension schemes to 25
Decrease the lifetime allowance to £1m
Increase the annual allowance to £50k

I agree about increasing the DB multiplier to a much more realistic figure, but I couldn't disagree more on the other two. If it were down to me I'd scrap the LTA entirely and reduce the annual allowance to an amount roughly equal to, and rising in line with, median earnings, but with a 5 year carry forward rather than the current 3. The argument about needing a high AA to allow people to build their pension just in their last few years is the wrong way round. We need to be encouraging people to start saving into pensions from the start of their careers and the best way to do that is with a 'use it or lose it' approach to the allowance.
In contrast, the LTA acts as a huge disincentive to early saving as it's impossible to know how much your funds will grow by and what the govt will have done with the LTA by the time you get there. By all means set a limit on the amount you can take out as a tax free lump sum, but punitive charges on the rest when you have no certainty at all on whether you'll hit them or not are just crazy.

zagfles

wessy53 wrote: »

So i am supposed to believe that the brains behind a major political party know less than a few self obsessed pot growers.

Are you implying we're cultivating cannabis? :rotfl:That could be a good alternative to a pension!

This 10 weeks before an election it must have some political merit, would love someone from the think team to come on here and blow you away.

Is there a drug theme to this post?

It appears to me that any solution would be considered financially illiterate seeing Martin himself decided all three major parties offerings were so.

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.

This is not about student grants or pensions this is pure politics and people on here expect to be able to use derogatory remarks like Red Ed and whatever remark you care to make about Ed Balls, without redress.

It's an open forum. They are free to reply.

Well not everyone thinks this way and that may just become apparent in 10 weeks time when Gideon and his Eaton cronies (see i am doing it now)

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.

atush

Linton wrote: »

The majority of children in the 1960s and previously never went to grammar schools. The objective of grammar schools was to educate a largely middle class elite on the basis that the rest would go into unskilled/semiskilled labouring jobs where education beyond the very basics was irrelevent. If you failed your 11+ your chances of getting to university were pretty close to zero.

Bringing back grammar schools means bring back secondary moderns - I wonder why we dont hear UKIP advocating that?

I went to a good state school int he USA, not private. It iwas due to where you lived and I was lucky.

but My OH went to grammar school. His parents were not middle class elite but working class. And he got a free university education with a grant for living expenses.

If it were today, he would not be where he is.

He was one of the students who were bought up by the grammar school/University system at the time. No way could his parents have afforded to help much nor put him thru (as we are doing with our 3). And having been brought up not to borrow much, there is no way he would have gone and gotten student loans of over 50K at over 6% either.

BTW, his brother failed the 11+. Went to work for the council, retired early due to 'stress' and now gets his pension plus has another job. The council also paid for him to have higher education along with his work.

So failing the 11+ didn't make him a laborer?

Daniel54

chucknorris wrote: »

I think kidmugsy made a good point about the multiplier applied to DB schemes, I'm in the teachers pension fund and the multiplier is 16. If I was the chancellor I would:

For the purposes of the lifetime allowance calculation, HMRC applies a uniform multiplier of 20

http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM11300030.htm