Two Eds are worse than one.

chucknorris

Daniel54 wrote: »

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

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

When I mentioned '16' I was referring to the annual allowance. But I have edited for clarity

atush

Quote:
"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.

Plus at least there they might know how to spell the name of a small riverside town in Berkshire?

zagfles

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

Like public sector workers for instance? For instance a nurse I know who got a well deserved promotion and breached the £40k annual allowance!

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.

The pensions industry love this sort of measure as it creates a panic buying situation. Even if implemented, people will still invest somewhere, if not in a pension, and most pension providers also provide other investments.

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?

Well the last Labour govt allowed £250k+ annual contributions! And they whinged when this govt reduced it to £50k!

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.

The "outrage" is because it isn't a sensible policy and it doesn't fix the problem it purports to. Like Martin says, "financially illiterate". Or do you assume a vested interest with him too, perhaps he's just eyeing his own pension?

Aegis

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.

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.

I'd genuinely love for them to try. I actually deal with these issues day in day out and have taken advanced pension advice qualifications and seen real life issues affecting people from a variety of walks of life (including some relatively modest DB pensions breaching annual allowance because of promotions). I'm not just a "self obsessed pot grower", I'm a qualified and practising pensions professional.

As far as I can tell, the majority of pension decisions from all parties are poorly thought-out when you consider that the primary purpose of pensions is to create a trusted framework to reduce potential reliance on the state in future. The latest batch of changes have mostly been positive after many years of negative tinkering from first Labour then the Coalition, but I strongly suspect that these changes have been brought in as something of a desperate move to restore confidence in the pension system. Certainly the prevailing view that I've seen from clients regarding pensions over the past few years has been sceptical distrust, whereas the recent changes have changed the into cautious optimism.

There's already a situation where people are generally saving far too little in pensions. Further restrictions will not help that situation at all, it will just encourage people to use a vehicle that the government treats less like a toy.

At this point, the single best policy that could positively impact pensions would be to simply leave them alone for at least three years to analyse their usage for a while and allow people to confidently use them with the new rules. Constant tinkering only reduces confidence further, which results in fewer people using them sufficiently.

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

Every political party makes stupid decisions, but pensions are the constant playground for any new ideas. We had Pensions Simplification on 6 April 2006 ("A Day"), and that was supposed to take the old system and make it easier to understand and manage. Since then, the governments in power at the time have seemingly been unable to stop themselves from making an average of at least one major change to pensions every year, which has resulted in a situation where we have no fewer than five forms of legacy transitional relief in place, changing maximum income rates on three occasions, changing minimum income rates, completely new death benefits on two occasions, changes to maximum contribution rates on two occasions (three if we include the anti-forestalling measures which resulted in the special annual allowance), and the introduction of mandatory pension savings for employees.

In contrast, over the same timescale we've had one major change to capital gains tax and a couple of major changes to income tax rates and thresholds which would affect taxable portfolios. ISAs have had their contribution allowances and flexibility significantly increased, but otherwise remain fundamentally the same. Offshore bonds have barely changed at all. Taxation of specific investment types (unit trusts, OEICs, investment trusts, ETFs) all remain almost identical. It's only pensions which have seen this level of constant flux, and that is grossly unfair to those using these structures in good faith.

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.

I call it as I see it. I think that the Labour proposals are a pure "politics of envy" move to try to get lower net worth individuals to flock to them hoping they will tax higher earners more. However, it's worth remembering what has been said here already, i.e. that a £1m lifetime allowance will affect anyone hoping to generate a pension in excess of about £20,000 a year in retirement (taking into account available inflation-linked annuity rates and a desire for tax free cash). This is very much an aspiration for middle Britain, not just the ultra-rich, so it will be a policy which affects far more people than you might think.

robin61

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?

We still have grammar schools in Kent. They are very popular but the kids who are not academic enough to go there still get a decent education and have every chance of still going to university if they want to. So it doesn't have to mean a sub standard education for the rest - it works fine here. (I am not a UKIP supporter in any way).

chucknorris

wessy53 wrote: »

What a selfish self serving lot you are

Not a mention that it may benefit some of the kids of today.

No lets worry about those who already have more reserves than can probably be spent in a limited life span, lets worry about the effect on the guys on £150k a year for gods sake. Non of you will hit the breadline and most won't be affected.

If your worried about 60% tax bands and 150K pensions then my heart bleeds

Stand back for the Daily Mail Brigade!!!!!

No one is (or should be) worried about being in the 60% tax band, because obviously the higher the marginal tax band that you are in, the more you earn.

The reason that the focus was on pensions, rather than the benefit to the students, is because this is a pension forum board, on a money saving website. If it was an educational or student money saving forum, the focus would be different.

BobQ

jamesd wrote: »

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

Yes I agree that is not too generous. I am just pointing out that most people only dream of a £27K pension and there is no absolute right to tax relief. As ever there is balance to be struck and that is a political choice.

£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

.

You make a fair point about fluctuating contributions and I agree annual contribution caps could be higher with the LTA used as the main control. I doubt that the Labour proposals are that set in stone and would be implemented more flexibly provided they delivered the overall savings.

BobQ

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 was about to click thanks and then I saw that FLA at the start of the next paragraph.:)

BobQ

TheTracker wrote: »

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.

Is the argument perhaps that anyone who has say 200,000 a year to put in a pension not only gets the tax relief but also has much longer to accrue a larger pension pot through investment growth?

dunroving

As someone who is just learning these things (steep curve, but know a lot more than I did 2 years ago), could I ask someone to explain, without getting into politics, what economic or financial purpose the annual allowance serves?


I'm trying to see what is the advantage or disadvantage to it being £30k, £40k, or £50k ... why does it matter?