Why the new Pension Rules are a Scam.

PeacefulWaters

monkey_shoulder wrote: »

I think you missed the point. They will let me draw down flexibly, but only if the pension pot is transferred to a "Retirement Account". This means that the whole pot is liable for tax.


If I transferred to another provider, the same would apply. It is the "Crystallizing" of the fund which make it eligible for tax. They make a big deal about the 25% tax free bit but they don't draw attention to the 75% taxed at highest rate bit.


MS

I got the point. You haven't.

You're now blinding yourself to the opportunity you'd previously identified because you're believing the incorrect assumptions that your rant centres around.

Aegis

monkey_shoulder wrote: »

I think you missed the point. They will let me draw down flexibly, but only if the pension pot is transferred to a "Retirement Account". This means that the whole pot is liable for tax.


If I transferred to another provider, the same would apply. It is the "Crystallizing" of the fund which make it eligible for tax. They make a big deal about the 25% tax free bit but they don't draw attention to the 75% taxed at highest rate bit.


MS

That 75% taxable section of your pension hasn't changed for decades, this has nothing to do with the new rules.

What you want to do is perfectly achievable, but not with all providers. All you need to do is move to a provider that can handle flexi-access drawdown with phased crystallisations. Any SIPP should be able to do that, as should a handful of the better personal pensions.

C_Mababejive

The new tax rules are not really about pensions, personal choice and freedom.

That is just a smoke screen for the Proletariat

What its is really about is pumping money into our failing economy.

As another round of QE is not a good idea, they have cast their greedy eyes around to find pots of money elsewhere and setled upon the billions locked into pensions.

They are locked in their for a good reason but no matter. If we can liberate that cash and flush it into the economy, it can only be good,,right Dave?

Capital idea..Us Torys are all well wadded so we dont need pensions..we will con the mugs into liberating their pots and flushing it into the economy then they can live in penury until they die..

kidmugsy

C_Mababejive wrote: »

The new tax rules are not really about pensions, personal choice and freedom.

That is just a smoke screen for the Proletariat

What its is really about is pumping money into our failing economy.

As another round of QE is not a good idea, they have cast their greedy eyes around to find pots of money elsewhere and setled upon the billions locked into pensions.

They are locked in their for a good reason but no matter. If we can liberate that cash and flush it into the economy, it can only be good,,right Dave?

Capital idea..Us Torys are all well wadded so we dont need pensions..we will con the mugs into liberating their pots and flushing it into the economy then they can live in penury until they die..

Did you change your name from Dave Spart by deed poll?

dunstonh

When I asked my pension provider, ReAssure, how I could get at my money they stated, and I quote: " You will not be able to take your benefits flexibly from your current ReAssure pension unless you take the whole pot as a lump sum."

That sounds reasonable considering Reassure are a holder of closed books merged/bought from others. So, will have a lot of old fashioned policies. It isnt a problem for anyone though as you just transfer it to a modern pension that does allow the options you want.

People with black and white TVs didnt expect their TV to suddenly show in colour when that became available or offer widescreen, high definition etc. They had to buy a new one. Cars without modern saftety features didnt suddenly get them added when they became available. You had to buy a new one.

What they are saying is that I must cash-in my pension and re-invest in what they call a Retirement Account. This is a new financial product that they charge to set up and take a percentage in fees to manage. On top of that, although I am entitled to a 25% cash free sum, the other 75% will be taxed, at the highest rate!

They are not saying that. They are saying if you use them, those are their terms. You are free to accept those terms or shop around. The tax position wouldnt change between providers.

I thought that I could take, say, £10,000 a year out of it without tax, since my personal allowance is £10,600, but oh no, the remainder of the capital ( after a Tax Free lump sum ) must be moved within six months or face a blistering 55% tax.

Where are you getting all this information from?

This is a most misleading and invidious scheme to turn our pension funds into tax income!

No its not. The changes just enhance options that already existed prior to April 2015. The changes are very good and it looks like you are misunderstanding them.

They make a big deal about the 25% tax free bit but they don't draw attention to the 75% taxed at highest rate bit.

You are only taxed at the highest rate if your income for that year takes you into that rate.

Scottish Widows charge 0.7% up to 30k and 0.3% above that. I am yet to discover how much Reassure charge. Can't find it on their website. I am assuming 0.7% is probably industry standard.

There is no industry standard. Between 0.3% and 2.5% is the possible range. There is a good chance you will actually save money by moving from an old fashioned scheme to a modern one.

zagfles

monkey_shoulder wrote: »

What I have quoted comes directly from ReAssure's literature, and the Money Advice Service "Your Pension: it's time to choose" booklet. See page 14 in that booklet.


I don't see what is incorrect.


Furthermore I am finding it very difficult to "shop around" as they say because very few providers tell you how much they charge for set-up and management of the retirement account.


Scottish Widows charge 0.7% up to 30k and 0.3% above that. I am yet to discover how much Reassure charge. Can't find it on their website. I am assuming 0.7% is probably industry standard.


MS

Providers' charges are usually clearly laid out on their websites. See Snowman's spreadsheet: http://forums.moneysavingexpert.com/showpost.php?p=64540489&postcount=15

zagfles

C_Mababejive wrote: »

The new tax rules are not really about pensions, personal choice and freedom.

That is just a smoke screen for the Proletariat

What its is really about is pumping money into our failing economy.

Failing? It's not doing too badly compared to the rest of Europe.

As another round of QE is not a good idea, they have cast their greedy eyes around to find pots of money elsewhere and setled upon the billions locked into pensions.

They are locked in their for a good reason but no matter. If we can liberate that cash and flush it into the economy, it can only be good,,right Dave?

Capital idea..Us Torys are all well wadded so we dont need pensions..we will con the mugs into liberating their pots and flushing it into the economy then they can live in penury until they die..

Yes because people really are stupid enough not to realise if they spend all their pension then it'll be gone.

Martin was highlighting the opposite problem, that people will be scared of spending their pension for fear of it running out.

http://blog.moneysavingexpert.com/2014/09/29/cancelling-the-tax-on-unused-pension-pots-could-be-a-disaster-for-many-older-people/

We'll see who's right and who's wrong in a few years. My bet's on the pension freedoms not resulting in a massive spending spree. Obviously some people will blow their pots early, but I suspect Martin's right and more people will underspend than overspend.

In fact I think one of the underlying motives for the changes is to help people pass their money on tax free, as the LibDems wouldn't allow the Tories to raise the IHT threshold. That would have the opposite effect and people would spend less not more. Under the old rules pensions are always "spent" in the lifetime of the pensioner/spouse or else heavily taxed.

kidmugsy

"Yesterday, 10:54 PM" Perhaps the OP had "dined well" as they say in the House of Commons. Or was "tired and emotional" as Private Eye puts it.

Freecall

kidmugsy wrote: »

"Yesterday, 10:54 PM" Perhaps the OP had "dined well" as they say in the House of Commons. Or was "tired and emotional" as Private Eye puts it.

.... or "rat ar!$!d" as the bloke down the pub puts it.
:beer:

green_man

To OP.

Your provider does not provide what you require. This is not Osborne's fault. You do not have to crystallize your benefits to transfer to another provider.

I found this article a good starting point when trying to find a SIPP suitable for cheap flexible drawdown:
http://monevator.com/compare-uk-cheapest-online-brokers/

Note - You may have to check out the providers web sites to find out the charges for being in drawdown.