Budget - Green paper on pension contribution tax relief

Notfarfromtheborder

adspence wrote: »

I can't agree more. Let's hope they don't listen to this stupid meddler. I'm 50 now, and plan to stop at 55 in late 2019. This would push my ability to get access to my pension funds until the end of 2024 at 60 as I wouldn't catch up this moving target until then.

Basically a disaster, and would certainly stop me saving in my pension, something I'd immediately ramped up last year on the back of the new flexible rules. I'd need a way to fund the 5 years from 55-60. It would also be another 5 years for the growth to push me closer to the LTA. It is MY money. It should be MY choice when I access it. This git basically wants me to work longer just because I'm theoretically going to live longer...which may not be the case at all! I'll be fitter, healthier and more active at 55 than I will be at 60 no matter what people think about increased longevity. If I have the funds to support a 40+ year retirement then I should be allowed to do so.

Also, why stay working when some youngster can have my job instead?

This would be a seriously bad move.

Completely agree with every word of the above, and in a similar position, albeit 4 years younger than you.


I too ramped up contributions (£34K over last 12 months) with a plan of going into draw down at 55, any changes to this would be a nightmare.


My big plan is to have enough in the retirement pot by 50 (allowing for future growth of 4% for the years from 50-55) so I would be able to quit the pressured job I'm in now and do something less challenging with the knowledge my retirement was sorted.


I suppose the next few months could force a rethink from pension contributions to investments outside of pension wrapper, I just wish there was some protection in place for those of us that are planning for the future rather than the 'Jam today' brigade.

Paul_Herring

chiefie wrote: »

When they moved the pension age from 50 to 55 what were the rules then for advance notice anyone know ?

http://www.wiltshirepensionfund.org.uk/normal-minimum-pension-age-increased-to-55

Most relevant to your question:

Q8. Why didn’t the Government change the normal minimum pension age gradually over a number of years rather than introduce a sudden increase on 6 April 2010?
A8. The Government announced the change in 2003 and delivered the relevant tax rules through legislation in the following year. The change came into effect from 6 April 2010. This deliberate time lag allowed ample time for employers and pension scheme administrators to decide and plan how best to implement the change to suit the needs of their own pension scheme members. For example, some employers chose to phase in the change over the years leading up to April 2010.

JasonPr

Is anyone here planning to respond to the consultation?

zagfles

There's no way the CPS suggestions will be taken up. One of them is moving public sector to DC, just a couple of years ago the govt promised no more changes to publicsector pensions for 25 years - are they really going to break that promise so soon and end up with loads of strikes on their hands?

And as for raising the pension age with just a year's notice, that would be political suicide, and would destroy confidence in savings if rules can be changed with no notice.

Besides, the consultation is about tax relief on contributions, nothing else. They've already massively changed how people can access their pension, they're not asking for opinions on further changes to how and when people can access their pension. They're looking at changes to the accumulation phase.

EdSwippet

JasonPr wrote: »

Is anyone here planning to respond to the consultation?

Nope. Ever tried to tell a teenager something? That's what it's going to feel like.

The short consultation period means that all of the previous 'think tank' reports that advocate change can be quickly dusted off and sent in. Naturally there are few if any previous reports that advocate no change -- why would one have bothered to write such a report in the past? So the weight of argument will be for change, giving the govt the result it wants. Completely by coincidence, of course.

kidmugsy

Such a move would focus minds on longer working lives

That is the sort of talk that ought to lead to the so-and-so being strung up. Bossy, patronising, the-man-in-Whitehall-knows-best twaddle.

Happily, I'd think that Osborne is far too fly to fall for it; he'll probably pray that it's in the Labour manifesto next time.

FatherAbraham

Pensions were originally provided by employers, defining benefits to be received after the end of employment. There was no taxation during the accumulation of benefits, and no National Insurance either. Income taxation was levied as benefits were received. One could argue that a higher salary today was being sacrificed for income deferred into the future.

Altogether a simple and logical taxation model.

Then money-purchase schemes came along, and the same taxation-deferral model applied, which is also logical and equitable.

However, these defined-contribution schemes typically involve the member having to make large contributions to come anywhere near the benefits accumulated by defined-benefit-scheme members.

Suddenly there's talk of taxing us on our deferred income today.

It's easy to see the numbers for defined-contribution schemes -- but how can taxation be applied equitably today to defined-benefit schemes? Nobody even knows what the present value of future benefits promises are.

We shouldn't change anything. The present model is both fair, and encourages saving for retirement. In any case, ISAs already exist, if one wants to save for retirement that way.

Warmest regards,
FA

maria3104

I have saved into my pension for 33 years, not large sums per annum. The incentive TAX RELIEF.

The benefit to the state, I will not require pension credit, or qualify for any benefits for the years of my life 60+. I would say a bargain to the state.

Lets keep tax relief but get everyone to start as I did at 18.

Just a thought!

woolly_wombat

zagfles wrote: »

Not really, a basic rate taxpayer using salary sacrifice is getting about 45% tax & NI relief (inc employer's NI, which is often wholly or partially added to the pension).

If they went for a flat rate tax relief they'd obviously have to put something in place to stop salary sacrifice otherwise it'd be trivially easy for higher rate taxpayers to avoid. Either that or make employer pension contributions a taxable benefit.

Well if you look at the policy paper for pensions tapered annual allowance published on 8 July 2015 you will see that anti-avoidance measures have already been put in place re salary sacrifice to avoid the taper:
https://www.gov.uk/government/publications/pensions-tapered-annual-allowance/pensions-tapered-annual-allowance

"This affects:

• individuals with income of over £150,000, including the value of any pension contributions, who save in a registered pension scheme will be affected by the taper".....

"Legislation in Summer Finance Bill 2015 introduces a tapered reduction in the annual allowance from 6 April 2016, for those with an ‘adjusted income’ of over £150,000.

The ‘adjusted income’ definition adds-back any pension contributions, to prevent individuals from avoiding the restriction by exchanging salary for employer contributions. For those in defined benefit or cash balance arrangements, the value of the employer contribution will be calculated using the annual allowance methodology. That is the employer contribution will be the pension input amount for the arrangement, less the amount of any contributions made by or on behalf the individual during the tax year.".....

"anti-avoidance rules will apply so that any salary sacrifice set up on or after 9 July 2015 will be included in the threshold definition"

WW

Paul_Herring

woolly_wombat wrote: »

"This affects:

• individuals with income of over £150,000, including the value of any pension contributions, who save in a registered pension scheme will be affected by the taper".....

Um...

and who have an income (excluding pension contributions) in excess of £110,000.

Doesn't affect all "higher-rate taxpayers" (specifically £42K-£110K) though.

...yet.