Millionaires... how?

gadgetmind

grey_gym_sock wrote: »

most of the complexity we've been discussing doesn't affect "normal" ppl.

Perhaps not, but people see complicated rule change after complicated rule change, restriction after restriction, penalty after penalty, and it all gives a strong message that HMG have private pensions square in their crosshairs and that almost anything can happen in the future.

Doing any long term pension planning in the UK is like trying to walk in a straight line during an earthquake.

Malthusian

yes, there is. they could have stopped paying in and claimed 1 of the "protection" things.

You are correct and I was wrong, in that situation they should have claimed Fixed Protection. Apologies. I mixed up Fixed Protection and Individual Protection, the latter of which requires you to be over the limit already but the former of which does not. Simplification eh. Moving on with the debate...

most of the complexity we've been discussing doesn't affect "normal" ppl, who never contribute more than, say, £10,000 in any 1 year to pensions.

I do not subscribe to the view that if someone can afford to contribute more than £10,000 a year to pensions, they have too much money and are not allowed to complain about anything. The complexity does affect doctors, high-earning professionals, small business owners, wealth creators. And many people on these forums. Does that not matter?

Some people think that you're not allowed to argue for their interests and must couch every argument about pensions as if it's for the sake of the man on the factory floor who has no spare income to save into a pension and anything he does pay into a pension will probably achieve nothing but a reduction in means-tested pension benefits. I can't be bothered.

in any case, if ppl are put off pensions, and use S&S ISAs for retirement provision instead - or even follow the dreaded BTL route - then they are not ppl making no provision.

True. But there used to be this idea that money "in a pension" is held in trust to provide you with income in retirement. This does not just mean that you aren't allowed to access "your money" until 55. It means that if you go bankrupt your pensions are protected. You can blow a stocks & shares ISA at any time on private school fees or an ill-advised investment but not a pension. (Ok, you can blow your pension on ill-advised investments but it was much harder.) This, it seems, is being gradually replaced by the "it's my money" idea.

I am largely in favour of this, the pension freedoms have been very good for a lot of people, as is the ability to leave pensions to your family without having the tax relief clawed back all at once. And most MSErs will be the same, because we're self-motivated by nature and have no intention of blowing any of our savings. But from a broader perspective it's another nail in the coffin of long-term planning.

N1AK

racing_blue wrote: »

If you (or your friend) have a net worth of over £1m: how and when did you (they) get there? I'm wondering about ways to skin the rabbit. Broad brush strokes would be OK. Thanks.

Net worth = however you define it.

Save £10k a year, invest it and get 5% returns, wait 37 years and you're a millionare :beer: but my Networth is only £350k currently so what would I know

talexuser

I agree with the pension freedoms, but worry about unintended consequences of lax regulation or education. The cynic might think its a way of trying to boost economic activity now at the expense of many not having enough to live on in the future and thus increasing the burden on state care. And the financial services industry does not seem to have a very trustworthy record on advice when it comes to mis-selling at every opportunity.

jimjames

talexuser wrote: »

And the financial services industry does not seem to have a very trustworthy record on advice when it comes to mis-selling at every opportunity.

It's not the financial services industry that worries me. It's the non regulated investments that can say and do anything to entice people in, including words such as "guaranteed" which have absolutely no meaning that worry me. If the average person sees an investment guaranteed at 10% per year then they are unlikely to know the difference between that and a regulated one that has the statement "you may get back less than you invest".


It's only 2 years down the line they find out that they've lost their pension pot putting it into airport parking, storage pods, carbon credits or rare metals and the guarantee wasn't even worth the paper it was written on.

Pincher

We need a Quaker II religious order.

The financial services should be run by people who have no right to possess any property, like priests. Orphans are recruited from birth, and neutered so there is no urge to horde wealth for an heir. They should have security of tenure, but execution by extreme torture for any betrayal of investor interests.

You are still free to invest in any wild, hare brained scheme, but if you want a house you can have absolute trust in, come to the House Quaker II. Obviously, we need a secret order of assassins to kill any copy cat businesses that dare to fake our name.

To avoid identity theft or internet re-direction, we should have actual physical branch offices. We will implant customers with RFID chips, have DNA sequence recorded, Iris and fingers scanned.

For disabled clients, a trio of brothers will turn up to conduct any business. This is so that:

1. All transactions are witnessed, in case of customer/brother collusion.

2. There is safety in numbers, if there are valuables to be transported.

3. In case of brothers trying to escape the order.


I look forward to the Financial Services and Markets Act 2020, which will make all the castrations and assassinations legal, for the sake of preserving shareholder value.

Chickereeeee

Pincher wrote: »

We need a Quaker II religious order.

etc.

Good idea, but it would fall foul of the sex discrimination laws.

C

grey_gym_sock

Malthusian wrote: »

I do not subscribe to the view that if someone can afford to contribute more than £10,000 a year to pensions, they have too much money and are not allowed to complain about anything.

nor do i.

and i think the complaints about the goalposts being moved have some validity.

what i don't think are valid are complaints that less tax relief is on offer, because e.g. the annual allowance has been reduced (except when that was retrospective - that is moving the goalposts), or (if it happens) because tax relief is restricted to the basic rate.

if pensions are no longer attractive to you, there's a simple alternative: pay the tax on your earnings, and invest in ISAs or unwrapped. tax rates for high incomes are very low by historical standards (by which i mean: compared to the 1945-1971 period, which was the "golden age" of capitalism).

tax relief on pensions in the UK costs far more than total military expenditure. the only purpose of this tax relief (that i am aware of) is to encourage ppl to make decent provision for their retirement. that could be achieved at far lower cost. and so far, the cost hasn't fallen at all, despite reductions in various allowances.

grey_gym_sock

gadgetmind wrote: »

Doing any long term pension planning in the UK is like trying to walk in a straight line during an earthquake.

and yet you keep coming back for more

i do have sympathy with the amount of effort you're ending up putting into understanding changes in taxation of pensions, when you could be thinking about something more productive. and with the many other ppl who will never understand all the details which affect them.

however, it's obvious that pensions are very tax efficient for you. the effort is worth the pay-off.

perhaps using pensions is more like experiencing an earthquake in tokyo. the sudden changes are disconcerting, but the buildings are very unlikely to fall down

gadgetmind

grey_gym_sock wrote: »

if pensions are no longer attractive to you, there's a simple alternative: pay the tax on your earnings

There are other alternatives. One of these is to work less, and pay massively less tax, which is what I'm doing as of next April. Another is to leave the UK, which I see huge numbers of people doing, and the rate is climbing.