Osbourne's tax relief changes in the March budget

kidmugsy

So be it. Why should you be privileged over people with DC pensions? Time you rich people paid your whack.

TheTracker

Teaandscones wrote: »

Which would then put me as a lifelong basic rate taxpayer over the LTA retrospectively subject to 55% tax

I expect you meant this to show inequity. It does, in the opposite way you may have intended. What it depicts is that you've enjoyed significant tax relief over your career to the extent you never exited BRT bands. So maybe "a lifelong tax relief exploiter". No problem with that, well done you.

Many DB workers I know simply don't comprehend the equivalent salary without the mandatory pension contribution and deny it as accurate when calculated. If you have a £1m+ equivalent pension then it's possible to reverse calculate the average salary boost across your career and even your lifelong tax relief.

princeofpounds

So be it. Why should you be privileged over people with DC pensions? Time you rich people paid your whack.

Very true. It's really very wrong that DC participants end up getting taxed much harder than DB.


It's morally equivalent to saying everyone has to pay 40% higher tax rate. Except for people who work for the government or British Telecom or BA or other good old companies. You lovely chaps and chapesses can be taxed at 30%.

rpc

What they should really do is get rid of the LTA - few have enough control over their investments.

A lower annual allowance with very generous carry forward arrangements would stop "rich" people (including those with generous DB pensions) from sheltering too much from tax but not penalise more normal savers, including those making large one-off contributions in later life.

A ceiling based on unpredictable investment growth doesn't really make sense, but is politically convenient.

It won't get rid of them completely, but it's a start to getting rid of these daft DB multipliers (which don't represent the true cost or discriminate between schemes with significantly different benefits).

chucknorris

kidmugsy wrote: »

To partly answer my own question: maybe the biggest useful single advance for DB schemes would be to replace the multiplier of 20 (for annual allowance calculations) by 35. But that would probably require a bigger majority in the Commons than this government has got.

Isn't the multiplier 16 (not 20) for annual allowance calculations? I thought that it was 20 for lifetime and 16 for annual.

GunJack

Why are you lot so against DB pensions?? It's ok talking about equivalent salaries, percentage relief rates, etc. but to the vast majority of DB members (civil service and similar) it's meaningless, the pensions generated are small (often less than basic SP), and a high proportion of the employees won't be on much more than NMW and couldn't earn £20k, let alone contribute more to a pension....

..and yet most of you seem to think as they've got a DB pension, they're rolling in it both now and on retirement. Removing sal sac for most of these people (myself included) is very likely going to be seen as bashing the less well-off as that's often going to be the tipping point of affordability...

TheTracker

GunJack wrote: »

Why are you lot so against DB pensions?? It's ok talking about equivalent salaries, percentage relief rates, etc. but to the vast majority of DB members (civil service and similar) it's meaningless, the pensions generated are small (often less than basic SP), and a high proportion of the employees won't be on much more than NMW and couldn't earn £20k, let alone contribute more to a pension....

..and yet most of you seem to think as they've got a DB pension, they're rolling in it both now and on retirement. Removing sal sac for most of these people (myself included) is very likely going to be seen as bashing the less well-off as that's often going to be the tipping point of affordability...

I don't think anyone is against them at all. The issue lies in how they are measured as assets. What does it mean if someone has a £30k DB pension. What is it worth? You need to measure it because if you are putting in place restrictions on DC pensions you need to ensure a fair and level playing field by making equivalent changes to those with DB pensions. Many people will have some of each, which makes it even more difficult.

In a world where there are annual allowance and lifetime allowance limits on DC pensions, would you agree it is fair and proper to have equivalent AA and LTA allowances on DB pensions? Most would. Now the official calculations to perform that equivalence test are, most would agree, tilted in favour of the DB pension. Many people call for the equivalence test to be recalculated.

kidmugsy

chucknorris wrote: »

Isn't the multiplier 16 (not 20) for annual allowance calculations? I thought that it was 20 for lifetime and 16 for annual.

I suspect you know more than I do on this. But if so I object to both the 16 and the 20. They are inequitable vis-a-vis DC pensions. Use the average and double it = 36 = 35, near enough.

GunJack

TheTracker wrote: »

I don't think anyone is against them at all. The issue lies in how they are measured as assets. What does it mean if someone has a £30k DB pension. What is it worth? You need to measure it because if you are putting in place restrictions on DC pensions you need to ensure a fair and level playing field by making equivalent changes to those with DB pensions. Many people will have some of each, which makes it even more difficult.

In a world where there are annual allowance and lifetime allowance limits on DC pensions, would you agree it is fair and proper to have equivalent AA and LTA allowances on DB pensions? Most would. Now the official calculations to perform that equivalence test are, most would agree, tilted in favour of the DB pension. Many people call for the equivalence test to be recalculated.

para. 1. - if someone has a 30k db pension, it's worth...30k a year (inflation excluded). Although I think that amount of db pension would be a relative rarity, I think you'll find that the majority of people who have a db pension won't have ever earned 30k a year, never mind have it as a pension!! I don't think you should try and measure it the same as a dc pot, simply because it's a different type of pension, and doesn't have a pot associated with it.

para 2 just sounds like sour grapes, tbh, if you were either a. lucky enough or b. chose employer so that the db pension was part of the employment package, why should you now suffer for it? Let's face it, it's possibly the best part of a career in some form of civil/public service, 'coz the salaries certainly weren't. I'm not being funny, but the sort of people who are concerned by lifetime allowances being reduced have obviously been in receipt of whacking great salaries to be able to be putting £1M into a pension scheme (less the 40% tax relief, of course )

greenglide

if someone has a 30k db pension, it's worth...30k a year (inflation excluded). Although I think that amount of db pension would be a relative rarity, I think you'll find that the majority of people who have a db pension won't have ever earned 30k a year, never mind have it as a pension!!

While this is probably true we do see "many" people posting in this forum who do have eye-watering levels of DB pensions. Although the majority of public sector workers will be low paid the top levels certainly arent (in pure cash terms). These and the private sector schemes still running do have the ability to produce large sums of money.