Osbourne's tax relief changes in the March budget

greenglide

why not leave DB alone unless the employee earns over, say, 80-90k a year? Could that work within the possible reforms?

As for sal sac, what about restricting it to, say, 10% of salary to prevent a lot of the abuses of the system whilst not bashing low & modest earners?

Surely whatever is done should be fair and equitable for both DC and DB when the true costs and benefits of both types of pensions are taken into account? Especially when the same person is in both DB and DC schemes, especially when contributing to AVCs within a DB scheme like I do to fund a PCLS (not in public sector).

To my mind salary sacrifice is a bending of the rules which is available only at the employer's whim. It really should be available to everyone (by always offsetting pensions contributions against NI) or taking it into account in the tax relief.

Personally the idea of a tax relief of 30% or so for everyone for pension contributions makes much sense. There is a difference between people who see pensions as an income stream in retirement (however modest) and those who see it as simply a way to chase the maximum tax advantages and a way to avoid higher rate tax IMHO.

Linton

Surely the real answer to salary sacrifice is to make it unnnecessary by reforming NI. At the moment it is regressive with very high earners paying a much lower % of earnings than low earners. Employers NI could be based on total remuneration.

AlwaysLearnin

greenglide wrote: »

There is a difference between people who see pensions as an income stream in retirement (however modest) and those who see it as simply a way to chase the maximum tax advantages and a way to avoid higher rate tax IMHO.

Not necessarily - surely a person could aspire to achieve both?

kidmugsy

At last the penny drops. You preserve all the benefits of existing pensions, and they keep exclusive use of the name "pensions". Their successors will be called - wait for it - LOTSAs, standing for LOng Term Savings Accounts. Brill. What could possibly go wrong?

chiefie

kidmugsy wrote: »

At last the penny drops. You preserve all the benefits of existing pensions, and they keep exclusive use of the name "pensions". Their successors will be called - wait for it - LOTSAs, standing for LOng Term Savings Accounts. Brill. What could possibly go wrong?

The way the government likes things they will be Totally Out Sourced Savings Accounts.

Snakey

Additional Retirement Savings Exemption?

Teaandscones

kidmugsy wrote: »

Nor is the point (at least my point) that DB pensions should be mucked around with retrospectively - that would be improper. The point is that when annual and lifetime allowances are calculated there should be at least a rough equivalence of treatment between DB and DC, and at the moment there isn't.

But your proposal to retrospectively increase the multiplier will do just that and muck around existing DB and DC pensions. One of the main problems about pensions is the lack of trust of the government changing the rules retrospectively so putting people put off saving.

A better solution is to abolish the LTA under reforms of the tax relief system. My two penneth would be a single rate of 30% for DC, annual allowance reduced to £30k, abolition of the LTA and for ease of admin 20% employee rate for DB but tax relief maintained for employers. There would need to be rules to stop swaps in contribution rates and scheme pays conditions so employees can give up pension to pay for loss of tax relief but these could be done.

gadgetmind

Teaandscones wrote: »

tax relief maintained for employers.

For DC and DB, one would presume?

kidmugsy

Teaandscones wrote: »

But your proposal to retrospectively increase the multiplier.

But that's not what I've proposed. Any increase or decrease to future annual allowance or annual multiplier is obviously not retrospective. A change in the Lifetime Allowance or multiplier would be, but then I've already suggested that the LTA be either increased or abolished, which would compensate.

gadgetmind

I just can't see any of the more complex changes being introduced in a hurry as it will take 2+ years for people to change systems to cope. I think we'll see the taper brought in as per latest raft of changes, a few bombastic statements, and nothing more concrete announced for a year or so.