25%tax free ???

amiaspden

zagfles wrote: »

If they did move to pension-ISAs then surely the PCLS would need to be replaced by something else eg a govt top up, otherwise what would be the incentive to tie money up till 55 or older? I don't think tax free growth would be enough of an incentive - and of course you can get that in an ISA. The £15k ISA limit is more than most people save in a pension.

So not sure what Steve Webb is on about. Yes you wouldn't get the PCLS with TEE but there would be some other tax break/incentive to replace it.

But I can see them sticking with EET and replacing the PCLS with a boost for basic rate taxpayers. That would make more sense and would be far less of a nightmare to admister/transition from.

Someone posted a link to a thinktank document yesterday, the briefing note from the Centre for Policy Studies. It recommended the ISA option, with contributions being topped up by 50%. However it did say that there would have to be a very small annual allowance, probably less than 10k, but it thought this would be plenty for the vast majority of people.

shaun1952

I have a small pension pot of £10,000 from my previous employer , i am retiring in August 2017 when i am 65 .
What is the best option for this £10,000 do i take it now , wait until I'm 65 , leave it till after i have retired ?
or do i move it into something else , say my existing one i have with my present company. The trouble with the one i am paying into now is it will only be running for 3 years and have around £20,000 in the pot on my retirement date, what i do want is not to pay tax on it if i can get away with doing so.
So in total i will have around £30,000 in 2 pension pots by August 2017 .
Many thanks for any advice , i am at a complete loss as to what to do .

zagfles

amiaspden wrote: »

Someone posted a link to a thinktank document yesterday, the briefing note from the Centre for Policy Studies. It recommended the ISA option, with contributions being topped up by 50%. However it did say that there would have to be a very small annual allowance, probably less than 10k, but it thought this would be plenty for the vast majority of people.

What?? Topped up by 50%?? That's more than the tax relief anyone gets now, and then tax free on the way out too?? And £10k is more than the average pension contribution now.

It would cost the govt a fortune. Even if they really meant 33% of the gross (50% of the net), it's still far more than now if it's a PISA and so tax free on the way out.

I get the impression the govt wants to reduce the deficit, not increase it!

AnotherJoe

shaun1952 wrote: »

Many thanks for any advice , i am at a complete loss as to what to do .

Start a new thread with that info and add what your current earnings are and if you will have any other pensions paying out regular sums when you retire and how much money you will need each year and what other savings you have.

Malthusian

I have never heard anybody advise people not to put money into normal ISAs (saved out of taxed income) on the grounds that a future government might make it taxable on the way out as well, and yet it's the first thing a lot of people say when there's a mention of a pension ISA.

Pensions have been endlessly raided for tax over the past few decades while ISAs have not been. So in that sense the people paranoid about a TET pension ISA are just expecting past trends to continue.

The thing about ISAs is that people think of them as bank accounts - in the case of cash ISAs they basically are. To apply income tax to withdrawals on ISAs would be no different from directly taking 20% out of everyone's bank account. The Government wouldn't survive that.

However, pensions are different. Historically, those with pensions fell into two categories: those in receipt of pensions and those who were saving into them. Those in receipt of pensions didn't care when (e.g.) dividend relief was abolished because it didn't make any difference to their annuity or final salary pension. Those saving into pensions didn't care either because pensions were something they didn't have to think about for another ten or twenty years. So the principle was established that you could do pretty much anything you wanted to pensions, as long as you didn't go near pensions already in payment, and no-one would seriously protest.

OldBeanz

Malthusian wrote: »

... So the principle was established that you could do pretty much anything you wanted to pensions, as long as you didn't go near pensions already in payment, and no-one would seriously protest.

Quite so. The Guardianistas are going into meltdown about GO believing he will do away with the 25% tax free element while ignoring that he is far more likely to whack the HRT payers.