Pensions: George Osborne to drop tax relief plans

EdSwippet

dunstonh wrote: »

The budget has not happened yet. There have been no announcements or backtracking. Everyone is still in the dark just as we were before.

Two thoughts around this.

Firstly, the government is now well known for 'flying kites' to gauge public reaction on a policy before trying to implement it. This is what passes today for what in previous generations would perhaps have been careful analysis of behavioural and economic factors. It isn't a good substitute, but politicians cannot see further than the next election so it's what we've ended up with. Given this, it is reasonable for the press and the public to react and provide feedback that the government would otherwise lack. An informational vacuum would lead to even worse rule-making than at present.

Secondly, such 'speculation' provides an early warning system for folk who are adversely affected. For example, someone planning a pension contribution anyway can bring it forwards 'just in case' a problem scenario provided by the media comes to pass. Of course, it's not helpful if behaviours change entirely. But for simple no-cost changes such as this timing example, media reporting -- even if it turns out later to be over-reaction -- is still useful.

kinger101

dunstonh wrote: »

I just find it ridiculous that the media created hypothetical scenarios of what could happen in the budget. Then spent about a month changing the scenarios and not say the scenarios will not be happening. Yet in that time, GO has never announced a single change to pensions or backtracked on anything.

The budget has not happened yet. There have been no announcements or backtracking. Everyone is still in the dark just as we were before.

The way is works is various people within the treasury mentioned various scenarios to the press. It gets debated in the media. The pros and cons, and the public reaction is gauged. Then GO makes a decision of what will happen before the budget.

The media didn't create any of this. They were just used as a consultation forum.

dunstonh

Whilst it is not uncommon for the Government to fly kites, it should be noted that not one kite was flown when it came to the pension freedom options.

So, we can't assume anything. I suspect this time around that the whole thing took on a life of it's own from beginning to end.

eastcorkram

I know it's been said that tax relief would be unchanged, but do you think salary sacrifice will be left unchanged too? Frustrating that I've not heard it mentioned.

EdSwippet

dunstonh wrote: »

Whilst it is not uncommon for the Government to fly kites, it should be noted that not one kite was flown when it came to the pension freedom options.

You could probably argue that pension freedom wasn't controversial, at least in the sense that there would be winners but no losers. (Okay, so folk taking annuities who might otherwise have chosen drawdown could argue they 'lost', and in a sense they would have, sort of... but the supposed ability to sell on annuities should at least help even there.)

dunstonh wrote: »

So, we can't assume anything. I suspect this time around that the whole thing took on a life of it's own from beginning to end.

The FT reported that they had information from sources close to the treasury, as did other media. This is precisely how policy kites are flown. Combined with the ludicrously mis-titled Strengthening the incentive to save "consultation" launched in July, I am personally in no doubt that this year's budget speculations in the press have a grounding in reality.

gadgetmind

Spidernick wrote: »

The other poster's assertion that 'if paying by salary sacrifice, then BR tax payers already get above this level of saving between tax and NI' is just plain wrong.

Employee earns about £40k pa. Class 1 NI = 12%, income tax = 20%, if money put into pension via sal sac then neither of these are payable. Yes, there can be further gains if the employer puts some of the employer's NI into the pension, but it's already a total tax+NI saving of about what HMG were touting for basic rate tax payers as it stands.

If I'm wrong, then I'm wrong, but please show me the numbers.

robin61

Aretnap wrote: »

Posting on a board like this it's easy to assume that everybody is financially savvy. In fact, the Biotech company I work for consists mainly of PhD educated higher rate taxpayers... and the bloke who does our payroll tells me that only a handful of people pay in more than the minimum amount that the company matches (5%). A few refuse to pay in at all. Even well educated people seem to be shockingly ignorant of just how valuable pension tax relief can bel:

I agree with this. My colleagues are all managerial / professionals and I am more often than not shocked about their lack of understanding about pensions. Even those on their 50s like me who I would have expected to have retirement plans in place. I have lost count of the number of people I have pointed towards the benefits of our AVC scheme.

gadgetmind

There are a fair few at my place of work who'll be rather surprised when I stop working at about 55. Others will say "Ok, for him, he's loaded" without realizing that I only have a few bob stashed away because I've stashed away a few bob and it didn't happen by accident.

saver861

dunstonh wrote: »

Whilst it is not uncommon for the Government to fly kites, it should be noted that not one kite was flown when it came to the pension freedom options.

Yes that was George doing his surprise act thing.

dunstonh wrote: »

So, we can't assume anything. I suspect this time around that the whole thing took on a life of it's own from beginning to end.

Well I think the 'treasury spokesman' has but the kibosh on any changes to the pensions. Perhaps no coincidence said 'treasury spokesman' spoke the day after Newsnight carried an item on its program the night before, suggesting there would be changes and PISA's were the thing. Clearly they did not want more people whacking in their limits in an attempt to beat the budget 'changes'.

Its not clear when the decision was made to drop it, but it seems to be down to a mixture of back bench revolt and the EU issue.

kidmugsy

EdSwippet wrote: »

Okay, so folk taking annuities who might otherwise have chosen drawdown could argue they 'lost', and in a sense they would have, sort of...

No, they wouldn't have lost. That wouldn't stop them coveting what other people had, and dressing it up as losing, or "losing out" as such people like to say.