Pensions: George Osborne to drop tax relief plans

Wednesday2000

robin61 wrote: »

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.

Since reading about pensions on here I have told my husband to inform people at his work about the AVC scheme and it is amazing how few of them had any idea about it. Throwing away money.

zagfles

Spidernick wrote: »

OK, Einstein, please explain how employer's NI affects someones NET salary, seeing as you have wonderfully misinterpreted the point I was making!

Err...I didn't say it affects the employer's NET salary, I was replying to your sentence

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.

When it clearly isn't wrong if the employer pays some of that NI saving into the pension. They get the saving whether it's in net pay or pension.

(You might also want to look at your use of the words 'if' and 'where the employer shares' and then the assertion I was refuting which makes no distinction around Er's NI, the sharing of which is far from a given).

I do wish people would read things properly before rattling off an ill-thought-out reply!

Pot...kettle...

rpc

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.

Driven, perhaps, by the pensions industry who seem to be on an annual cycle of "quick give us more money before the government stops you."

Spidernick

zagfles wrote: »

Err...I didn't say it affects the employer's NET salary, I was replying to your sentence When it clearly isn't wrong if the employer pays some of that NI saving into the pension. They get the saving whether it's in net pay or pension.

Aaaaargh! That is the whole point I was making. You clearly haven't read all my contributions in this thread (and the original one to which I was replying). Please do so as I really cannot be bothered repeating myself.

(Apologies for the sarcasm earlier, but I really don't appreciate people starting replies to my posts with the word 'rubbish' when that is far from justified!)

dunstonh

rpc wrote: »

Driven, perhaps, by the pensions industry who seem to be on an annual cycle of "quick give us more money before the government stops you."

I haven't seen much of that at all. Indeed, you rarely get any marketing on quickness with pensions on the advice distribution side. The providers tend to save that for ISAs.

Is it something you see more on the DIY provider side?

zagfles

Spidernick wrote: »

Aaaaargh! That is the whole point I was making. You clearly haven't read all my contributions in this thread (and the original one to which I was replying). Please do so as I really cannot be bothered repeating myself.

If you insist. The one you replied to

Originally Posted by gadgetmind

Originally Posted by JoeCrystal
YHaving at 33% tax relief for basic rate taxpayer would be a boon

If paying by salary sacrifice, then BR tax payers already get above this level of saving between tax and NI.

This will be true in some circumstances (probably most). He didn't say "all BR tax payers..." which would indeed have been "plain wrong". The "level of saving between tax and NI" does not say or imply that all the tax and NI saving is in net pay rather than being paid into the pension. Any more than a 33% flat relief would, as that would likely work by default by increasing pension for the same net contribution.

(Apologies for the sarcasm earlier, but I really don't appreciate people starting replies to my posts with the word 'rubbish' when that is far from justified!)

Apology accepted, and I apologise for the use of the word "rubbish", but maybe people don't appreciate getting a sarky reply that 20+12 is less than 33 "last time I looked", seemingly implying the PP is stupid. Or nit-picking over trivia like whether the NI saving goes into the pension or net pay when I point out the PP is actually right in some/most circumstances.

robin61

I will be very pleased and relieved once I retire and take my pension. Hopefully within a year or two at the most.
We are just going from budget to budget wondering about what new wheeze the Chancellor will come up with next. It isn' t good and doesn' t provide an environment to encourage pensions saving.
They really need to come up with a proper long term plan.
I am relieved that it looks like there are not going to be big changes this time but really I am getting quite fed up of going through this once or twice a year.
I would be tempted to say they had their strategy wrong ...thing is I don' t think there is any strategy at all.

bowlhead99

dunstonh wrote: »

I haven't seen much of that at all. Indeed, you rarely get any marketing on quickness with pensions on the advice distribution side. The providers tend to save that for ISAs.

Is it something you see more on the DIY provider side?

Some are more aggressive than others; for example the one below I got from HL on Friday night -am not a customer but they send me regular emails because I considered getting a SIPP with them many moons ago and haven't taken myself off the mailing list because a couple of family members use them and sometimes ask me about things they get...

I highlighted the bit which is their 'stir up some urgency' sales tactic.

From: Hargreaves Lansdown <email@xxxxxxx>
To: xxxxx
Sent: Friday, 4 March 2016, 18:26
Subject: Pension tax relief - what should investors consider before the Budget?

Dear Mr xxxx
There are a number of press reports today about changes to pension tax relief in the Budget.

We do not know what, if anything, will change, but we hope this information helps you decide if you should consider bringing forward any planned pension contributions before the chancellor delivers his speech on Wednesday 16 March.

It has been widely reported a new flat rate of tax relief between 25% and 33% could be announced. Other reports suggest the chancellor could introduce a flat rate of 20% and make pension withdrawals tax free. Contribution limits could also be cut.

What should investors consider?
Whatever happens, these reports suggest it's extremely likely changes will be announced in just 12 days. Some investors may wish to make pension contributions now and benefit from the tax relief currently on offer. Higher-rate taxpayers receive up to 40% tax relief, and top-rate taxpayers up to 45%, depending on individual circumstances.
That said, some investors could be better off delaying until after the announcement. For example, basic-rate and non-taxpayers could receive greater tax benefits, depending on what's announced.

If you want to make the most of the current rules and are considering a pension contribution, you may only have until Wednesday 16 March. There is a possibility any change might not happen straightaway, but in the past similar changes have taken immediate effect so you may wish to consider acting as soon possible.

Please remember these changes are not guaranteed. The chancellor may introduce other changes, or there may be no change at all.

[etc etc]
Any questions?
We're extending our opening hours this weekend. If you have any questions about tax relief or how to make a pension contribution please email us or call and we'll be happy to help.

While it is possible for some changes to come in quickly (e.g. petrol price going up on budget day) I'm not really aware to which particular historic 'similar changes' they refer which had a major adverse effect for huge swathes of investors and took effect overnight with no possibility to do anything about it in the remaining couple of weeks of the tax year.

For example, the recent earnings-related tapering of the £40k band for a tiny proportion (the top <1% of earners) was 'brought in' part way through a tax year but to avoid screwing over their electorate they let you keep what you had already put in and have a whole year's allowance at the new rate allowing many people to get £40-80k instead of 40 or the new sub-40, and then only needing to properly plan the 'new rules' for the next whole tax year. Similarly the recent changes to dividend tax relief etc are coming in for future years and not current years.

But aside from direct marketing like the above, the spokesmen for DIY pension companies have been all over the press articles in recent months getting in their soundbites of 'sound advice' to consider your position ahead of 16 March. As the press have been looking for filler to their articles to make them sound like there's a real credible story, they have been happy to bring in people from the pensions industry to comment, and the pensions industry is very happy to comment that it might be very wise to act within the next couple of weeks to lock your money into a pension with them for many decades.

EdSwippet

bowlhead99 wrote: »

I'm not really aware to which particular historic 'similar changes' they refer which had a major adverse effect ...

Probably Alistair Darling's nonsensical attempt, ultimately abortive, to restrict pension tax relief for high earners with immediate effect from the 22 April 2009 budget.

This would not have affected vast swathes of pension savers (but then HL didn't claim that these 'similar changes' did). But it would have been both a kick in the teeth to any high earner not regularly saving into a pension -- for example, the self-employed -- and its tapering allowance was roundly criticised by the conservatives, then in opposition, as being wildly complex and impractical (apparently in the intervening years the conservatives have decided that wildly complex tapering is in fact a simply great idea after all).

AnotherJoe

But you didn't highlight "That said, some investors could be better off delaying until after the announcement. For example, basic-rate and non-taxpayers could receive greater tax benefits, depending on what's announced."

And they did say " If you want to make the most of the current rules and are considering a pension contribution"

So I wouldn't say that was scaremongering, I'd say it was prudence and keeping their customers informed. Imagine if they issued no guidance at all and then the mooted instant changes had come in? I think they would rightfully have been criticised when these changes had been so widely telegraphed (or even Daily Telegraphed...)