Budget

robin61

So no changes to tax relief, PCLS, lifetime or annual allowances or salary sacrifice.
I will be interested to see the details about this new lifetime ISA for homes and retirement with a 20% contribution from the government. I wonder what restrictions there will be in terms of when you can access the money ?

Sterlingtimes

Great relief! It looks at though 2016/17 will be the financial year for bundling as much as way as possible for many of us while the going's good.

PensionTech

I wonder what restrictions there will be in terms of when you can access the money ?

Age 60, or you can take it out before 60 but lose the gov't bonus (plus interest) and have to pay a 5% charge.

Also limited to £4k a year net saving, can only be set up by people aged between 18 and 40, bonus only payable on savings made before age 50.

I think this is testing the waters. If successful, this could lead to the slow introduction of the PISA with more and more restrictions on traditional pensions until they are done away with completely.

robin61

PensionTech wrote: »

Age 60, or you can take it out before 60 but lose the gov't bonus (plus interest) and have to pay a 5% charge.

Also limited to £4k a year net saving, can only be set up by people aged between 18 and 40, bonus only payable on savings made before age 50.

I think this is testing the waters. If successful, this could lead to the slow introduction of the PISA with more and more restrictions on traditional pensions until they are done away with completely.

Yes I guess if these were popular it might well be the tip of the iceberg. And I wonder if there will be any guarantee that the age 60 to access won' t increase. Or is that asking for too much ?

PensionTech

And I wonder if there will be any guarantee that the age 60 to access won' t increase. Or is that asking for too much ?

That's the thing with the PISA/LISA: there are too many goalposts that can be moved. Of course, the current system isn't immune to this either, but at least the direct link to income tax relief makes it that much harder politically to cut pensions relief than some arbitrary "bonus". And do you notice that age 60 is well above the NMPA - even for those who (like myself) are currently scheduled to hit SPA at 68 and therefore have an NMPA of 58? This does not suggest good things to me about the future of pension ages generally.

Other pensions-related headlines:

• Pensions dashboard given go-ahead, industry expected to develop for 2019 (could this lead to a quiet abandonment of pot-follows-member?)
• Interest in the FAMR proposal to allow access to some DC savings pre-55 in order to pay for pensions advice
• More relief available for employers paying for employees' pensions advice
• Restructuring of pensions/money guidance services
• Some technical changes to authorised payments regulations etc. to allow 2015 freedoms to operate more sensibly/fairly
• Big increase to employer contributions for unfunded public sector schemes due to a change in the discount rate

robin61

Sterlingtimes wrote: »

Great relief! It looks at though 2016/17 will be the financial year for bundling as much as way as possible for many of us while the going's good.

That will be my strategy but then it has been for a few years now.

kingrulzuk

I’m 32 and I don’t have any pension, but I like the sound of this new PISA.

Andrew_Cottrell

If contributions can be made until 50, why limit to under 40 only? This only makes sense, to me, if the plan is to stop contributions to traditional pensions, at some future time, for those who are under 40 on 6 April 2017.

Can't withdraw without penalty until state pension age (SPA) minus five years compared to SPA minus ten years for traditional pensions (other than for first property deposit).

The 25% top-up is same as 20% rebate for basic rate taxpayers without salary sacrifice. But top-up only on first £4k per year.

No tax on withdrawal and obviously no pension commencement lump sum.

PensionTech

I’m 32 and I don’t have any pension, but I like the sound of this new PISA.

LISA, not PISA. For now. But you can only save £4k a year into these accounts, and only until you're 50. You will need to try to make some other arrangements for yourself in retirement because that won't cover you. Pensions are still an important tool for retirement saving.

rpc

PensionTech wrote: »

Age 60, or you can take it out before 60 but lose the gov't bonus (plus interest) and have to pay a 5% charge.

Also limited to £4k a year net saving, can only be set up by people aged between 18 and 40, bonus only payable on savings made before age 50.

I'll be eligible for this, but on the treasury factsheet it looks entirely uninteresting. The tax boost on buying a house would have been useful 15 years ago, but as a retirement vehicle it gives less tax relief than salary sacrifice (or a personal pension for a high rate taxpayer) and a later age for accessing it than a pension.

I think you are right about testing the waters...

PensionTech

as a retirement vehicle it gives less tax relief than salary sacrifice

How do you work that out? I make it equal (assuming BR taxpayer in work and in retirement, pay in £68, gross contribution £100, get back £25 tax-free, £60 net of tax for total of £85; under PISA, pay in £68, fund value £85, get back £85). Not allowing for compound interest, moving down tax bands, higher access age, (much) lower annual allowance or employer contributions though - all of which work in favour of pensions.