Osborne's tinkering revealed as damaging

bowlhead99

Not everything the government does has to be measured in what it takes or adds to gross domestic product. For example, the suggestion in post #1 is that we get a boost now but eventually end up with a steady state reduction of 0.1% of GDP.

So, taking that at face value and disregarding jamesd's inconvenient analysis, on the face of it the country is losing money due to the last couple of governments' "meddling".

However, we all have a bunch of extra freedoms, and freedoms and flexibility contribute to quality of life. So instead of, "you must do this and this and this and then get an annuity, whether or not that suits your circumstances", we have "you can do this or this or this". To have a generally more satisfied population, maybe that is worth losing 0.1% of your income each year?

Personally I don't agree with progressively smaller lifetime allowances (for DC) which can be complex to plan around, when there are already annual limits which reduce for the extremely high earners. The system isn't perfect. But you won't get much sympathy complaining that you have hit either of the limits, because a truly massive majority really won't get anywhere near hitting that limit.

If a doctor stops providing his doctoring services for the last 5 or 10 years that he'd be good at it, because he accumulated his million and can already retire on £40-50k a year pension, then that's some lost productivity - but good luck to him, and it will leave a role for someone else to fill. A huge number of people can only dream of getting to a million while living a "normal" lifestyle and not putting a massive proportion of salary away in a pension as some here do.

Teaandscones

marlot wrote: »

I believe a significant number of GPs are in this position, and choosing to retire at 55-ish, despite the actuarial reduction.

My dad's eye specialist has just retired at 55 due to the lifetime allowance so he is now waiting for them to find a replacement. I am sure that is great for the operation of the health service.

bowlhead99

Teaandscones wrote: »

My dad's eye specialist has just retired at 55 due to the lifetime allowance so he is now waiting for them to find a replacement. I am sure that is great for the operation of the health service.

So your complaint is that the eye specialist earned too much over the course of his life and already had enough to retire comfortably at 55 so he didn't want to bother working for a lower salary or high tax rate until he was 60 or 65 or 70.

A solution to that is to either not pay such decent compensation to eye specialists in the first place (and take your chances with what that does for the quality of healthcare), or let these people who already have more than enough to comfortably retire just carry on earning large salaries while taking substantial tax deferral opportunities - despite not needing the assistance or incentive to put money away because they're unlikely to be a drain on the economy in retirement.

I'm sure the majority, who don't get eye specialists' salaries, are not overly worried by the lifetime cap - assuming it rises with inflation rather than becoming a real practical cap for mr or mrs average.

Paul_Herring

EdSwippet wrote: »

How about this latest kite: replace tax deferral with a government top up on pension contributions calculated at 100% minus the persons' age. What could possibly go wrong?!

Non starter I reckon.

Sounds like tax relief for those who least need it. If younger people can afford to put aside money, then it's going to have, what, 30? 40? years of compounded tax-free growth to start with.

What incentives are proposed for those who couldn't put aside money when younger but are able to start later on in life?

And I wonder what the Office for Tax Simplification would have to say about it...