Budget: Hammond mulling tax cuts for young paid for by slashing pension tax reliefs

Malthusian

economic wrote: »

my dad is about to cash in his pension for an annuity at 10%. worth doing now or wait till the budget?

10% sounds like a guaranteed annuity rate, unless your dad is very old or in poor health. What difference do you think the Budget will make?

economic

Malthusian wrote: »

10% sounds like a guaranteed annuity rate, unless your dad is very old or in poor health. What difference do you think the Budget will make?

yes it is a guaranteed rate, hes not in poor health and he is only in his early 60s.

not sure just wondering if he should wait till after budget is announced in case there is a more optimal decision to be made (eg tax free lump sum before the annuity).

Linton

economic wrote: »

yes it is a guaranteed rate, hes not in poor health and he is only in his early 60s.

not sure just wondering if he should wait till after budget is announced in case there is a more optimal decision to be made (eg tax free lump sum before the annuity).

With a 10% annuity rate it would seem that under normal circumstances taking any tax free lump sum would be sub-optimal.

economic

Linton wrote: »

With a 10% annuity rate it would seem that under normal circumstances taking any tax free lump sum would be sub-optimal.

yes i would agree. he doesn't need the cash (he has a fair bit in ISAs and normal savings accounts). so its best to just go ahead with the annuity.

Paul_Herring

Thrugelmir wrote: »

Pension tax relief costs £50 billion a year. Restricting relief to high rate taxpayers in some manner seems a fair enough target. Given there's still a budget deficit that needs to be bridged.

Not collecting a tax, for which legal provision has been made, isn't a cost, in much the same way that a £5k rise I didn't get isn't a reduction in pay, and a postponed excise duty increase on petrol isn't a saving to the consumer.

And it's not (a total) relief - it's (largely) a postponement of tax that will be paid*

What the government should be doing is downsizing, and spending less of our money, not coming up with ever more inventive mission-creep-ideas with which to spend more of it. (HS2, fake sockpuppet health charities, Kids Company, Ethiopian Spice Girls, foreign aid paying for space programmes, introducing more layers of government to make devolved areas, spending half the NHS budget on compensation claims, ....)

Parking_Trouble wrote: »

Corbyns populist policies sound good to me, free education, affordable social housing, re-nationalisation, more manufacturing, etc.
I just wish I could believe he can deliver it. No one else has managed.

At the risk of partaking of a pinch of hyperbole, he wants to nationalise Greggs and have it free at the point of use, and wants workers to pay for it by knocking the tax allowance back to £4,300.



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* 25% TFLS and any potential change in marginal tax-rates notwithstanding.

Thrugelmir

Paul_Herring wrote: »

And it's not (a total) relief - it's (largely) a postponement of tax that will be paid*

Not if it's 40% in and 20% out. Then there's the issue of loss of ERS NIC on salary sacrifice schemes. Also the intentional reduction in income to beneath £50k in order that there's no requirement to repay any child benefit. The system benefits those that can most afford it.

What's required is simplification so that people feel treated equally.

chucknorris

economic wrote: »

yes it is a guaranteed rate, hes not in poor health and he is only in his early 60s.

not sure just wondering if he should wait till after budget is announced in case there is a more optimal decision to be made (eg tax free lump sum before the annuity).

Obviously if it sounds too good to be true, then it isn't what I thought that you were talking about (I incorrectly assumed that you were talking about an enhanced annuity due to ill health), so what is a 'guaranteed rate annuity' does it expire before death, ie. based upon a defined duration rather than until death?

economic

chucknorris wrote: »

Obviously if it sounds too good to be true, then it isn't what I thought that you were talking about (I incorrectly assumed that you were talking about an enhanced annuity due to ill health), so what is a 'guaranteed rate annuity' does it expire before death, ie. based upon a defined duration rather than until death?

the rate is what he will get till death. there are various options, theres a 10yr one where if he dies within 10 years then my mum will get the remaining years till 10 years the full amount.

he is a smoker so he is trying to find out if he can get even better rates, but he is of course happy with the 10%.

economic

guaranteed rates are basically enhanced rates above the market rate. they are a special feature of some pensions (not sure they exist anymore) - i guess as a selling point as the pension company assumed the high returns in the 80s/90s would continue.

datlex

atush wrote: »

Will he still be in the job come the budget?

I suspect so seeing as how the budget is on 22nd November

Malthusian wrote: »

All sorts of radical ideas get floated in the newspapers before a Budget so that when the real thing comes, everyone breathes a sigh of relief when it turns out to be the usual boring deckchair-rearranging.

The Torygraph has already skipped ahead to the bit where the whole thing is oversimplified and misleadingly described as an "X" tax (pasty tax, dementia tax, bedroom tax),.

My partner's dad would have benefitted from the so called dementia tax. As it stands he has to pay in full for his care if he goes into a home. He has less than £100k in savings and assets. Presently he faces loosing them all except for the last £23,000 due to his needs. Every old person could need care, even if they don't have dementia. He has to pay for home care as he has more than £23k in the bank. Though he can and does claim attends allowance which is not means tested. He owns half of a property with a housing association (recently house on street went for £85K.). Had the Tories kept their policy, he and others in a similar situation would know that they would not lose virtually everything.

Eric_the_half_a_bee wrote: »

I know that there is speculation around pension tax reliefs before every budget, but this is being widely reported:

http://www.dailymail.co.uk/news/article-4983488/Tax-threat-older-workers-autumn-budget.html
http://www.cityam.com/273873/budget-2017-philip-hammond-mulling-tax-cuts-young-paid
http://www.telegraph.co.uk/news/2017/10/15/philip-hammond-mulling-new-age-tax-raid-older-workers-budget/
https://www.moneymarketing.co.uk/pension-tax-relief-firing-line-budget/

I saw these earlier today. What is not clear is how it will effect folk in their 40s and 50s. We already missed out on LISAs by a few years. Does this mean it will now be even harder for us to save towards our retirements?