Can and Will the Goalposts Change for Pension Savers?

Twointhebush

I'm starting to have some What If doubts. I can currently access my pension at 55 (a few years off for me), but under a different government that could change radically couldn't it? I like the idea that my money isn't trapped forever and I could take some money out at 55, maybe to buy a property for example. Likewise I'm getting used to the idea of drawdown rather than annuity. If this was changed and I was forced to buy an annuity with my pension, I might think differently about saving into a pension per se. So can and will the goalposts change for pension savers?

kidmugsy

Twointhebush wrote: »

So can and will the goalposts change for pension savers?

No doubt, but it won't matter to you because Mr Corbyn's supporters will send you, being a bourgeois running dog, to the country to spread poo on the fields. Unless of course you wear glasses in which case they will shoot you out of hand.

And Lord knows what they'll do to you if you happen to be Jewish.

But perhaps they won't indulge their baser instincts. Still, wherever you have money it will be vulnerable to confiscation of one kind or another. I wouldn't myself be more worried about pension money than any other sort, except that pension money would doubtless lose its IHT privilege.

How does one put cash in a Swiss bank account? I wish I knew.

Linton

Twointhebush wrote: »

I'm starting to have some What If doubts. I can currently access my pension at 55 (a few years off for me), but under a different government that could change radically couldn't it? I like the idea that my money isn't trapped forever and I could take some money out at 55, maybe to buy a property for example. Likewise I'm getting used to the idea of drawdown rather than annuity. If this was changed and I was forced to buy an annuity with my pension, I might think differently about saving into a pension per se. So can and will the goalposts change for pension savers?

The goalposts for pensions and anything else connected with your finances will almost certainly change over time no matter what the government. What you think those changes will be is up to your political prejudices. Though I would suggest you dont let your political prejudices, or those of people who have an agenda to sell, drive your financial planning.

It would seem very unlikely for the government to force people to buy annuities again - I cant see how it could be to anyones advantage.


An increase in the age at which one can take a pension is possible (even likely), but would be expected to introduced with many years warning.

Whatever happens you will be in a better position with more money saved than less. It would make sense to optimise this for current circumstances to some extent. However as in all things financial diversification is important.

System

In many countries the traditional way of investing for your old age is to put all your spare cash into educating and training your children so that they will become prosperous and be be able to support you.
Brainpower and knowledge are about the only things that can't be confiscated by the government.

dunstonh

I'm starting to have some What If doubts. I can currently access my pension at 55 (a few years off for me), but under a different government that could change radically couldn't it?

Anything can change in most walks of life.

Pension legislation on accessibility is not expected to change as they linked it to 10 years less than state pension age from 2028. the legislation has not gone through yet but it was confirmed last year that it will be included in a future finance act.

I like the idea that my money isn't trapped forever and I could take some money out at 55, maybe to buy a property for example.

That would usually be a very bad move due to the level of tax you would pay (tax on the pension withdrawal and investing in an asset that would be subject to CGT and income tax (rental income) and then included in your estate for IHT). Unless you happen to have a large pension where the 25% only could be used.

Likewise I'm getting used to the idea of drawdown rather than annuity. If this was changed and I was forced to buy an annuity with my pension, I might think differently about saving into a pension per se.

Drawdown has been available for 20 years. Its nothing new. Recent changes made it more common but there really hasnt been any major changes in pensions since 1988. Virtually all changes since then have made the pensions more accessible and flexible with changes made in 2006 and 2015.

The annuity market is barely efficient now. Just 4 providers remain and most insurers have been selling their old life and pensions books to get rid of them to focus on investments and other markets. Sometimes changes mean you cant turn back the clock.

There is no hint of any changes that would see annuities returning. The various calls have been to amalgamate and simplify ISAs and pensions with the most likely change in the near future being the removal of higher rate tax relief to a single rate.

In many countries the traditional way of investing for your old age is to put all your spare cash into educating and training your children so that they will become prosperous and be be able to support you.

That has been a major change in the UK. In the past, we did look after our parents within the family when they got older. Nowadays, people expect the state to pay for it and the cost of providing social care is an increasingly massive burden to the country.

Paul_Herring

Nowadays, people expect the state to pay for it...

Which, technically by proxy. means the children are still supporting their parents, since the 'state' doesn't have any money, except that which they extract by law...

nrsql

Yes and yes.
That's the inherent risk with pensions.

The state pension is a Ponzi scheme and pension funds are an easy target to finance it. The safeguard is public opinion and voter power - you better hope that you are similar to a larger block of voters if you can't access the money you have given away to your pension.

michaels

Was it Hungary that 'Nationalised' private pensions to cover a little short term financing difficulty? I can see there being political will for private 'fat cat' pensions to be shared more equally.....

dunstonh

I can see there being political will for private 'fat cat' pensions to be shared more equally.....

It already exists. It is called the lifetime allowance. it was brought in for that very reason.

Linton

nrsql wrote: »

Yes and yes.
That's the inherent risk with pensions.

The state pension is a Ponzi scheme and pension funds are an easy target to finance it. The safeguard is public opinion and voter power - you better hope that you are similar to a larger block of voters if you can't access the money you have given away to your pension.

Why do you think pensions are a particular target for government sequestration? Surely bank accounts would be easier to get hold of and S&S ISAs are not that different to pensions. And then what about real estate. Its difficult to hide.



It is purely rhetoric to say the SP is a Ponzi scheme. It means nothing. What do you deduce from the statement? NI/SP is certainly sustainable provided the retirement age is adjusted to ensure that the contribution income matches the cost over the long term.


Any system that provides the elderly with the necessities of life by definition takes from the current workforce. This may be via taxes or it could be by the elderly using their savings. The net effect is the same: some of the goods and services created by the working population that would otherwise be available for their benefit is being used by the non-productive elderly. The current system is surely a benefit for the whole population as it provides security. Apart from a few that may fall between the gaps, no-one needs to be worried that that they may have to work until they drop. What is your alternative - dispose of the non productive part of the population?

kidmugsy

Paul_Herring wrote: »

Which, technically by proxy. means the children are still supporting their parents, since the 'state' doesn't have any money, except that which they extract by law...

I fear that misses the point that the children hope that their parents will be supported by somebody else's children.