"Final salary pensioners may have income limits halved"

squirrelpie

say you have a 50k pension, then the multiplier of 20 would make that 1 million so inside the LTA, if the multiplier was 40 then the pot value would be 2 million so tax payable +++.

Seems perfectly reasonable to me that you should pay some [additional] tax if your pension is 50k!

hugheskevi

I think some political realism is needed here.

Any increase to DB valuation would hit the NHS pension scheme hardest, as the largest open DB scheme with a lot of high earners.

The Government in general and a new Tory leader in particular is unlikely to want to push a measure which is going to exacerbate NHS bad news stories.

Public service pension schemes face huge upheaval as a result of McCloud, so again the Treasury is unlikely to want to start pushing through controversial changes that will be strongly opposed by unions.

Quite why a private financial company thinks an obvious way to recoup the cost of McCloud - arising from better pensions to most members - is to significantly worsen the pension position of long serving and higher earning staff is unclear to me. Much more obvious would be to move all staff to post 2015 schemes and either increase contributions or reduce actual rate.

jimi_man

hugheskevi wrote: »

I think some political realism is needed here.

Any increase to DB valuation would hit the NHS pension scheme hardest, as the largest open DB scheme with a lot of high earners.

The Government in general and a new Tory leader in particular is unlikely to want to push a measure which is going to exacerbate NHS bad news stories.

Public service pension schemes face huge upheaval as a result of McCloud, so again the Treasury is unlikely to want to start pushing through controversial changes that will be strongly opposed by unions.

Quite why a private financial company thinks an obvious way to recoup the cost of McCloud - arising from better pensions to most members - is to significantly worsen the pension position of long serving and higher earning staff is unclear to me. Much more obvious would be to move all staff to post 2015 schemes and either increase contributions or reduce actual rate.

Yes and no. The NHS is certainly a big organisation but there are also many people who aren’t large earners, quite often don’t stay for years and years and so are unlikely to fall foul of this.

Contrast that with the police where even the lowest rank retiring with a full 30 year pension, gets around £26k and so would fall foul of the 40x multiplier.

westv

I was under the impression that the LTA was only applicable to DC pensions. The 20 x current is just used to calculate how close any DC pot is to the limit by taking account of the DB scheme. So anybody on ,say, a £40k DB pension wouldn't be affected on a x 40 system unless they also contributed to a DC scheme as well.

NoMore

Nope LTA applies to DB pensions as well whether you have dc pot or not. 20x used to calculate the DB pension in relation to the LTA.

shinytop

Nope, applies to DB too. Hence the recrnt publicity re doctors' pensions. DB pension gets reduced to pay any tax due.

Edit- beaten to it!

https://www.bma.org.uk/advice/employment/pensions/lifetime-allowance

arnoldy

Yes the DB is undervalued at 20x -especially for public sector which do have full inflation proofing and spouse benefits.


BUT these things need to be seen in the round. Yes those working in NHS/LGPS have fabulous pension schemes most of us could only dream about. However they are PAYE - i.e. they pay lots of income tax!!!


Many of those with DC pensions are self employed/private traders and with a little bit of thought it is possible to pay much reduced or almost no income tax. That's why the BBC pays its Stars through private service Companies for example. No 45% tax there!! But then again the self employed life isn't easy either.


So the whole system needs looking at for fairness, not just tinkering with a bit of it like the pension 20X

GunJack

Taking it to 40x would be so punitive it should be a political non-starter. IF they're thinking of altering it, I could see a case for 25x maybe, but no higher.

Retrospectively hammering people fortunate to have DB pensions (most of which will have had them since before LTAs were introduced) is just plain wrong IMHO.

nigelbb

GunJack wrote: »

Taking it to 40x would be so punitive it should be a political non-starter. IF they're thinking of altering it, I could see a case for 25x maybe, but no higher.

Retrospectively hammering people fortunate to have DB pensions (most of which will have had them since before LTAs were introduced) is just plain wrong IMHO.

Especially in the case of NHS & other public sector pensions where the pension is effectively just deferred salary.

Paul_Herring

nigelbb wrote: »

Especially in the case of NHS & other public sector pensions where the pension is effectively just deferred salary.

All pensions are considered to be deferred salary, no?