Rishi after Pensions Tax Relief

michaels

I always wonder what some of these things 'cost' the govt - if most of those earning less than 24k are on universal benefit then it only costs the gov 20 something p in the £ after tax and minimum wage increases generally move money from employers to the govt through the same mechanism. 

Not sure how if the govt can't afford cost of living increases for public sector workers that private employers are assumed to be able to afford 3 x CPI increases?  Seems odd to be pricing people out of jobs with inflation already forecast to go to 2.6m.

michaels

nigelbb said:

Why the mad rush to cut government spending by tax rises & a public sector pay freeze?  It would be nice to tidy up all the tax avoidance schemes like salary sacrifice & the self-employed paying themselves dividends rather than salary but that is a secondary issue. The coronavirus pandemic is a once in a lifetime event akin to a war & a once in a lifetime event so the government should fund it over the course of a lifetime. According to the BBC the cost of government borrowing this year will be £372 billion. We have historically low interest rates at present so paying back that debt over the next eighty years amounts to less than £5 billion per year. The government borrowed £55 billion last year so an increase of under 10% will barely be felt.

https://www.bbc.co.uk/news/business-52663523

Not sure how many times we have gone over this but one person's 'salary sacrifice' is another's 'employer pension contribution' as these are identical in practical operation for DC and even harder to untangle for unfunded DB.

Thrugelmir

nigelbb said:

Why the mad rush to cut government spending by tax rises & a public sector pay freeze? 

Economy has permanently shrunk and the fog has yet to clear.  Money paid in extra wages doesn't flow back into the economy. More likely spent on a foreign holiday or imported car. Funding needs to be directed in providing employment. Governments easiest target in this regard is infrastructure projects. 

michaels

Looks like we spoke to soon, some sort of change to indexation rules affecting index linked bonds and DB pensions (the BBC are either to dumb to explain it or assume their readership are too dumb to understand it)

https://www.bbc.co.uk/news/business-55070292

garmeg

michaels said:

nigelbb said:

Why the mad rush to cut government spending by tax rises & a public sector pay freeze?  It would be nice to tidy up all the tax avoidance schemes like salary sacrifice & the self-employed paying themselves dividends rather than salary but that is a secondary issue. The coronavirus pandemic is a once in a lifetime event akin to a war & a once in a lifetime event so the government should fund it over the course of a lifetime. According to the BBC the cost of government borrowing this year will be £372 billion. We have historically low interest rates at present so paying back that debt over the next eighty years amounts to less than £5 billion per year. The government borrowed £55 billion last year so an increase of under 10% will barely be felt.

https://www.bbc.co.uk/news/business-52663523

Not sure how many times we have gone over this but one person's 'salary sacrifice' is another's 'employer pension contribution' as these are identical in practical operation for DC and even harder to untangle for unfunded DB.

Easy solution like Alistair Darling's "anti-forestalling" rule from years ago - allow existing salary sacrifice percentages to continue but no further increases allowed. Reductions allowed but cannot revert back.

Still a bit of a pain though.

ussdave

michaels said:

Looks like we spoke to soon, some sort of change to indexation rules affecting index linked bonds and DB pensions (the BBC are either to dumb to explain it or assume their readership are too dumb to understand it)

https://www.bbc.co.uk/news/business-55070292

Aren't a lot of DB schemes these days linked to CPI instead of RPI, so impact is limited?
I may have misunderstood - have read it in a rush.

michaels

garmeg said:

michaels said:

nigelbb said:

Why the mad rush to cut government spending by tax rises & a public sector pay freeze?  It would be nice to tidy up all the tax avoidance schemes like salary sacrifice & the self-employed paying themselves dividends rather than salary but that is a secondary issue. The coronavirus pandemic is a once in a lifetime event akin to a war & a once in a lifetime event so the government should fund it over the course of a lifetime. According to the BBC the cost of government borrowing this year will be £372 billion. We have historically low interest rates at present so paying back that debt over the next eighty years amounts to less than £5 billion per year. The government borrowed £55 billion last year so an increase of under 10% will barely be felt.

https://www.bbc.co.uk/news/business-52663523

Not sure how many times we have gone over this but one person's 'salary sacrifice' is another's 'employer pension contribution' as these are identical in practical operation for DC and even harder to untangle for unfunded DB.

Easy solution like Alistair Darling's "anti-forestalling" rule from years ago - allow existing salary sacrifice percentages to continue but no further increases allowed. Reductions allowed but cannot revert back.

Still a bit of a pain though.

You still have new employees though, if the package including pension is 70k is that 50+20 or 60+10?

garmeg

michaels said:

garmeg said:

michaels said:

nigelbb said:

Why the mad rush to cut government spending by tax rises & a public sector pay freeze?  It would be nice to tidy up all the tax avoidance schemes like salary sacrifice & the self-employed paying themselves dividends rather than salary but that is a secondary issue. The coronavirus pandemic is a once in a lifetime event akin to a war & a once in a lifetime event so the government should fund it over the course of a lifetime. According to the BBC the cost of government borrowing this year will be £372 billion. We have historically low interest rates at present so paying back that debt over the next eighty years amounts to less than £5 billion per year. The government borrowed £55 billion last year so an increase of under 10% will barely be felt.

https://www.bbc.co.uk/news/business-52663523

Not sure how many times we have gone over this but one person's 'salary sacrifice' is another's 'employer pension contribution' as these are identical in practical operation for DC and even harder to untangle for unfunded DB.

Easy solution like Alistair Darling's "anti-forestalling" rule from years ago - allow existing salary sacrifice percentages to continue but no further increases allowed. Reductions allowed but cannot revert back.

Still a bit of a pain though.

You still have new employees though, if the package including pension is 70k is that 50+20 or 60+10?

As I said, a pain.

Stick it back in the "too difficult" or "can of worms" box.

zagfles

michaels said:

Looks like we spoke to soon, some sort of change to indexation rules affecting index linked bonds and DB pensions (the BBC are either to dumb to explain it or assume their readership are too dumb to understand it)

https://www.bbc.co.uk/news/business-55070292

Usual sensationalist rubbish from the BBC. It's the "replacing" of the flawed RPI with CPIH, something that has been discussed for ages and what the Chancellor seems to have done is delay it's implementation till 2030, rather than 2025 which some were arguing for. So the headline should really have been that he's delaying the implementation of the change which the ONS were arguing for, so pensioners with RPI linked pensions will get above (real) inflation increases for another 10 years.

As someone with a DB pension linked to RPI, I see this as good news because the demise of RPI was inevitable, this preserves it for another 10 years. Cheers, Rishi

zagfles

ussdave said:

michaels said:

Looks like we spoke to soon, some sort of change to indexation rules affecting index linked bonds and DB pensions (the BBC are either to dumb to explain it or assume their readership are too dumb to understand it)

https://www.bbc.co.uk/news/business-55070292

Aren't a lot of DB schemes these days linked to CPI instead of RPI, so impact is limited?
I may have misunderstood - have read it in a rush.

I think they are in the public sector but not the private. An actual minor pension advantage in the private sector!