Threats to PCLS in the budget?

dunstonh

randompenitent said:

dunstonh said:

Shall we just copy and paste the responses that have been made for the last 33 years every time a budget is due?

Seems fair enough. (But why only the last 33 years?)

1988 was when tax free cash was set to 25%.  (2006 increased the amount of tax free cash available by including some pensions that had less or no tax free cash available.  2015 further increased tax free cash benefits).

So, since 1988, the trend has been to increase tax free cash.  That is not unexpected as the economy benefits from the inflow of money from pensions.   

Malthusian

Mick70 said:

Many also now have second homes to rent out and use as pensions and this trend is growing  , this could be another target ?

The Treasury is well aware that every time you make pensions less attractive (as opposed to making them more attractive but not letting people put in as much as they'd want, which has been the direction of travel for the last decade or so) people stop putting their money in pensions "where I might never see it again" and put into property instead "where it's safe because it's real".

So instead of investing for their retirement by investing in businesses and government debt (much of it in the UK), they invest for their retirement by pushing up property prices and stopping young people and locals from getting on the housing ladder.

This not only stokes house price inflation but gums up the economy (because it ties up money in assets which can't easily be realised) and reduces the living standards of retirees (because they can't draw down from their capital in the way they can with more liquid pension funds, they're limited to spending the income yield from their property).

No part of this is a Government objective. That doesn't mean that raiding the tax free lump sum can't happen (the Government does stupid things all the time when there's enough popular pressure) but it does explain why people have been claiming the tax free lump sum was under threat for decades and it hasn't happened.

The idea that the tax free lump sum is under threat is floated before every budget because a) it sells newspapers b) it makes whatever measures the Government actually announces instead seem more reasonable.

jamjar92

The whole of the LGPS AVC industry is built around providing a TFLS (subject to tax rules) more so now, since there is no more an automatic lump sum in the post 2015 CARE pension to take.