Telegraph reporting - pensions tax threat

Silvertabby

kidmugsy said:

nigelbb said:  The state pension & the triple lock is the same for all. 

Oh no it isn't.  If you have a new-style State Pension you get the triple lock on all your pension.  If you have the old-style, you don't. Only the basic part gets the triple lock; your additional pension gets CPI.

Yes - it'll be a while yet before everyone is on the full new-style pension.

In my own case, I reach SPA next year and will get the full £179 per week - but only £135 gets the triple lock.  The remainder ( a combination of graduated pension, SP2 top up and post 2016 voluntary Class 3 NI contributions) is still linked to CPI.

ex-pat_scot

MX5huggy said:

I think employees NI should be scrapped, it unfairly falls on low to middle earners, its smoke and mirrors. Why do we pay more tax on earned income than unearned? If you need some system to record NI credits then set NI very low 2% seems to be OK for higher rate payers. 

The initial premise of NI was broadly that it was hypothecated to cover ill health, retirement etc. It was seen as an insurance, and the thinking was that the HR taxpayers had paid enough for "their share" once they hit the HR threshold.

Nowadays the notion of direct attribution / hypothecation against health costs, maternity and sick pay has long gone. Even the notional annual "stamp" for pension entitlement is a little notional these days.

Nowadays, NI is income tax in all but name. 
Politicians daren't increase the headline rate, lest they be accused of raising tax, so instead play the dreadful pantomime of moving allowances, NI, exemptions, tax credits etc instead of admitting that they are raising taxes.
The only real thing stopping them merging income tax and NI would be pensioners, who pay income tax but no NI on pension income.  To change to "one tax" would be a huge blow to them

molerat

Silvertabby said:

kidmugsy said:

nigelbb said:  The state pension & the triple lock is the same for all. 

Oh no it isn't.  If you have a new-style State Pension you get the triple lock on all your pension.  If you have the old-style, you don't. Only the basic part gets the triple lock; your additional pension gets CPI.

Yes - it'll be a while yet before everyone is on the full new-style pension.

In my own case, I reach SPA next year and will get the full £179 per week - but only £135 gets the triple lock.  The remainder ( a combination of graduated pension, SP2 top up and post 2016 voluntary Class 3 NI contributions) is still linked to CPI.

No, the whole of the new pension basic amount, the £179, is increased by the triple lock.  Only the protected payment, anything above the basic £179 and accumulated pre 2016 meaning the starting amount at that time was in excess of the new pension, is restricted to CPI.

Linton

Silvertabby said:

kidmugsy said:

nigelbb said:  The state pension & the triple lock is the same for all. 

Oh no it isn't.  If you have a new-style State Pension you get the triple lock on all your pension.  If you have the old-style, you don't. Only the basic part gets the triple lock; your additional pension gets CPI.

Yes - it'll be a while yet before everyone is on the full new-style pension.

In my own case, I reach SPA next year and will get the full £179 per week - but only £135 gets the triple lock.  The remainder ( a combination of graduated pension, SP2 top up and post 2016 voluntary Class 3 NI contributions) is still linked to CPI.

??? Surely if you reach SPA next year your slate was wiped clean in 2016 and so the whole £179 should be triple locked (not sure about Graduated Pension).    The bit which is raised with CPI is the extra SP which you only get if you had already accrued more than the new state pension in 2016, which you hadnt.

Or am I confused?

kidmugsy

Linton said:

Silvertabby said:

kidmugsy said:

nigelbb said:  The state pension & the triple lock is the same for all. 

Oh no it isn't.  If you have a new-style State Pension you get the triple lock on all your pension.  If you have the old-style, you don't. Only the basic part gets the triple lock; your additional pension gets CPI.

Yes - it'll be a while yet before everyone is on the full new-style pension.

In my own case, I reach SPA next year and will get the full £179 per week - but only £135 gets the triple lock.  The remainder ( a combination of graduated pension, SP2 top up and post 2016 voluntary Class 3 NI contributions) is still linked to CPI.

Or am I confused?

Pensions are so complicated that it's impossible not to be confused from time to time.

jimi_man

Silvertabby said:

kidmugsy said:

nigelbb said:  The state pension & the triple lock is the same for all. 

Oh no it isn't.  If you have a new-style State Pension you get the triple lock on all your pension.  If you have the old-style, you don't. Only the basic part gets the triple lock; your additional pension gets CPI.

Yes - it'll be a while yet before everyone is on the full new-style pension.

In my own case, I reach SPA next year and will get the full £179 per week - but only £135 gets the triple lock.  The remainder ( a combination of graduated pension, SP2 top up and post 2016 voluntary Class 3 NI contributions) is still linked to CPI.

That's not strictly correct. After 2016 (as in your case) you were transferred to the New State Pension (nSP) so the amount that you were given as your 'figure' would be affected by the whole of the triple lock guarantee. 

This from the Govt paper:

The effect is that for people who reach State Pension age from 6 April 2016, the triple lock applies to the full rate of their new State Pension, whereas for people who reached State Pension age before that date it applies to the basic State Pension and does not apply to any additional State Pension they are entitled to.

Silvertabby

jimi_man said:

Silvertabby said:

kidmugsy said:

nigelbb said:  The state pension & the triple lock is the same for all. 

Oh no it isn't.  If you have a new-style State Pension you get the triple lock on all your pension.  If you have the old-style, you don't. Only the basic part gets the triple lock; your additional pension gets CPI.

Yes - it'll be a while yet before everyone is on the full new-style pension.

In my own case, I reach SPA next year and will get the full £179 per week - but only £135 gets the triple lock.  The remainder ( a combination of graduated pension, SP2 top up and post 2016 voluntary Class 3 NI contributions) is still linked to CPI.

That's not strictly correct. After 2016 (as in your case) you were transferred to the New State Pension (nSP) so the amount that you were given as your 'figure' would be affected by the whole of the triple lock guarantee. 

This from the Govt paper:

The effect is that for people who reach State Pension age from 6 April 2016, the triple lock applies to the full rate of their new State Pension, whereas for people who reached State Pension age before that date it applies to the basic State Pension and does not apply to any additional State Pension they are entitled to.

Ok, willing to stand corrected, but my foundation amount in 2016 was about £140 (old basic State pension plus a bit of grad pen and some SP2 top up).  

I haven't worked since then, and so am making up the difference with voluntary Class 3s.  The Government info sheet I read said that voluntary Class 3s paid by those who reached SPA before April 2016 will be triple locked, but will be linked to CPI for those of us who reach SPA/pay Class 3s for post 2016 years.

molerat

Silvertabby said:

jimi_man said:

Silvertabby said:

kidmugsy said:

nigelbb said:  The state pension & the triple lock is the same for all. 

Oh no it isn't.  If you have a new-style State Pension you get the triple lock on all your pension.  If you have the old-style, you don't. Only the basic part gets the triple lock; your additional pension gets CPI.

Yes - it'll be a while yet before everyone is on the full new-style pension.

In my own case, I reach SPA next year and will get the full £179 per week - but only £135 gets the triple lock.  The remainder ( a combination of graduated pension, SP2 top up and post 2016 voluntary Class 3 NI contributions) is still linked to CPI.

That's not strictly correct. After 2016 (as in your case) you were transferred to the New State Pension (nSP) so the amount that you were given as your 'figure' would be affected by the whole of the triple lock guarantee. 

This from the Govt paper:

The effect is that for people who reach State Pension age from 6 April 2016, the triple lock applies to the full rate of their new State Pension, whereas for people who reached State Pension age before that date it applies to the basic State Pension and does not apply to any additional State Pension they are entitled to.

Ok, willing to stand corrected, but my foundation amount in 2016 was about £140 (old basic State pension plus a bit of grad pen and some SP2 top up).  

I haven't worked since then, and so am making up the difference with voluntary Class 3s.  The Government info sheet I read said that voluntary Class 3s paid by those who reached SPA before April 2016 will be triple locked, but will be linked to CPI for those of us who reach SPA/pay Class 3s for post 2016 years.

I don't know where you are reading that but your understanding is way off the mark.  For those retiring post 2016 any amount up to the full new pension amount however and whenever accrued is increased by the triple lock.

jimi_man

Silvertabby said:

jimi_man said:

Silvertabby said:

kidmugsy said:

nigelbb said:  The state pension & the triple lock is the same for all. 

Oh no it isn't.  If you have a new-style State Pension you get the triple lock on all your pension.  If you have the old-style, you don't. Only the basic part gets the triple lock; your additional pension gets CPI.

Yes - it'll be a while yet before everyone is on the full new-style pension.

In my own case, I reach SPA next year and will get the full £179 per week - but only £135 gets the triple lock.  The remainder ( a combination of graduated pension, SP2 top up and post 2016 voluntary Class 3 NI contributions) is still linked to CPI.

That's not strictly correct. After 2016 (as in your case) you were transferred to the New State Pension (nSP) so the amount that you were given as your 'figure' would be affected by the whole of the triple lock guarantee. 

This from the Govt paper:

The effect is that for people who reach State Pension age from 6 April 2016, the triple lock applies to the full rate of their new State Pension, whereas for people who reached State Pension age before that date it applies to the basic State Pension and does not apply to any additional State Pension they are entitled to.

Ok, willing to stand corrected, but my foundation amount in 2016 was about £140 (old basic State pension plus a bit of grad pen and some SP2 top up).  

I haven't worked since then, and so am making up the difference with voluntary Class 3s.  The Government info sheet I read said that voluntary Class 3s paid by those who reached SPA before April 2016 will be triple locked, but will be linked to CPI for those of us who reach SPA/pay Class 3s for post 2016 years.

Hi

It doesn't make any difference how it's made up. For those reaching SPA post 2016, then the nSP will apply and therefore the triple lock applies to the whole amount.

This was queried in the Lords late last year as being potentially unfair against older pensioners who reached SPA pre 2016, against those younger pensioners who reached SPA post 2016, but the answer was basically that it's 'swings and roundabouts'.

zagfles

kidmugsy said:

zagfles said: The AA is already "decoupled" from earnings, except for very high earners affected by the taper.

Not so: carry forward ties together your AA and your earnings, in the sense, for example, that somebody on less than £40k p.a. income can't exploit carry forward.
To simplify it is necessary to simplify. Funking it will just leave complications in place or introduce new ones.

If you mean the tax relief limit, then if recycling rules also abolished, everyone over 55 could simply use a simple tax dodge of paying £20k a year into a pension and taking it straight out again, generating an extra £5k tax free cash allowance. You need to think about it a bit more!

On the contrary, that's part of the plan.  Let them do it.  One reason that things get so complicated is that puritan obsessives (e.g. Gordon Brown) insist on imposing complexity in fear that otherwise people might enjoy themselves.

Rebuttal in italics.

First paragraph is complete rubbish, I've explained it hundreds of times here, CBA doing it again.

Second misses the whole point of pensions. They're supposed to encourage savings for old age not give over 55's an extra £5k PA. Won't happen.