Pls help me to retire early - DC pension - 3 years later

RNV

I may soon find out that my last 3 years of massive contributions were a big mistake....

Re 09:47 post   Money blog: Chancellor 'considering change to pension lump-sum' - with big cut to tax-free amount | UK News | Sky News

yet another speculation, I know, but still does make you chuckle...

michaels

RNV said:

I may soon find out that my last 3 years of massive contributions were a big mistake....

Re 09:47 post   Money blog: Chancellor 'considering change to pension lump-sum' - with big cut to tax-free amount | UK News | Sky News

yet another speculation, I know, but still does make you chuckle...

Oh good, the government plan to steal (that is the right word) £25k from me that I have saved in a pension rather than an ISA to pay of my mortgage.  Almost all my pension contributions were made from income that would have been taxed at 20% and will all be taxed at 20% on the way out so I am not benefitting from income tax relief, I was only potentially benefitting from the TFLS a whole 6.25%

FIREDreamer

RNV said:

I may soon find out that my last 3 years of massive contributions were a big mistake....

Re 09:47 post   Money blog: Chancellor 'considering change to pension lump-sum' - with big cut to tax-free amount | UK News | Sky News

yet another speculation, I know, but still does make you chuckle...

Link doesn’t take you to the story, so a screenshot is shown below.

FIREDreamer

More here …

https://moneyweek.com/personal-finance/pensions/pension-tax/will-labour-axe-pension-tax-free-cash

I wonder who the provider approached by the government is.

michaels

As above, for a basic rate tax payer the only advantage to paying into a pension is the TFLS whereas for a higher rate tax payer there would still be the win from saving 40% on the way in and only paying 20% on the way out.

Possibly the most regressive change that could be made from a party that claims to support working people - surely they could not be that blatant?!

Albermarle

Steve Webb, the ex pensions minister, who seems to pop up regularly in these various speculative articles, says that getting rid of the 25% tax free will be off the agenda. He also says that whilst limiting tax free cash to a lower figure than now has no doubt been discussed, it would seem unlikely. The amount of money it would generate quickly is small, and transitional arrangements would be complicated.
In real terms, inflation has already reduced it significantly anyway.

NI on employer contributions seems to be gaining some credence though, especially as it will effectively scupper the loophole of salary sacrifice, although that will depend on the % levied.

FIREDreamer

Albermarle said:

Steve Webb, the ex pensions minister, who seems to pop up regularly in these various speculative articles, says that getting rid of the 25% tax free will be off the agenda. He also says that whilst limiting tax free cash to a lower figure than now has no doubt been discussed, it would seem unlikely. The amount of money it would generate quickly is small, and transitional arrangements would be complicated.
In real terms, inflation has already reduced it significantly anyway.

NI on employer contributions seems to be gaining some credence though, especially as it will effectively scupper the loophole of salary sacrifice, although that will depend on the % levied.

Still saves employee NI though. So salary sacrifice is still worth it.

Albermarle

FIREDreamer said:

Albermarle said:

Steve Webb, the ex pensions minister, who seems to pop up regularly in these various speculative articles, says that getting rid of the 25% tax free will be off the agenda. He also says that whilst limiting tax free cash to a lower figure than now has no doubt been discussed, it would seem unlikely. The amount of money it would generate quickly is small, and transitional arrangements would be complicated.
In real terms, inflation has already reduced it significantly anyway.

NI on employer contributions seems to be gaining some credence though, especially as it will effectively scupper the loophole of salary sacrifice, make operating salary sacrifice less attractive for employers , although that will depend on the % levied.

Still saves employee NI though. So salary sacrifice is still worth it.

Yes you are right, I have adjusted my comments .

michaels

Albermarle said:

Steve Webb, the ex pensions minister, who seems to pop up regularly in these various speculative articles, says that getting rid of the 25% tax free will be off the agenda. He also says that whilst limiting tax free cash to a lower figure than now has no doubt been discussed, it would seem unlikely. The amount of money it would generate quickly is small, and transitional arrangements would be complicated.
In real terms, inflation has already reduced it significantly anyway.

NI on employer contributions seems to be gaining some credence though, especially as it will effectively scupper the loophole of salary sacrifice, although that will depend on the % levied.

It is an interesting idea, I wonder how much it would raise and how that is split between employers and those benefiting from a sal sac rebate - the latter will struggle to complain as they will still be avoiding employees NI that most have to pay.   It will appear to cost the public sector a lot so sounds 'fairer' but of course in reality net cost is zero for public sector.