Jeremy Hunt in plea to early retirees: ‘Britain needs you’

RogerPensionGuy

https://www.express.co.uk/finance/personalfinance/1727404/Pension-lifetime-allowance-Chancellor-Jeremy-Hunt-55-horror-tax-savers-pensions
.

This may help, however people who have activated pensions that have changed their pension AA from 40K to 4K may not find it too helpful I guess.  

zagfles

RogerPensionGuy said:

https://www.express.co.uk/finance/personalfinance/1727404/Pension-lifetime-allowance-Chancellor-Jeremy-Hunt-55-horror-tax-savers-pensions
.

This may help, however people who have activated pensions that have changed their pension AA from 40K to 4K may not find it too helpful I guess.  

Increasing the LTA will be useless for those who've already crystallised their pension(s) and have used up all or nearly all their LTA. And for those who've partially/not crystallised under the LTA but have uncrystallised funds above the LTA it'd give them a tax gain even if they don't return to work.

It might cause people still working but considering retiring because of LTA issues to reconsider. But I doubt it would have any effect on those already retired.

daveyjp

Spinybif said:

Time to phase out all unearned benefits.  Hard workers are fed up paying taxes to see the lazy & stupid  claim benefits without giving anything back.  Simple solution, you have to work for the community on the National Minimum Wage to earn your benefits. Even the disabled could read to children who are behind at school, fully able  could litter pick or  remove graphiti.  I'll bet 90%of those "unable" to get work would suddenly do so. If you have made sacrifices to earn your early retirement and don't need to rely on the state good luck to you. Why breach the LTA only to be penalised by 55% tax whilst working for the privilege 

Who manages all these extra 'public sector' employees?

RogerPensionGuy

zagfles said:

RogerPensionGuy said:

https://www.express.co.uk/finance/personalfinance/1727404/Pension-lifetime-allowance-Chancellor-Jeremy-Hunt-55-horror-tax-savers-pensions
.

This may help, however people who have activated pensions that have changed their pension AA from 40K to 4K may not find it too helpful I guess.  

Increasing the LTA will be useless for those who've already crystallised their pension(s) and have used up all or nearly all their LTA. And for those who've partially/not crystallised under the LTA but have uncrystallised funds above the LTA it'd give them a tax gain even if they don't return to work.

It might cause people still working but considering retiring because of LTA issues to reconsider. But I doubt it would have any effect on those already retired.

They could say because people made decisions on LTA movements that were out of sensible control the LTA % used/consumed can be adjusted to temp people back or stay long in paid employment, the history of the LTA figure from 2006 to date is just bonkers, makes planning just luck.

michaels

I guess there are a lot of Tory MPs who are soon to retire with large DB pots who might do very well if the LTA is increased

pensionpawn

MACKEM99 said:

Has no one thought about the huge number who are still in education at 18 and in some cases after Uni do not go into the workforce till they are 25, thus not paying tax, whereas many of those retiring now started work at age 16 and starting paying tax and NI at a much earlier age.  When I left school there was only 5% who went on to Uni.  Currently I understand it is something like 50%.  This must have an effect?

I was "economically active" through university in the 1980's as I was sponsored (employed) by a company and for the first 3 years of a four year electronic engineering degree receiving a taxable salary between April - September and taking up a full time job on graduating. Shame we don't do that (beside Dyson...) anymore.

zagfles

michaels said:

I guess there are a lot of Tory MPs who are soon to retire with large DB pots who might do very well if the LTA is increased

Well it was them who reduced it from Labour's 1.8 million!

pensionpawn

SouthCoastBoy said:

I think the crux of the issue is working conditions, which I imagine most mps don't grasp. People are fed up with performance reviews, and being told you have to work harder but are offered very little extra in return. I know I am.

Couldn't agree more. Plus spending more time with my family.

pensionpawn

Grumpy_chap said:

Altior said:

I can't see too many people having issues with someone in their 50s retiring if they can afford it themselves. The issue does come if they can't afford it, and expect other taxpayers have to supplement their lifestyle.

The recent press hysteria references these, apparently large, numbers of over-50's that are retiring.  Given the pension freedom rules, would I be fair to assume that this reference to early-retirees really refers to over-55's and not over-50's?

What is the criteria for being able to afford early retirement at age 50?

When the pension freedoms were initially introduced, there was much speculation in the press that people would turn 55, draw the tax-free sum and then splurge out on a sports-car, thus leaving themselves with inadequate means for their full retirement.
There does not seem to be much evidence of that type of behaviour being the reality.

However, I wonder, and it is pure speculation as I have no figures or data, but I still wonder.  Are those retiring at age-55 really able to afford to retire?
At one level, I suppose anyone who has reached LTA should be able to fund a suitable life-style for practical eternity.
However, there have been the odd thread on here with people mentioning that they have reached 55, would it be a good idea to draw their pension lump sum from what seems to be a smallish pension fund, pay off what is left of their mortgage and then live on the remaining pension income going forwards.
I am not yet 55, and I have thankfully achieved mortgage-free, but I do not feel that my pension fund (which is larger than some of these other threads seem to have when deciding for early-retirement) is sufficient for me to consider retirement as soon as 55 arrives.
So, back to my wondering - will we have a swathe of people that have retired early in 2020 at age 55, realising they've run out of money at age 62 and then deciding they have no choice other than to return to work?
At that point, the individuals may have lost much of their working capacity through the time away from the work-place and out of the constraints of forced routine, but they'll be wanting to go back to a higher-end salary like they enjoyed previously yet with the reduced skill set.  I am not in any way saying that age 62 is too old to be very useful in the work-place.  This is in the context of the long break in work and then returning, having not kept abreast of development, etc.  I mean, I find it a bind to go back after two-weeks annual leave in the sun, let alone after a theoretical break of a few years.  In some industries, to maintain employment, certifications have to be renewed periodically but one assumes the early-retiree will not have been doing so.

I suppose we will need to wait another 3 - 5 years or so before we find out whether there were early-retirees thta were not really able to afford to be an early-retiree.

..or someone targeting LTA could end up the richest person in the graveyard. 

OldScientist

daveyjp said:

Spinybif said:

Time to phase out all unearned benefits.  Hard workers are fed up paying taxes to see the lazy & stupid  claim benefits without giving anything back.  Simple solution, you have to work for the community on the National Minimum Wage to earn your benefits. Even the disabled could read to children who are behind at school, fully able  could litter pick or  remove graphiti.  I'll bet 90%of those "unable" to get work would suddenly do so. If you have made sacrifices to earn your early retirement and don't need to rely on the state good luck to you. Why breach the LTA only to be penalised by 55% tax whilst working for the privilege 

Who manages all these extra 'public sector' employees?

According to the ONS ( https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2021 ), in 2022 just over half of UK individuals receive more in benefits than they pay in taxes. So, as a whole, quite a lot of us are on 'unearned benefits' (including, for most people, their state pension since you would have needed to have set £250k aside (out of NI?) to have enough to buy an annuity with an inflation adjusted income of £10k).

In 2016 (couldn't find any more recent figures, see https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/articles/howisthewelfarebudgetspent/2016-03-16 ), of the benefit budget, 42% went on pensions, 16% on incapacity and disability, 1% on unemployment benefits, 10% on housing, 18% on family, income support, and tax credits.

In other words, the plan targets, at best, about 17% (well, 27% if you include housing) of the welfare budget.

Here's some questions as food for thought:

- Who decides what is 'community work'? For example, is picking fruit or veg for a commercial grower 'community work' or not?
- As davejp said, who is tasked with organising and managing the process (this probably means new posts and incurs costs) and who supervises once they are in place?
- Who provides the budget for appropriate PPE?
- For those on disability benefits who decides what an individual is capable of (a medical review takes time and costs money, particularly if it is, as currently, outsourced to the private sector)?
- Who ensures (and pays for) the necessary adjustment to workplaces to ensure suitable working conditions for the disabled?
- Who ensures that the new workers are not exploited or, where they are working with vulnerable people (e.g., children), they do not exploit others?