Budget 15th March2023, any pension changes predictions or views?

zagfles

JoeCrystal said:

Retired_Minky said:

According to the FT the money purchase allowance is also going up to £10k

That is interesting; I wonder if they will bump up the Tax relief limit on member contributions as well, which is, at the moment, is limited to relief on contributions up to the higher of: 100% of your UK taxable earnings or £3,600. If they increase from £3,600  to £10k, I will be pretty miffed about that!

Other than that, I doubt this budget will benefit me apart from very minor changes in take-home pay if any.

Why would they increase the tax relief limit, that makes no sense, they're trying to encourage people to stay in work. Increasing the tax relief limit just gives a tax break to non-earners or very low earners.

Increasing the MPAA makes sense so people who've started drawing a pension can go back to work and not get penalised for normal levels of workplace pension contributions.

RogerPensionGuy

Labour will comment on many items in tomorrow's budget but today on TV a Labour spokesperson made no negative comments about LTA, AA and MPAA going up when asked.

Just remember LTA was previously 1.8M and AA was 255K way back 10/15 years ago so overall no big news here, just doing sensible stuff that should of never been required but was because they tinkered with it.

The BBC TV showed a picture saying source is HMT and it showed what all media outlets are saying LTA 1.8M and AA 60K. Also to note many outlets are saying the MPAA to 10K.

Just thinking the last few years they were putting about 800K LTA and 25/30K AA and possible goal posts just kept getting pulled, a total shambles since they started reducing from that 1.8M LTA. 

If all the above turns out to be true, I think more people will remain/rejoin the workforce and they will not lose so many votes at the next election, it certainly will not lose them any votes.

Grumpy_chap

MK62 said:

someone who retired last year with a £1.8M pot would be pretty miffed if there's no backdating

Yes, but that would be no different to the issue when there have been various "holiday" periods for SDLT.  Someone who completed "yesterday" would feel miffed, but that is how it is and there is no backdating.  I can't see that there would be any backdating if the LTA is uplifted either.

We all make decisions based upon the rules as they are at the time and in the knowledge the rules can change in the future. 
As an example, I have based my pension contributions this year based on the current rules and my expectation that the rules will be the same next year - basically spreading available contributions over time to spread the tax minimisation.  If the AA increases next year, then I would have made higher pension contributions this year as the higher AA next year would allow me to achieve the same "spreading".  C'est la vie!

I do think a far bigger change to keeping people working would be to eliminate the cliff-edge measures.  That seems to mean bringing the 45% rate down to £80k but then allowing everyone to retain the personal allowance.  Also, some measure to eliminate the child care fees cliff edge at £100k

zagfles

DoublePolaroid said:

MK62 said:

If the LTA is raised to £1.8M, I wonder if the max tax free cash will rise with it to £450k (currently it's 25% of the LTA, c268k).

 

If so, someone who retired last year with a £1.8M pot would be pretty miffed if there's no backdating........but the rest of the country might be pretty miffed if the chancellor spends what little he has on this kind of tax giveaway......

The optics might well be in the realms of (to borrow a recent phrase) "God, this is awful"..........it's not so much whether it's right or wrong to do this, it's case of whether it's right to do it at this time, when the majority are being asked to stump up more tax (through frozen allowances) to help the county's coffers.....

"We're in it together" is starting to sound very hollow indeed.....

My bet is that this will be explicitly packaged as part of Hunt's plan to "save" the NHS, the health service being utilised as a metaphorical human shield against criticism.

The fact that it will help lots of people entirely unconnected to the health service (and whose voting preference could possibly be influenced by the policy) will be held on the down-low.

The NHS isn't the only area with skills shortages, but it's probably the one that works best when trying to score political points. Maybe they're after Gary Lineker's vote

SpeedSouth

If the AA increase does happen, could it be introduced for this tax year 22/23 would you think?  I imagine it would be from 23/24 but would be nice if I could drop some more in this year.

Albermarle

arnoldy said:

Sea_Shell said:

You just know that the opposition will have a field day with those increases.  

"helping the rich" etc etc.


I wonder...IF they did win next time out, will they REVERSE these changes, or suddenly go very quiet on them.  

Yup you can hear the melody of the words now, "...Jade single mother with 3 disabled children can't even afford shoe leather to walk to the foodbank whilst the rich get £1.8 million tax free and can pass that on to their kids" etc etc 

I wonder if there might be a sting in the tail/small print of a review of the pension inheritance tax rules. Whilst an argument can be made for increasing LTA/AA, the pension inheritance tax exemptions can only really be seen as largely benefitting wealthier households/Top 10% passing on large sums down the family line, bolstered by tax relief but paying little or no tax back. If the LTA goes up to £1.8 million, the scope for doing this gets even greater.
Along with the property owning divide, it just further increases inequality. Could be a good target for Labour one day.

zagfles

Grumpy_chap said:

MK62 said:

someone who retired last year with a £1.8M pot would be pretty miffed if there's no backdating

Yes, but that would be no different to the issue when there have been various "holiday" periods for SDLT.  Someone who completed "yesterday" would feel miffed, but that is how it is and there is no backdating.  I can't see that there would be any backdating if the LTA is uplifted either.

We all make decisions based upon the rules as they are at the time and in the knowledge the rules can change in the future. 
As an example, I have based my pension contributions this year based on the current rules and my expectation that the rules will be the same next year - basically spreading available contributions over time to spread the tax minimisation.  If the AA increases next year, then I would have made higher pension contributions this year as the higher AA next year would allow me to achieve the same "spreading".  C'est la vie!

But part of the objective is to get people who've early retired back into work. If someone has retired because they hit 100% LTA and they've crystallised their pension, they're not helped at all, so they're not going back to work.

So they might do something like give people who've crystallised already at a lower LTA some more LTA for future pension inputs.

zagfles

Albermarle said:

arnoldy said:

Sea_Shell said:

You just know that the opposition will have a field day with those increases.  

"helping the rich" etc etc.


I wonder...IF they did win next time out, will they REVERSE these changes, or suddenly go very quiet on them.  

Yup you can hear the melody of the words now, "...Jade single mother with 3 disabled children can't even afford shoe leather to walk to the foodbank whilst the rich get £1.8 million tax free and can pass that on to their kids" etc etc 

I wonder if there might be a sting in the tail/small print of a review of the pension inheritance tax rules. Whilst an argument can be made for increasing LTA/AA, the pension inheritance tax exemptions can only really be seen as largely benefitting wealthier households/Top 10% passing on large sums down the family line, bolstered by tax relief but paying little or no tax back. If the LTA goes up to £1.8 million, the scope for doing this gets even greater.
Along with the property owning divide, it just further increases inequality. Could be a good target for Labour one day.

Quite likely. They could for instance make inherited pensions taxable on death under 75, as it is for death over 75. This would be a simple change and they can't be accused of a retrospective change which upsets people's planning as no-one plans to die under 75.

arnoldy

zagfles said:

Grumpy_chap said:

MK62 said:

someone who retired last year with a £1.8M pot would be pretty miffed if there's no backdating

Yes, but that would be no different to the issue when there have been various "holiday" periods for SDLT.  Someone who completed "yesterday" would feel miffed, but that is how it is and there is no backdating.  I can't see that there would be any backdating if the LTA is uplifted either.

We all make decisions based upon the rules as they are at the time and in the knowledge the rules can change in the future. 
As an example, I have based my pension contributions this year based on the current rules and my expectation that the rules will be the same next year - basically spreading available contributions over time to spread the tax minimisation.  If the AA increases next year, then I would have made higher pension contributions this year as the higher AA next year would allow me to achieve the same "spreading".  C'est la vie!

But part of the objective is to get people who've early retired back into work. If someone has retired because they hit 100% LTA and they've crystallised their pension, they're not helped at all, so they're not going back to work.

So they might do something like give people who've crystallised already at a lower LTA some more LTA for future pension inputs.

Agreed but the bottom line is that those affected by LTA are very small numbers so won't make a big difference in grand scheme of things about return to work. The big issue for numbers is sickness/disability and part time. This is related to tax and benefits policy and so Hunt needs to do more to make pay work for low and medium earners, clear blue water between working and being on UC. Why get up at 6am every day to flog your guts off for £5-£10 a day better off question for many. 

njm123

Sea_Shell said:

You just know that the opposition will have a field day with those increases.  

"helping the rich" etc etc.


I wonder...IF they did win next time out, will they REVERSE these changes, or suddenly go very quiet on them.  

The LTA was much higher under the previous Labour administration so they'd probably be better attacking on the lines that they welcome the rise as it addresses issues in the NHS caused by Conservative policies, and sidestep the benefits the rich argument.

As I've retired early and am very much it the target group for the media and tories -"get back to work you owe it to the country message"  all I'm hoping for from the budget is that there are no direct or indirect measures that seriously harm my financial planning.

Either in the form of a "Stick" designed to disadvantage early retirees or by measures that "benefit" the groups that they are targeting for votes but just end by persisting high inflation for longer.

I'd suggest a full review of the tax/benefits/pension system to either smooth out some of the anomalies/cliff edges caused by the continual tinkering  or redesign for how society is now.  However I fear that would get skewed by the various lobby groups and politicians need to be elected that they'd just make an even bigger mess.