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

Universidad

NedS said:

Rather than constantly raising State Pension Age, I would prefer to see the State Pension means tested

Either way, my generation pays for it. Means testing the state pension means that the people who've done the most to prepare for retirement pay for it. I suppose there aren't many conservative voters in my generation, but there may never be again at this rate.

RogerPensionGuy

NedS said:

What I think should happen:

LTA to increase by 10.1% in April and thereafter by CPI inflation.

They need to address the LTA for those who have already retired and hit 100%. An increase in the LTA in April doesn't help them (thinking NHS consultants etc). So for those who have already used 100%, they can also benefit from the monetary value of any rises (10.1% of £1,073,100) and any increases thereafter.

What I would like to see happen:

Abolish salary sacrifice and make a flat rate of tax relief for everyone at 25% or 30% depending how the sums stack up. This could be cost neutral and benefit lower/average earners encouraging them to save more for retirement. Unlikely to happen under a Tory government as it would likely disproportionately hit their voter base. Very unlikely to happen in April as it would constitute major reform and likely require much consultation.

What might need to happen:

Rather than constantly raising State Pension Age, I would prefer to see the State Pension means tested like Child Benefit, where it tapers off for people with pension income between £50k to £60K - so it effectively tops up anyone's income to £60k if they have pension income between £50k to £60K, but is completely removed for those with pension income about £60k (or set your own limits as you feel appropriate). I feel continuing to push back the state pension age is advantageous to the wealthy/healthy who are statistically more likely to live longer and disadvantages the less wealthy/healthy who are statistically less likely to even reach state retirement age.

Reference the LTA going up, they could just plonk on an extra say 10% even if a person has currently used 100% of say 1M (the lowest LTA ever figure) they could now potentially use another 10% of today's or tomorrow's LTA figure.

The government has been talking about doing pension stuff that may entice some people to work longer or actually rejoin the workforce. 

America's FED keep saying they need to slug wage inflation and ultimately increase the unemployment % rate to arrest the current sticky inflation, getting the older generation to work longer or rejoin the workforce would be a route to achieving their aims.

SouthCoastBoy

I can't see state pension being means tested, it's a massive vote loser and will also encourage people to retire earlier, the opposite of what the govt want

michaels

MX5huggy said:

Abolish employees NI and set Income Tax at 32%, 45% and 50%. 

For those aged under the SPA - you can still retire at 55/57/58 but only those over SPA avoid NI? as they are no longer accruing any additional state pension....

Very bad idea for me personally but I can see the logic

Grumpy_chap

RogerPensionGuy said:

1. LTA will start being raised very soon to maybe 1.3M straight away and then on an inflation index or similar or maybe just starts going up this April on such an index.

2. MPAA to 10K in April. 

3. AA to 30K PA in April. 

4. Input tax relief to 30% in April for all.

5. Tax-free 25% will be reducing in April. 

6. Various protections will be enabled allowing old or current rules to be applied for people with well established pension plans and schemes. 

Any comments are only ever wild guesses and any that turn out to be correct purely luck.

However, the guesses (1) and (3) here are incompatible with each other.  AA and LTA really have to move in the same direction at the same time and by similar proportions.

dunstonh said:

The LTA is a bad policy.  However, increases would be jumped on by Labour as favouring bankers.  

Now there's a thing - LTA (and AA) really is a case where reality is at odds with what you'd think.
LTA and AA were introduced 2006 by one Tony Blair with LTA at £1.5m.  That rose under successive years under Tony Blair and Gordon Brown until we reached LTA £1.8m and AA £50k.
Then, from David Cameron onwards, down to AA £40k in 2014 and down to LTA £1m in 2016.  AA has remained frozen, LTA has crept slow back up.
If LTA and AA are to be retained as policy instruments, it really is time that both are uplifted by a fair chunk.  Not sure that Labour could throw the "favouring the rich" towel at it - there would be an obvious and immediate reposte.

RogerPensionGuy

Reference the LTA and AA moving together. 

AA started off at 215K in 2006, up to 255K and then down to 40K.

The LTA started off at 1.5M then up to 1.8M and then to 1M and just up to 1.073M a few years ago.

So the history shows they get pulled up and down pretty randomly, makes planning pretty tricky or not possible for some.

Hopefully the government will make all the rules more simple and agreed to stop short term changes all the time, maybe any negative changes need a 10 year lead time.

WYSPECIAL

NedS said:

What might need to happen:

Rather than constantly raising State Pension Age, I would prefer to see the State Pension means tested like Child Benefit, where it tapers off for people with pension income between £50k to £60K - so it effectively tops up anyone's income to £60k if they have pension income between £50k to £60K, but is completely removed for those with pension income about £60k (or set your own limits as you feel appropriate). I feel continuing to push back the state pension age is advantageous to the wealthy/healthy who are statistically more likely to live longer and disadvantages the less wealthy/healthy who are statistically less likely to even reach state retirement age.

Making it means tested would encourage people likely to be impacted to retire and take their DB pension earlier at a reduced rate.  It would add to the problem of people retiring early due to LTA.

DoublePolaroid

The government are considering proposals for how to mitigate the issue within the NHS of senior doctors retiring/reducing hours/refusing overtime due to the risk of tax bills as a result of breaching the AA and LTA. 

At a time when the NHS is perceived to be in (perma)crisis, inadequate staffing is a recognised issue and consultants (and quite possibly GP’s) may be set to follow junior doctors and nurses into industrial action over pay and/or conditions, I’d be astonished if AA or LTA was reduced. Personally I doubt either will increase for PR reasons, but movement upward is far more likely than down. 

LHW99

DoublePolaroid said:

The government are considering proposals for how to mitigate the issue within the NHS of senior doctors retiring/reducing hours/refusing overtime due to the risk of tax bills as a result of breaching the AA and LTA. 

At a time when the NHS is perceived to be in (perma)crisis, inadequate staffing is a recognised issue and consultants (and quite possibly GP’s) may be set to follow junior doctors and nurses into industrial action over pay and/or conditions, I’d be astonished if AA or LTA was reduced. Personally I doubt either will increase for PR reasons, but movement upward is far more likely than down. 

Getting details of pension input amounts from the NHS seems to be a particular problem also, making calculating what tax may have to be paid a nightmare. I don't know if that would require a rule change, or just a bit more efficiency in the back rooms though.

sgx2000

Here is a prediction.
The Government will take as much money, as they can get away with, from pensions.
And then give it to the rich in tax cuts