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

marlot

SouthCoastBoy said:

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

I agree.  I note that state pension is taxable, so anyone with >50k/year from other sources pays 40% on their state pension anyway.

But there is huge inequality between young and old.  Young are typically paying an extra 9% 'graduate tax', whereas old don't pay NI on earnings.  Arguably merging NI and income tax would go some way to fixing this. 

Albermarle

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.

You are the only one so far I think to mention abolishing salary sacrifice. This would be a good thing in my view, as it is basically just a loophole to avoid paying some employee and employer NI. Also some people are exploiting it to get child benefit, not pay student loan back etc It would bring in quite a few Billions I think, although I understand implementing it could be tricky.
Regarding means testing pension income- those with DC pensions can easily vary their pension income each year to suit. Probably would have to be some reference with having an annuity. However I think means testing SP would just be too politically toxic.
As previously mentioned, I would not be totally surprised with at least a review of IHT and pension pots/beneficiary pensions. Points strongly highlighted as being unfairly generous to the better off by recent IFS reports.

molerat

marlot said:

SouthCoastBoy said:

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

I agree.  I note that state pension is taxable, so anyone with >50k/year from other sources pays 40% on their state pension anyway.

But there is huge inequality between young and old.  Young are typically paying an extra 9% 'graduate tax', whereas old don't pay NI on earnings.  Arguably merging NI and income tax would go some way to fixing this. 

Many "oldies" never had the opportunity to have to pay "graduate tax", it is not something you have to pay it is down to the path you choose.  I don't agree with merging NI and tax but NI should be paid on earned income irrespective of age and all benefits should be brought into the tax system, especially the gateway benefits.

Gary1984

I just don't see how abolishing salary sacrifice works unless you start taxing employer pension contributions which just opens another can of worms.

It's just an agreement where your employer pays you X less and pays X more into your pension. If salary sacrifice is abolished why can't I negotiate these terms myself directly with my employer and get to the same end result?

westv

molerat said:

marlot said:

SouthCoastBoy said:

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

I agree.  I note that state pension is taxable, so anyone with >50k/year from other sources pays 40% on their state pension anyway.

But there is huge inequality between young and old.  Young are typically paying an extra 9% 'graduate tax', whereas old don't pay NI on earnings.  Arguably merging NI and income tax would go some way to fixing this. 

Many "oldies" never had the opportunity to have to pay "graduate tax", it is not something you have to pay it is down to the path you choose.  I don't agree with merging NI and tax but NI should be paid on earned income irrespective of age and all benefits should be brought into the tax system, especially the gateway benefits.

And it's 9% over £25k (or whatever the figure is now).

Steve_666_

I predict Rishi and Jerry (maybe they should start an Ice Cream company) will rewards their mates, whilst penalising the rest of us under the pretext that its all Putins fault.

vacheron

Albermarle said:

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.

You are the only one so far I think to mention abolishing salary sacrifice. This would be a good thing in my view, as it is basically just a loophole to avoid paying some employee and employer NI. Also some people are exploiting it to get child benefit, not pay student loan back etc It would bring in quite a few Billions I think, although I understand implementing it could be tricky.

The issue is that the governmenent still want to encourage pension saving and the "loopholes" you refer to are undeniably significant incentives to do just that.

There is no chance I would be paying anything close to the amount I am currently contributing if it wasn't for the additional perks that come with a Salary Sacrifice arrangement.
However, the additional savings I am making now are considerably higher than the benefits I recieve, and anyone who pays more in now should have less reliance on the state in their later years.

 

snowlaser

NedS said:

Rather than constantly raising State Pension Age, I would prefer to see the State Pension means tested ... , where it tapers off for people with pension income between £50k to £60K (or set your own limits as you feel appropriate). 

This is a dreadful idea.  If it was 60k on day 1 you can bet that within a few years it would be 10k and only the very poorest would get it, just like the LTA was £1.8m and then cut back, just like the 40% tax was for the "rich" originally and now hits the middle class

Etc etc

Don't give them an inch.  We should all be out in parliament square with placards if this is in the budget.

Expotter

According to The Telegraph, the chances of an increase in the MPAA are 7/10 and of an increase in the Pension Lifetime Allowance, 6/10.

michaels

What is the thinking behind an increase in the mpaa?  Is it supposed to encourage those who have already started taking some pension back into the workforce?