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

Expotter

RogerPensionGuy said:

https://www.dailymail.co.uk/news/article-11841951/Boost-middle-class-workers-Jeremy-Hunt-plans-raise-pension-cap.html

From that article:

"Whitehall sources said the Chancellor will use the Budget to unveil 'significant' increases in pension allowances that are blamed for driving doctors and other professionals out of the workforce.

The £1million lifetime allowance on tax-free pension savings will see the first substantial increase for a decade.

The £40,000 cap on annual pension contributions will also be raised. Both moves are designed to tackle the so-called 'pension trap' which can leave some professionals facing punitive tax charges if they continue working into later life."

They're making it appear as if it's a done deal. 

Albermarle

Expotter said:

RogerPensionGuy said:

https://www.dailymail.co.uk/news/article-11841951/Boost-middle-class-workers-Jeremy-Hunt-plans-raise-pension-cap.html

From that article:

"Whitehall sources said the Chancellor will use the Budget to unveil 'significant' increases in pension allowances that are blamed for driving doctors and other professionals out of the workforce.

The £1million lifetime allowance on tax-free pension savings will see the first substantial increase for a decade.

The £40,000 cap on annual pension contributions will also be raised. Both moves are designed to tackle the so-called 'pension trap' which can leave some professionals facing punitive tax charges if they continue working into later life."

They're making it appear as if it's a done deal. 

Steve Webb, the ex pensions minister and now often in the media, was on the Radio 4 Today programme this morning.
He also said similar to the above, but was not very positive about the move(s) because in his opinion.
1) It is clear that very few retired people are keen to return to work, especially those who have the resources to be able to add £40K pa to a pension or worry about Million Pound pots. 
2) There is a problem with NHS pensions, but this should be solved by the NHS. Increasing everybody's allowances is a sledgehammer to crack a nut.
3) If they really want to get more people in work they could spend the money better by reducing NHS waiting times and looking at better child care options

He saw raising AA and LTA as basically a political gesture to the Blue Wall/ comfortable Tory voting middle/upper Middle classes.

Although it will lay them open to accusations of favouring the rich, same old Tories etc 

zagfles

Albermarle said:

Expotter said:

RogerPensionGuy said:

https://www.dailymail.co.uk/news/article-11841951/Boost-middle-class-workers-Jeremy-Hunt-plans-raise-pension-cap.html

From that article:

"Whitehall sources said the Chancellor will use the Budget to unveil 'significant' increases in pension allowances that are blamed for driving doctors and other professionals out of the workforce.

The £1million lifetime allowance on tax-free pension savings will see the first substantial increase for a decade.

The £40,000 cap on annual pension contributions will also be raised. Both moves are designed to tackle the so-called 'pension trap' which can leave some professionals facing punitive tax charges if they continue working into later life."

They're making it appear as if it's a done deal. 

Steve Webb, the ex pensions minister and now often in the media, was on the Radio 4 Today programme this morning.
He also said similar to the above, but was not very positive about the move(s) because in his opinion.
1) It is clear that very few retired people are keen to return to work, especially those who have the resources to be able to add £40K pa to a pension or worry about Million Pound pots. 
2) There is a problem with NHS pensions, but this should be solved by the NHS. Increasing everybody's allowances is a sledgehammer to crack a nut.
3) If they really want to get more people in work they could spend the money better by reducing NHS waiting times and looking at better child care options

He saw raising AA and LTA as basically a political gesture to the Blue Wall/ comfortable Tory voting middle/upper Middle classes.

Although it will lay them open to accusations of favouring the rich, same old Tories etc 

I can see the logic in raising the LTA, but not so much the AA. Possibly they could increase the carry forwards years to help people with lumpy DB accrual.

I doubt they expect many retired people to return to work, more likely try to get people who are still working but considering retiring due to LTA issues etc to stay on.

PS I don't know why people still believe the tired old stereotype about middle/upper middle classes being Tory voters. The Tories did better amongst working classes than middle/upper classes at the last election, and similar in the one before. I'm sure the upper middle classes remember the days of a 1.8M LTA, a £250k AA, and 40% top tax rate - under the last Labour govt!

https://yougov.co.uk/topics/politics/articles-reports/2019/12/17/how-britain-voted-2019-general-election

zagfles

SouthCoastBoy said:

Silvertabby said:

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.

Contrary to popular belief, not all of us oldies enjoyed 'free' university education.  That was limited to just the 12%(ish) of school leavers whose parents could afford for them to continue 'swanning around in school instead of getting a job and bringing much needed money into the house'.

The only one my class who went on to university was a GP's daughter.

I think that is a slightly missguided statement. I came from a very working class background, so much so when I was younger rather than having new shoes bought me I had the ends cut of the current shoes, we really didn't have any money. However that did not stop me from going to university, I paid for myself through A levels, having a full time job in the summer working 7 days a week and then having a number of jobs in the winter. 

Following my A levels I went to uni, the first person in my family, I got a full grant, my parents did not need to contribute. Without that full grant I doubt if I would ever have gone to uni, so I did enjoy a free university education.

Same here. But when I started work, basic rate tax was 29% and the personal allowance in real terms (today's money) was £7k.

My kids both graduated with around £50k of so called "debt", but that just means they pay 9% extra "tax" (loan repayments) on income over about £27k. So even with the loans repayments accounted for, my kids are paying a lot less tax than I was when I started work. So who really got the "free" education?

Uni costs are a red herring in the usual intergenerational comparisons. House prices are the real issue, but no govt dares to implement policies to stabilise prices, instead they just keep feeding the fire with daft schemes to supposedly "help" but which just stoke prices.

arnoldy

Re: LTA increase speculation. Bit annoying if people have crystallised their pot at £1.0731M (and maybe also had to pay some LTA tax). They have used 100% of LTA and no amount of increase is going to change that. On a related point if it is going to have an effect an increase to £1.5M seems the minimum, anything less is tinkering. 

woolly_wombat

Albermarle said:

Steve Webb, the ex pensions minister and now often in the media, was on the Radio 4 Today programme this morning.
He also said similar to the above, but was not very positive about the move(s) because in his opinion.
1) It is clear that very few retired people are keen to return to work, especially those who have the resources to be able to add £40K pa to a pension or worry about Million Pound pots. 
2) There is a problem with NHS pensions, but this should be solved by the NHS. Increasing everybody's allowances is a sledgehammer to crack a nut.
3) If they really want to get more people in work they could spend the money better by reducing NHS waiting times and looking at better child care options

He saw raising AA and LTA as basically a political gesture to the Blue Wall/ comfortable Tory voting middle/upper Middle classes.

Although it will lay them open to accusations of favouring the rich, same old Tories etc 

I had to chuckle when Steve Webb added that raising the AA was likely to result in even more people taking early retirement.

This hasn’t really been thought through has it?!

ex-pat_scot

unintended consequences at every turn.

I'd certainly welcome a sensible lift in LTA, and it would significantly impact my plans on when I retire.
At the moment, the HR tax threshold acts alongside the LTA (and the BCE5a test at 75) as a strong incentive to navigate the system into
- retire as soon as you hit the ceiling
- deplete up to HR tax threshold each year, in order to avoid the growth being hit by BCE5a
- retire as quickly as possible, so you've enough time to deplete before 75 (at least the growth)
- defer the SP, using it in effect as a delayed later-life annuity 

If the LTA were raised, then all of this gaming wouldnt be required...

fizio

I remain sceptical about anything led by DM but it is likely he will do something to address 2 issues affecting the over 50's

1. Looking to retire early/soon as they are nearing the cap

2. Retired early already during covid as had hit the cap beforehand

The former will be looking for a LTA increase while the latter will be looking for how they can start a new pension from 0 when going back to work as the chancellor keeps insisting they should.

The 2 main downsides to announcing this policy are

1. Reduction in tax for 'millionaires' while the 'working man' is clobbered. This will go down about as well as the bankers bonus's and the removal off 45% tax - and we all know how that ended

2. Giving anyone a tax reduction doesn't help the govt drive to reduce borrowing as they keep stressing is the number 1 priority.

Its a tough one as it does seem like what looks like a sensible policy in some ways will be undone by how bad the optics look.

It will be interesting to see what happens next week as some sort of fudge is in the offing for sure

Filo25

I think they can sell this a lot easier than the Truss madness, I mean the AA has been massively devalued by inflation anyway over the years, and it will help with the issues with retention of senior professionals.

A lot depends on what else is in the budget as well, they maybe have more room to manoeuvre on public finances with the fall in the cost of the energy support package, and falling workplace participation is becoming a big issue

MK62

They'll have a hard time portraying a rise in the Annual Allowance as anything other than a tax break for the relatively wealthy, because, in the end, that's exactly what it would be........and personally, I'm extremely sceptical that raising the AA will do anything to solve staff retention issues.