Budget to boost lifetime allowance for pension savings

jim8888

Albermarle said:

Cus said:

Would there be an increase in the tax free sum to £450k?

Under current rules yes, but until all the details are known you can not be sure about anything.

Yes, devil is in detail. What happens with those of us who have chrytsallised some of our pensions in order to take some of our 25% tax free cash? The last time I did this I had to submit how much of the LTA I had already taken. Under current rules the max you could take was £268,250 (25% of £1,073,000). Now it seems you will be able to take £450,000. But will you be able to do this if you previously chrystallised 100% of your fund when it hit the £1,073,000? Honestly, there has to be a simpler solution to pension taxation than the LTA.

ex-pat_scot

LHW99 said:

Be good to see an increase in the amount non-earning people could pay into a pension per year. £3600 is very low and has been the same since 2001

indeed, but since the thrust of changing the pensions rules is to encourage non-workers back into the workplace, the non-earning pension allowance is not going to meet that objective.

RogerPensionGuy

jim8888 said:

Albermarle said:

Cus said:

Would there be an increase in the tax free sum to £450k?

Under current rules yes, but until all the details are known you can not be sure about anything.

Yes, devil is in detail. What happens with those of us who have chrytsallised some of our pensions in order to take some of our 25% tax free cash? The last time I did this I had to submit how much of the LTA I had already taken. Under current rules the max you could take was £268,250 (25% of £1,073,000). Now it seems you will be able to take £450,000. But will you be able to do this if you previously chrystallised 100% of your fund when it hit the £1,073,000? Honestly, there has to be a simpler solution to pension taxation than the LTA.

Hopefully anyone previously caught out by the LTA being kicked up and down that has used a % of the lower silly LTA figures will get a bolt on of sine description I hope.

If LTA is indeed 1.8M from 6th of April2023 I hope the government confirm it cannot be shafted downwards or sideways and any negative changes to pensions have a 15 or 20 years lead time and fair protections who could get stuffed by goal posts being moved.

NedS

LHW99 said:

Be good to see an increase in the amount non-earning people could pay into a pension per year. £3600 is very low and has been the same since 2001

Given the aim of this budget is clearly to encourage people (back) into work, any change may more likely go the other way - if you want to pay into a pension you have to have earned income. That said, those unable to work still deserve the opportunity to save for their retirements and a pension is the only realistic vehicle to do that, being exempt from means-tested benefits determinations. So who knows, but I've not heard any rumours or speculation of any increase.

UrbanAchiever

DoublePolaroid said:

lisyloo said:

I raised a smile when they said how poor (junior) doctors were and then how we needed to stop doctors retiring early because they were "too wealthy".
I realise there's an imbalance there across the profession but it did raise a wry smile.

Without wishing to derail the thread, there is an important point here which both the media and the junior docs themselves appear to have failed to adequately communicate to the public.

Career progression for a large chunk of junior doctors is impossible because there are far more junior docs competing for most hospital specialty consultant posts than are actually available. So whilst in the past the quid pro quo could be said to go something along the lines of we'll pay you less than market rate and flog you as a junior, but when you become a consultant you'll make it back, that is simply not going to be the case for many of them now.

I think that they should be pushing this line of reasoning a little more in justifying their industrial action - because the fact that consultants are being paid £260/hr to fill in demonstrates they absolutely are paid below market rates by their monopoly employer - but what do I know?

I thought one of the drivers for the increase in LTA was the number of doctors and consultants retiring early.  That doesn't square with your comment that there aren't enough consultant jobs available for the junior doctors?  I'm in the dark on how this all works so there may be a good explanation...

Grumpy_chap

NedS said:

LHW99 said:

Be good to see an increase in the amount non-earning people could pay into a pension per year. £3600 is very low and has been the same since 2001

Given the aim of this budget is clearly to encourage people (back) into work, any change may more likely go the other way - if you want to pay into a pension you have to have earned income. That said, those unable to work still deserve the opportunity to save for their retirements and a pension is the only realistic vehicle to do that, being exempt from means-tested benefits determinations. So who knows, but I've not heard any rumours or speculation of any increase.

Someone else commented that MPAA would increase to £10k.  It would be harsh to lift LTA, AA, MPAA but exclude those not earning, eg care duties

DoublePolaroid

UrbanAchiever said:

DoublePolaroid said:

lisyloo said:

I raised a smile when they said how poor (junior) doctors were and then how we needed to stop doctors retiring early because they were "too wealthy".
I realise there's an imbalance there across the profession but it did raise a wry smile.

Without wishing to derail the thread, there is an important point here which both the media and the junior docs themselves appear to have failed to adequately communicate to the public.

Career progression for a large chunk of junior doctors is impossible because there are far more junior docs competing for most hospital specialty consultant posts than are actually available. So whilst in the past the quid pro quo could be said to go something along the lines of we'll pay you less than market rate and flog you as a junior, but when you become a consultant you'll make it back, that is simply not going to be the case for many of them now.

I think that they should be pushing this line of reasoning a little more in justifying their industrial action - because the fact that consultants are being paid £260/hr to fill in demonstrates they absolutely are paid below market rates by their monopoly employer - but what do I know?

I thought one of the drivers for the increase in LTA was the number of doctors and consultants retiring early.  That doesn't square with your comment that there aren't enough consultant jobs available for the junior doctors?  I'm in the dark on how this all works so there may be a good explanation...

A consultant thinking about retiring today likely became a consultant 20-30 years ago and has been accruing pension benefits for 30-40 years, hence the financial freedom to consider retirement. That doesn’t relate to the situation junior doctors aged in their 20’s and 30’s find themselves now. 

zagfles

Grumpy_chap said:

NedS said:

LHW99 said:

Be good to see an increase in the amount non-earning people could pay into a pension per year. £3600 is very low and has been the same since 2001

Given the aim of this budget is clearly to encourage people (back) into work, any change may more likely go the other way - if you want to pay into a pension you have to have earned income. That said, those unable to work still deserve the opportunity to save for their retirements and a pension is the only realistic vehicle to do that, being exempt from means-tested benefits determinations. So who knows, but I've not heard any rumours or speculation of any increase.

Someone else commented that MPAA would increase to £10k.  It would be harsh to lift LTA, AA, MPAA but exclude those not earning, eg care duties

Was it harsh to cut the LTA, AA and MPAA over the last 13 years but exclude the tax relief limit for non earners?

It's not supposed to be a giveaway where everyone gets a share. It's supposed to try to address a specific "problem", too many people retiring early and becoming "economically inactive". It would be pointless tweaking the tax system to discourage early retirement with one hand and then tweak it to encourage "economic inactivity" with the other.

DreZZ

NedS said:

LHW99 said:

Be good to see an increase in the amount non-earning people could pay into a pension per year. £3600 is very low and has been the same since 2001

Given the aim of this budget is clearly to encourage people (back) into work, any change may more likely go the other way - if you want to pay into a pension you have to have earned income. That said, those unable to work still deserve the opportunity to save for their retirements and a pension is the only realistic vehicle to do that, being exempt from means-tested benefits determinations. So who knows, but I've not heard any rumours or speculation of any increase.

Every adult can currently pay £20k PA into their ISA.  OK, no contribution from HMRC but no hassle getting any amount out of the ISA at retirement.

Malthusian

RogerPensionGuy said:

If LTA is indeed 1.8M from 6th of April2023 I hope the government confirm it cannot be shafted downwards or sideways 

Why would they tell such a transparently obvious lie? Everyone would just laugh at them.
The Government slashed the LTA from £1.8 million to £1 million before and it can do so again any time it wants. The State giveth and the State taketh away.
If it passed a law saying that it wasn't allowed to cut Lifetime Allowance again, or that any future changes to pension rules must have a lead-in time of at least 15 years, a future Government could simply abolish that law. "The situation has changed, we need to act urgently to protect pensioners / to get through Future Crisis X, yada yada."