Budget 2023: Tax-free pension limits raised - here's what it means for your savings

zagfles

itsmeagain said:

zagfles said:

Grumpy_chap said:

Is there any uplift to the amount that can be contributed to a pension if no earned income?
The current £2,880 net, £3,600 gross contribution?
I can't see anything obvious in the media articles.

No. Why would you expect there to be, the whole reason for increasing the limits was to encourge people to stay in/return to work.

How will that encouragement help then?

The doctors that left years ago and the wealthy middle class that left up to 2 years ago with their £50kPA DB pension or protected £1.8b DC pots plus loads of other investments can now go back to work to top up their pension with £10k instead of £4k of their £200k salary, not being able to wave the MPAA to permit the new £60k PIA limit - brilliant!

I'm not convinced they'll be rushing back from their yachts & golf course. A late reaction - too little - too late - no foresight.

No point in dangling very small carrots to people that don't need to work.

Government needs to think again!

Why would they have a DC pension on top of a DB which uses up all their LTA? Taking a DB doesn't trigger the MPAA.

Anyway, it's not in dispute that the LTA is causing doctors to retire early. Labour agree, but it seems they want some bespoke solution for doctors.

Anyway, I was just responding to a PP who seem puzzled there was no uplift in the non earners tax relief limit.

itsmeagain

zagfles said:

Albermarle said:

zagfles said:

Albermarle said:

zagfles said:

Pat38493 said:

PensionSaverPeter said:

I wonder what will happen if Labour get in and do re-implement the LTA cap?  Would they set it back to £1,073,100 or perhaps higher?

Will those that have since paid in to their pension to take them above the re-implemented cap be given some protection on that amount so they don't again get hit with the punitive tax charges.  It seems a bit disingenuous to hit them when they've have topped up in good faith they they wouldn't get hit with the massive taxes.

I've just listened to an interview with the shadow chancellor where she seemed to imply that they would re-instate the LTA at the current level, and give "doctors" the same exception that judges have today (she was not pressed to further define what she meant by doctors).

Judges use an unregistered scheme. How are they going to do that retrospectively for doctors? It doesn't sound like they've thought it through, in fact how could they, it's only 2 days since the budget. It's knee-jerk political point scoring, not carefully considered policy. There's probably not going to be an election for 18 months, so I wouldn't worry about it yet, wait until the BMA and hopefully some of the few independant and financially aware journalists press them for exact details of their proposals.

I agree that it is probably not worth doing anything yet, or even thinking it about it too hard ( and getting a headache) . 

Chancellor springs totally unexpected policy in budget. Said Chancellor is perfectly aware what the Labour reaction will be.

Oh really? When the Labour shadow health secretary called for exactly that a few months ago?

https://www.theguardian.com/society/2022/sep/03/doctors-pensions-labour-would-abolish-cap-says-wes-streeting

Yeah, he was perfectly aware

The article only mentions Doctors pensions.

What "cap" do you think he was talking about?

These two...

"The lifetime pension allowance, which was frozen last year at just over £1m until 2026, is the amount that any individual can save into a pension tax-free.

A second cap applies to the amount accumulated in a pension without incurring tax"

zagfles

itsmeagain said:

zagfles said:

Albermarle said:

zagfles said:

Albermarle said:

zagfles said:

Pat38493 said:

PensionSaverPeter said:

I wonder what will happen if Labour get in and do re-implement the LTA cap?  Would they set it back to £1,073,100 or perhaps higher?

Will those that have since paid in to their pension to take them above the re-implemented cap be given some protection on that amount so they don't again get hit with the punitive tax charges.  It seems a bit disingenuous to hit them when they've have topped up in good faith they they wouldn't get hit with the massive taxes.

I've just listened to an interview with the shadow chancellor where she seemed to imply that they would re-instate the LTA at the current level, and give "doctors" the same exception that judges have today (she was not pressed to further define what she meant by doctors).

Judges use an unregistered scheme. How are they going to do that retrospectively for doctors? It doesn't sound like they've thought it through, in fact how could they, it's only 2 days since the budget. It's knee-jerk political point scoring, not carefully considered policy. There's probably not going to be an election for 18 months, so I wouldn't worry about it yet, wait until the BMA and hopefully some of the few independant and financially aware journalists press them for exact details of their proposals.

I agree that it is probably not worth doing anything yet, or even thinking it about it too hard ( and getting a headache) . 

Chancellor springs totally unexpected policy in budget. Said Chancellor is perfectly aware what the Labour reaction will be.

Oh really? When the Labour shadow health secretary called for exactly that a few months ago?

https://www.theguardian.com/society/2022/sep/03/doctors-pensions-labour-would-abolish-cap-says-wes-streeting

Yeah, he was perfectly aware

The article only mentions Doctors pensions.

What "cap" do you think he was talking about?

These two...

"The lifetime pension allowance, which was frozen last year at just over £1m until 2026, is the amount that any individual can save into a pension tax-free.

A second cap applies to the amount accumulated in a pension without incurring tax"

Indeed. The Guardian journalist clearly understood what he was talking about.

Somebody

zagfles said:

What "cap" do you think he was talking about?

I personally think the cap referred to was more skewed towards the annual allowance, given that for DB pensions it's based on the pension input amount (PIA).  If a senior doctor got a promotion, did overtime, extra shifts and other job related awards (or a combination thereof) during the tax year then the PIA for that year could easily breach £40k without their knowledge. It then becomes a shock having to fork out the annual allowance tax charge after the event.

mlv-1967

itsmeagain said:

I'm not convinced they'll be rushing back from their yachts & golf course. A late reaction - too little - too late - no foresight.

No point in dangling very small carrots to people that don't need to work.

Government needs to think again!

This government has given up on thinking. They let the Telegraph, Mail and Express do their thinking for them, and this is the result. 

zagfles

mlv-1967 said:

itsmeagain said:

I'm not convinced they'll be rushing back from their yachts & golf course. A late reaction - too little - too late - no foresight.

No point in dangling very small carrots to people that don't need to work.

Government needs to think again!

This government has given up on thinking. They let the Telegraph, Mail and Express do their thinking for them, and this is the result. 

Or maybe the shadow health secretary

itsmeagain

zagfles said:

itsmeagain said:

zagfles said:

Grumpy_chap said:

Is there any uplift to the amount that can be contributed to a pension if no earned income?
The current £2,880 net, £3,600 gross contribution?
I can't see anything obvious in the media articles.

No. Why would you expect there to be, the whole reason for increasing the limits was to encourge people to stay in/return to work.

How will that encouragement help then?

The doctors that left years ago and the wealthy middle class that left up to 2 years ago with their £50kPA DB pension or protected £1.8b DC pots plus loads of other investments can now go back to work to top up their pension with £10k instead of £4k of their £200k salary, not being able to wave the MPAA to permit the new £60k PIA limit - brilliant!

I'm not convinced they'll be rushing back from their yachts & golf course. A late reaction - too little - too late - no foresight.

No point in dangling very small carrots to people that don't need to work.

Government needs to think again!

Why would they have a DC pension on top of a DB which uses up all their LTA? Taking a DB doesn't trigger the MPAA.

You've misinterpreted. I said DB OR DC, not on top.
Plus - no one said that taking DB triggers MPAA.
However, some people have an additional DC/SIPP, especially for private work / additional contributions.
DB does/did apply to the LTA using a factor of 20.
Some used their DC/SIPP to bridge the gap / buy their holiday villa etc; deferring the DB to improve their early reduction factor.
Having taken early retirement, triggered the MPAA (from their DC/SIPP), they have been limited to the 4k MPAA (now £10k).
For anyone that retired due to the £40k input limit, why would they go back to work for the new £10k MPAA limit?
They can still only sink £10k rather than the new £60k into their further contributions. Not much of an incentive for the early retired wealthy (55-65's) that don't need to work anyway.
Even if they retired claiming their DB... I doubt that all employers would let them rejoin the closed DB scheme!

zagfles

itsmeagain said:

zagfles said:

itsmeagain said:

zagfles said:

Grumpy_chap said:

Is there any uplift to the amount that can be contributed to a pension if no earned income?
The current £2,880 net, £3,600 gross contribution?
I can't see anything obvious in the media articles.

No. Why would you expect there to be, the whole reason for increasing the limits was to encourge people to stay in/return to work.

How will that encouragement help then?

The doctors that left years ago and the wealthy middle class that left up to 2 years ago with their £50kPA DB pension or protected £1.8b DC pots plus loads of other investments can now go back to work to top up their pension with £10k instead of £4k of their £200k salary, not being able to wave the MPAA to permit the new £60k PIA limit - brilliant!

I'm not convinced they'll be rushing back from their yachts & golf course. A late reaction - too little - too late - no foresight.

No point in dangling very small carrots to people that don't need to work.

Government needs to think again!

Why would they have a DC pension on top of a DB which uses up all their LTA? Taking a DB doesn't trigger the MPAA.

You've misinterpreted. I said DB OR DC, not on top.
Plus - no one said that taking DB triggers MPAA.
However, some people have an additional DC/SIPP, especially for private work / additional contributions.
DB does/did apply to the LTA using a factor of 20.
Some used their DC/SIPP to bridge the gap / buy their holiday villa etc; deferring the DB to improve their early reduction factor.
Having taken early retirement, triggered the MPAA (from their DC/SIPP), they have been limited to the 4k MPAA (now £10k).
For anyone that retired due to the £40k input limit, why would they go back to work for the new £10k MPAA limit?
They can still only sink £10k rather than the new £60k into their further contributions. Not much of an incentive for the early retired wealthy (55-65's) that don't need to work anyway.
Even if they retired claiming their DB... I doubt that all employers would let them rejoin the closed DB scheme!

That will obviously apply to some. Others will only have the DB and will not have triggered the MPAA. Some might have just taking the PCLS for the DC and not triggered the MPAA. But anyway, it's well accepted by both Labour and Tories, plus the BMA, that pension limits have/will cause doctors to retire.

I expect the changes are more aimed at persuading those still working and considering retiring not to, rather than those with a massive pension, yacht and golf course to go back.

Albermarle

I would think that the increase in MPAA was not aimed at Doctors, or wealthy retirees on the golf course.
They also want to encourage lower paid workers back into the workforce where there are labour shortages.
It's effect is not going to be huge, but at the same time, £4K was always a very low level, and many people breach the MPAA unknowingly, so for them having a higher level will be a good thing.

PowerSavingMode

My son will be classified a 'non-earner' (recent health issues) for 2023-2034 — considering he won't have any earnings coming in, what is the limit he could put into his pension? Is it to remain at £3,600? And is that £3,600 net of pension relief?