Labour's LTA plans?

Albermarle

RogerPensionGuy said:

Below is copy/paste from the link at the bottom. This is why Labour needs to comment now on its view because people are making decisions because the time between an election call and result and Anti-Forestalling being applied is not enough time to protect expectations. 

.Possible Action By Labour

• Anti-Forestalling Legislation:  We can see a Labour government having an emergency budget and introducing legislation overnight to ensure that anyone who triggers taking pension benefits in 2024/25/26 (i.e., after the date of any emergency budget) to avoid taxes when there is no LTA, will be included in any new LTA and exceeding the limit thereby creating new excess over LTA tax charges.

***
https://www.financialadvice.net/will_labour_bring_back_the_lifetime_allowance_and_how/video/2004/32

Somewhat selective quote. The next part says this;

• Labour has a history of much higher LTA limits anyway.  To avoid the issues detailed above on restarting the LTA, we can see Labour:
• Reintroducing the LTA at a much higher level e.g., £2m to encourage more NHS and Civil Service workers to stay in their roles and happily build up pensions.

QrizB

Albermarle said:

Somewhat selective quote. The next part says this;

Labour has a history of much higher LTA limits anyway.  To avoid the issues detailed above on restarting the LTA, we can see Labour:

• Reintroducing the LTA at a much higher level e.g., £2m to encourage more NHS and Civil Service workers to stay in their roles and happily build up pensions.

If they were to do that, plus undertake to increase it by CPI for the duration of the parliamentary term, I suspect almost everyone would be happy. Even the people in this thread

zagfles

QrizB said:

Albermarle said:

Somewhat selective quote. The next part says this;

Labour has a history of much higher LTA limits anyway.  To avoid the issues detailed above on restarting the LTA, we can see Labour:

• Reintroducing the LTA at a much higher level e.g., £2m to encourage more NHS and Civil Service workers to stay in their roles and happily build up pensions.

If they were to do that, plus undertake to increase it by CPI for the duration of the parliamentary term, I suspect almost everyone would be happy. Even the people in this thread

I suspect that'll be their cop-out, even the £1.8M unindexed as it was in 2010 under Labour would probably do for the vast majority. 

Although they might need special rules for those who've already fully crystallised, eg for people who've crystallised, the LTA % use is reworked based on the 1.8M level rather than the actual level at the time. Since one of the reasons for abolishing the LTA rather than increasing it was that it wouldn't benefit anyone who's already crystallised 100% and so wouldn't encourage them to stay in/return to work.

Pat38493

As to forestalling legislation, I could be proved wrong but I doubt it will be their top priority to do that as a first measure - it will not really win them much additional popularity, and it will be a very unpopular measure amongst a small minority, especially if they did it immediately on coming to power without stating that they were intending to do it in their manifesto.

Why risk the bad publicity for what is probably a relatively small gain?

Personally I am not that close hitting the old LTA amount anyway, but I suppose I might hit it later on if I get a good investment run in the early years and my pot grows faster than I am spending it.

RogerPensionGuy

The link below is just another headline showing what hassle will be caused if Labour try negatively affecting some people, but cherry pick others not to be affected reference the LTA reintroduction.
☆☆☆

https://www.telegraph.co.uk/money/pensions/labours-public-sector-pension-tax-break-risks-legal-action/
☆☆☆

https://www.thetimes.co.uk/article/pensions-lifetime-allowance-tax-cut-jeremy-hunt-budget-x9vwxj7hx?gad_source=1&gclid=CjwKCAiA_aGuBhACEiwAly57MSASyKFjNFS3QhQt79jf-kYXt3nP38jpgRc0oAdbiut4g9wwQYePMRoCaNwQAvD_BwE
☆☆☆

https://www.telegraph.co.uk/money/pensions/labour-plots-protect-top-public-sector-workers-pension-raid/#:~:text=Labour is plotting to protect,the so-called lifetime allowance.

zagfles

Well this thread has taken a completely OT political turn! Inevitable I guess when politically opinionated people get their hackles up without having anything to say about the specific topic being discussed

Anyway - back on topic, this has got me intrigued. After the much more high profile u-turns on stuff like green spending and banker's bonuses, a u-turn on this relatively minor obscure issue would have gone almost unnoticed. Clearly they've rolled back or completely given up the old class war "eat the rich" approach, after all we've been conditioned to believe bankers are the epitome of greedy capitalists. So why the coy approach to the LTA issue, just vague assurances to select groups which will inevitably lead to accusations of unfairness and discrimination.

I'm starting to suspect they'll make changes which would be irresponsible to announce in advance. For instance flat rate tax relief. This does sort of replicate the LTA, as it provides a tax penalty if you pay higher rate tax in retirement (tax on way out being higher than relief on the way in). The HR threshold is very approximately the level of pension you'd get if at the LTA. So they could argue they are "replicating the principles of the LTA through a fairer more progressive tax relief system"

But announcing this in advance would be crazy. People in higher rate tax close to retirement but unlikely to be in HR tax in retirement would stuff their pensions now to get higher rate relief while they can.

There, another conspiracy theory to discuss, but at least it's on topic

JayRitchie

zagfles said:

Well this thread has taken a completely OT political turn! Inevitable I guess when politically opinionated people get their hackles up without having anything to say about the specific topic being discussed

Anyway - back on topic, this has got me intrigued. After the much more high profile u-turns on stuff like green spending and banker's bonuses, a u-turn on this relatively minor obscure issue would have gone almost unnoticed. Clearly they've rolled back or completely given up the old class war "eat the rich" approach, after all we've been conditioned to believe bankers are the epitome of greedy capitalists. So why the coy approach to the LTA issue, just vague assurances to select groups which will inevitably lead to accusations of unfairness and discrimination.

I'm starting to suspect they'll make changes which would be irresponsible to announce in advance. For instance flat rate tax relief. This does sort of replicate the LTA, as it provides a tax penalty if you pay higher rate tax in retirement (tax on way out being higher than relief on the way in). The HR threshold is very approximately the level of pension you'd get if at the LTA. So they could argue they are "replicating the principles of the LTA through a fairer more progressive tax relief system"

But announcing this in advance would be crazy. People in higher rate tax close to retirement but unlikely to be in HR tax in retirement would stuff their pensions now to get higher rate relief while they can.

There, another conspiracy theory to discuss, but at least it's on topic

I think you may be right. Changing the tax allowances on pension contributions, removing salary sacrifice as an option, possibly reducing the tax free allowances on pension withdrawals all seem very possible.

RogerPensionGuy

I neither agree or disagree that people including me harp on too much about pension treatment and very especially the LTA, but I'm happy to do any number of U-Turns in the future. 

Personally I'm pretty lucky reference my pensions, paid employment possibilities and my lifestyle plan going forwards at this point in time, but indeed very happy they tore up the LTA. 

I agree the LTA alone is far from a top issue many people feel now, but the way they have played with pensions the last 17 years, I just have very little confidence pension planning will become more sensible and stable, they treat it as a moving feast or whatever. 

With lots of debts to be paid by the UK tax payers these next few decades, I still see governments consider it as a  nice easy low hanging fruit to be pruned at will.

There are still so many unfair situations in the current pensions, a few below. 

20% 40% 45% Tax relief rates could do with fair and reasonable adjustments. 

12% 2% Employee NI contributions via salary sacrifice should be available to all.

13.8% Employer NI contribution savings could be used better for employees. 

Government workers on gold-plated pensions with bells on just adjusting pension rules for people not employed within the government, maybe the pension industry experts should have much much more input on these long long term stuff.

☆☆☆

Pensions like much else need long-term bipartisan systems in place when we play ping pong every 5 years in the UK. NHS, Roads, Railways, Education, Green policy, Pot-Holes etc etc come to mind in a jiffy.

The Conservatives will lay a few more bear traps on the 6th of March and monitor what Labour say or won't comment on, plus the Cons have another autumn statement that they can use if they desire, its a game and obviously the tax payers must pay the bills for this system. 

JoeCrystal

My personal view is to wait until the electoral manifesto comes out for both parties and compile the lists of what can or will personally benefit me directly or indirectly. We still have the next budget to look out for; that one is interesting, considering it is the final budget before the next General Election.

RogerPensionGuy

I got the below link sent to me today, not surprisingly that people disengage with pension stuff, 10 months on, a big trusted organisation is apparently indicating LTA is one to watch and monitor. 
☆☆☆
.
https://www.fidelity.co.uk/lifetime-allowance/