Labour's LTA plans?

steviola

Cus said:

RogerPensionGuy said:

Grumpy_chap said:

UrbanAchiever said:

So if they reintroduce it with a carve out for public sector workers, when I'm nearly ready to retire, I'll leave my private sector job, get a public sector job, then retire.  I guess there may be a qualifying period though.  That's a tough one to legislate for.

Those articles linked by RPG all suggest that the "carve out" is been dropped as an idea.  Which is not surprising as it would seem to be entirely unworkable.

Yes indeed, it looks like they have back tracked on the carve-out, but more interesting to me, no mention they are walking back from reintroducing the LTA. So in my head currently Labour will form the next government and indeed poke the LTA from the ashes.

Thankfully I have planned for all the above I hope. 

I suspect Labour will reintroduce the LTA at a level that appeases the maths behind the public sector carve out group, yet allows them to say that they have reversed the Tory decision that 'protected the rich'.  Some fudge.  I'm offering a spread at £1.6mn-£1.8mn..

Do you think they’ll change the limit on the tax free lump sum back to 25% of the LTA? Or keep it fixed? Or even reduce it???

Teaandscones

The TFLS limit and to a lesser extent the exemption from inheritance tax of pensions are the big losses to HM Treasury. The obvious solution is to leave the limit at £268k and let it get caught up by inflation and include pensions in IHT perhaps as a quid pro quo to reducing the rate of IHT from 40% (which is about the highest in the OECD).
There would be no need for the LTA.

RogerPensionGuy

steviola said:

Cus said:

RogerPensionGuy said:

Grumpy_chap said:

UrbanAchiever said:

So if they reintroduce it with a carve out for public sector workers, when I'm nearly ready to retire, I'll leave my private sector job, get a public sector job, then retire.  I guess there may be a qualifying period though.  That's a tough one to legislate for.

Those articles linked by RPG all suggest that the "carve out" is been dropped as an idea.  Which is not surprising as it would seem to be entirely unworkable.

Yes indeed, it looks like they have back tracked on the carve-out, but more interesting to me, no mention they are walking back from reintroducing the LTA. So in my head currently Labour will form the next government and indeed poke the LTA from the ashes.

Thankfully I have planned for all the above I hope. 

I suspect Labour will reintroduce the LTA at a level that appeases the maths behind the public sector carve out group, yet allows them to say that they have reversed the Tory decision that 'protected the rich'.  Some fudge.  I'm offering a spread at £1.6mn-£1.8mn..

Do you think they’ll change the limit on the tax free lump sum back to 25% of the LTA? Or keep it fixed? Or even reduce it???

I think Labour could do anything with pensions and in fairness,  pensions have been a football game since 2006 and its just accepted by society in general. 

The UK has a real older age demographic situation just arriving and looking at many decades of high taxation.

This next period of time should be used by any government to lock in a sensible stable pension era and entice people to invest in pensions.

But, if Labour just get the football out again and kick it against a few walls making it bounce and spin for political reasons, pensions will fall more out of favour and indeed only increase the tax burden for the younger generations coming along. 

It will be interesting watching what Labour will do, maybe they will smell the coffee and leave pensions alone in the short term, possibly do a long term review with a bipartisan set-up and include the pension industry to make only sensible changes that don't undermine peoples confidence in pensions.

michaels

RogerPensionGuy said:

steviola said:

Cus said:

RogerPensionGuy said:

Grumpy_chap said:

UrbanAchiever said:

So if they reintroduce it with a carve out for public sector workers, when I'm nearly ready to retire, I'll leave my private sector job, get a public sector job, then retire.  I guess there may be a qualifying period though.  That's a tough one to legislate for.

Those articles linked by RPG all suggest that the "carve out" is been dropped as an idea.  Which is not surprising as it would seem to be entirely unworkable.

Yes indeed, it looks like they have back tracked on the carve-out, but more interesting to me, no mention they are walking back from reintroducing the LTA. So in my head currently Labour will form the next government and indeed poke the LTA from the ashes.

Thankfully I have planned for all the above I hope. 

I suspect Labour will reintroduce the LTA at a level that appeases the maths behind the public sector carve out group, yet allows them to say that they have reversed the Tory decision that 'protected the rich'.  Some fudge.  I'm offering a spread at £1.6mn-£1.8mn..

Do you think they’ll change the limit on the tax free lump sum back to 25% of the LTA? Or keep it fixed? Or even reduce it???

I think Labour could do anything with pensions and in fairness,  pensions have been a football game since 2006 and its just accepted by society in general. 

The UK has a real older age demographic situation just arriving and looking at many decades of high taxation.

This next period of time should be used by any government to lock in a sensible stable pension era and entice people to invest in pensions.

But, if Labour just get the football out again and kick it against a few walls making it bounce and spin for political reasons, pensions will fall more out of favour and indeed only increase the tax burden for the younger generations coming along. 

It will be interesting watching what Labour will do, maybe they will smell the coffee and leave pensions alone in the short term, possibly do a long term review with a bipartisan set-up and include the pension industry to make only sensible changes that don't undermine peoples confidence in pensions.

Is that a joke?

I see the new administration trying to do a lot of 'big' things quickly whilst they are still 'honeymoon' / max political capital and pensions will be just one of those big things.

zagfles

Cus said:

RogerPensionGuy said:

Grumpy_chap said:

UrbanAchiever said:

So if they reintroduce it with a carve out for public sector workers, when I'm nearly ready to retire, I'll leave my private sector job, get a public sector job, then retire.  I guess there may be a qualifying period though.  That's a tough one to legislate for.

Those articles linked by RPG all suggest that the "carve out" is been dropped as an idea.  Which is not surprising as it would seem to be entirely unworkable.

Yes indeed, it looks like they have back tracked on the carve-out, but more interesting to me, no mention they are walking back from reintroducing the LTA. So in my head currently Labour will form the next government and indeed poke the LTA from the ashes.

Thankfully I have planned for all the above I hope. 

I suspect Labour will reintroduce the LTA at a level that appeases the maths behind the public sector carve out group, yet allows them to say that they have reversed the Tory decision that 'protected the rich'.  Some fudge.  I'm offering a spread at £1.6mn-£1.8mn..

£1.8M makes some sense - it would appease the vast majority of their mates in the public sector, transition would be easier, all past crystallisations could be reworked based on a 1.8M LTA, giving spare LTA to those who crystallised 100% while the LTA was lower, and protections can be binned as that was highest the LTA has ever been, it was also the value under the last Labour govt. 

What they do about the PCLS would be interesting, retain the £268k cap, or up it to 25% of new LTA, or something else like reduce the PCLS to 15% (15% of £1.8M is £270k just above the current PCLS limit). Latter probably too controversial and would need transitional rules.

MK62

My view is that if the PCLS rules were to change, it would most likely be by gradual reduction of the upper limit.....perhaps eg 250k first........but I suspect they might leave it and just let inflation reduce it's real value over time.
Controversial perhaps, but at least one party might view a substantial reduction in the upper limit coupled with an increase in the percentage as being fairer......eg 30% with an upper limit of 200k (or whatever numbers which would make the change cost neutral...ish).....but I guess that would be quite unpopular with some....

JoeCrystal

RogerPensionGuy said:

I think Labour could do anything with pensions and in fairness,  pensions have been a football game since 2006 and its just accepted by society in general. 

And here, I think that the government successfully legislated and rolled out auto-enrollment pensions. Speaking as someone who works for a company that never saw a point in paying contributions, having auto-enrollment has been a real boon for people who generally do not have access to pension schemes whose employer contribute to it. And that does not consider pension freedoms for the DC schemes either.

If the government can improve the auto-enrollment contribution rates, that would be a good start overall!

I will read the next Budget with interest, considering it is the last Budget before the next General Election. (And the one after the next General Election as well!)

Silvertabby

I don't think the 25% tax free cash limit will be reduced.  It represents a huge (if long term) savings in the public sector pensions costs, in that the vast majority of public sector pensioners opt for maximum commutation at the p. poor rate of 1:12.

Albermarle

Teaandscones said:

The TFLS limit and to a lesser extent the exemption from inheritance tax of pensions are the big losses to HM Treasury. The obvious solution is to leave the limit at £268k and let it get caught up by inflation and include pensions in IHT perhaps as a quid pro quo to reducing the rate of IHT from 40% (which is about the highest in the OECD).
There would be no need for the LTA.

This is sensible but there could be problems with changing the trust status of pensions.
The IFS have suggested some half way houses on the IHT issue, rather than going from not including them in an estate, to including them 100%.
Death and taxes and pensions | Institute for Fiscal Studies (ifs.org.uk)

RogerPensionGuy

As Labour brought in A day on the 6th of April 2006 and if their LTA had kept pace with inflation, think I read it should be 2.4M in April 2024.

Maybe when they finally get back in to number 10, they will indeed put to LTA to 2.4M I hope. 

Maybe 1.8M is a halfway compromise. 

Apart from the LTA headline, that 268K TFLS being a 25% of an historical number of 1.073M will require adjustments.

How about reintroduce the LTA at 2M and locked on an inflation index guaranteed locked, have an anti tinkering device fitted also.

Maybe allow 25% TFLS up to that 2M/500K and then just maybe water down that 25% as the LTA moves upwards. 

So much changes in pensions these last 18 years.

So we better get ready for new names and acronyms for all the new Labour changes coming, lets not forget a new host of all the various pension protections to cover people who want to keep the new rules as per 06th of April 2023.

What fun times to come. 
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Below is a link that sorta links up with the LTA saga, one big point made is by freezing the TFLS at 268K and not allowing it to rise with inflation, the government will by fiscal drag really really mop up taxes in the future, the link is definitely worth a watch if interested in the LTA saga.
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https://youtu.be/pGVjunRZnyQ?si=umQNrwX1aZCLyHYd