Labour's LTA plans?

Albermarle

If Labour wants to ensure winning the next election and by a good majority, I don't understand why they wouldn't say they doing another U turn on their LTA comments, as an LTA comment U turn would not loose them any votes, but saying nothing and people worried they will reintroduce it and possibly apply pension forestalling rules immediately will lose them votes.

In the greater scheme of things LTA is a non issue for the vast majority of voters, who would have no idea what it is anyway.

Even for many of those affected by it, it would not be a reason to vote for one party or the other.

So as a vote winner or loser, it is hardly relevant.

dunstonh

In the greater scheme of things LTA is a non issue for the vast majority of voters, who would have no idea what it is anyway.

From a voting point of view, I think you are right.  Many of those who are on track to fall foul of the LTA were not aware they were.

Cus

dunstonh said:

In the greater scheme of things LTA is a non issue for the vast majority of voters, who would have no idea what it is anyway.

From a voting point of view, I think you are right.  Many of those who are on track to fall foul of the LTA were not aware they were.

I don't know how many people purely vote based only on the amount of tax they will pay.  If you get to a point in your life where you are wealthy no matter who is in government, and yet your decision is just based on things like LTA, then imo that's sad.  I doubt there are people like that.

El_Torro

RogerPensionGuy said:

If Labour wants to ensure winning the next election and by a good majority, I don't understand why they wouldn't say they doing another U turn on their LTA comments, as an LTA comment U turn would not loose them any votes, but saying nothing and people worried they will reintroduce it and possibly apply pension forestalling rules immediately will lose them votes.

I don't think this is costing either Labour or the Tories any votes. Relatively few people in the UK are aware of what the LTA is, even fewer are affected by the abolishment of the LTA. Even if Labour were to put the reinstatement of the LTA in their election manifesto I doubt this would lose them any seats.

Personally I think abolishing it was the wrong thing to do. We can argue that an LTA of £1.073M is too low, I think getting rid of it altogether was not the way to go though. After all it's going to cost the UK government about £800 million a year, money that could be spent on making the state pension more generous, which would benefit a lot more people, especially people who need the money.

Trying to look at it pragmatically I know that £800 million isn't much in the grand scheme of things. The government spends about £1,200 billion a year after all. Compared to that £800 million is neither here nor there.

Not that it matters all that much in the long term. No doubt some future Tory or Labour government is going to move the goal posts again before most of us reach retirement.

michaels

If you were concerned, would there be anything you could do to avoid the problem in future - is it just a matter of putting a pension into payment, or perhaps purchasing an annuity?

In terms of what Labour might do, putting DC pots back into the estate for inheritance purposes might well happen but is unlikely to be announced as a specific policy before the election.

Grumpy_chap

This has been discussed at some length previously:
https://forums.moneysavingexpert.com/discussion/6471844/will-the-pension-lta-be-re-invented-by-any-government/p1

The real clues as to what Labour intend will be what they say (or don't say) when they have to publish a manifesto.
Labour spoke their knee-jerk rejection to abolishing the LTA when it was announced, despite having previously lobbied for "the LTA to be sorted to save the NHS".  They've since gone quiet and my instinct is that we will not see Labour proposing to reintroduce the LTA.

RogerPensionGuy

I agree currently not much % of voters are aware or affected by the LTA. 

I know a good few people who CETV'd outa good DB scheme in to DC schemes and not being aware they then well pushed over the LTA and paying big charges for the advice and ongoing fees. 

Still unaware apparently not interested in the LTA being there or not.

My view is if Labour's manifesto is to leave the LTA, AA and similar alone if they come to power, they should state it now because the time frame between election being called to election occurring is too short for many people to quickly sort pensions.

In my case, I've decided to action pension choices very soon to hopefully not get caught out if LTA negative changes and/or forestalling is implemented.

So in my case I've decided to leave the workforce early and use pensions as effectively as possible for me and I don't want to work paying 40% income and 2% NI at my age, 

So in my case, pension ⚽️ and future unknowns is making me drop out of the workforce. 

If Labour have rolled back on bankers bonuses before any manifesto, why didn't they bleat out in small print anywhere a few other comments that may make a difference.

The LTA is just so silly, Labour ramped it up to 1.8M, Conservatives ramped it down, then scrapped it, then Labour say they will reinstate it.

If the LTA kept with inflation from introduction in 2006, it would be 2.6M now.

Looking forward to 6th of March event and September election I guessing. 

...

https://www.moneymarketing.co.uk/opinion/steve-webb-three-big-challenges-holding-lta-reintroduction-back/
.

dunstonh

Personally I think abolishing it was the wrong thing to do. We can argue that an LTA of £1.073M is too low, I think getting rid of it altogether was not the way to go though. After all it's going to cost the UK government about £800 million a year, money that could be spent on making the state pension more generous, which would benefit a lot more people, especially people who need the money.

800m a year wouldn't add much to the state pension.   It's peanuts in spending terms.  And the state pension doesn't need to be any more generous.     If

And don't we already crucify taxpayers enough to fund those who do nothing for themselves? - yes, that is intentionally harsh, but benefits have moved on from helping those in need.   Helping those in need is a worthwhile thing for taxpayers to fund.   Not the bloated handouts to those that don't

El_Torro

dunstonh said:

Personally I think abolishing it was the wrong thing to do. We can argue that an LTA of £1.073M is too low, I think getting rid of it altogether was not the way to go though. After all it's going to cost the UK government about £800 million a year, money that could be spent on making the state pension more generous, which would benefit a lot more people, especially people who need the money.

800m a year wouldn't add much to the state pension.   It's peanuts in spending terms.  And the state pension doesn't need to be any more generous.     If

Yes, an extra £800M a year to state pensions won't make much difference. I pretty much covered this in my previous post but to give more perspective: The state pension currently costs the government about £112 billion a year. So increasing that spending by £800M would make less than 1% difference.


Saying that the state pension doesn't need to be any more generous is a matter of opinion. Some will agree with that statement, some won't. 

While I agree that people should be in charge of their own destiny / finances the government shouldn't ignore the number of people who stop paying in to their DB pension because it's "too expensive" or the number of people who don't pay enough in to their DC pension. 

It's an old argument: In the UK private pensions are relatively generous and the state pension is relatively stingy. In many other countries the pendulum swings the other way. This works fine for me, as well as most of the people who regularly visit this forum, because we know how important private pensions are. Not everyone thinks that way though.

Albermarle

michaels said:

If you were concerned, would there be anything you could do to avoid the problem in future - is it just a matter of putting a pension into payment, or perhaps purchasing an annuity?

In terms of what Labour might do, putting DC pots back into the estate for inheritance purposes might well happen but is unlikely to be announced as a specific policy before the election.

The IFS have put forward some ideas regarding reducing the ability to 'hide' a DC pension pot from the taxman.
IIRC they did not include completely removing the ability to do that but suggested some ideas like a separate nil rate band for pension pots . So a % of a large pot could be ignored for IHT purposes, but the rest could not.
Or that the pot would be ignored for IHT but all of it taxed at 20% before reaching the beneficiary.
Just ideas as far as I know.