Labour's LTA plans?

dunstonh

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. 
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It's an old argument: In the UK private pensions are relatively generous and the state pension is relatively stingy.

Often those that don't agree with that statement point to data comparing other countries.    Usually from facebook posts that contain fake data or poor quality media articles using similar fake data  (or more commonly uses on the state element and ignores the contribution levels).   However, what they fail to realise is that often in those other countries, the contributions towards it in working life tend to be higher.  Whereas in this country, we have utilised auto-enrolment and the private sector instead.   

The UK state pension is a flat rate but the state pensions of Spain, Gemany and France is based on what you pay in.   In the UK, the extra paid in goes toward private provision rather than state provision.

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. 

Making pension contributions compulsory should have been implemented.   Even if phased over a period.

Pat38493

My view is that the only way Labour is going to do anything like re-instroducing the LTA is if the media or another political party makes a big stink of it and turns it into a significant issue.  I can't see the Tories doing that as they were the ones who abolished it, so they will just never mention it again.  If they do something it will be something different than re-introducing the LTA.

bolwin1

I'd have thought the most obvious thing for Labour would be to either;
1. Change the rule to make all inherited pensions taxable, not just if the deceased holder was over 75 and / or
2. Make them liable for inheritance tax. 
Given most of the unions, doctors, teachers etc. will be concerned about DB pensions, this wouldn't impact them, so there'd be little noise.

german_keeper

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

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

I do see and hear comments like this and I wonder what the reality is. I don't have extensive experience of the benefits system but I'm not sure I have experienced anything that would fit in with this narrative. Both my nieces have at times claimed benefits and with my background working for the old Benefits Agency and HMRC I have helped them out. I also assume that I have known plenty of people that have claimed in work benefits.

But who are these people who live the life of Reilly at taxpayer's expense? My understanding of the system is that unless you satisfy certain criteria in order to continue to receive benefits you have to jump through lots of hoops. You have to keep detailed records of all the steps you have taken to find work, be prepared to travel up to an hour and a half to find work and essentially be prepared to do any kind of work. Effectively looking for work is a full time job. Or am I just being naive?

QrizB

german_keeper said:

But who are these people who live the life of Reilly at taxpayer's expense?

Fraud aside, there aren't any. But it's a popular trope used by politicians and newspapers for agitating the middle classes.

A bit like Schrodinger's Immigrant, who is simultaneously "over here stealing our jobs" while "lounging around on benefits".

RogerPensionGuy

I think 16 years of playing ⚽️ pensions has unfortunately made it hard to plan and switched lots of pressure off.

I think some current pension rules and the complicated various different and conflicting protections have many good and bad points now and over the ⚽️ years has made winners and loosers. 

I think if Labour get in to power at the election, they hopefully won't start changing pensions stuff straight away, maybe a statement of doing nothing whilst they get a review and proper consideration and anymore changes are sensible and allow and explain protections or lock-ins for when the ⚽️ game starts again as it obviously needs sensible tweeks.

Malthusian

german_keeper said:

But who are these people who live the life of Reilly at taxpayer's expense? My understanding of the system is that unless you satisfy certain criteria in order to continue to receive benefits you have to jump through lots of hoops. You have to keep detailed records of all the steps you have taken to find work, be prepared to travel up to an hour and a half to find work and essentially be prepared to do any kind of work. Effectively looking for work is a full time job. Or am I just being naive?

You're talking about unemployment benefits; long-term benefit claimants are on disability. Which is also not easy to claim, but for different reasons. Either way, anyone "living the life of Reilly" on any kind of benefit is almost certainly working under the table. 

And this is beside the original point, which was State Pension. State Pension is an age-restricted universal basic income and paid to anyone who passes a certain age, regardless of how much money they have, with no hoops to jump through. 

UK State Pension costs £112.5 billion a year, so if you reintroduced the LTA, raised £800 million a year and put it all towards the State Pension, you would (in simplistic terms) expect an increase of £1.45 a week.

Grumpy_chap

RogerPensionGuy said:

I think some current pension rules and the complicated various different and conflicting protections

I think that comment about overcomplicated and conflicting parameters can be applied to our whole taxation regime, not just pensions.  I doubt we'll get a Government any time soon that really overhauls the systems completely as is really required to create a coherent, consistent, progressive outcome.
This probably needs to just stay at that comment / observation as otherwise this thread will drift far from topic.

Albermarle

bolwin1 said:

I'd have thought the most obvious thing for Labour would be to either;
1. Change the rule to make all inherited pensions taxable, not just if the deceased holder was over 75 and / or
2. Make them liable for inheritance tax. 
Given most of the unions, doctors, teachers etc. will be concerned about DB pensions, this wouldn't impact them, so there'd be little noise.

Point 1) is an obvious target as the pre 75 loophole does not really make much sense anyway.

Point 2) is more tricky legally but there are some ideas floating around for limiting the ability to hide pension pots away from IHT, as opposed to making them 100% liable.

If I was Chancellor I would have my eye on salary sacrifice for pension contributions, which costs the Treasury increasing Billions each year. Although I understand technically it would not be simple to do that.

Hoenir

Albermarle said:

If I was Chancellor I would have my eye on salary sacrifice for pension contributions, which costs the Treasury increasing Billions each year. Although I understand technically it would not be simple to do that.

Two aspects. Simply results in deferred taxation. Money invested provides working capital to companies. Long term savings are beneficial.