Labour Pension tax benefit reduction/limit - what would this mean to those paying in £60k?

Marcon

greyflanneltrousers said:

Marcon said:

greyflanneltrousers said:

leosayer said:

gravel_2 said:

How would this kind of change attach to salary sacrifice pensions, or would it simply not?

That's one of many challenges.

I think a flat rate of tax relief is only feasible if the government stops future DC/SIPP contributions and moves everyone to a LISA-style savings pot.

In other words, moving from a EET (exempt exempt taxed) regime to TEE (taxed exempt exempt) as described in the consultation from 2015 linked below.
https://assets.publishing.service.gov.uk/media/5a817985ed915d74e33fe68b/Strengthening_the_incentive_to_save_consultation__print_.pdf

Gravel's original comment is really what I should have asked. My pension is salary sacrefice into a company pension.

This is what I was trying to figure out how it would work. It's too much for my little brain to figure out.

I am afraid that EET and TEE stuff goes way over my head.

You and a great many others! Which is why advice from an IFA would go a long way towards helping you - and you can afford such advice when many can't. 

I rang a couple of IFAs with whom I deal regularly on a professional (rather than personal) basis and quoted your comment: 'I find IFAs aren't interested in me because I don't have a) hundreds of thousands and b) I don't have a pension they can manage. Without exception each of the four IFAs I have spoken to have not given me any confidence.'

The answer was the same in both cases - nothing to stop you asking for one-off advice on a particular aspect of your finances, and they'd expect most competent IFAs to accept a client on that basis; and if you've spoken to four IFAs and 'not been given any confidence' then possibly the problem lies with your expectations/attitudes.

Might be worth pondering their comments?

Yes, I did consider if it was me, not them.

Honestly, I am an agreeable and friendly person. I approached each of them with total open-mindedness. I love to learn and knew I was uneducated in matters of personal finance.

I didn't originally have this line in my reply, but the trauma of dealing with these IFA runs deep. So here goes: reading what your IFAs said in reply honestly scares the hell out of me even more. They fit to their stereotype that's for sure. If a customers expectation is not established in the first meeting my argument would be that is the fault of the IFA, not the customer. Rule 1 of customer care/sales. 

I know both these individuals extremely well and have dealt with them (and their very many satisfied customers) for decades - time enough for their planning skills to bear fruit. Your willingness to dismiss their entirely valid input, and put the 'blame' on the IFA for conforming to your stereotype of what you think they should be, really does suggest you need to look in the mirror a bit harder...

Grumpy_chap

dunstonh said:

   
 
There is an IFA in our county that has a £250k minimum, but that is because they have positioned themselves in the prestige/high net worth market
They are the only IFA in the county that I know wouldn't accept a client with £180k, even on transactional.

To clarify, is that £250k investment portfolio, or £250k annual income?  I assume £250k investment portfolio is not in that prestige / high net worth market.
The OP has £180k annual income.

I would also have thought, even if the OP currently has a small investment portfolio (pension), given the OP is considering making £60k per year pension contributions from now on in, that would be an attractive proposition for many IFA's given the rapid increase in portfolio size that would result.

I also would expect the OP to gain from an IFA to plan the best investment strategy.  I am not an expert, but even I can see that earning £180k and paying £60k per year into pension leaves residual income at the worst place from a tax perspective - just at the top end of the 60% effective rate through withdrawal of personal allowance.  Paying £40k one year then £80k the next would mitigate that impact a bit more favourably.

greyflanneltrousers

dunstonh said:

There is an IFA in our county that has a £250k minimum, but that is because they have positioned themselves in the prestige/high net worth market, and their services are aimed at them, and anyone outside of that is not in their target market.  The director of that firm told me that they won't break the £250k minimum unless it's the family of a client as it would dilute their brand and reputation.   They are the only IFA in the county that I know wouldn't accept a client with £180k, even on transactional.

£180k is my wage. You might have mis-read the context.

greyflanneltrousers

Marcon said:

greyflanneltrousers said:

Marcon said:

greyflanneltrousers said:

leosayer said:

gravel_2 said:

How would this kind of change attach to salary sacrifice pensions, or would it simply not?

That's one of many challenges.

I think a flat rate of tax relief is only feasible if the government stops future DC/SIPP contributions and moves everyone to a LISA-style savings pot.

In other words, moving from a EET (exempt exempt taxed) regime to TEE (taxed exempt exempt) as described in the consultation from 2015 linked below.
https://assets.publishing.service.gov.uk/media/5a817985ed915d74e33fe68b/Strengthening_the_incentive_to_save_consultation__print_.pdf

Gravel's original comment is really what I should have asked. My pension is salary sacrefice into a company pension.

This is what I was trying to figure out how it would work. It's too much for my little brain to figure out.

I am afraid that EET and TEE stuff goes way over my head.

You and a great many others! Which is why advice from an IFA would go a long way towards helping you - and you can afford such advice when many can't. 

I rang a couple of IFAs with whom I deal regularly on a professional (rather than personal) basis and quoted your comment: 'I find IFAs aren't interested in me because I don't have a) hundreds of thousands and b) I don't have a pension they can manage. Without exception each of the four IFAs I have spoken to have not given me any confidence.'

The answer was the same in both cases - nothing to stop you asking for one-off advice on a particular aspect of your finances, and they'd expect most competent IFAs to accept a client on that basis; and if you've spoken to four IFAs and 'not been given any confidence' then possibly the problem lies with your expectations/attitudes.

Might be worth pondering their comments?

Yes, I did consider if it was me, not them.

Honestly, I am an agreeable and friendly person. I approached each of them with total open-mindedness. I love to learn and knew I was uneducated in matters of personal finance.

I didn't originally have this line in my reply, but the trauma of dealing with these IFA runs deep. So here goes: reading what your IFAs said in reply honestly scares the hell out of me even more. They fit to their stereotype that's for sure. If a customers expectation is not established in the first meeting my argument would be that is the fault of the IFA, not the customer. Rule 1 of customer care/sales. 

I know both these individuals extremely well and have dealt with them (and their very many satisfied customers) for decades - time enough for their planning skills to bear fruit. Your willingness to dismiss their entirely valid input, and put the 'blame' on the IFA for conforming to your stereotype of what you think they should be, really does suggest you need to look in the mirror a bit harder...

Haha gotcha. That's why I nearly didn't put the comment in, because I knew you'd ignore everything else. And based on the few words they said, ie: them blaming me, then I wanted to see what your reaction would be if I blamed them. You didn't disappoint

greyflanneltrousers

Grumpy_chap said:

dunstonh said:

   
 
There is an IFA in our county that has a £250k minimum, but that is because they have positioned themselves in the prestige/high net worth market
They are the only IFA in the county that I know wouldn't accept a client with £180k, even on transactional.

To clarify, is that £250k investment portfolio, or £250k annual income?  I assume £250k investment portfolio is not in that prestige / high net worth market.
The OP has £180k annual income.

I would also have thought, even if the OP currently has a small investment portfolio (pension), given the OP is considering making £60k per year pension contributions from now on in, that would be an attractive proposition for many IFA's given the rapid increase in portfolio size that would result.

I also would expect the OP to gain from an IFA to plan the best investment strategy.  I am not an expert, but even I can see that earning £180k and paying £60k per year into pension leaves residual income at the worst place from a tax perspective - just at the top end of the 60% effective rate through withdrawal of personal allowance.  Paying £40k one year then £80k the next would mitigate that impact a bit more favourably.

I think you might be missing the context.

I already do put in £60k into my works pension.

But it is a company pension and as I discovered, IFA's aren't interested because it can't be moved over to them "come back when you leave/retire" etc. Even when I was willing to pay for advice, it just fell on deaf ears. My emails were ignored once I had the initial consultation. That was just one of the experiences. The other IFA were different but with similar odd attitudes.

My post was actually trying to figure out what salary sacrifice pension contributions would look like if Labour changed to a flat 25% tax benefit across the board. I couldn't get my head around what my wage would look like.

zagfles

There's already a thread on this see Lump sum pension contribution before potential Labour tax raid? — MoneySavingExpert Forum

dunstonh

(note this was at a time when my finances were all over the place. each of the first three IFAs below were found via Unbiased, and I quickly figured out that this is simply a lead gen website once you pull back the covers)

There are hardly any IFAs left on unbiased.   Certainly not the small independent IFAs.   They have been priced off it.  Unbiased mostly lists the FAs and national/regional salesforces.    When unbiased started, it was an IFA database.   However, it changed about 7 years ago to lead generation and that didn't work for many IFAs and they left unbiased.  Then more recently, unbiased decided to focus on regional and national salesforce FAs and priced the remaining independent IFAs off it.  

Going into the IFA hunt I actually had no expectation. I was ready to be told. Now I understand the difference between IFAs and financial planners. The expectation if I try to think back going into an IFA was they would review my finances and help me maximise and minimise. Help me budget. Help me ensure my pension was invested according to my risk.

There is no difference between IFAs and financial planners.  IFAs are financial planners.    The difference is typically between FA and IFA and, in particular, the wealth management firms that exist purely to hoover up assets under management.      The Wealth Management tagline is often an indicator as that is favoured by that model but that would be unfair on firms that have used that tagline for decades before the other type came along.   

Some clients need financial planning more than others.  Some clients use it religiously and in-depth. Others use it more basically or for certain phases of their life.

One of the IFAs happened to be SJP. I've since read about them in the press and it does not surprise me. What I found with this particular IFA is they simply ignored my thank you email and my wish to proceed with being helped. I sent another follow-up, literally no reply.

And this is what I expected.    You don't appear to know the difference between adviser type.      SJP are not IFAs.   There is a good chance the others were not too if you got them on unbiased.

That is not unusual.  Surveys over the years have found that over half of people who think they are seeing an IFA are actually seeing an FA.    Most community facebook posts asking for an IFA get given responses that are FAs and people don't know the difference when its pointed out.  

Interestingly, after the event, I spoke to friends on similar earnings to me and it's not a dissmiliar story. Some first hand, some third hand, and some probably still affected by the scandles of the 1980s. It's one of distrust.

IFAs didn't exist until 1988.  Prior to that it was insurance agents and brokers.  Polarisation came in 1988 as the first stage of many to improve standards.    Back then, there were close to 300,000  selling what are now regulated investment products.    Today, its closer to 20,000.

I suspect the world of financial advice is changing. This next generation are far more savvy. And as I said, I've taught my young kids exactly what pensions and investments are. Their 'portfolio' is better than mine will ever be. They are barely teens and they now understand compounding.

The next generation are not more savvy.   On tech, they are, but I do not see any difference in knowledge apart from t being more likely to be scammed from something on social media or to follow fashion investing.

So here goes: reading what your IFAs said in reply honestly scares the hell out of me even more. They fit to their stereotype that's for sure. If a customers expectation is not established in the first meeting my argument would be that is the fault of the IFA, not the customer. Rule 1 of customer care/sales. I was left with the assumption that people that use IFAs have enough money to not want to understand how to look after it. Whereas at my level of net worth there isn't enough to justify it. Literally I was left thinking that I wasn't a big enough deal for them. And yes I could have paid fo one-off advice, but it become very clear very quickly that it is the recurring revenue that is of most interest to them. And I get it.

So basically, you have formed an opinion of IFAs based on FAs rather than IFAs (apart from number 4 who appears to have quickly realised that it wasn't going anywhere).

Money does increase the workload for IFAs.   Beyond planning, you then have multiple wrappers, annual allowances, tax planning etc.    If you are just looking for budgeting advice, then its not really what an IFA is about.  

And a lot of those clients carry the knowledge to DIY but choose not to because they don't want to.   They want to use their time differently.

Most IFAs I know are at or above capacity for workload.   They also have to consider value for money (that is a regulatory requirement).   So, often, they are looking at what you need with the dual consideration of whether it's worth using an IFA from your perspective AND whether it is worth it from the IFAs perspective.  That is effectively the purpose of the initial free meeting.  A short meeting to see if there is scope for both sides to enter into a professional relationship going forward.   

Marcon

greyflanneltrousers said:

Marcon said:

greyflanneltrousers said:

Marcon said:

greyflanneltrousers said:

leosayer said:

gravel_2 said:

How would this kind of change attach to salary sacrifice pensions, or would it simply not?

That's one of many challenges.

I think a flat rate of tax relief is only feasible if the government stops future DC/SIPP contributions and moves everyone to a LISA-style savings pot.

In other words, moving from a EET (exempt exempt taxed) regime to TEE (taxed exempt exempt) as described in the consultation from 2015 linked below.
https://assets.publishing.service.gov.uk/media/5a817985ed915d74e33fe68b/Strengthening_the_incentive_to_save_consultation__print_.pdf

Gravel's original comment is really what I should have asked. My pension is salary sacrefice into a company pension.

This is what I was trying to figure out how it would work. It's too much for my little brain to figure out.

I am afraid that EET and TEE stuff goes way over my head.

You and a great many others! Which is why advice from an IFA would go a long way towards helping you - and you can afford such advice when many can't. 

I rang a couple of IFAs with whom I deal regularly on a professional (rather than personal) basis and quoted your comment: 'I find IFAs aren't interested in me because I don't have a) hundreds of thousands and b) I don't have a pension they can manage. Without exception each of the four IFAs I have spoken to have not given me any confidence.'

The answer was the same in both cases - nothing to stop you asking for one-off advice on a particular aspect of your finances, and they'd expect most competent IFAs to accept a client on that basis; and if you've spoken to four IFAs and 'not been given any confidence' then possibly the problem lies with your expectations/attitudes.

Might be worth pondering their comments?

Yes, I did consider if it was me, not them.

Honestly, I am an agreeable and friendly person. I approached each of them with total open-mindedness. I love to learn and knew I was uneducated in matters of personal finance.

I didn't originally have this line in my reply, but the trauma of dealing with these IFA runs deep. So here goes: reading what your IFAs said in reply honestly scares the hell out of me even more. They fit to their stereotype that's for sure. If a customers expectation is not established in the first meeting my argument would be that is the fault of the IFA, not the customer. Rule 1 of customer care/sales. 

I know both these individuals extremely well and have dealt with them (and their very many satisfied customers) for decades - time enough for their planning skills to bear fruit. Your willingness to dismiss their entirely valid input, and put the 'blame' on the IFA for conforming to your stereotype of what you think they should be, really does suggest you need to look in the mirror a bit harder...

Haha gotcha. That's why I nearly didn't put the comment in, because I knew you'd ignore everything else. And based on the few words they said, ie: them blaming me, then I wanted to see what your reaction would be if I blamed them. You didn't disappoint

Nor did you ...exactly the response I expected...and explains exactly why you aren't a client an IFA is is keen to accept!

greyflanneltrousers

Marcon said:

greyflanneltrousers said:

Marcon said:

greyflanneltrousers said:

Marcon said:

greyflanneltrousers said:

leosayer said:

gravel_2 said:

How would this kind of change attach to salary sacrifice pensions, or would it simply not?

That's one of many challenges.

I think a flat rate of tax relief is only feasible if the government stops future DC/SIPP contributions and moves everyone to a LISA-style savings pot.

In other words, moving from a EET (exempt exempt taxed) regime to TEE (taxed exempt exempt) as described in the consultation from 2015 linked below.
https://assets.publishing.service.gov.uk/media/5a817985ed915d74e33fe68b/Strengthening_the_incentive_to_save_consultation__print_.pdf

Gravel's original comment is really what I should have asked. My pension is salary sacrefice into a company pension.

This is what I was trying to figure out how it would work. It's too much for my little brain to figure out.

I am afraid that EET and TEE stuff goes way over my head.

You and a great many others! Which is why advice from an IFA would go a long way towards helping you - and you can afford such advice when many can't. 

I rang a couple of IFAs with whom I deal regularly on a professional (rather than personal) basis and quoted your comment: 'I find IFAs aren't interested in me because I don't have a) hundreds of thousands and b) I don't have a pension they can manage. Without exception each of the four IFAs I have spoken to have not given me any confidence.'

The answer was the same in both cases - nothing to stop you asking for one-off advice on a particular aspect of your finances, and they'd expect most competent IFAs to accept a client on that basis; and if you've spoken to four IFAs and 'not been given any confidence' then possibly the problem lies with your expectations/attitudes.

Might be worth pondering their comments?

Yes, I did consider if it was me, not them.

Honestly, I am an agreeable and friendly person. I approached each of them with total open-mindedness. I love to learn and knew I was uneducated in matters of personal finance.

I didn't originally have this line in my reply, but the trauma of dealing with these IFA runs deep. So here goes: reading what your IFAs said in reply honestly scares the hell out of me even more. They fit to their stereotype that's for sure. If a customers expectation is not established in the first meeting my argument would be that is the fault of the IFA, not the customer. Rule 1 of customer care/sales. 

I know both these individuals extremely well and have dealt with them (and their very many satisfied customers) for decades - time enough for their planning skills to bear fruit. Your willingness to dismiss their entirely valid input, and put the 'blame' on the IFA for conforming to your stereotype of what you think they should be, really does suggest you need to look in the mirror a bit harder...

Haha gotcha. That's why I nearly didn't put the comment in, because I knew you'd ignore everything else. And based on the few words they said, ie: them blaming me, then I wanted to see what your reaction would be if I blamed them. You didn't disappoint

Nor did you ...exactly the response I expected...and explains exactly why you aren't a client an IFA is is keen to accept!

Aaaaaanyway, enough of the point scoring, I'll try and get us back on topic.

What's pretty depressing is the conversations I had with all four IFAs were genuinely and at a time I needed help and was ready to accept it.

The only positive I can see in those conversations, and it's actually what I got out of it, was that perhaps I needed to hear what they had to say. Perhaps I needed a level of financial maturity before I engaged. Perhaps I needed to hear someone scoff or their shock at my debt/poor choices.

It might be interesting for me to approach some new financial services now that I perhaps have a better idea of what I am looking for. Like you mentioned, I didn't really know what an IFA did. I just assumed it was a catch all. Because my Googles started with Financial Advise.

If you have a read through those four examples I provided - putting aside your personal relationships with IFAs - it was genuinally a pretty awful experience. Either being hudwinked or let down like a lead balloon. You will have to take my word for it I suppose.

I really think there is a space for somewhere between an IFA and Financial Planner. Heck I could even now teach a version of myself enough to get ones finances on track.

greyflanneltrousers

dunstonh said:

(note this was at a time when my finances were all over the place. each of the first three IFAs below were found via Unbiased, and I quickly figured out that this is simply a lead gen website once you pull back the covers)

There are hardly any IFAs left on unbiased.   Certainly not the small independent IFAs.   They have been priced off it.  Unbiased mostly lists the FAs and national/regional salesforces.    When unbiased started, it was an IFA database.   However, it changed about 7 years ago to lead generation and that didn't work for many IFAs and they left unbiased.  Then more recently, unbiased decided to focus on regional and national salesforce FAs and priced the remaining independent IFAs off it.  

Going into the IFA hunt I actually had no expectation. I was ready to be told. Now I understand the difference between IFAs and financial planners. The expectation if I try to think back going into an IFA was they would review my finances and help me maximise and minimise. Help me budget. Help me ensure my pension was invested according to my risk.

There is no difference between IFAs and financial planners.  IFAs are financial planners.    The difference is typically between FA and IFA and, in particular, the wealth management firms that exist purely to hoover up assets under management.      The Wealth Management tagline is often an indicator as that is favoured by that model but that would be unfair on firms that have used that tagline for decades before the other type came along.   

Some clients need financial planning more than others.  Some clients use it religiously and in-depth. Others use it more basically or for certain phases of their life.

One of the IFAs happened to be SJP. I've since read about them in the press and it does not surprise me. What I found with this particular IFA is they simply ignored my thank you email and my wish to proceed with being helped. I sent another follow-up, literally no reply.

And this is what I expected.    You don't appear to know the difference between adviser type.      SJP are not IFAs.   There is a good chance the others were not too if you got them on unbiased.

That is not unusual.  Surveys over the years have found that over half of people who think they are seeing an IFA are actually seeing an FA.    Most community facebook posts asking for an IFA get given responses that are FAs and people don't know the difference when its pointed out.  

Interestingly, after the event, I spoke to friends on similar earnings to me and it's not a dissmiliar story. Some first hand, some third hand, and some probably still affected by the scandles of the 1980s. It's one of distrust.

IFAs didn't exist until 1988.  Prior to that it was insurance agents and brokers.  Polarisation came in 1988 as the first stage of many to improve standards.    Back then, there were close to 300,000  selling what are now regulated investment products.    Today, its closer to 20,000.

I suspect the world of financial advice is changing. This next generation are far more savvy. And as I said, I've taught my young kids exactly what pensions and investments are. Their 'portfolio' is better than mine will ever be. They are barely teens and they now understand compounding.

The next generation are not more savvy.   On tech, they are, but I do not see any difference in knowledge apart from t being more likely to be scammed from something on social media or to follow fashion investing.

So here goes: reading what your IFAs said in reply honestly scares the hell out of me even more. They fit to their stereotype that's for sure. If a customers expectation is not established in the first meeting my argument would be that is the fault of the IFA, not the customer. Rule 1 of customer care/sales. I was left with the assumption that people that use IFAs have enough money to not want to understand how to look after it. Whereas at my level of net worth there isn't enough to justify it. Literally I was left thinking that I wasn't a big enough deal for them. And yes I could have paid fo one-off advice, but it become very clear very quickly that it is the recurring revenue that is of most interest to them. And I get it.

So basically, you have formed an opinion of IFAs based on FAs rather than IFAs (apart from number 4 who appears to have quickly realised that it wasn't going anywhere).

Money does increase the workload for IFAs.   Beyond planning, you then have multiple wrappers, annual allowances, tax planning etc.    If you are just looking for budgeting advice, then its not really what an IFA is about.  

And a lot of those clients carry the knowledge to DIY but choose not to because they don't want to.   They want to use their time differently.

Most IFAs I know are at or above capacity for workload.   They also have to consider value for money (that is a regulatory requirement).   So, often, they are looking at what you need with the dual consideration of whether it's worth using an IFA from your perspective AND whether it is worth it from the IFAs perspective.  That is effectively the purpose of the initial free meeting.  A short meeting to see if there is scope for both sides to enter into a professional relationship going forward.   

I think you are right. Whatever types of organisations I ended up speaking to, I was under the impression they were IFAs. I just had a look at two of the companies website and there is not a mention of IFA anywhere.

Both were obtained from Unbiased, which tells me "Simply Enter Your Postcode Now — Local and Trusted IFAs.".

It is so misleading.

No wonder all of my friends earning the same thought I was mad going to any sort of financial service. I think I must have had a handful of conversations and they all had the same reaction.

My generation definately have a bad impression of financial services. I think part of the reason I didn't have a pension for so long is because I can remember during the 80s/90s hearing of pension disasters.

Perhaps I should rephrase all of my message to say Financial Service Providers instead of IFAs. Because judging by their websites this is what they are.