Pension 25% tax free lump sum

bjorn_toby_wilde

I guess you can never say never, but personally I think it’s very unlikely because,

a. It would be almost universally unpopular, hitting so many voters that it would be politically very damaging.
b. It would discourage saving into pensions, making more people reliant on the state.

That said, where politicians are concerned you really can’t rule out anything.

Russ56765

bjorn_toby_wilde said:

I guess you can never say never, but personally I think it’s very unlikely because,

a. It would be almost universally unpopular, hitting so many voters that it would be politically very damaging.
b. It would discourage saving into pensions, making more people reliant on the state.

That said, where politicians are concerned you really can’t rule out anything.

I think that's where my head was at,   logic being you plan your finances for years around the provisions you make for retirement so messing with that without significant lead time could really be an issue for people who cant really go back to work to replace the loss.     Thanks

Albermarle

Russ56765 said:

bjorn_toby_wilde said:

ali_bear said:

Speaking as a person who was once young. Receiving a modest gift from an older relative around the age of 30, when I was buying my first house, would have made a huge difference to my outlook at that time. 

Now I am older it would make little difference to receive a relatively large inheritance. 

Just saying that, unless your children are too feckless or idiotic to handle the money, it's probably better to pass some wealth on to them sooner rather than later, if you can. 

My feelings exactly.

I have no idea what I might inherit but always worked on the basis it would be nothing so anything would be a bonus.

If I do inherit I won’t need it and would rather pass it to my children. They’re not feckless and would get a great deal of benefit from having the money earlier.

My feelings and intent exactly,    although the desire to not give 40% of our eventual estate to the Gov is naturally a strong driver too. :--)

Also one more question any feelings on the likelihood of the 25% tax free sum being taken away at some point?    Clearly only speculation but I would be interested in you guys take on that?  

There were many threads about this pre budget, especially as parts of the media were whipping up fear about it.
Apparently quite a few people withdrew all their tax free cash prematurely, which has now put them in a disadvantageous position tax wise, especially if it was a large amount.

There would be no logic to removing the 25% tax free and as said it is very popular.
Probably the maximum amount you can take ( £268K) will not be increased though for a long time. 

Scrounger

Albermarle said:

Russ56765 said:

bjorn_toby_wilde said:

ali_bear said:

Speaking as a person who was once young. Receiving a modest gift from an older relative around the age of 30, when I was buying my first house, would have made a huge difference to my outlook at that time. 

Now I am older it would make little difference to receive a relatively large inheritance. 

Just saying that, unless your children are too feckless or idiotic to handle the money, it's probably better to pass some wealth on to them sooner rather than later, if you can. 

My feelings exactly.

I have no idea what I might inherit but always worked on the basis it would be nothing so anything would be a bonus.

If I do inherit I won’t need it and would rather pass it to my children. They’re not feckless and would get a great deal of benefit from having the money earlier.

My feelings and intent exactly,    although the desire to not give 40% of our eventual estate to the Gov is naturally a strong driver too. :--)

Also one more question any feelings on the likelihood of the 25% tax free sum being taken away at some point?    Clearly only speculation but I would be interested in you guys take on that?  

There were many threads about this pre budget, especially as parts of the media were whipping up fear about it.
Apparently quite a few people withdrew all their tax free cash prematurely, which has now put them in a disadvantageous position tax wise, especially if it was a large amount.

Not necessarily; if that tax-free cash is 'recycled' back into pension that enables an additional 6.25% gain.

Unorthodox I know, but effective if done in chunks of up to £30k drawdown (up to  £7k5 recycled per 12-month period).

That was one of my strategies to build my DC pension over the years. 


Scrounger

Russ56765

HNY 😁 

Conclusion for me is that I’m taking and spending/draining  my pension to live and leaving anything else I have elsewhere  as secondary spending or gifting at the appropriate time.  This video helps to clarify arguments for this approach.   

https://youtu.be/ThBVwmKs-0w?si=576Nw2IN__jYMvgA

kinger101

ali_bear said:

Whatever you feel about the current government and how they are attempting to bring the countries finances to a more sustainable footing. It seems the taxation rules are likely to see some loosening in about four years time, no? That is something you could plan for now. 

Don't bank on it.  The tax take has been steadily increasing under both parties.  It's generally best to play by today's rules rather than waiting to see what tomorrow's might be.