The inevitable pre-budget speculation on pensions

Cobbler_tone

CorseyEdge said:

Cobbler_tone said:

No one has had a stab at what it would actually generate for the government. It may not be a big number. Not the billions they go for anyway. They will balance noise vs reward in every decision.

Another recent Pension Expert publication article referenced an Institute for Fiscal Studies figure of around £2bn a year for limiting the tax free cap to £100k (makes sense if the overall cost of TFLS is £5bn/year) - I'd suggest that is quite a material saving - whether they wish to take on the public sector or those with £400k+ pension pots is another thing.

EDIT: I found the original 2024 IFS reference for those savings here - https://ifs.org.uk/articles/raising-revenue-reforms-pensions-taxation

Thanks for sharing. One article but maybe statements like this may slow down some of the running hares. It at least alludes that no change is likely to happen overnight.


I think they would be more likely to target the limit the NI savings seen via SS, which is also covered in this article. i.e. if you whack 50% of your salary into the pension you may not get the full associated saving.

It is all a balancing act for them. e.g. raising the basic rate of tax to 21% would generate £7b.
When the inevitable next government come in and raise the tax threshold to £20,000 a year that is going to cost them up to £80b a year. 

QrizB

Cobbler_tone said:

HedgehogRulez said:

If the 25% TFLS was reduced id be rioting on the streets. It's a key element of my retirement strategy to utilise. Already narked by it being limited to £268k in recent years.

Ladders being pulled up by the oldies again! They've benefited from it, so why cant their children?

I personally don’t think you’d have too much company.

Retirees have plenty of time on their hands for peaceful protests. Plus they vote, unlike so many younger people

Cobbler_tone said:

You don’t see rioting in the streets over hikes to SPA, which is a far more significant impact on many who rely on it.

That affects working-age people, though, who are too busy to protest and are less likely to vote!

https://www.britishelectionstudy.com/graph/?id=38404

MeteredOut

QrizB said:

Cobbler_tone said:

HedgehogRulez said:

If the 25% TFLS was reduced id be rioting on the streets. It's a key element of my retirement strategy to utilise. Already narked by it being limited to £268k in recent years.

Ladders being pulled up by the oldies again! They've benefited from it, so why cant their children?

I personally don’t think you’d have too much company.

Retirees have plenty of time on their hands for peaceful protests. Plus they vote, unlike so many younger people

Cobbler_tone said:

You don’t see rioting in the streets over hikes to SPA, which is a far more significant impact on many who rely on it.

That affects working-age people, though, who are too busy to protest and are less likely to vote!

https://www.britishelectionstudy.com/graph/?id=38404

I'm seriously concerned for the % of people who did not know if they voted

The_Green_Hornet

GunJack said:

ClashCityRocker1 said:

I think there is a case for reworking the whole income tax/NI system - probably taxing wealthy pensioners a bit more. But it would be a brave chancellor who did so, especially after saying they wouldn't.

But then what's a "wealthy pensioner"??

Someone who has a taxable income above £35k according to WFA eligibility.

Vitor

I've decided to take all my pensions, two a little early (3 years) and 'bank' the 25% tax free lump sums

Cobbler_tone

QrizB said:

Cobbler_tone said:

HedgehogRulez said:

If the 25% TFLS was reduced id be rioting on the streets. It's a key element of my retirement strategy to utilise. Already narked by it being limited to £268k in recent years.

Ladders being pulled up by the oldies again! They've benefited from it, so why cant their children?

I personally don’t think you’d have too much company.

Retirees have plenty of time on their hands for peaceful protests. 

Not great in a ‘riot’ 

LHW99

e.g. You don’t see rioting in the streets over hikes to SPA

Ssshhh! W@**e

RogerPensionGuy

I think pensions will be used to help balance the books along with plenty of other stuff. 

They just need to make pension inputs less attractive via various means, maybe slug pension vehicles with something fancy idears and obviously clobber any outflows out of pensions. 

Pensions have long been seen as football like game by governments, I don't expect this to change and I'll be unsurprised by any changes this budget.

I've given up serious planning with pensions now, I just guess and pick a balanced pathway and absorb the changes. 

kinger101

GunJack said:

ClashCityRocker1 said:

I think there is a case for reworking the whole income tax/NI system - probably taxing wealthy pensioners a bit more. But it would be a brave chancellor who did so, especially after saying they wouldn't.

But then what's a "wealthy pensioner"??

I think you can usually spot them by their attire. Brightly coloured trousers, shirt (not necessarily iironed) with a V neck sweater.  Though sports jacket and a tie on Sunday.

Usually drive a Volvo estate.

marathonic

Reducing the tax free allowance will bring in very little money in the near term as many simply won't draw down funds that are going to be taxed. For example, reducing the limit to £100,000 would just have many withdraw that £100,000 unless they really have an immediate need for more.

I'm sure part of their research involves looking at the rules in other countries. For example, if they followed the Irish model, they would be considering a £200,000 tax free lump sum with an option to drawdown an additional £300,000 at a fixed tax rate of 20%.