The inevitable pre-budget speculation on pensions

Cobbler_tone

GenX0212 said:

Cobbler_tone said:

snowlaser 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?

Rioting on the streets?  So you're saying you'd put bricks through shop windows if you were only allowed to have £175,000 tax free instead of £268,000?

I'd reframe it as 'a tiny percentage of the country would have a mild grumble' and carry on.

It's easy to get caught up in the worry and I count myself in this category with planning to retire next year.
Currently I have about £180k tax free (£720k total) in DC and also a £35k DB Lump Sum so about £215k tax free availability.

But when you think about it objectively then even if I managed to accumulate the max LSA before I actually retire and IF the LSA was reduced by £100k then it would be 20% tax on £100k = £20k.  

Now I would be far from happy if that happened but objectively it is not the end of the world either when weighed against a total pension pot worth over £1m. 

So personally speaking I have decided to ignore all speculation, stick to the plan and wait and see.

I love a game of 'hypothetical pension bingo'. Ignoring speculation is the best policy and someone once told me never to waste energy on something you can't change.

Suppose the limit did get reduced? In practical terms what does it mean?

- You could draw down the original amount. If £268k you pay the appropriate tax. Probably unwise for most.
- You draw down your TFLS (whatever it is) and buy an annuity with the rest. If you have a good innings you may be better off.
- You leave the rest in and draw it down.
- You could work another year or whatever.
- If it was earmarked for a mortgage, you push that out and use the annuity to pay it.
- Considering this person would be at their LTA, they tend to come with six figure ISA savings, dip into those.

I struggle to see how it would totally scupper someone's retirement plans but might take some thinking and an adjusted approach. i.e. an unplanned tax event for wealth above £1m shouldn't be a deal breaker, a tad worrying if perceived as such. I think some people like to be outraged by the thought of something.

That aside...how much admin and change would this cause for the government and how much would it actually save them? Certainly not the £10b by moving the SPA to 67!

RogerPensionGuy

Cobbler_tone said:

GenX0212 said:

Cobbler_tone said:

snowlaser 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?

Rioting on the streets?  So you're saying you'd put bricks through shop windows if you were only allowed to have £175,000 tax free instead of £268,000?

I'd reframe it as 'a tiny percentage of the country would have a mild grumble' and carry on.

It's easy to get caught up in the worry and I count myself in this category with planning to retire next year.
Currently I have about £180k tax free (£720k total) in DC and also a £35k DB Lump Sum so about £215k tax free availability.

But when you think about it objectively then even if I managed to accumulate the max LSA before I actually retire and IF the LSA was reduced by £100k then it would be 20% tax on £100k = £20k.  

Now I would be far from happy if that happened but objectively it is not the end of the world either when weighed against a total pension pot worth over £1m. 

So personally speaking I have decided to ignore all speculation, stick to the plan and wait and see.

I love a game of 'hypothetical pension bingo'. Ignoring speculation is the best policy and someone once told me never to waste energy on something you can't change.

Suppose the limit did get reduced? In practical terms what does it mean?

- You could draw down the original amount. If £268k you pay the appropriate tax. Probably unwise for most.
- You draw down your TFLS (whatever it is) and buy an annuity with the rest. If you have a good innings you may be better off.
- You leave the rest in and draw it down.
- You could work another year or whatever.
- If it was earmarked for a mortgage, you push that out and use the annuity to pay it.
- Considering this person would be at their LTA, they tend to come with six figure ISA savings, dip into those.

I struggle to see how it would totally scupper someone's retirement plans but might take some thinking and an adjusted approach. i.e. an unplanned tax event for wealth above £1m shouldn't be a deal breaker, a tad worrying if perceived as such. I think some people like to be outraged by the thought of something.

That aside...how much admin and change would this cause for the government and how much would it actually save them? Certainly not the £10b by moving the SPA to 67!

Apparently from an administration point of view, reducing the 268K is pretty easy to do unfortunately. 

I do wonder if changing the 268K is getting all the press, but wonder if they could do something a bit more strange with the PCLS TFLS LSDBA processes, maybe something we not expecting.

Unless they really belive the UK economy/GDP is going to the moon in these next 2 to years they will need any negative feelings to be taken this November and hopefully produce some milk & honey in 2027 & 2028 to generate good feelings.

Only two months to wait. 

westv

My current speculation is that the following will happen:-
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Cobbler_tone

RogerPensionGuy said:

Cobbler_tone said:

GenX0212 said:

Cobbler_tone said:

snowlaser 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?

Rioting on the streets?  So you're saying you'd put bricks through shop windows if you were only allowed to have £175,000 tax free instead of £268,000?

I'd reframe it as 'a tiny percentage of the country would have a mild grumble' and carry on.

It's easy to get caught up in the worry and I count myself in this category with planning to retire next year.
Currently I have about £180k tax free (£720k total) in DC and also a £35k DB Lump Sum so about £215k tax free availability.

But when you think about it objectively then even if I managed to accumulate the max LSA before I actually retire and IF the LSA was reduced by £100k then it would be 20% tax on £100k = £20k.  

Now I would be far from happy if that happened but objectively it is not the end of the world either when weighed against a total pension pot worth over £1m. 

So personally speaking I have decided to ignore all speculation, stick to the plan and wait and see.

I love a game of 'hypothetical pension bingo'. Ignoring speculation is the best policy and someone once told me never to waste energy on something you can't change.

Suppose the limit did get reduced? In practical terms what does it mean?

- You could draw down the original amount. If £268k you pay the appropriate tax. Probably unwise for most.
- You draw down your TFLS (whatever it is) and buy an annuity with the rest. If you have a good innings you may be better off.
- You leave the rest in and draw it down.
- You could work another year or whatever.
- If it was earmarked for a mortgage, you push that out and use the annuity to pay it.
- Considering this person would be at their LTA, they tend to come with six figure ISA savings, dip into those.

I struggle to see how it would totally scupper someone's retirement plans but might take some thinking and an adjusted approach. i.e. an unplanned tax event for wealth above £1m shouldn't be a deal breaker, a tad worrying if perceived as such. I think some people like to be outraged by the thought of something.

That aside...how much admin and change would this cause for the government and how much would it actually save them? Certainly not the £10b by moving the SPA to 67!

Apparently from an administration point of view, reducing the 268K is pretty easy to do unfortunately. 

Timely reminder. Maybe some people take a lack of commitment not to do it, as the green light that they are going to do it? Deja vu.

https://www.thisismoney.co.uk/money/pensions/article-15145475/Taking-pension-tax-free-cash-Budget-irreversible.html

michaels

Cobbler_tone said:

GenX0212 said:

Cobbler_tone said:

snowlaser 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?

Rioting on the streets?  So you're saying you'd put bricks through shop windows if you were only allowed to have £175,000 tax free instead of £268,000?

I'd reframe it as 'a tiny percentage of the country would have a mild grumble' and carry on.

It's easy to get caught up in the worry and I count myself in this category with planning to retire next year.
Currently I have about £180k tax free (£720k total) in DC and also a £35k DB Lump Sum so about £215k tax free availability.

But when you think about it objectively then even if I managed to accumulate the max LSA before I actually retire and IF the LSA was reduced by £100k then it would be 20% tax on £100k = £20k.  

Now I would be far from happy if that happened but objectively it is not the end of the world either when weighed against a total pension pot worth over £1m. 

So personally speaking I have decided to ignore all speculation, stick to the plan and wait and see.

I love a game of 'hypothetical pension bingo'. Ignoring speculation is the best policy and someone once told me never to waste energy on something you can't change.

Suppose the limit did get reduced? In practical terms what does it mean?

- You could draw down the original amount. If £268k you pay the appropriate tax. Probably unwise for most.
- You draw down your TFLS (whatever it is) and buy an annuity with the rest. If you have a good innings you may be better off.
- You leave the rest in and draw it down.
- You could work another year or whatever.
- If it was earmarked for a mortgage, you push that out and use the annuity to pay it.
- Considering this person would be at their LTA, they tend to come with six figure ISA savings, dip into those.

I struggle to see how it would totally scupper someone's retirement plans but might take some thinking and an adjusted approach. i.e. an unplanned tax event for wealth above £1m shouldn't be a deal breaker, a tad worrying if perceived as such. I think some people like to be outraged by the thought of something.

That aside...how much admin and change would this cause for the government and how much would it actually save them? Certainly not the £10b by moving the SPA to 67!

I wish I was in the position where 33.6k / 67.2k (higher rate taxpayer) if the TFLS limit is cut to 100k could be seen as a rounding error....

Albermarle

Cobbler_tone said:

RogerPensionGuy said:

Cobbler_tone said:

GenX0212 said:

Cobbler_tone said:

snowlaser 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?

Rioting on the streets?  So you're saying you'd put bricks through shop windows if you were only allowed to have £175,000 tax free instead of £268,000?

I'd reframe it as 'a tiny percentage of the country would have a mild grumble' and carry on.

It's easy to get caught up in the worry and I count myself in this category with planning to retire next year.
Currently I have about £180k tax free (£720k total) in DC and also a £35k DB Lump Sum so about £215k tax free availability.

But when you think about it objectively then even if I managed to accumulate the max LSA before I actually retire and IF the LSA was reduced by £100k then it would be 20% tax on £100k = £20k.  

Now I would be far from happy if that happened but objectively it is not the end of the world either when weighed against a total pension pot worth over £1m. 

So personally speaking I have decided to ignore all speculation, stick to the plan and wait and see.

I love a game of 'hypothetical pension bingo'. Ignoring speculation is the best policy and someone once told me never to waste energy on something you can't change.

Suppose the limit did get reduced? In practical terms what does it mean?

- You could draw down the original amount. If £268k you pay the appropriate tax. Probably unwise for most.
- You draw down your TFLS (whatever it is) and buy an annuity with the rest. If you have a good innings you may be better off.
- You leave the rest in and draw it down.
- You could work another year or whatever.
- If it was earmarked for a mortgage, you push that out and use the annuity to pay it.
- Considering this person would be at their LTA, they tend to come with six figure ISA savings, dip into those.

I struggle to see how it would totally scupper someone's retirement plans but might take some thinking and an adjusted approach. i.e. an unplanned tax event for wealth above £1m shouldn't be a deal breaker, a tad worrying if perceived as such. I think some people like to be outraged by the thought of something.

That aside...how much admin and change would this cause for the government and how much would it actually save them? Certainly not the £10b by moving the SPA to 67!

Apparently from an administration point of view, reducing the 268K is pretty easy to do unfortunately. 

Timely reminder. Maybe some people take a lack of commitment not to do it, as the green light that they are going to do it? Deja vu.

https://www.thisismoney.co.uk/money/pensions/article-15145475/Taking-pension-tax-free-cash-Budget-irreversible.html

Some parts of the media give the impression that the Chancellor has already 'plotted' what she is going to do.( not just with pensions) 

When in reality she and her team will still be examining all options and the implications thereof. Lots of to-ing and fro-ing between No 10 and No 11 and the OBR, probably right up until the budget.
So they would be crazy to start ruling things in or out at this stage.

LHW99

SmokeysTravels said:

aroominyork said:

Bringing the House back to order... spouse 1 dies over 75, leaving SIPP to spouse 2 who dies under 75. Do beneficiaries of the SIPP pay income tax on withdrawals? 

No - if spouse 2 dies under 75 then this (currently) will be income tax free for their beneficiaries on withdrawal. If they keep it and die over 75 then it becomes liable for income tax again for their beneficiaries. 

In terms of being assessed for IHT (from 2027) then every time it moves to a non spouse it will be assessed. 

Just goes to show how b****y complicated pension regulations are!!!

You live and learn (especially here)

Grumpy_chap

RogerPensionGuy said:

Apparently from an administration point of view, reducing the 268K is pretty easy to do 

Or not if we jump on the band wagon that indicates that any change to pension rules that may negatively impact me has to be with no less than 1 billion year's notice and Rachel Reeves has to personally visit each person at home for a rich tea & cuppa while she explains every intricate detail of the change. 

hotncold47

 I must stop reading all this pre budget speculation I'm starting to get twitchy now. 

Could someone put me straight about the TFLS situation when you are approaching 75? Does it lose it's tax free status or am I getting brain fog. I know I can only add £2880 until 75 if not working.

Cus

Ah Rach, just stick another penny on the basic rate of income tax and a couple of more on the higher rate and be done with it..