MSE News: Budget 2015: Pension lifetime allowance to fall to £1m

Its going to shoot the government in the foot as how much do you think all those doctors and army officers pensions are worth? Many retiring on £40k+ pensions must equal a pension 'pot' well over £1m.

I just see this as another incentive to invest in property as I should be near optimal pension contributions by the time I'm 50. Imagine all those 1st time buyer starter homes I'm going to have to buy as the government won't make putting money in pensions more attractive?

I am a bit stunned to think that I could be pretty close to the LTA, frankly not having had my eye on this particular ball for a while - I have only drawn one DB pension of £8k/yr at 60 2 years ago, which together with AVCs at the time was cited as about 14% LTA. I am in process of crystallising a £300K SIPP and have my best pension (DB) which I expect to be about £20k to come in 2018 and £40k in the DC section of the same scheme. I also have a Section 32 policy which was valued at about 70k in 2012.

In present day terms I am looking at maybe £36k retirement income from age 65, ignoring the SIPP. Apart from state pensions this is virtually the household's retirement income - my wife was a stay at home mum.

I'll have to do a proper projection (at least the SIPP will value will be fixed in now) and make sure I keep up with the unannounced protection provisions just in case.

I agree that contribution limits should be a better way to do it, outside of DB. I know I am better off than most but that is in large part because I had done by 60 what I consider necessary for a secure old age, without reliance on the state, rather than indulge in expensive holidays, eating out, and regular new cars.

There are some very mixed messages in all these changes. What many will read into this is spend it while you've got it.

I don't expect any sympathy for what some probably consider a nice problem to have, but I am pretty bemused about it.

At least I should have my SIPP lump sum in the bank this week, pre Balls's contribution to the further undermining of my plans!

Hope I don't have to tell the boss that we may have to divorce to split the pensions

This is a disgrace. How can anyone possibly plan what they put into their pension when they keep changing the rules. Anyone on a decent salary of over £100k has been absolutley slaughtered by this last government. No child benefit. Pensions slashed. 60% marginal rate of income tax.

jamesd wrote: »

That may be because according to Percentile points from 1 to 99 for total income before and after tax for 201213 a tax payer with a before tax income is in approximately the top 2.5% of all tax payers by income:

1	8,370
2	8,670
3	8,970
4	9,260
5	9,570
10	10,900
20	13,100
30	15,400
40	18,000
50	21,000
60	24,800
70	29,700
80	36,700
81	37,700
82	38,700
83	39,700
84	40,700
85	41,800
86	42,800
87	44,100
88	45,600
89	47,200
90	49,200
91	51,500
92	54,300
93	57,700
94	62,000
95	67,900
96	76,100
97	88,000
98	106,000
99	150,000

See the linked spreadsheet for the full range of values and for the after tax values.

I am somewhere between the 82nd and 83rd percentile which is good but hardly rich having always been a basic rate taxpayer. However on my spreadsheet I could be caught out by the LTA if I carry on working to SPA. The policy certainly encourages early retirement. I suspect that in the next few years we will hear of a problem of a shortage of GP's and Headteachers as those in their 50's find themselves caught out by the new limit.

So this change does effect my plans as I will have a deferred DB scheme and a SIPP. Without yet doing the calculations I think I would need to take my DB scheme a year or two earlier to avoid the total value when I take it exceeding £1m.

I plan to take the SIPP soon to help fund the period before I take the main pension. Am I right in thinking that as soon as I take the tax free lump sum from the SIPP then it's value at that point is fixed against the lifetime limit so that the remainder can continue to grow without affecting the remainder of my lifetime limit ?

Thanks...