The Lemon Fool

According to the bbc: BBC News - Budget to boost lifetime allowance for pension savings
https://www.bbc.co.uk/news/business-64949083

Many organisations are reporting this. Fingers crossed as LTA looms large for me, as while I'm just under now, the mean spirited test at 75 would destroy most future growth. It should always have been a limit based on contributions, not outcome

The reason I retire 10 years ago - fully debated with the appropriate minister "we all have to shoulder our share" - apparently no longer the case

Pension recycling here we come

Sorry but this has zero effect on vast majority. If the LTA troubles you you are in the top 1%. The average UK pension pot is under £100k. I consider myself well off, pensions maybe £300k.

This looks like a bung to super rich in London and South East, doctors and CEOs. Strange how's there's money for this and extra defence, but we can't afford to complete an infrastructure project like hs2.

Adamski wrote:Sorry but this has zero effect on vast majority. If the LTA troubles you you are in the top 1%. The average UK pension pot is under £100k. I consider myself well off, pensions maybe £300k.

This looks like a bung to super rich in London and South East, doctors and CEOs. Strange how's there's money for this and extra defence, but we can't afford to complete an infrastructure project like hs2.

Start saving early, the power of compounding has a massive effect on the total, the LTA has driven behaviours, my retiring at 50 had an impact on all UK pension funds

Adamski wrote:Sorry but this has zero effect on vast majority. If the LTA troubles you you are in the top 1%. The average UK pension pot is under £100k. I consider myself well off, pensions maybe £300k.

This looks like a bung to super rich in London and South East, doctors and CEOs. Strange how's there's money for this and extra defence, but we can't afford to complete an infrastructure project like hs2.

This does only affect a minority, but they will mainly be Tory supporters, and in persentage terms is costs the taxpayer bu66er all.

But you think about a police sargeant on £45k, aged 60 so able to retire on 2/3 salary. You seen how much an index linked £30k pension with spousal benefits costs on the open market for a 60 year old?

Of course this assumes Publec Sector pensions ever get a sensible multiple applied towards the LTA.

Paul

goRt wrote:Start saving early, the power of compounding has a massive effect on the total, the LTA has driven behaviours, my retiring at 50 had an impact on all UK pension funds

Might be a little self aggrandising there goRt?

I know what you meant

BigTim wrote:

goRt wrote:Start saving early, the power of compounding has a massive effect on the total, the LTA has driven behaviours, my retiring at 50 had an impact on all UK pension funds

Might be a little self aggrandising there goRt?

I know you meant

It's just a matter of fact and something I warned about at the time - I was a director of the 3rd largest co on the FTSE, the division I set up from scratch was subsequently (2 years later) responsible for the company's first-ever profit warning which led to it dropping out of the 100

DrFfybes wrote:But you think about a police sargeant on £45k, aged 60 so able to retire on 2/3 salary.

A police sergeant who is aged 60 now - perhaps.

Someone who started in the police since 2015, nope, nowhere near. Now a CARE scheme with a 1/55.3 accrual.

https://assets.publishing.service.gov.u ... _Guide.pdf

goRt wrote:

BigTim wrote:

goRt wrote:Start saving early, the power of compounding has a massive effect on the total, the LTA has driven behaviours, my retiring at 50 had an impact on all UK pension funds

Might be a little self aggrandising there goRt?

I know you meant

It's just a matter of fact and something I warned about at the time - I was a director of the 3rd largest co on the FTSE, the division I set up from scratch was subsequently (2 years later) responsible for the company's first-ever profit warning which led to it dropping out of the 100

I missed this at the time and agree about the behaviours. From a lowlier position in a UK financial institution even I set the LTA as the "target" and for others too (Drs and consultants being cases in point) working beyond LTA is disincentivised, by extension so is investment in risk assets.

BigTim wrote:

goRt wrote:

BigTim wrote:

goRt wrote:Start saving early, the power of compounding has a massive effect on the total, the LTA has driven behaviours, my retiring at 50 had an impact on all UK pension funds

Might be a little self aggrandising there goRt?

I know you meant

It's just a matter of fact and something I warned about at the time - I was a director of the 3rd largest co on the FTSE, the division I set up from scratch was subsequently (2 years later) responsible for the company's first-ever profit warning which led to it dropping out of the 100

I missed this at the time and agree about the behaviours from a lowlier position in a UK financial institution even I set the LTA as the "target" and for others too (Drs and consultants being cases in point) working beyond LTA is disincentivised, by extension so is investment in risk assets.

There really should never be an LTA, the annual allowance (which is also rumoured to be increasing) should be enough to control things.

There's a serious debate needed around restricting relief on contributions to 20% which never seems to gain traction, but they happily remove at higher income levels

goRt wrote:There's a serious debate needed around restricting relief on contributions to 20% which never seems to gain traction, but they happily remove at higher income levels

Are you referring to the taper upon the amount of allowable contributions?

As for changing the "relief on contributions", that is a HUGE idealogical point that could be debated for years.

Why isn't NI taxed? After all it is in part a pension contribution. Other pension contributions are not taxed either, though it's described as a relief and managed by first taking the tax, then returning it.

I suggest that the thread be limited to changes that are actually possible in this budget without a change in government or revolution.

The argument is that in modern economies, a few people get much more done than others. Encouraging them, whether hospital consultants or computer wizzards, to work longer and harder boosts economic output far more than their tax benefits, which get recycled anyway.

That might not be fair, but without economic growth the plodders will be poorer.

Adamski wrote:Sorry but this has zero effect on vast majority. If the LTA troubles you you are in the top 1%. The average UK pension pot is under £100k. I consider myself well off, pensions maybe £300k.

This looks like a bung to super rich in London and South East, doctors and CEOs. Strange how's there's money for this and extra defence, but we can't afford to complete an infrastructure project like hs2.

May I disagree with you? My sister works as an editor in London on a salary of about £45k. She opted not to have children. She quietly and stoically contributed the maximum into her pension (as a percentage of her salary) over the last 45 years. She's about to retire. We've just done a (huge) exercise of consolidating all her (6 or 7 over her working life) pension pots and the value is (at present) just under the LTA. We were expecting to take the LTA hit at age 75. On the basis of those figures, I suggest she is not in the top 1%. She's just worked hard and quietly and saved into her pension (which was the pension thinking all those years ago).

Equally, I think you are right in that there has been a push for a while to increase the LTA (e.g. the Torygraph campaign to do so), but that was not going to happen to appease e.g. the Torygraph readers, but certain voters were putting pressure on their MPs for an increase. There is now a handy pretext ("let's get people back into work") that is palatable to increase the LTA, which isn't "I need to placate my apparently wealthy Tory voters"

yorkshirelad1 wrote:

Adamski wrote:Sorry but this has zero effect on vast majority. If the LTA troubles you you are in the top 1%. The average UK pension pot is under £100k. I consider myself well off, pensions maybe £300k.

This looks like a bung to super rich in London and South East, doctors and CEOs. Strange how's there's money for this and extra defence, but we can't afford to complete an infrastructure project like hs2.

May I disagree with you? My sister works as an editor in London on a salary of about £45k. She opted not to have children. She quietly and stoically contributed the maximum into her pension (as a percentage of her salary) over the last 45 years. She's about to retire. We've just done a (huge) exercise of consolidating all her (6 or 7 over her working life) pension pots and the value is (at present) just under the LTA. We were expecting to take the LTA hit at age 75. On the basis of those figures, I suggest she is not in the top 1%. She's just worked hard and quietly and saved into her pension (which was the pension thinking all those years ago).

The LTA works differently to that - take the 25% tax-free (which crystalises the %age of LTA used) then bleed off any fund growth in a tax efficient way to avoid the test at 75

Have you actually looked at how to bleed off money to avoid the 75 LTA charge? As I approached 55 with a 95% LTA I prepared a spredsheet and found with a 5 year LTA freeze, and portfolio growth at 2% over reasonable inflation I couldn't keep my income below HRT and stop the pension climbing away from me and producing 6 figure tax charges at 75.

The 18% inflation total we might get over 3 years was a killer.

Urbandreamer wrote:Why isn't NI taxed? After all it is in part a pension contribution. Other pension contributions are not taxed either, though it's described as a relief and managed by first taking the tax, then returning it.

The pay from which you deduct NI is already taxed.

Urbandreamer wrote:Why isn't NI taxed? .

NI is already similar to a tax
so glad you aren't Chancellor

yorkshirelad1 wrote:May I disagree with you? My sister works as an editor in London on a salary of about £45k. She opted not to have children. She quietly and stoically contributed the maximum into her pension (as a percentage of her salary) over the last 45 years. She's about to retire. We've just done a (huge) exercise of consolidating all her (6 or 7 over her working life) pension pots and the value is (at present) just under the LTA. We were expecting to take the LTA hit at age 75. On the basis of those figures, I suggest she is not in the top 1%. She's just worked hard and quietly and saved into her pension (which was the pension thinking all those years ago). ..

To be in the top 1% needs a household net wealth of £3.6m, Top 5% £2m (source: ONS). Most people have very little saved and pensions under 100k.

The Mail's reporting the LTA could be raised to £1.8m. Two adults with pensions of £1.8m and no other assets would put you in the top 1%. But in reality most wealthy households have their assets spread amongst whole range of assets - their main home, their pensions, investments, cash and other assets. So not unreasonable to assume if you have a pension of £1,8m would need to double or treble that to get a household total wealth number.

Quite ok to disagree, and we all have different points of view, (and even though I am a conservative voter so would be generally supportive) i see this as a bung to give the top 1% a tax break, having already given up on the election. The conservatives know that's its already lost.

A fairer policy would be to increase the personal allowance to benefit everyone.

pochisoldi wrote:

Urbandreamer wrote:Why isn't NI taxed? After all it is in part a pension contribution. Other pension contributions are not taxed either, though it's described as a relief and managed by first taking the tax, then returning it.

The pay from which you deduct NI is already taxed.

If you say so. Strangely, others including HMRC differ.

https://www.google.com/search?client=fi ... income+tax
https://www.gov.uk/national-insurance/how-much-you-pay

Is National Insurance a tax? Well, that changed in my lifetime too. A recent chancellor declared it as a tax. Previously it was not, hence the amount paid had a cap as the amount that an individual was likely to claim (from the insurance) didn't increase as incomes increased beyond a certain point. Hence, the arguments when those with higher incomes were required to continue to pay something once they reached a "cap", thereby making it a tax.

I confess that I thought these facts were known.