The modern Robin Hood, King of Thieves

[AtW]

" High-earning savers in their twenties and thirties will lose up to £161,263 over the course of their lifetime as a result of a Government tax raid on pensions, Telegraph analysis reveals today.

A "Robin Hood"-style pensions revolution which is expected to be announced in George Osborne's March Budget will decimate the retirement funds of young professionals, including lawyers, doctors and accountants, hitting them eight times harder than their parents' generation.

Sources close to the Government say it will introduce a "flat rate" of tax relief to replace the current system in which taxpayers receive relief at the highest marginal rate of tax they pay. The new rate is expected to lie between 20pc and 33pc - far lower than the 40pc higher rate taxpayers currently receive on pension contributions.

Calculations by Hargreaves Lansdown, a pension firm, show a 25-year-old higher-rate taxpayer saving £250 a month will lose up to £161,263 from their pension between now and reaching state pension age. An affluent 55-year-old, who is likely to have already built up most of their pension under the current system, can expect to be up to £21,461 worse off. "

More from the Tory friendly source: Revealed: Osborne's 'pension revolution' will cost young professionals £161,263 - Telegraph

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But as Waldorf would say - Labour would have increased taxes anyway, so might as well take it 5 years early from pro-business Tory administration

[DimPrawn]

Apart from "free" gold plated public sector pensions, the ONLY sense in saving in a pension was if you were a high rate tax payer now and expected to be a low rate taxpayer when you retired. Since a pension is simply deferring tax till when you retire, it makes zero sense if you only receive tax relief at the lower rate, only to pay the tax again at the same rate when you retire. In theory, the prospect of receiving tax relief now seems attractive, however the reality is you're gaining feck all.

Based on this, I'm out.

PS Reminds me of the theory vs reality joke.

A son asks his Dad
"Dad, what's the difference between theory and reality?"

Well Dad says, "Ask your Mum if she would **** the milkman for £1M"
The son did this, and his mum said "Yes she would"

Okay, his Dad says "Now go and ask you sister if she would suck the the postman off for £2M"
The son did this and his sister said "Yes of course"

"Well there you are son, in Theory we are sitting on £3m of easy money, but in reality, me and you are just living with a couple of unrealistic whores".

[AtW]

Added poll...

I reckon it's going to be 33% - so that 40-45% tax payers don't feel too shafted in one go, and naive 20% tax rate payers would rejoice at Chancellor giving them free money (close to their death, if they make it).

At later stage it would be changed to new "fair" rate of around 25% - still good for 20% taxpayers who got no money to save for pension anyway, so Chancellor isn't losing any of his money.

But as Waldorf says - it would have been much worse under Labour ...

[Waldorf]

But as Waldorf says - it would have been much worse under Labour ...

You are learning at last!

I don't pay into pensions anymore, I just use my ISA allowance each year, there has been too much fiddling with pensions and I have no faith that they won't be fiddled about in the future.

Personally I think that relief should be a flat 20%, although I can see it being higher especially if the plan to merge tax and NIC comes off. The combined basic rate would then be 32%. (Pension contributions only get tax relief, not NIC relief).

The deal with pensions is that you get tax relief on contributions but pay tax when you take your pension in the future. Higher rate taxpayers currently get 40/45% relief yet when they retire they only pay tax at 20%, that doesn't seem fair added to that there is the 25% lump sum that can be taken tax free.

I would have preferred something like a pension ISA, payable from taxed income but tax free when you take the income.

[DimPrawn]

The deal with pensions is that you get tax relief on contributions but pay tax when you take your pension in the future. Higher rate taxpayers currently get 40/45% relief yet when they retire they only pay tax at 20%, that doesn't seem fair added to that there is the 25% lump sum that can be taken tax free.

They "only pay 20%" because their pension is not enough to reach the higher rate. How is it "not fair"?

It was the only thing making the risk of future pension pot robbery and restrictive rules worthwhile. Otherwise forget it.

[AtW]

You are learning at last!

[AtW]

I would have preferred something like a pension ISA, payable from taxed income but tax free when you take the income.

Why put your hard earned after high tax money into a pot that will not be useable by you until you are very old and in all probability there will be new "fair" taxes at the time of withdrawal?

Chancellor would very much prefer to get all tax upfront for sure, but I reckon that would result in near total collapse in pension savings - stock market crash would follow because pension funds would not have all that money to maintain the bubble.

btw, I don't have any pension contributions at the moment because I've considered it all big Con, especially now when they change rules so much and apply them to existing savers, however just because it does not affect me does not mean I should be welcoming gidiotic idea.

oi admin, may we have a new smilie: :gidiot: --->

Pretty please...

[AtW]

They "only pay 20%" because their pension is not enough to reach the higher rate. How is it "not fair"?

I am pretty certain that people in 20% tax bands don't have any money to save for pension - there is no disposable income to just have normal live, nevermind pension.

I reckon around 70-80% of pension contributions come from 40-45% taxpayers AKA mugs who voted for Tories because they promised to move 40% threshold to £50k... oh, and Waldorf voted for Tories because Labour would have been so much worse with their plan to pay off deficit later

[AtW]

Higher rate taxpayers currently get 40/45% relief yet when they retire they only pay tax at 20%

No, my Labour loving friend, the real unfair part is that those taxpayers are paying tax at 40/45% tax band in the first place.

[AtW]

if the plan to merge tax and NIC comes off.

That will only happen in one case - if Govt takes more tax from people, otherwise it will never happen.

So it's best that it will never happen, any "tax reforms" they make, especially "simplification" is just to tax a lot more.