New pension shafting

[centurian]

Why is that?

Is that group even saving much extra into pensions?

They are saving humongous amounts - just it's not apparent from looking at their payslip.

It's down to the way the annual "contribution" is calculated for defined benefit schemes. It is not based upon the amount "paid in" during the year, but upon how much the "defined benefit" has changed since last year, then multiplied by 16.

Note, even the existing method is considered generous in terms of it's tax consideration by many - not truly reflecting the full amount of the benefit the person has received over the year.

Even with the current contributions limit of £40K per year, senior NHS managers and some doctors are starting to push up against that limit on salaries of ~80K+, even though they think they are only making pension contributions of ~6K per year

Under a 33% flat rate relief, anyone close to the 40% tax bracket will get hit hardest - they will have to pay the 7% difference - and it's not 7% of the "employee contributions" - it's 7% of the defined benefit increase x 16. If they get a pay rise - even a modest one, this often triggers a chunky defined benefit increase, so the tax bill could easily be higher than the pay rise.

That's why Steve Webb is such a twunt on this point. He kept banging on again and again like a broken record about 33% flat rate, but would never address the elephant in the room - how this would work with public sector pensions.

[AtW]

33pc flat relief rate (which would crucify middle income public sector earners - i.e. nurses, police officers etc. - hence why he was ignored)

Why is that?

Is that group even saving much extra into pensions?

Haircut on already saved pension pots seems inevitable, Georgie might just get there first.

[centurian]

Yeah, they aren't saying (yet) that you'll HAVE to give back tax relief on money already saved. They are talking about giving you an OPTION (aren't they nice people) to give it back in exchange for future tax breaks -- meaning you could take it out tax free in future.

Yeah, with marginally better options than the one offered to a band-leader...

Luca Brasi held a gun to his head, and my father assured him that either his brains or his signature would be on the contract.

Again, this is coming from a now unemployed, former LibDems pensions minister, who was relentlessly banging on week-in, week-out about a 33pc flat relief rate (which would crucify middle income public sector earners - i.e. nurses, police officers etc. - hence why he was ignored), so you have to take what he says with a pinch of salt.

Even so, I think "no smoke without fire" applies here.

[AtW]

'My house is my pension' say half of over 50s | Money Observer

Dear Leader Corbyn will show 'em...

[DimPrawn]

'My house is my pension' say half of over 50s | Money Observer

[WordIsBond]

Yeah, they aren't saying (yet) that you'll HAVE to give back tax relief on money already saved. They are talking about giving you an OPTION (aren't they nice people) to give it back in exchange for future tax breaks -- meaning you could take it out tax free in future.

And I, of course, will completely trust the government not to take away any of those future tax breaks. Won't everyone?

Now that everyone is required to save into a pension, they are going to take away the tax break. Isn't that nice of them?

[AtW]

This is the most worrying part - if they want to change the rules for future contributions - fair enough, but to go after money already saved

Naturally he goes after money already saved - they've allowed savers to fatten up a bit in pots that a locked, and he wants a lot of tax NOW to get himself elected later, nevermind loss of tax revenues in future years, that would be somebody elses problem!

[AtW]

I think you are quite frustrated of not getting enough sex.

PM me and I will help you with some contacts.

I've been shafted by Gideon pretty badly and expect more of this to come next year, he did not have my consent, oh wait I actually was stupid enough to vote for Tories in May...

[FatLazyContractor]

FAO AtW

I think you are quite frustrated of not getting enough sex.

PM me and I will help you with some contacts.

[DimPrawn]

http://forums.contractoruk.com/gener...ml#post2115826

I fank you.

[centurian]

Steve Webb, a prominent member of the coalition government until May

The Lib-Dem pensions minister in the coalition who was clearly so good at his job, his local constituents thought he was wasted in parliament and decided to move him on in 2015

Got to view everything he says through the prism of a) not going the pensions reforms he wanted - flat rate relief and b) being fired by the electorate.

That said, I wouldn't dismiss everything he says.

What about the pension money we’ve already saved?

This is the potential bombshell. Mr Webb thinks the Chancellor would want to encourage savers to hand back tax relief they’ve already enjoyed, in return for the promise of future tax breaks when they spend their savings.

This could involve savers having to make highly complex calculations as to whether they would be better or worse off. Equally importantly, savers would also need to trust successive governments to uphold the future tax promises.

This is the most worrying part - if they want to change the rules for future contributions - fair enough, but to go after money already saved

[AtW]

Brought to you by



" Savers will be asked to give up billions of pounds of tax relief they have received on their retirement funds under a tax grab being prepared by the Government, the former minister for pensions predicts today.

Steve Webb, a prominent member of the coalition government until May, warns that people who have been “saving for decades” are the ultimate target of an inquiry announced two weeks ago.

The Treasury is considering re-writing the tax rules on pensions that currently ensure savers are charged only when they withdraw the cash after age 55.

In future, pensions could become almost identical to Isas – taxed up front rather than on withdrawal – albeit with a bonus to reward people for setting aside money for the long-term.

Commentators claim this would be one of the most far-reaching changes to pensions since the concept of mass retirement saving was first introduced by David Lloyd George, with the support of Winston Churchill, in the “people’s budget” of 1909. "

More - The biggest pensions shake-up in a century: how will it affect you? - Telegraph

AtW's comment - it turns out that Gordon Brown was a saint.