George Osborne's Autumn Statement - your reactions please!(224 Posts)
The Chancellor George Osborne will begin making his Autumn Statement in Parliament today at 12.30. Thought we should start up a thread so Mumsnetters can comment as it happens.
It's pretty simple - people are living 30 years into retirement not 3 so pensions cost too much.
I agree that the new upper cap on the total sum held in the pension will affect public sector workers, senior executives in the public sector, senior NHS staff and others. I read that with some glee.
So your pot cannot exceed £1.5m - I think there is some protection for those already over that sum.
so if your pension will be £50k a year then that is £1.5m pot for public sector schemes. There will be senior NHS doctors who will get £50k a year pension.
"How do I know if I have exceeded the Lifetime Allowance?
You, firstly, need to calculate the value of any money purchase or defined contribution pension savings.
This is simply the value of your fund which can be accessed online if you have a Barclays Stockbrokers SIPP. If you have your pensions with an alternative administrator, they should be able to confirm the value to you.
The valuation of final salary or defined benefit schemes is more complicated. HMRC calculates this as being the income that you would be entitled to multiplied by 20. Therefore an income of £50,000 would carry an equivalent fund value of £1 million. So if you have final salary benefits these could significantly increase the total value of your pensions.
Anyone who already holds "primary protection" or "enhanced protection" for their pension savings are not entitled to fixed protection, and the protection already held will continue to apply."
You have to apply for fixed protection by 5 April 2012 if you are due a £50k a year pension or have £1.5m pot so it seems.
Its above my head. Or maybe up my exterior. Ossy may be suffering from consternation or constipation.
It also depends on your career as well. If you are likely to be in one jobs for 30 or 40 years full time as many men and women have beenthan an employer contribution and your own with tax relief on the contribution was a wise way of making people save. If in retirement you were then paid half or 2/3rds of your final salary for the next 30 years or however long you live that's a good deal.
If it's not final salary (most aren't these days) and you just buy an annuity you need a very large pot to get an inflation linked pension these days. It is certainly very wise to save for old age in some manner or other.
The new opt out arrangements are what we used to have - anyone as old as I am will remember when you were automatically opted in to SERPs unless you opted out. I think it was the Tories who decided to change that so that people were opted out unless they opted in - I remember the budget that announced that as some kind of free market triumph as indeed perhaps it is. Now we are trumpeting the new forthcoming automatic opt in.
Odd thing is, when I first started work, I wasn't allowed into my company pension scheme - they had an age limit of 25. I've never understood that one...
That's ok Edam. I will need to auto-enroll 1000s of our employees next year and it is good to hear what people think so good bit of research on public feeling for me. We will have a lot of questions to answer when we have to do this.
Your final salary pension should not be going down tear on year but should be increasing with inflation up to a cap of normally 5%. The overall fund will have increased but do has the cost of providing pensions due to longevity and low interest rates. Therefore your ex employer will be forced to pay more money in to keep the value of your pension, hence why companies are now spending billions more on old final salary promises so will be paying a lot more than the premium holidays they saved. To be honest looking at the openendedness of final salary promises, they would never have been used. It is like the state pension. When it was invented nobody could have predicted people would live so long. It is still disgusting when an exec leaves a company and gets a wrapping pension payout but then do do politicians. In fact the biggest pension pots who are more likely to be affected by the government cap of £1.25m are some of the senior civil servants. The execs at my company will come nowhere near and not many will be able to retire before 65 although it does depend on your lifestyle. I could probably manage on half!
Banks give you an interest rate after their investment returns so effectively if you are getting an interest rate of 2% from a bank holiday this is very different to the investment return the bank will be getting. Plus the interest rate banks pay is almost always lower than the rate of inflation so the value of your money is being gently eroded over the years.
Say your fund was £1000 then a 0.5% fee would be £5 per annum so not a lot. This covers their administration, invesent management and etg. No real indicator to do with interest rates. The return you get depends on the investment fund you are in.
(And isn't 0.5% fee p.a. quite a lot when interest rates are so low? What slice of the return on investment is taken up by the fees?)
I do have four year's worth of final salary pension - scheme is now closed and seems to be dwindling ever year according to the statements I get. Scheme with current employer will give me something like £2k a year if I stay with them 20 years (and I'm paid above national average wage and my employer contributes a reasonable amount).
But that's just an example, pensions seem to be a very bad investment all round unless you are a fat cat who gets sacked for being useless.
Prior to 2001 all personal pensions were vastly overpriced but since then many pension schemes are quite lowly priced and many company schemes are 0.5% per annum charged which is not excessive but you do need to be well infomed. Companies are now paying heavily for the price of premium holidays with the pension cost in most companies exceeding the current wages bill.
I hardly think they are a con and I don't work in the industry. Those with final salary pensions will be very grateful and company paid ones are well worth joining. I would rather have some form of income than rely on the state but there are other forms of saving.
Pensions are a con for all but the well-off and very well informed. There have been repeated mis-selling scandals and even without them, the only people making money out of pensions are those who work in the industry. You pay in for decades, only to see a tiny return in the end, when other people have been doing nicely out of their commissions and fees.
Let's not forget all those companies who took 'pension holidays' in the 90s. We were told, by the Major government, that pension funds were too big and had far more money swilling around than would ever be required to meet their obligations. No-one has ever explained that one, or been held to account for being completely and utterly wrong.
I am losing all child benefit as a single mother soon but I still don't mind if the old keep their bus passes and the one off winter fuel payment which at £250 or whatever it is is not going to provide very much fuel for anyone. However we do need a debate as a nation about whether we want to retain national insurance employee and employer contributions and the like and benefits even to the rich if they paid in or whether we want to scale benefits right back and just pay them to the very needy perhaps for fairly short periods and eveyone pay in quite a bit less than they do now.
Sadly the public finances are so bad with our interest annually alone coming to £150bn on our massive debts that we probably will need to lose most of the universal benefits, reduce state pensions and have benefits only for thsoe in real need for short periods without reducing tax or NI at all I fear.
However it is the cost of the means-testing that will be used as the argument. I agree why should a working family lose their child benefit when a pensioner on £50k keeps their's. it seems very unfair but promises are votes and unlikely to chane I would say. The ever age pension pot though is quite low and I have had this conversation with some well off pensioners who agree but not enough to give up these benefits!
Surely the winter fuel allowance and bus passes should be really rigidly means-tested, given only to people with no income but the state pension? If people choose to save, good for them, but I se no reason why taxes should subsidise my in-laws - he's a retired consultant, ffs. Surely the OAP should ALSO become just a safety net, going forward?
This was the main issue on the recent 3 hours Radio 4 programme on benefits - do we want a contributory culture where if you contribute you draw out later - your pension etc and if you don't you have a very minimal and just about survivable but very harsh basic welfare provision which is what Beveridge set out OR do we make welfare much cheaper (and perhaps lower taxes) and say the benefits are there only if you are in dire straits which most people will never be and make it not contributory. Apparently Australia has the latter and much of the eu had a very expensive contributory scheme instead.
The new opt out pension for the low paid will probably not be worth their contributing to. I would advise them to opt straight out of it.
Is it worth a sixty year old with no prior saving being part of a low level pension scheme - not really, better to clear mortgage or save in some other form of savings due to the credits system although hopefully this will be saved with flat rate pension and no credits.
That is it Virtually. Hence why flat rate pension do necessary otherwise people enrolled in without understanding the opt out will lose out. The previous government did not even consider that aspect.
The more means testing is applied the more people will be encouraged not to save and provide for their own pensions. Or even not declare savings. So I don't think WFA should be means tested. And elderly people in their 80's and 90's filling in forms to get it. A lot of them wouldn't and the consequences wouldn't be good.
losing trust, what's the scandal waiting to happen? Is it that people will be encouraged to save for a pension that is no higher than what they would get as income support if they had saved nothing at all? (I think i have read about this somewhere). What is the issue about interaction with tax credits?
I suppose there is still an advantage to saving if you think one day there may not even be income support, so that you are left with nothing at all if you don't save - admit this is unlikely! but who knows?
If government wants to promote saving for retirement, it's logical not to means test WFA - assuming you think means testing does discourage savings which to some extent I think it must, even if only at the margins.
Especially an issue with auto-enrollment coming in this year for most companies. Without a flat/rate pension it is a potential scandal waiting to happen. The stupid thing is it was a labour policy with the main admin contract worth millions going to one company on the eve of the election without proper tender process and no thought about the interaction of tax credits. If that is typical I would rather have well-thought out u turns. The pensions minister is one of the best guys in parliament for me though. If only I was so confident with education and health?
Virtuallyarts - I really cannot explain the French taxation system in a post on MN. But, yes, of course people at the lower end of the earnings spectrum are taxed much less than those at the top of the range.
Yes and a lot of people have been moved to 4 day weeks and not had pay rises for years never mind a 1% rise, many have had cuts.
I think the current system is that couples get £200 (?) a week income and when Labour brought that in it was a problem as those who never saved got put in the same position as those who had. It's the difficulty with having a welfare state which supports those not very well off but also tries to be fair to those who went without a lot all their lives to save for retirement.
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