Who is able to build up this sort of pension pot?

[NetballMumGrrr]

£1 million and now £1.7 million’ who can put £40k a year into a pension? And now £60k?

such disparities in wealth in this country!

BBC Pension Article

My ex.

I think the amount is including the employer contribution, assumed investment growth, and possibly tax relief.

The person who's pot it was contributed only a tiny fraction of the notional value of the pot and, unless they live to far beyond average lifetime expectancy, they won't necessarily get it all back either.

I'm not an actuary so don't fully understand the maths behind it, but it's often said that the size of pension pot required to draw an index linked pension of a fairly average amount such as £30k is hundreds of thousands of pounds.

I've just looked at an illustration for me. It assumes that I'll live to 92 and my final salary pension will be valued on that basis. Even if I die a couple of years into retirement and the amount I put in out of my own money, let alone this huge theoretical 'value' was barely touched.

Is this comment even necessary?! What has junior doctors striking for what they believe is right got to do with a consultants pension contribution?

Because junior doctors have entered in the bottom rung of a hugely lucrative career path and have access to a path to retire with far more than most can dream of?

You don't have to be terribly high earners to do this, I have recently hit it due to a combination of final salary pensions & personal pensions. We put the maximum in each year when we can as it's very tax efficient. We've never had fancy cars/second homes/huge mortgages/private schools like some in our position would, we've chosen to prioritise other things.

To be honest the LTA doesn’t affect that many people, around 4% of people?

Having a large LTA charge is a nice problem to have as it means you can afford it. The reality is that the LTA charge is paid on how much the pot is including growth, so it’s perfectly possible for someone to pay in £100k and have enough growth to well exceed £1million by the time they retire - it depends on how well their investments do.

However, it probably should be abolished entirely given the knock-on effects it’s having, especially as the government should be incentivising people paying into their pensions more.

That said, I also think the 40% Tax Relief is very overly generous, so they should change tax relief to 30% for everyone regardless of income tax band imho.

Will the Doctors annual allowance increase as well? This is a big problem every year for Dh.

Yeah, but that’s because they put in years of hard stressful work to get themselves there. It’s not like it’s just handed to them. And it doesn’t mean they should do the job they’re required to do as ‘juniors’ and the hours they do until they get to that position.
The comment was irrelevant to the post and just another dig and people fighting for what they believe is right.

Experienced professionals who pay into their pension scheme for the majority of their working life will likely have this amount, depending on salary and contributions of course. Particularly applies to those who have defined benefit, or 'final salary' pensions.

You're not going to see have that size of pension pot if you work PT in a minimum wage job and pay the bare minimum into a pension.

Essentially it's a saving scheme. The more you earn and 'save', the more you'll have. None of it comes for free so it's not about fairness and equality for all

This.

I hit it at 50 from working in financial services and then retired early having reached my ‘number. Exactly what JH wants to stop. So I do agree it might help achieve his objective.

I'm at just under 40% of the allowance at age 50 with 30 years of standard contributions into the civil service scheme. I'm not a high earner and my pay for my qualifications isn't great. So it's not surprising that people who are older and much higher paid are breaching the allowance.

Like I said in my previous post, most people aren't putting away £1M of actual money into their pension, it's a theoretical value based on the pot value, including tax relief, investment growth and employer contribution that would be needed to produce the stated retirement income and it will only be realised if they live until they're late 80s/early 90s.

Yes, doctors may have decent pensions, but that doesn't help them when they're in their 30s and 40s, earning an average salary, working shifts and trying to live and pay childcare, often in high cost areas. It's a real problem that doctors often can't afford to live close enough to London hospitals, be meet their on call requirements to be able to get to work under a certain time limit.

MPs and Judges ... but they never had a cap on their pension anyway...

People like me! My pension pot gets £40K a year in it with my company contribution and my own, I am about to get a payrise and will have to reduce my own contribution unless the AA is increased.

Perhaps some posters could get over their envy and realise that we desperately need these top earning people like doctors to remain in their profession. Some people are just so short sighted it's unbelievable, they'll be on other threads moaning about how they can get a GP appointment and the irony will sail right over their heads.

Can't obvs

A consultant who may have trained from school to into their late 30s (way longer than most professions), who is paid a pittance in comparison to those at the top of other sectors (business / law / accountancy / etc.), who will have spent decades working long hours etc. - suddenly gets to a point where as well as all the daily issues in the NHS they are told that they may have a £16-£20k tax bill because the pension pot has done well on the stock market...

It is hardly surprising that they make the decision to do fewer NHS hours to avoid the issue - moving into private, or simply working fewer hours...

if the country needs those highly trained people then they need to ensure that they are not penalised, not complicated as a concept, but taken a while for the government to realise it!

So this will go some way towards sorting out the issue...

Exactly this.

How very strange that almost all the suggestions on this thread are doctors etc.
What about city workers, top lawyers, company directors - I would have thought they would be top of mind. Perhaps it's not bash a banker month atm?

The Cabinet writing it into law so that they can literally amass more wealth by excluding themselves from income and capital gains taxes. That’s what is known as the pork barrel in the US. The extra bits tacked onto laws purely for the personal financial benefit of those writing the laws.

I’m a medical consultant. I earn £105000 (2nd to top point of NHS salary scale). If I stay in the NHS pension I have to put 13.5% of my income I got he pension scheme which is about £1100/month. I cannot contribute less it’s either in or out. So I put in about £13500 so nowhere near the £40000 annual allowance. Last year my pension pot ‘grew’ by £80000 due to the way the pension growth is calculated. So you can see. How easy it is to hit the life time allowance - I’m expecting to by the time I’m 53.

The annual allowance problem is that I the. got taxed at 40% on the difference between £40000 and £80000. I don’t have a spare £22000 hanging around in savings to pay this. This is money I haven’t earned or spent and might not been be there by the time I retire (in 22 years time). It’s like being taxed on the increased value of your house year on year before you sell it.

And that is what is making senior doctors (and nurses and managers) retire early. And if we want the health service to keep functioning and to be able to train the next generation we need these people to work into their 60s not retire at 52.

Not looking for sympathy - just explaining.

As my banker brother said - rules which were designed to stop wealthy bankers putting their bonuses straight into their pensions are penalising the wrong people.

The aim is to keep people working longer.
These people pay the most tax and have a high level of skill set that is still valuable today, whatever the profession.
I am one of them, I had reached the limit, so was thinking about taking early retirement, but I might just go on a few more years to top up my pension.
I am 57 and earn a decent wage but not stratospheric. I also know I am very lucky to be in my position.

Headteachers, senior police officers, GPs, consultants and anyone with a half decent job. So many people just had to stop contributing to their pensions, as they were in danger of exceeding the cap. This is why so many have chosen/been forced to retire early. It was a huge mistake to freeze it, and the problem has been growing for probably the last 10 years.
So backward of all parties to discourage people from saving for their retirement.

That said, I think it’s a ridiculous change and there’s far more pressing issues.

Its to address the VERY pressing issue of our most experienced and highly qualified doctors being forced to reduce their working days , at the time when their skills are urgently needed by patients, AND by the younger doctors they are teaching and training.

Its a ridiculous waste of our investment in the NHS, to let them be forced out of work by a badly planned pension tax system.

The junior doctors are on very different terms to those who are now consultants. My parents were and my siblings are consultant doctors. One of my own children is a junior doctor. Their pay is comparatively less than the older generations, they face having to move around the country every few years due to job allocation, they don't have the supportive system of old. One third of the year group has emigrated.
I support the strike