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

@Clovacloud see section on "if you don't pay income tax" mentioning the first £2880 you contribute gets tax relief.
www.gov.uk/tax-on-your-private-pension/pension-tax-relief#:~:text=If%20you%20do%20not%20pay,re%20on%20a%20low%20income

Hydrangeatea, thanks.

in terms of recruitment & retention we need something for younger workers. I see a lot of teachers now opting out of the TPS which is crazy because it's a great scheme. but they need that money to live.

Yep it's all well and good being snidely and saying it's the same people asking for pay rises not, but what use is a good pension if you can't afford to live whilst younger.

Defined benefit schemes are valued relatively high eg senior doctors. My stbexh's pension value form has just come back at £790k, public sector with 18 years still to go (im tying to it rather than getting half, it's better for me!)

The reason why people are talking about public sector workers is because they are the ones with the generous final salary pension schemes. DH (public sector) and I (private sector) both earn similar amounts. I put much more into my pension than he does but his pot is much larger than mine because of the very high 'employer contributions' (aka my taxes). Maybe the government could put less into public sector pensions and the pension cap problem will be solved and it would save the tax payer money.

In the NHS, the apparent amount you put in is a calculated figure based on the theoretical growth of your pension pot. My husband apparently 'put in' £72,000 to his pension last year, on which he was taxed. That's more than his entire take-home salary post tax. This is aimed at stopping the doctor exodus due to the ridiculous way in which they calculate it - would be much easier if they just added up what employer an employee actually put in and used that figure.

@Chocolateydrink

The pension forms part of your pay, often public sector pays less than private but has better pension and sickness benefits

Yes see here: https://www.gov.uk/tax-on-your-private-pension/annual-allowance

Public sector schemes typically have 25% employer contribution and 10% employee contribution. I don't know how much DB schemes increase each year but say 5%. That's 40% of someone's salary in total. Therefore anyone earning £100k or more will automatically fall fowl of the allowance. If the scheme does well in a particular year, much lower salaries may well find themselves being taxed unexpectedly.

If public sector pensions were reduced, wages would have to go up to balance out. Generally public sector jobs pay much less but the benefits are better. Remove those benefits and who'd do the jobs?

If you prioritise saving into a pension rax efficiently and your employer also contribute then it's possible with regards help of compound interest and stock market rises.
Starting early and maximising payments in your younger years before mortgages and child expenses rake over is important.
Unfortunately many young adults are keener to enjoy life and miss this valuable window of opportunity to accrue wealth from interest and time.

The junior doctors of today don't have the defined benefit pensions enjoyed by the consultants of today.

"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?"
It's because as explained above doctors don't have any choice about the level of their pension contributions PLUS the £1m is not an actual, real amount of money, it's a theoretical value of what their final-salary-based pension is worth.

People in private sector jobs nearly always have far more flexibility to decide how much they'll put into their pensions, and also are much less likely to have a final salary based pension. So their pots are valued at an actual real amount.

Also, re. the junior doctors it's all very well theoretically having a great pension when you're old, but if you can't pay the rent today it's not much help!

Let's be honest - the massive staff shortages & recruitment problems make it pretty obvious that NHS (and other public sector) workers are underpaid relative to other jobs.

(not a public sector worker, just worried about staffing)

I'd imagine it's because there's a very well publicised shortage of doctors at the moment and people feel strongly that we need them, whereas neither of those things is true of eg city workers. I'm glad about this change because it removes the disincentive for NHS doctors to extra, desperately needed shifts. Not because of what it will do to the work choices of investment bankers.

Only people who don’t need it will be able to benefit from it.
Just the Tory’s setting themselves up with a nice cushion ready for when they loose the next election

I will hear a great many things against this Tory government. But I do think even they probably had the brains to work out that as the current pension cap is acting as a disincentive to some people to work/work more, particularly those whose skills we desperately need, it was going to be a fairly easy win to amend it. You have to make work pay if you want people to do it, and that doesn't stop being the case when the workers concerned don't actually need the money.

I went over my annual allowance last year while I was on maternity leave, so I hadn’t paid in a lot that year. I went over it because it went from being a registrar part time to a consultant. I also went to a more than full time consultant because of the pandemic so was working all hours in intensive care. This meant there was a theoretical growth in the few years of old pension I had which pushed me over the limit. Luckily I could spread it over 3 years. This is money I probably won’t ever see and yet I’d have to pay tax on it. I have no control over how much I pay in or how much it grows. If it was a private pension the growth wouldn’t count. My senior colleagues have been hit with massive tax bills that they’ve had to remortgage for. So they are reducing their hours.
I was stung for working extra during covid. So I’ve reduced my hours back down rather than stay at higher hours. My trust would love me to stay at higher but I don’t want to risk a massive tax bill.

Anyone earning 6 figures but without a family, I should think.

Not me 😀

It's not that strange to be honest. City bankers and earners on over £240k (including pension contributions) are limited to a tax free pension contribution per year of 4k not £40k. They will be making other plans for retirement...

I know someone who has 1.3m in a pension. They earn about £120k a year.

Yes we should take it back to what it was when Labour were last in power, so that'll be £1.8M (plus inflation)... www.gov.uk/government/publications/rates-and-allowances-pension-schemes/pension-schemes-rates

This - and you can easily end up with a tax bill much higher than your actual income. I had a six figure tax bill when I wasn’t even a higher-rate taxpayer, due to a promotion and some weirdness in how the NHS pension pot size is calculated. Thank god it was 2019-20 and there was a covid mitigation in place, or we would literally have lost our house.

I went over it because it went from being a registrar part time to a consultant.

Yep this was my problem too - but they actually calculate your final salary as if you were full time, even if you are part time, so I was actually only a part time consultant and still got stung!

‘Labour has already vowed to reverse the abolition of the £1m tax-free cap on pension savings announced in the Budget, saying it only helps the richest…’

It seems the Labour Party have that wrong. Is Kier S not aware of the impact on medics?