25% Tax free withdrawal from Pensions - does anyone know when this expires?

[adultkidsquestion]

Posting here for traffic. Labour may not renew the existing "policy?" that allows you to withdraw 25% from your pension tax free. Does anyone know when this expires? Have googled to no avail!

In his case it was legislation to provide a pension for him higher than other people in the public or private sector could get. To exempt him personally from maximum pension legislation. It certainly was something special

No, keir Starmer was personally was exempted from the maximum pension limit. Check the legislation before you post ill informed comments.

A regulation made under the previous Conservative government.
That specifically applies to only the five years that Keir Starmer was DPP.

A piece of legislation that was required for whoever was in the DPP role. You can look up the regulations for previous DPPs and the wording is the same. For example, Kenneth MacDonald who preceded Keir Starmer in the role https://www.legislation.gov.uk/uksi/2007/802/contents/made

Well, I’m pretty certain no one put a gun to his head and made him benefit from it.

He could have refused to, coz principles.

Maybe he can still do it?

This is all rather old news..
https://www.bbc.co.uk/news/uk-politics-65052706

"Sir Keir Starmer has said he will include himself in plans to scrap a pensions tax break for high earners if he wins power."

"He said he had not taken advantage of the perk and did not want to."

He didn’t however have to accept the special treatment that came with the pension associated with the role. It smacks rather of the hypocrisy prevalent in that those who lean to the left but use private education and healthcare, both of which are entirely optional, while wishing to remove the choice from others…

Fair play to Sir Keir Starmer for openly stating that he would never use private healthcare - but why is he not taking the same stance on his pension? Or, for that matter, education. His children go to a state school, but one about which OFSTED said “an absolutely wonderful school – warm, nurturing, extremely well led and managed, with excellent teaching and a very inclusive ethos”. Why not give every one else the opportunity to access the same level of state education, and once that’s done tax the alternative? That’d be too sensible of course…

That’s very good news, if true…. But then one wonders why he made the government go through the cost and use of limited parliamentary time in the first place to put the legislation on the books. I imagine at the time he didn’t expect to be called out on it :)

I can’t see this happening. Too many people are relying on lump sum to pay off mortgages.

You think he shouldn't have a pension at all for his time as DPP?

It was a legal duty of the Government, his employer, to make pension arrangements. It wasn't his choice. It was a quirk of the DPPs position that it was excluded from the relevant bits of the 1971 and 1972 Acts. A unique regulation was required for anyone acting as DPP. It's not a Keir Starmer thing - it's shocking that the Conservative spin machine could reliably predict popular ignorance and gullibility on this and stir it up from a non-thing.

There was however nothing in law preventing him or the government contributing to a DC scheme of the sort the rest of us have to use. There was no legal duty to provide him with a bullet proof DB scheme exempt from any of the taxes the rest of us pay. They just had to provide a pension scheme.

I also object to being stereotyped as part of the conservative spin machine, as I didn’t vote for them. I have voted for Labour in the past, until they wrecked private sector pensions in the 90s, I’ve voted LibDem, and conservative. But always based on policy and not some strange tribal belonging.

I like the idea of setting tax relief on pensions to 33% for everyone though, instead of a discriminatory LTA based on whether you’re a state employee or not.

This idea is nonsensical because it involves some people being taxed on pension contributions and other people receiving tax relief at over 100% i.e. being paid to contribute to their own pension.

The entire principle is that everyone contributes tax free and is taxed when they withdraw. To tax some people when they pay in and when they withdraw would be grossly unfair.

And anyway, Labour categorically stated that it will not raise income tax so applying income tax to pension contributions would be breaking a manifesto pledge.

Compare the regulation that applies to Starmer to that of his predecessor. It's the same, nothing unique for him it's part of the DPP role. The regulation itself isn't anything special. It's a one-liner.

The 1971 Act shall have effect in relation to any pensions payable under the pension schemes for <insert name of outgoing DPP> (being schemes made under section 1 of the Superannuation Act 1972(1)), as if they were pensions specified in Part I of Schedule 2 to the 1971 Act.

It's all own to the DPP's pension not being listed in the 1971 Act. After many years this is now being replaced with a civil service pension so the individual pension regulations for DPPs won't be required in the future.

And I am not accusing you of being part of the Conservative spin machine. The spin machine just drops the one-liner tweets like bait in the water.

I'm not a Labour supporter myself either, but I object to ignorance and misdirection.

@Nepmarthiturn

Tax relief is ultimately government money. It should have been paid as tax, but the government agrees to waive it to encourage people to save for old age. It massively benefits the well paid, to the tune of hundreds of thousands of pounds. How much do you think people on minimum wage benefit?

We could rename it as a ‘pension bonus’, and give the same rate to all workers. It would at least make things a little fairer.

@DogsDinner

What salary are you classing as well paid? I consider myself well paid (higher rate tax payer) and whilst I get 40% tax relief, I can assure you that it doesn't equate to hundreds of thousands of pounds. Even at the previous lifetime allowance, it's unlikely to be that much. By the time factor in growth over the life of a pension and salary growth it will be lower. Obviously the bigger the pension fund, the more relief will likely have been received. Remember that any growth over the Lifetime allowance is taxed at a much higher rate. I think it's 55% but could be wrong.

However anyone can contribute to a pension, even if they earn nothing. We created a family SIPP when they were new and bought a small industrial building, with a 10 year commercial mortgage. We were a bit short of money to make the purchase price back then, so we enrolled our 18-month-old son with £2,800 which the government added to so it was 3,600 to reach the threshold. DS is now 25, and his "share" of the asset, its value increase and the income it has earned in 23 years equates to almost £50k. He's been auto-enrolled into pensions in two jobs since he was 21, and will be enrolled into several more before he retires, but that first money that went in is the most valuable and will form a solid basis for his pension, even if the state pension is chipped away in value, as I expect it to be. Obviously, we expect him to pay into a pension throughout his career, as we did, because we were both self-employed so no employer contributions. Crucially, because this is a trust, it does not form part of our estate so it can (under the current rules at least) be passed onto the surviving members intact. DH and I could each take 25% tax-free of the value, and still leave the income to compound or invest but until we have a need, the money is fairly safe, earning 4%, and beating inflation.

Everyone gets relief at whatever their marginal tax rate is which is totally fair so that everyone contributes tax free. Everyone can contribute tax free to their pension and everyone is taxed when they withdraw the money, at the applicable marginal rates. It's ridiculous to suggest some people should be double taxed and others should get tax relief at over 100%.

@Nepmarthiturn Couldn't agree more

Hi, I wanted to find out if I want to withdraw all my pension before the Mansion house agreement comes into effect, which is the best way without paying the 40% tax?

How closely do you avoid it, personally I've just made it into the right side of cut off by 12 minutes. Born by the skin of my teeth on the last day at 11:48pm before it changes! Phew!

You resurrected a Zombie thread, but why are you worried about the Mansion House agreement ? You'll still have the option to choose what funds your pension is invested in, it will just be the default funds that the pension companies will be changing to be more UK focused. And no, there's no magic way of withdrawing your pension out without paying whatever tax is due.

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Thanks for answering my question, with regards to the mansion House Agreement my current pension is one of the ones that has signed Agreement, and I believe we Dont have a say in what happens with 10% of the pension from your pot as the provider invests where they feel. If I had a choice I wouldn't be worried.

I've never heard of a pension provider that doesn't give you choice over where you invest your funds. You will be able to choose a fund that isn't affected by the Mansion House Agreement. I'd suggest asking your pension provider what the options are. If your current provider doesn't allow you to, then move your pension to a company that can. It's pretty straightforward (unless you have safeguarded benefits) - I've done it a couple of times to keep the running costs low.