Planned tax raid on private pensions by the government

[Oldbean1965]

I have read a few articles about how the government plans to raid private pensions in their budgets in order to raise money. Of course it could all be stirring by the media.
How could they get their hands on our private pension money? We'll pay tax on it when we start receiving it anyway, which galls me as it's our savings. Why should you pay tax on money you've already been taxed on throughout your working life and saved?
I hate this government already, but the previous government were a shit show too 😡

But you pay into your pension BEFORE tax yes? So you haven't already been taxed on it.

They are going to tax anything and everything they can get their hands on.

But… train strikes are cancelled.

I’m a bit worried about this. My promised state pension has already been delayed and now my work pension might be raided.
Only positive is Dr says I won’t live beyond 70 due to chronic disease ( I look really fit and healthy though and take care of myself).
I can’t plan for an early death and spend what I will have though

You are taxed when you withdraw

They may bite the bullet and get rid of the higher rate of tax relief paid on pensions to higher earners. This has been threatened for years. My DH is in this bracket and has only just begun pension saving (fool that he is…) so I’d like him to benefit from it, but it’s not justifiable really.

In fairness to Labour, George Osborne was all set to do this a few years ago, but backed off after the insurance industry went berserk about it. It’s been a long time coming.

Or maybe they’ll reduce the lifetime allowance. Who knows. But they won’t be dipping in to pots.

Train strikes cancelled?? 😂

https://uk.news.yahoo.com/train-strikes-lner-every-weekend-101702680.html?guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAFfB1JAVrSSNZkRiodnBmpXMaltRs4v1xil8gpILDxI6kFvSajsq9Y5wYE3Yjos0LKfzZ9qVAHPj5_pCGAg1sx1mUz4OSaDxm1V8Zi_IgcqXM_aJooG5hbRUHWSz72EXvOXyfS5eIyK8kIUL-c5P8U60uHA-Ytbqvgk4XSy3cuCb

Correct. You are taxed when you withdraw. The OP is suggesting that she's already been taxed on her income, which is not the case. She has not been taxed on the amount in her pension pot.

Lots of things they could do including 1) Abolish higher rate relief on pension contributions 2) Change inheritance rules so that pension pot cannot pass to spouse / children tax free 3) Reduce / abolish the 25% Tax Free Cash

I work close to the industry and the views I'm hearing are 1) is likely, 2) possible 3) possible but unlikely. All of these would be a 'kick in the nuts' and put people off pension savings.

The biggest 'kick in the nuts' of course would be to means test the state pension...

Why should you pay tax on money you've already been taxed on

The money in your pension pot has NOT already been taxed - in fact it is the opposite as in most cases you get tax relief at source for putting money into a pension. So you've been given more, not had it taken away.

Neither do you pay tax on the income or gains the pension pot generates as it grows.

You pay tax when you withdraw it only.

The money you pay into a private pension is not taxed and presently you can take the first 25% tax free. After that you pay tax as you withdraw it. It's a good deal if you're a high earner atm. I wouldn't be taking too much notice of the press.

Agree with all this. I benefit massively from the higher rate tax relief but I can see this is unlikely to be sustainable. The could drop the yearly amount for the tax relief I suppose - say make it 30k a year instead of 60k. I pay the full 60k a year into my pension some years and it does feel like a lot of tax advantage given the state of the nation.

It will be an interesting one to watch.

A large part of the reason the govt has pushed so hard on workplace pensions (private) is it helps relieve the state of the pensions and benefits needed by an increasingly ageing population.

Tax relief for pensions is currently very generous because we have had govts (plural) that need to get more people to pay for their own retirement now and decades down the line.

If tax relief gets cut, how will that impact the support the state needs to provide to the retired population in 10 / 20 / 30+ years time?

Not an easy decision to make.

Well ...you guys who voted for the Comrades (presumably out of anger and frustration), you have what you democratically chose.
😂

Who are you addressing here?

British people who voted Labour, obviously.

I think you’ll find I didn’t vote for the Conservative government, whose actions led to the current state of fiscal affairs.

Oh ok, I assumed you were responding to someone on this thread.

That's all fine .. but I could tell you, having this sort of a Government is the worst.
Born in a Communist country, they have been mostly decimated there, however, the small bunch of people in that party are far less "radical"
and audacious than British Socialist Government.

The idea of abolishing higher rate tax relief has been knocking around for years, though, and it’s not as easy as it sounds. Would need to address issues around DB pension contributions for higher rate taxpayers (not impossible) and salary sacrifice (not impossible but more difficult). I think there’s a reason it’s not been done before, when it does seem the most obvious.

I can see them potentially reducing the annual allowance, which wouldn’t affect most people too much (though again, some potential issues around DB schemes).

Easy enough to find ways of hitting those with higher incomes/larger pension pots and leaving alone the lower earners.

After all, it's the lower earners who need to be encouraged to join workplace pension schemes and make provision for themselves.

Higher earners and wealthy people will be fine anyway and arguably don't need the same kind of "nudge" to make provision as they'll be well covered anyway and won't be the ones reliant on basic state pension or pension credit.

Higher rate tax relief on pensions should have been scrapped years ago, the 25% tax free lump sums should have been reduced years ago. People don't need to be able to put in £60k per year - £30k pa would be plenty for "normal" people.

We need to stop giving tax incentives to the rich. Concentrate all efforts on lower and middle earners.

They will get their money when they change the tax laws which is how they got their hands on private pensions last time they were in and how we no longer have defined benefit because they became unaffordable. They will suck the life out of this country.

@MontagueMoo · Today 09:44
Neither do you pay tax on the income or gains the pension pot generates as it grows.
You pay tax when you withdraw it only.

This isn't true and was the cause of many senior Drs retiring early. They were paying large amounts of tax on gains in the pension pot they had no control over .

@Putting how would it work with defined benefit pensions?

Stopping people people from taking 25% out of their pension pot tax free to build a conservatory or go on a retirement cruise makes us a communist country now?

Would you care to put up links to those articles?