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 😡

My parents were as fortunate as yours. I’m conscious I might not be so will follow my dad’s mantra to do it while you can. Nobody knows what the future holds so planning for the worst and hoping for the best seems sensible.

Completely agree - my husband didn't even make 50 before he died, and I am in my early '50s now. So, I want to make the most of life...and pay as little as is legally possible in tax to make sure I can!

The problem with this is that they don’t narrow the gap by raising people up. They do it by bringing people down so more people are struggling; fewer people can pay off their giant mortgages and yet the really rich remain untouchable. It is wrong. This is not levelling up. This is closer to politics of envy.

One thing I have learned recently, is that I should enjoy my money now. Go away, have nice holidays, live with as much excess as I can afford - I am no longer worrying about my retirement as it looks like I’ll be poor either way. So I can either enjoy my money, or keep it and end up penalised for that later. I’d rather be poor at 80 when I am less likely to be able to go anywhere and do anything, than poor now trying to save for that.

That's becoming a more and more popular way of thinking. Especially among the young who simply can't pay enough into pensions to make them worthwhile due to also paying tax, NIC, student loans, etc., despite low wages.

The current generation of pensioners are probably going to be the richest in modern history as they benefitted from all those years of inflation, endowment and share issue windfalls, decent wage rises, etc.

The next generations coming through won't be so lucky, sadly.

The current generation of pensioners are probably going to be the richest in modern history as they benefitted from all those years of inflation, endowment and share issue windfalls, decent wage rises, etc.

Yes, all those Tory voters like you. It’s not the politics of envy, it’s the result of successive Tory governments and the mantra of “Self, Self, Self and Fuck everyone else”!

Yes there are some very wealthy pensioners but that’s not me or any of my older friends.

Some are lucky to live in retirement flats that they rent and others are stuck in poor quality rented accommodation that their landlord can’t be arsed to maintain properly or improve with decent insulation. They’re often widowed and living on a state pension and benefits and choosing between heating and eating.

Aren’t they fucking lucky?!?! 🤡

"Yes there are some very wealthy pensioners but that’s not me or any of my older friends.

Some are lucky to live in retirement flats that they rent and others are stuck in poor quality rented accommodation that their landlord can’t be arsed to maintain properly or improve with decent insulation. They’re often widowed and living on a state pension and benefits and choosing between heating and eating.

Aren’t they fucking lucky?!?! 🤡"

Perhaps they need to, apparently, choose between heating and eating because they've never bothered to budget and pissed away all their money instead of saving into a pension? Pension Credit is fairly generous (free rent, free Council Tax, pensioner benefits such as bus pass, WFA, etc) so I'm not sure why £200 a week isn't enough to live on. When they need a care home, they'll get it for free - unlike those that have saved for their old age.

I'd say they're very lucky given they've lived through an age of final salary pensions and completely failed to save for their old age. Why is that? Did they choose to opt out of the pension schemes so that they could have more beer money?

I'd say they're very lucky given they've lived through an age of final salary pensions and completely failed to save for their old age. Why is that? Did they choose to opt out of the pension schemes so that they could have more beer money?

I’d say many of them are women who only ever held poorly paid jobs who - even if occupational pension schemes were available to them - couldn’t afford to take part in them because they needed every penny they earned to live on. Pension credit is very far from generous. The inability on MN to envisage any other circumstances than those of privilege that some posters sneer from is incomprehensible.

I never said all pensioners. I'm talking about averages. Today's pensioner, on average, is better off than pensioners of 20 years ago, and highly likely to better off than pensioners in 20 years time. Of course there will be outliers, as that's exactly what an average means. The fact is that we have more millionaire pensioners today than we did 20 years ago (after adjusting for inflation) and forecasts show that we'll have fewer millionaires in 20 years time (after adjusting for inflation). Same with life expectancy - again today's pensioners will, on average, live the longest, compared with pensioners, on average 20 years and pensioners, on average in 20 years time. So the average pensioner of today, is indeed "lucky" in terms of wealth and health. As I say, that doesn't mean to say all pensioners are wealthy or healthy. I have no doubt some are living in poverty and struggling with their health - that doesn't negate the facts about averages.

I agree, the current generation of pensoners, and those of us who have retired early, are for a few generations at least, going to be some of the wealthiest.

But I think we are going to see an increasing polarisation - those employed in some shape or form by the state wil continue to have good incomes in retirement for a generation or maybe even 2 (tail end of Gen X and then Gen Y) than those who worked in the private sector which might, for a while keep the average high - helped by the fact that these generations are more likely to inherit signicant sums than later generations.

Of course there are some Gen X/Y non public sector workers who wll have very comfortable retirements, but they will be the outliers compared to the averge worker on an average salary I think. Succesive governments meddling with (and raiding) private sector pensions has seen to this. Auto enrolement has, in part, tried to address that but it'll take generations until that's a level to give a comfortable retirement!

"Auto enrolement has, in part, tried to address that but it'll take generations until that's a level to give a comfortable retirement!"

People have the option of opting out of those schemes. A former colleague was moaning to me and opted out of the generous company pension scheme because 'I want that money now and the future will take care of itself'. He was earning £42k in 2012, so he shouldn't have been desperate for that extra take-home pay. He just wanted more money to spend on his lifestyle.

He'll likely end up completely reliant upon the state in his old age.

People either need to be forced to save into a pension scheme or they should be made to live with the consequences of opting-out. Giving stupid people the option of jam today and jam tomorrow is never going to work.

"Giving stupid people the option of jam today and jam tomorrow is never going to work"

Or maybe the smart people. Which is probably your point.

The average UK pension pot is £20,000!

I think that's the average for all people wth a pension pot, which obviously includes those that are only in their 20s and have saved little all the way up to those in their 90s that are still alive.

More useful is the average pension pot at retirment age. The closest I could find was this - which indicates, rather worryingly, that for women in their 60s its £152k and for men £228k.

Though does that mean that he average married couple has a retirement of £380k in their '60s? I suspect not.

Those pension pots are much higher than I would have guessed. I wonder if there’s a figure excluding public sector.

There are some breakdowns between defined contribution (mostly private sector) and defined benefit (mostly public sector). Such as:-

"The median (middle) value of DC pension pots among those aged 50–59 with a DC pension was £33,500 in 2018–20, compared with around £220,500 for the estimated value of the median (middle) DB pension promise for those with DB pensions."

Which is quite a stark comparison really!

(https://ifs.org.uk/publications/how-important-are-defined-contribution-pensions-financing-retirement)

Eek. But yes that’s more what I thought, just anecdotally really.

Im a high earner and everyone i know in my position is smashing big piles of cash into pensions every year. 40, 50k. Its a very valuable tax break and the people benefitting from it (me included) don't need it to the extent it is currently provided.id do it via reducing annual amount if it was me though.

"The median (middle) value of DC pension pots among those aged 50–59 with a DC pension was £33,500"

That would give an annuity of £1500, so £30 a week.

Let's hope that the compulsory enrollment starts to see results, because it looks like the median person is going to have a really shit retirement.

Thisoldthang
Its actually really worrying how many people have their head in the sand about it. I think there's a glut in their 50s now especially who will struggle. I think younger people don't trust state pension & actually try to save more

I agree. My DCs paid in 10-15% from the day they started work, but I know lots of people in their 40s and 50s who either don’t have a pension, or have about £10k in it and think it’s miraculously going to provide them an income.

if 12.5% of your salary ends up being such a huge amount you are at risk of going over the annual allowance, why are doctors complaining they aren't paid enough?! Loads of people pay similar percentages into their pension, in fact plenty pay a lot more, because their employer pays sod all.
Maybe doctors need to take a step back and recognise their 'poor' pay is not so poor when you consider the value of the nhs pension they get.

You don't understand how DBS schemes work. It's absolutely nothing to do with your pension contribution, it's to do with how much your expected pension pay out increases each year. Which is based on last years salary vs this years salary multiplied by CPI. Every time you get a sub inflation pay rise your expected pension actually goes down, but you can still end up paying a large tax bill on that each year. The tax system for pensions just isn't designed for DBS schemes

We even have people who say that different occupations/professions should have different tax rules!

No one is saying that, just that different types of pension schemes should have different types of tax applied to them. The same way that different income bands have different levels of tax applied to them.

What would be the fairest way of doing that though? Public sector schemes are far better than anything you can get in the private sector - so should they be taxed more heavily to reflect this? Think the workers would all go on strike!

At least one poster on this thread was saying exactly that.

The problem with the NHS pension scheme wasn’t the breaching of the AA per se it was mainly the inability to take steps to avoid breaching it and not being able to calculate the impact. This would have potentially been possible in other schemes. I’m not an expert but I read on another thread there was now a solution for this