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 😡

Nor Brown's raid by removing the tax credits on dividends.

Well if you’re losing it, you’re losing it? What’s the point in making the contribution in the first instance? You can adjust your contribution each tax year?

I think that is the challenge. Public sector wages will rise. Taxes will rise to pay for this, and then many Public sector workers won't be much better off in real terms. Any payrise for me as an experienced health professional will push me into higher tax bracket, will make my pension contributions on my total salary (not just the higher portion) rise, so I will probably only see 30% of the payrise.

Then the increase in borrowing to pay for this and effect of higher salaries may push up inflation, and interest rates, and it's likely that in real terms I will be no better off in real terms, and lower paid people and private sector workers will be worse off. Raising nhs salaries is a propaganda exercise which looks good as the government is linking higher salaries to better care. But it will be interesting to see if this is the reality, my prediction is that it won't. My teams single biggest challenge is 'entitlement'. We are shouted at when people aren't seen as soon as they feel they are entitled to. We are insulted when people can't be seen at the times they feel they are entitled to. We are harassed when we discharge people who don't turn up. We are criticised when we are running late. We have complaints made when people lose their medical equipment and we don't have the budget to replace it immediately. Our professional opinion is disparaged by Google drs who think they know better

If people are being taxed more under the headline 'it will improve nhs services' they will feel even more entitled and we will get even more abuse, more staff will leave and wait lists will go up.

This government will make everyone poorer. U.K. per capital GDP is already on par with Mississippi, the poorest state in America. You get what you vote for. But hey, at least they’re taxing education 🤡!

A lot of the posters on MN will be basic rate taxpayers now but coming up to retirement when the kids are off their hands, their careers will have moved on, they’ll have money to spare to put to pension, maybe to retire a bit earlier, and they won’t be able to get higher rate tax relief in the future.

I’ve only got a few years to go. If I lose the benefit of my higher tax relief I’ll just retire a little bit earlier than I would otherwise have done or reduce my hours. A lose to the economy

It does worry me a bit how it will impact for defined benefit schemes. Lots of people could earn under £50k but imagine it is possible the calculation of the contribution to their pension on a DB scheme could have them owing money back as they are calculated as earning over £50k considering their pension. A lot of my family are public sector and earn enough it could impact them. People are so stretched. It’s one thing to encourage people to spend vs save but it’s another to have a lot of public sector set up so their pension works in a way that they can’t lower their contribution but can be liable to a tax bill. I really sympathised with senior doctors being hit by the rules on contributions. I know they earn a lot but most people on a salary (even a high one) would struggle with suddenly facing a large additional tax bill they didn’t have planned into their budget at the moment with the cost of living increases.
It is what it is though. All policies have some level of inherent unfairness and someone always loses out. If it’s us this time we will manage I’m sure. I at least have some confidence the current government will invest in more that benefits everyone and focuses on low earners, who need help the most right now.

Lol at how it's all Labour's fault after being in power since July or Labour voters caused this :) They had to borrow 3.1billion in their first month of government to cover costs incurred by the previous Con government without even implementing any policies of their own.
Also the vast majority of the public sector are getting 5% pay rises, which is less than the private sector average this year and covers the past year's inflation rate of 11-13%, so hardly a raise at all. The only high pay rises are doctors, who apparently are in a better bargaining position to argue for the pay restoration that everyone in the NHS needs, including nurses, but hey ho.

Socialism and communism are not remotely the same thing.

Whatever dreadful things I feel about the ex Tory govt. they weren’t Nazi’s either. 🤷🏻‍♀️

I think only a small proportion of the electorate who could vote, voted for Labour, the majority of people did not.

Oops, I think you meant to say

“this government will try to narrow the humongous gap between the wealthy I’m alright Jack’s and those living on and below the poverty line which include huge numbers of working parents”.

I'm self employed. Still quite happy with the choice I made.

Correction:The Tory government has already made everyone a lot poorer.

Now the current lot have to try to fix the NHS, transport, poverty, potholes, stop the dumping of shit in our waterways.

News flash: It costs money to fix more than a decade of neoliberal ideology.

As long as the changes are applied to everybody… unfortunately I have a feeling the public sector workers will be spared, making the whole thing unfair. You can’t say ‘high earners’ need to contribute more but exclude some high earners from it.

I mean that there is too much scope for pensions to be used for tax avoidance and of course for exploiting loopholes for bringing income under the level to be eligible for child benefit. I'd welcome that being addressed.

@AuntieJoyce this is potentially another silly question but if you work less or not at all to avoid paying more tax then won't your employer get someone to take your place who will pay tax? (Unless you are the owner of the business and close it down I suppose)

And although I agree that many on Mumsnet are in the higher rate tax band (and I hope to be myself when the kids leave home as you say!) it's still only like 15% of the population.

Inheritance tax is remarkably unpopular, given the small proportion of estates that are impacted. This is because estates that pay IHT are often spilt between several beneficiaries and because many people aspire to give generously, but either it gets eaten up by care-home fees or they are organised enough to give away excess wealth before they die. IHT disproportionately impacts unmarried adults who die prematurely.

@Oldbean1965 thing is, you can take out 25% of your lump sum tax free. it is not above the realms of possibility that they will remove the tax free status on the first 25%!! also it is possible for them to raise the tax on all private pensions! this will more likely than not, be happening. My hubby is currently in the middle of cashing in all his private pension. even hiding it under the mattress is safer nowadays!! the company he is with told him that nearly every one is cashing in their whole pensions at the moment!

I would be utterly, utterly fucked in this scenario. I've been a trailing spouse, not always lived in the UK, fostered, have a handicapped child and now have health issues of my own, so have a very patchy work history. We put most into DH's pension, I don't have a full state pension and virtually no private pension.

I work in the public sector and a lot of people I work with would just reduce their hours if they had to pay 40% tax on pension contributions. They already pay a higher % in contributions than lower paid staff so would be better off working less. How does reducing productivity help?

You can’t blame current GDP on the labour government though.

Don't you pay loads of tax then if you take it all at once especially if it's not an amount that would go into the higher rate tax band if you took it over several years

@allthemiddlechildrenoftheworld "also it is possible for them to raise the tax on all private pensions! this will more likely than not, be happening"
That is why I initially opened this thread...what are they actually changing? What tax is going to happen?

At the risk of stating the obvious, presumably you have looked at topping up any gaps in NI contributions from previous years? You can still go back to the mid-noughties I think.

@ThreeFeetTall not a daft question. We have a few people at work who are coming up to retirement who have gone down to 3 days. Certain bits of their role are just spread around others. Not ideal I know.

If I was to leave yes they would replace me but that person would need to come from somewhere, which would leave a gap somewhere else and so on. It was still be a loss of some of my tax to the economy

Removing the higher rate tax relief would be a complete ball ache to administer which is presumably why they’ve not done it yet. I’m also not sure how the numbers stack up because if they did a flat 30% basic rate tax payers might put in more which would represent a cost.

I wouldn’t object to them changing the pension exemption from inheritance tax as long as spouses and possibly minor children were exempt. It is a massive tax avoidance loophole at the moment.

I would be very annoyed if they did away with the 25% lump sum as have based mortgage calculations on the assumption we’d be using some of it to clear the mortgage. Similarly changing the goal posts re when a pension could be accessed would be annoying and potentially very damaging for some individuals.