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 😡

I probably should have added in receipt of benefits to that list, not specifically aimed at anyone

Bar pensioners of course who have been hit with the removal of WFA. Especially those on just the state pension

Anyway which of your taxes that you pay do you want to see go up?

Why should doctors get special exemptions?
The rules should be the same for all.

Yep, I work for nhs and definitely would. The recent pay rise has tipped me into the next pension contribution banding, so of the 5% increase, I will only see half of that. But as its based on actual earnings, if I reduce my hours by 1-2 a week, then it drops me back down and I will end up with the same money for slightly less work

I’ve already answered that. Because there’s a shortage of doctors.

Well he will likely be having a massive tax bill.
So thanks, from the rest of us!

Indeed. If only everyone was as fiscally incompetent.

I'm a pensioner as well.

I'd be quite prepared to pay NI on my earnings, which I don't have to do currently. I think the cuts to NI that the previous government instigated should be reversed. I wouldn't actually be completely opposed to paying more income tax if there were a way of ring fencing it, though that isn't going to be happening. I am also fully on board with my circumstances being such that I'm not eligible for the WFA. Does that answer your question?

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.

All doctors aren’t the same. Junior doctors saw their salaries massively eroded over a long period, hence their recent pay rise. They won’t be paying 12.5% into their pensions.

Not someone just relying on the state pension though which is where the removal of the WFA will impact most

The rest well maybe you can opt in for paying more to HMRC anyway. I don't think the electorate go for voting in higher taxes hence the whole obfuscation from Labour on we won't raise taxes. To then get in and raise them

There are loads of sectors whose pay has been eroded, and plenty where junior pay is low, and people accept it because they hope to get to the senior ranks where pay is higher. Big4 junior staff are on very low pay and work very long hours but they all hope to get to the high up jobs after 10-12 years (hang on - bit like junior doctors to consultants?!). But plenty of sectors aren't getting airtime when they complain about stagnating pay over the last 20 years and crap DC pensions along with it.

The annual allowance is calculated differently for DB schemes - there’s a calculation based on the assumed increase in value of a notional pension pot over the year, rather than being directly related to contributions. It can kick in at quite a low increase in salary if someone’s in a final salary scheme.

i generally find private pension changes grossly unfair. We are advised to save and many of us take long term financial advice and obviously save long term into our private pension pots, only for a new government to change the rules at little notice.

Well pensions pots can be passed on free of inheritance tax so I guess that's an easy target.

It was pretty obvious that some taxes would be raised and there was a commitment not to raise certain taxes. Thank you for your considered response to the details of the answer I gave you. 🙄

Not sure what you want me to say, I get some on mn are very keen to increase taxes and it's not a surprise after reading on here for a while, but imo we have a high tax burden already and even Labour knew they had to drive the line that there would not be tax rises as people generally are not keen.

Unless someone else is paying of course

Hence the IFS commenting on their conspiracy of silence

This is exactly the problem and leads to lack of trust in the pension system and hence people saving less, which is the opposite of what the government should want to happen.

For the record I think if they do remove higher rate pension tax relief it will take some time to bring in given changes needed to payroll systems and anti-avoidance legislation. They also have the impact on government pension schemes to think about

"Why should you pay tax on money you've already been taxed on throughout your working life and saved?"

You don't - that's the point of a pension, you defer the tax to when you draw it, which for most people will be at a lower marginal rate than when you were working. You also currently get 25% tax free.

Yes. I’ll accept losing the higher rate tax relief with good grace when they raise the tax bands significantly.

I really hope so !

So far so good 😊

oh sweet summer child

I think you are allowed to withdraw all of the 25% tax free element, leaving the taxable 75% behind to be taken out as you wish.

i think this was one of the options I had.

There is certainly the possibility of the tax relief being a "tax reducer" rather than a deduction from income, in the same way as the rule changes re mortgage interest on buy to lets. So that whilst there's still tax relief, the pension payments don't reduce taxable income so wouldn't work to avoid the child benefit claw back nor the personal allowance taper, etc.

It would certainly stop people who earn £65k from putting £5k into pension to keep all their child benefit or those earning £120k from putting £20k into pension to keep their personal allowance and free childcare.

I know you are. I did it when I retired. Most people do. Withdrawing all of it and paying tax on 75% is fiscal lunacy.

I thought this is what people wanted? I don't vote Labour because this is what they do. But yet everyone seems to want them in power and now all I see is complaints 😆