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 😡

Is it perhaps the fact that the system is much more efficient in the private sector?

I've only been private once and I was seen on time by a very polite doctor and didn't feel rushed. I was examined and then sent upstairs for an X-ray. I didn't have to wait for the X-ray and it was completed in ten minutes. I then went downstairs and the doctor had the X-ray and booked me in for an operation at the same hospital. It was a very calm and pleasant experience.

The NHS on the other hand...

First you have to deal with the frantic phone mashing at 08:45 and then breng stuck in a queue for anything up to an hour. After that you've got to get past the gate-keeping receptionists at the GP. If you manage to get an appointment, you'll be seen 30 minutes after your allotted timeslot. You've then got ten minutes to make your case for further treatment. If you get a referral, you could have to wait a couple of months for the initial consultation and then need additional appointments for basic things like x-rays and then follow up appointments for the results and even longer waits for the actual treatment.

Personally, I think the British public are far too placid in a 'mustn't grumble' way when it comes to the NHS. People should obviously treat the staff with respect, but the actual level of service is very poor.

Why? Would you want to earn some extra money that had an effective tax so high you actually ended up with less net income? Because that’s what can happen to someone who is putting 20k in pensions to avoid losing personal allowance/tax free childcare. I doubt I’ll ever earn that much but if I did I’d be taking unpaid parental leave or going part time before I had a net loss from earning an extra 20k.

So no reliable source then.
As I said, scaremongering. I would have thought you'd have better things to do on holiday

@Flopsythebunny if you say so. It was a genuine question from me, so I really couldn't give two hoots what you think 🙄

@Flopsythebunny I'm wide awake, listening to the gale force wind & rain & actually have nothing better to do, so please see attached screenshots 🙄

Yes you're taxed on pension when you withdraw the money, because it's then classed as an income, but money goes into any pension scheme tax free, so the OP questioning the justice in the government taxing money they've "saved" when theyve already paid tax, is a wrong assumption. The caveat is that it must be a recognised pension scheme, not a normal savings account.

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?

Oh those sensationalist headlines OP

do you always get sucked into the Daily Fail style inflammatory language "tax raid". They do it to wind you up you know.

anyone with over £250,000 in their pension pot likely to be affected by this speculative "tax raid" isn't doing too badly and shouldn't be staying awake at night worrying.

@daisychain01 yes I do get sucked in by the news & newspapers. I said as much in a previous post; and after reading that Gordon Brown raided the pension pots when Labour were last in I have no trust in them at all. I have no trust in any of the parties tbh.

However, if you have a private pension, in addition to a work-place pension, you pay into that on already taxed income, so when you withdraw it, it shouldn't be taxed again

Just how much sustainable annual income do you think a £250k pension pot would provide?

https://www.legalandgeneral.com/retirement/pension-annuity/pension-annuity-calculator/

Legal & General say that £250k would only provide £10k a year if you retired at 60 years old. I haven't done the full calculation, but that's almost certainly not index linked and won't increase with inflation.

Interest rates are currently quite high, so that figure will fall as interest rates are reduced.

A few years ago, when interest rates were lower, an actuary told me that a minimum of £1.3 million was required to safely retire.

I'm guessing you work in the public sector and have no idea just how valuable your government backed, index linked pensions actually are. The sums required by those working in the private sector are terrifying.

@ThisOldThang £1.3m per person is crazy! DH and I have £1m between us, which is forecast to be £40K a year plus our state pensions on top, which will give us a very comfortable lifestyle with no mortgage.

Of course an actuary would say you need more to retire safely. They’re all filthy rich, so can’t imagine that people can live very comfortably on £50k.

No, you get tax relief on your private pension as well. The pension provider will add the basic rate tax on as it goes in (ie, you pay in £80 but your pension fund goes up by £100). And if you're a higher or additional rate tax payer then you get the rest of the tax back when you do a tax return.

Tory hysteria shills out in force today....

I don't think they are placid, mine are far from it! But as for most people there are no alternatives, people do put up with a system which just doesn't work efficiently. Whereas a business which has competition, knows it has to provide an effective service. The health insurance models which many countries have would be a better option I think. As health professionals we could refuse to treat abusive patients, in the same way a company can refuse to serve a rude customer, but currently we cannot until things get really really bad. For the past month we have had 2 security men stood in the reception of our health centre and panic buttons installed in our clinic rooms after 2 different people were physically aggressive to members of our team . And this is a paediatric clinic in a relatively affluent area in London.

Labour posters often use this line, surely you know by now not everyone loves Labour as you might

Absolutely.

Someone earning £120k loses all their tax-free childcare and free nursery hours.

So if you earn £120 and have 2 kids, if labour remove the option to put that extra £20k into pension then you'd be pretty crazy not to drop to 4 days a week during the preschool years. You'd take home £70k (including £4k tax free childcare) instead of £76k but pay for 1 day less childcare (at least £5k per child). You end up with more money and an extra day per week with your kids.

Once they're at school, you can go back to full-time but use the unpaid leave scheme instead to take 6 weeks off unpaid per year to keep below the £100k cliff edge and have the summer off with your kids. You save £1.5k per child on holiday childcare as well as getting the £2k tax-free childcare, so you effectively don't lose any income but you get to have a lovely summer with your kids. You can take 18 weeks total per child, so with 2 kids you can do that through most of their primary years.

People will obviously do whatever works out best for their family. So you need to make sure the tax system doesn't cause perverse disincentives. As a pp said, 'unforeseen consequences' which anyone could have predicted.

Out of interest, did they give a figure for a couple?

Never voted Labour in my life, and that's nearly 40 years of elections. I can spot politically motivated shit stirring well enough, though.

It's an open forum, Labour are in power and will go up against criticism

Not everyone voted for them or thinks they are great. Every thread you get the same as your post. Either report people you think are 'shills' or go to a closed FB site where everyone agrees with you

Gen X and Millennials are yet again bearing the brunt of the fiscal irresponsibility of the previous generations then.

Oh lay off. How irresponsible of us to get jobs, pay taxes and buy homes. Suuure.

Is that £40k index linked? If not, the purchasing power could easily halve every ten years. Would you find £20k as comfortable in a decade's time or £10k in twenty years time. How about £5k in 30 years time?

You'll also have two state pensions coming in, so that's £20k of (currently) index linked pension. I've got 20 years to go until I receive a state pension and it might be means tested by then.

I'm married, but things are looking very bleak for single people with borderline private pensions. They'll have too much to get the state pension and not nearly enough to live comfortably on their private pension.

The government should be encouraging people to put even more into their private pensions (e.g. 10% employer and 10% employee), not cutting tax incentives that will only increase state dependency in old age.

What a load of shite. No links, no nothing.

Wealth hoarding.