Salary sacrifice to be taxed

[SomethingInTheAirToday]

https://x.com/politlcsuk/status/1986914552093745592?s=46

not only are my generation not going to have a state pension or private healthcare, but we also can’t save into our own pensions because we need to fund the current generation.

this makes me so angry

The proposal was to means test it. It wouldn’t be removed from anyone unless they had separate means exceeding the average UK full time salary of £37,500. If you will have a private pension of that size why on Earth do you think you should be able to claim hundreds of thousands of pounds in welfare?

Negroany does not look idiotic. You have denied saving on NI through salary sacrifice but you have done if as you say your employer is deducting it on your payslip as salary sacrifice. Negroany said you couldn't be on salary sacrifice as you said you were not saving on NI.
It is you who looks idiotic.

The proposal was to means test it. It wouldn’t be removed from anyone unless they had separate means exceeding the average UK full time salary of £37,500. If you will have a private pension of that size why on Earth do you think you should be able to claim hundreds of thousands of pounds in welfare?

Because to get pension of this size on DC using SWR I'd have to have about 950k in my pension pot. Assuming 45 years of working life I'd need to save over 20k annually (I'm removing inflation /investments growth/ pension charges to simplify my point).

To be able to save such amounts I need to be a higher earner which means I'm already taxed through the roof.

You're making the same mistake which RR does - you believe that just because people have something you can take it away from them and they will oblige. Doesn't work like this.

So people with a pension over £35k lose the state pension, is that what you propose?
If so, what about people with income from other sources such as ISAs?
If someone has a pension of £30k but can bolster this by taking another £30k per year from an ISA, do they lose the state pension?

I haven’t denied saving NI on salary sacrifice. You are making things up now.

And how stupid RR is - this tax is supposed to raise 2bn only, it's really nothing in greater scheme of things for the government, but for businesses and individuals it's significant and will further increase employers costs means less recruitment and higher unemployment.

I haven’t read all these posts but do you know what? I am sick of all this whinging. No one knows exactly what will be in this budget despite all the right wing rags stirring up as much hysteria as possible. I and my husband while not remotely wealthy as middle earners may well be in the firing line and he may need to put back his retirement. But you know what? Labour were voted in to change things because people were sick of the collapse of essential public services and the economy so stop whining when they are trying to do this against a horrendous back drop of global problems and 14 years of austerity. Yes they may get it wrong in which case you can vote them out in four years. I can more or less guarantee that the various replacements currently on offer will not do any better. Cut them some slack and let them at least try. Hopefully the poorest in our society will be protected and the rest of us need to reflect on why we think it is possible to make things better without any money!

Agree.

It’s such nonsense isn’t it and won’t be means tested anyway
Labour has already confirmed this

Maybe it’s to help pay for the lift on the 2child benefit cap

If welfare is increasing even more it’s all got to come from somewhere unfortunately
Same old same old.

My god, it’s like teaching Swahili to chickens.
That £4000 tax relief, that would have otherwise gone in tax, instead goes into your pension, which is invested and compounds over the years. If you have any sense it will be invested in a globally diversified way and you will reap the benefits.
Then, you have 25% of that entire pot completely tax free.

She’s a massive twat , nothing more to say on it. We will all be screwed if every one of these totally ridiculous policies are in the actual bloody budget. Hope the labour voters are happy because not a single other person is!

Not going to cut them any slack, sorry.

14 years of so called austerity coincided with aftermaths of 2008 crisis, covid and the war in Ukraine. Nothing like this was seen in decades. But things were getting a bit better in the last couple of years before Labor, inflation was going down, wages growing fast, job market was white hot.

Labor don't have any of these issues to deal with, yet they managed to kill this all.
I don't know anyone who's doing better under this government, apart from maybe unionised public sector, everyone is worse off, if not through direct taxes then via inflation and loss of job opportunities, and there is no improvement in public services seen.

As to 2 child cap - according to poll 59% of voters are against lifting it.

Removing investment growth from your “point” makes your “point” meaningless and mathematically illiterate nonsense.

tell me about maths 😂

your point about random amount of 37500 makes it educated though

anyway, this won't happen no matter how much you're trying

It’s a loophole, same as salary sacrifice for any other employer benefit is/would be. My former employer couldn’t sign us up for it without our consent, much as they would have liked to as they also avoid NI.
Personally I think NI is a good thing, yes I’m happy to pay up for NHS and any benefits I might need, especially if it makes my (large, wealthy corporate) employer contribute more as well. I know I wasn’t the only one in my department who opted out of salary sacrifice.

Guess what makes it even better? They’re doing it because they want to pay the state pension for five years after someone dies.

https://x.com/independent/status/1987505984332292301?s=46

a lot of you will call it “ageism” but this is entitlement plain and simple. No other generation gets as many handouts from the government than the current pensioners.

Well in that’s case it’s not the old who would benefit - it’s their heirs!!

what a bizarre idea

I cannot understand why this government is doing everything to discourage saving into a pension. Every political party, financial institutions etc say that not enough is being saved by present day workers for a comfortable retirement. We should be encouraged to put as much as we can afford* so we aren't reliant in old age for councils etc paying for our care.

• Some limit should be fixed so that multi millionaires don't avoid paying their taxes

Who is "they" in your sentence here?

It's a proposal. Not one made by the government either.

And it's only for five years after you draw it. Not five years extra for everyone.

I personally don't agree with it. But you should read things before you post lies about them.

That’s what someone has suggested - the Lib Dem pensions minister when the triple lock was put in place under the coalition.

I would say the chance of this happening is nil.

If you don’t understand that trying to estimate the contributions that would be required to generate a specific level of income in retirement while ignoring the impact of investment growth makes your calculation entirely meaningless and wrong by orders of magnitude then I am not sure trying to “tell you about maths” would be a productive use of my time. My primary school aged children understand compound growth.

I don't disagree with wanting to finally catch a break after decades of paying taxes but I don't see how it's sustainable. It almost certainly will be means tested or even removed (pension credits only or something) by the time I get there so to me, the choice is do I spend 25 years paying in for other people only to have it collapse or do we just start the process now?

How stupid do you have to be to take seriously a proposal that dead people will have a State pension paid for 5 years after they die🙄

They claw back any and all overpayments after a death, even if it’s only a day.

The most likely scenario is the 2up/2down one with Income tax and NI, or possibly 1% on tax.

I wouldn’t put it past the bastards to freeze the personal allowance until 2030 though.

If it hadn’t been frozen, it would be over £15k now.

Do you understand it though?
If yes, can you give a full estimate with assumption about annual contributions and growth rate if savings required and how this hypothetical 37.5k will look like at the end of this term? please apply inflation to pension amount, not just investments projection.

Let's assume I'm 22 yo now, start my career, expect to work till 67.
Tell me how much I have to save pa and how much you'll give me pa when I retire. Don't forget to index my pension please.

Sorry you are incorrect. This is exactly what salary sacrifice is!

Salary : 10k
Pension: -£1k
New salary: :£9k

Every employer in my life has used salary sacrifice for pensions. It means paying all relevant taxes on £9k and not £10k. There are a number of proposals out there regarding what happens to that £1k your salary has been reduced by!