Pensions - take 25% now, before Labour can tax it?

[missinglalaland]

I can see Labour are preparing the ground for tax rises. With promises not to raise income tax or national insurance, I think they will have to come after pensions.

My DH is 55, and still working with no plans to retire. He has not saved enough to hit the maximum tax free ceiling on a lump sum.

Should he take out 25% of what he dies have and crystalise that pot? Bung the money in ISA’s and against the mortgage, and keep saving into his pension?

Idea is to do it now before the October budget, when the tax free lump sum could disappear.

I cannot see any downside. What might I be missing?

Labours idea of ordinary working people are those on benefits. The rest of us they don't care about. It's always been the same.

This. They used to care about the working class, but now they're only interested in the non-workers (more votes I guess. Keep them dumb and keep them dependent). I would love to be a labour supporter but unfortunately they're about 'hand'outs' rather than 'hands-up'.

Jeez, after the Tory shit-show you'd still rather have them in government? I suppose narrow self-interest trumps general societal improvement every time. 🤔

Many ordinary working people are on benefits because pay is shit and shareholders interests are prioritised over the low paid.

Slight correction... Labour's idea of ordinary working people is those on benefits and those employed in the public sector. They have never seen the private sector, including those who work in it, as relevant. That will never change

This! @Tryingtokeepgoing

Slight correction... Labour's idea of ordinary working people is those on benefits and those employed in the public sector. They have never seen the private sector, including those who work in it, as relevant. That will never change

Lots of talk about people supporting themselves in retirement but they only mean those with public sector pensions. Those in the private sector have no certainty in pension rules and have to shoulder the responsibility of understanding and making decisions on investing, how to make their pot last etc. The majority of people are not financially literate and pensions are complicated. I don't think any government should be allowed to get into power and change the rules. I know it will never happen but a framework should be independently agreed and reviewed.

Many ordinary working people are on benefits because the last Labour government created and then massively expanded in-work benefits as a way of subsiding jobs to reduce unemployment. This policy was implemented after their previous tactic of massively expanding the number of graduates to reduce the unemployment numbers failed, because they forgot that post graduation all these graduates would need jobs and they failed to generate investment in the private sector to create jobs for them. Subsequent coalition and conservative governments have failed to tackle this problem, because it can't be unwound in one term. The problem with a government and government, staying in power too long is they have time to cause real structural damage to our economy. It then takes - that's how Baroness Thatcher won in '79, Sir Tony Blair in '97, Lord Cameron in 2010 and Sir Kier Starmer in 2024

14 years isn't "one term".

No, that's the point. Massive increases in the benefits system are easy. Reductions to the benefits system take more than one term - but if you start it in then you'd be voted out and so won't be in power for 14 years!!

As Alexander Fraser Tytler observed, "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy"

It's hilarious how people get so upset about Labour doing something they haven't even done.

The hyperbole of children (most likely in their 50's) being left penniless by (non existent) changes in inheritance tax because they can't inherit a million pounds tax free (it's currently a million tax free for a married couple leaving a home to offspring, only c5% of estates even fall into IHT territory).

And "pensioners" left destitute by future changes to tax on the pension lump sum (by definition those pensioners will already have dealt with their lump sum and be in drawdown on any private pensions, or drawing the state pension, because otherwise they're not "pensioners" are they!).

Anyway, on the actual original topic - I'm 56 and semi retiring this year, but not intending to draw my pension as I have large cash sums not protected from tax so it makes sense to spend those first. I'm not going to bring forward my drawdown plans as that would just create more unprotected sums. I'll wait for the budget.

Ooh, I'll be a pensioner and can moan about how Labour hates me. What fun.

This is the investment board where, shock horror, posters are interested in retirement planning and when they might actually be able to take their retirement income and in what form.

@SlipperyLizard You might already know this, but the logic to pension funds being tax-free comes out of the creation of pension schemes as we know them today with the original 1928 trustee act. A lot of the provisions covering death benefits have a nod to this act as pensions are just really trusts with a few bells and whistles.

Yes I would. And if Labour carry on at the rate they have over the last few weeks then I won’t be the only one who’s not happy with them.

I knew it was all lies when they said they weren’t going to increase taxes. It was obvious they were skirting the issue when they were asked about it. They promised the earth to get votes and surprise surprise they’ve suddenly got to cut allowances and increase people’s. Taxes.

...the majority always votes for the candidates promising the most benefits...

So, "narrow self-interest", like I said in my first post.

Well if you have large cash sums then you can obviously afford to vote Labour and won’t be massively impacted by their plans. Lucky you 🙄

Well, I'm not sure how to respond to that rubbish. They didn't promise the earth, and they were very specific about which taxes they wouldn't raise.

Anyone with any sense knows they have to prioritise spending, I'd rather they targeted the money where its needed most, than providing tax breaks for relatively well-off pensioners - unless you'd rather they used unfunded borrowing and crash the economy again?

And incidentally, I would personally lose out if they do tax pensions but, while that's not exactly enjoyable, I can see beyond the end of my own nose (I refer you to my previous comments about "self-interest").

I'm not sure even Margaret Thatcher would have described a pensioner with an income of under £11,400 as "relatively well-off" !! Because you do realise that's the cut-off now for the winter fuel payment...less than half of the living wage for a full time worker.

The lengths those on the left will go to to defend a clear attack on the less well off beggars belief really - if any other party had implemented this policy the wailing would be audible from space. Labour do it...nothing to see hear...don't be so mean...give them a chance.

Our politics is getting more and more tribal and American by the year, and it's not good for society. Why is it not possible to debate policy nowadays?

You talk about tribalism, but you'd rather still have a Tory government after the unarguable mess they made of virtually everything; that's tribalism. Those who continue to vote for the same party time after time no matter how they perform in government are the ones who are tribal - the tories were awful, they needed to be gone. I have some sympathy for the loss of winter fuel allowance but many wealthy pensioners were also getting it when they don't need it. I have much less sympathy for those worried about paying a bit more extra tax on the lump sum they'll take from their private pension. I didn't vote for Labour, but I do believe in redistribution of wealth and I'm prepared to give them more than 4 weeks to see if they improve things across the board before crying for another Tory government.

Where have I said I’d rather have a Tory government? Indeed, where have I ever said I voted conservative in the last election? Or indeed the one before that… Perhaps you need to take your blinkers off, leave your prejudices at the door and be a bit more open minded to those with no particular affiliation to any party who have valid concerns about how this government is treating the electorate already. If they are taking us for fools after 4 weeks, one could argue that’s not a great sign for the next 4 years and 11 months. Though, as long as people like you are willing to make excuses for them perhaps they don’t need to worry ;)

Yes, and I'm happy to pay more tax so that people not as well off can have more support. That's why I vote Labour. I expect them to increase my taxes. I don't mind being "massively impacted" either.

And I think it's right cut winter fuel payments from pensioners like my late mother who died with over £200k in the bank. Why did she need it? She didn't.

Also agree with increasing inheritance tax. As it is, you get up to a million pounds tax free. And only 5% of estates pay it at all. It's laughable how riled people get about a tax they will likely never be bothered by.

You don’t get up to £1 million tax-free as an individual, half of that would be someone else’s allowance. At least be accurate in what you spout.

Why choose the allocated investment space of MN to discuss sanctimonious soapbox views on politics? There’s plenty of threads elsewhere on the boards for you to knock yourself out on.

I didn't "choose" it, I was responding to other people whining. I opened the thread because I'm interested in pensions, only to find people spouting sanctimonious soap box views.

Yes, it's a joint allowance, but most people are in fact eligible for that as it's more usual for people to be married than not. My beneficiaries won't get that, because I'm unmarried with no kids. I think they should level the playing field and stop extra tax on single people, make the allowance non transferrable and not have an extra allowance for property (a third of people won't be able to use that aspect anyway). Treat people as individuals, not married units. But my point was that people get so upset about IHT yet only around 5% of estates pay it.

I am single also but I can see, as could most sensible people, that a tax that could end up turfing someone out of their home when their spouse dies and they have no assets to pay IHT on its value is not remotely sensible.

Presumably you didn’t seek to pay the full 40% on your mother’s £200k estate. So you’re OK with benefiting from the thresholds when they suit you.

I think it's should be possible to arrange inheritance tax raises without turfing people out of their home

I know we have had years of Tory gov with apparently few brain cells - I remain cautiously optimistic about this lot

Deferred in sone way for example

I have been married for over 40 years. Like a lot of women my age, I was a SAHP for a while. I wanted to go back to work. Childcare was hard to find. Companies were completely inflexible.
Because of this my husband’s finances and mine are completely intertwined. This has never bothered either of us as our goals in life are the same.
I think any idea of this not being respected in inheritance laws would affect us greatly and many other married couples.