Pensions and the budget.
Discussion
Last year George Osborne announced a further cut in the pensions Lifetime Allowance taking effect from 5 April 2013.
It was previously £1.8m, then £1.5m and will reduce to £1.25m. This is roughly eqivalent to a maximum pension of £50,000 p.a. obtainable with full tax relief on contributions.
Depending on how much you earn, the government is currently contributing 50%, 40% or 20% towards your pension. The higher your earnings, the more help you get from the government.
Can this survive the Chancellor's Budget on 21 March?
It was previously £1.8m, then £1.5m and will reduce to £1.25m. This is roughly eqivalent to a maximum pension of £50,000 p.a. obtainable with full tax relief on contributions.
Depending on how much you earn, the government is currently contributing 50%, 40% or 20% towards your pension. The higher your earnings, the more help you get from the government.
Can this survive the Chancellor's Budget on 21 March?
Ozzie Osmond said:
Last year George Osborne announced a further cut in the pensions Lifetime Allowance taking effect from 5 April 2013.
It was previously £1.8m, then £1.5m and will reduce to £1.25m. This is roughly eqivalent to a maximum pension of £50,000 p.a. obtainable with full tax relief on contributions.
Depending on how much you earn, the government is currently contributing 50%, 40% or 20% towards your pension. The higher your earnings, the more help you get from the government.
Can this survive the Chancellor's Budget on 21 March?
The government doesn't contribute anything to pensions. At all. At best tax is delayed and then any remaining fund is stolen by the Government on death.It was previously £1.8m, then £1.5m and will reduce to £1.25m. This is roughly eqivalent to a maximum pension of £50,000 p.a. obtainable with full tax relief on contributions.
Depending on how much you earn, the government is currently contributing 50%, 40% or 20% towards your pension. The higher your earnings, the more help you get from the government.
Can this survive the Chancellor's Budget on 21 March?
REALIST123 said:
The government doesn't contribute anything to pensions. At all. At best tax is delayed and then any remaining fund is stolen by the Government on death.
I take it you have no pension provision then? Well guess what.Assume for the sake of argument someone earning £50,000 a year.
- Gets 40% tax relief on pension contributions. Every £600 he puts in is matched by £400 from the government.
- Investment returns are not taxed and money grosses up tax free within the pension plan.
- Retires at 60 and draws out 25% of the pension plan value completely free of all tax.
- Draws pension of, say, £20,000 a year which is only taxed at 20% (compared with 40% relief on the contributions paid in - so that's a straight profit of the 20%)
PS If you don't have a pension I hope you're not ignoring ISA as well.
Ozzie Osmond said:
REALIST123 said:
The government doesn't contribute anything to pensions. At all. At best tax is delayed and then any remaining fund is stolen by the Government on death.
I take it you have no pension provision then? Well guess what.Assume for the sake of argument someone earning £50,000 a year.
- Gets 40% tax relief on pension contributions. Every £600 he puts in is matched by £400 from the government.
- Investment returns are not taxed and money grosses up tax free within the pension plan.
- Retires at 60 and draws out 25% of the pension plan value completely free of all tax.
- Draws pension of, say, £20,000 a year which is only taxed at 20% (compared with 40% relief on the contributions paid in - so that's a straight profit of the 20%)
PS If you don't have a pension I hope you're not ignoring ISA as well.
davepoth said:
For higher rate payers maybe. Do those maths again for someone earning around £22k and see where it gets you.
Well:They still get tax relief on the way in (at basic rate)
And they still get 25% tax free cash at retirement
And much / most of their pension will not be subject to tax
again agree, I think the term panders to the part of the public that only think in terms of take home pay, deductions being one of those bits of the slip that are avoided.
In other words it only costs you £600 off the bottom line, but effectively £1000 is what goes into the pension. The fact that the £1000 was yours in the first place is glossed over as a sales pitch, for want of a better expression.
In other words it only costs you £600 off the bottom line, but effectively £1000 is what goes into the pension. The fact that the £1000 was yours in the first place is glossed over as a sales pitch, for want of a better expression.
Ozzie Osmond said:
People who say it's not worth doing a pension are nuts.
I received a letter last April notifying me my £220,000 pension fund is on target to pay £9,000 gross a year. Which is odd, as the nice man who sold it to me in 1995 said I could be guaranteed at least 10 per cent a year of the fund. Let the good times roll.audidoody said:
I received a letter last April notifying me my £220,000 pension fund is on target to pay £9,000 gross a year. Which is odd, as the nice man who sold it to me in 1995 said I could be guaranteed at least 10 per cent a year of the fund. Let the good times roll.
And remind me what interest rates where when you bought the pension and what they are now.Oh and what about life expectancy....??
Or inflation?
Ozzie Osmond said:
People who say it's not worth doing a pension are nuts.
I received a letter last April notifying me my £220,000 pension fund is on target to pay £9,000 gross a year. Which is odd, as the nice man who sold it to me in 1995 said I could be guaranteed at least 10 per cent a year of the fund. Let the good times roll.Ozzie Osmond said:
People who say it's not worth doing a pension are nuts.
I received a letter last April notifying me my £220,000 pension fund is on target to pay £9,000 gross a year. Which is odd, as the nice man who sold it to me in 1995 said I could be guaranteed at least 10 per cent a year of the fund. Let the good times roll.Ozzie Osmond said:
I take it you have no pension provision then? Well guess what.
Assume for the sake of argument someone earning £50,000 a year.
PS If you don't have a pension I hope you're not ignoring ISA as well.
I don't have a pension and certainly not about to start one. Anything the Govt gives you will be taken away from you. Money that you don't have direct control over will be subject to an ever changing set of demands from Govt as demonstrated by the current situation.Assume for the sake of argument someone earning £50,000 a year.
- Gets 40% tax relief on pension contributions. Every £600 he puts in is matched by £400 from the government.
- Investment returns are not taxed and money grosses up tax free within the pension plan.
- Retires at 60 and draws out 25% of the pension plan value completely free of all tax.
- Draws pension of, say, £20,000 a year which is only taxed at 20% (compared with 40% relief on the contributions paid in - so that's a straight profit of the 20%)
PS If you don't have a pension I hope you're not ignoring ISA as well.
Anything you tie up in a pension will eventually be plundered for future Govt spending.
audidoody said:
I received a letter last April notifying me my £220,000 pension fund is on target to pay £9,000 gross a year. Which is odd, as the nice man who sold it to me in 1995 said I could be guaranteed at least 10 per cent a year of the fund. Let the good times roll.
You should count yourself lucky that you have three pensions to come....anonymous said:
[redacted]
It seems it does but only if you use wonky maths...http://www.telegraph.co.uk/finance/personalfinance...
Under new tax-free limits announced in the Autumn Statement, workers with gold-plated final salary pensions can get an inflation-linked income of up to £62,500 a year before they have to pay tax on their pension pot. But a saver in a defined contribution pension scheme could get an index-linked pension of just £35,000 before having to pay tax.
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