The future for pensions.....ISAs and capped tax relief?
Discussion
Is this likely?
Should higher rate tax payer pile into pensions now to get tax relief while they still can?
Here's the green paper produced by the chancellor in the last budget:
https://www.gov.uk/government/uploads/system/uploa...
and here's a proposal for how it would work
http://www.cps.org.uk/publications/reports/retirem...
Should higher rate tax payer pile into pensions now to get tax relief while they still can?
Here's the green paper produced by the chancellor in the last budget:
https://www.gov.uk/government/uploads/system/uploa...
and here's a proposal for how it would work
http://www.cps.org.uk/publications/reports/retirem...
CPS said:
The eight specific proposals:
Pension contributions from employers should be treated as part of employees’ gross income, and taxed as such.
Tax relief on pension contributions should be replaced by a Treasury contribution of 50p per £1 saved, up to an annual allowance, paid irrespective of the saver’s taxpaying status.
ISA and pension products should share an annual combined contribution limit of £30,000, available for saving within ISA or pension products (or any combination thereof). This would replace the current ISA and pensions tax-advantaged allowances.
The 25% tax-free lump sum should be scrapped, with accrued rights to it protected.
The Lifetime Allowance should be scrapped. It adds considerably complexity to the pensions landscape, and with a £30,000 combined contributions limit for pensions and ISAs, it would become less relevant over time.
The 10p tax rebate on pension assets’ dividend income should be reinstated.
People should be able to bequeath unused pension pot assets to third parties free of Inheritance Tax (perhaps limited to £100,000), provided that the assets remained within a pensions framework.
The annual allowance should be set at £8,000, with prior years’ unutilised allowances being permitted to be rolled up, perhaps over as much as ten years, all subject to modelling confirmation.
Pension contributions from employers should be treated as part of employees’ gross income, and taxed as such.
Tax relief on pension contributions should be replaced by a Treasury contribution of 50p per £1 saved, up to an annual allowance, paid irrespective of the saver’s taxpaying status.
ISA and pension products should share an annual combined contribution limit of £30,000, available for saving within ISA or pension products (or any combination thereof). This would replace the current ISA and pensions tax-advantaged allowances.
The 25% tax-free lump sum should be scrapped, with accrued rights to it protected.
The Lifetime Allowance should be scrapped. It adds considerably complexity to the pensions landscape, and with a £30,000 combined contributions limit for pensions and ISAs, it would become less relevant over time.
The 10p tax rebate on pension assets’ dividend income should be reinstated.
People should be able to bequeath unused pension pot assets to third parties free of Inheritance Tax (perhaps limited to £100,000), provided that the assets remained within a pensions framework.
The annual allowance should be set at £8,000, with prior years’ unutilised allowances being permitted to be rolled up, perhaps over as much as ten years, all subject to modelling confirmation.
I can see it might be an issue for those whose combined savings and ISA input is more than £30k p/a, but that isn't many people.
This seems to be a good idea for the majority of people - especially the bit about being able to bequeath unused pension pots. Looks like the annuity market might be a bit more upset than it is now.
This seems to be a good idea for the majority of people - especially the bit about being able to bequeath unused pension pots. Looks like the annuity market might be a bit more upset than it is now.
Centre for Policy Studies? Centre for what, cloud cuckoo land?
If you tax people now on the employers pension contributions people they will leave and not join pension schemes.
If you remove the 25% tax free lump sum they will leave and not join pension schemes. This is the biggest selling point of pensions to the vast majority of people.
The operation of a maximum lifetime allowance is hardly complex but I would support the removal though because it is unfair to have both a annual contribution limit and maximum fund limit.
You can already pass on pension funds free of tax up to age 75.
If you tax people now on the employers pension contributions people they will leave and not join pension schemes.
If you remove the 25% tax free lump sum they will leave and not join pension schemes. This is the biggest selling point of pensions to the vast majority of people.
The operation of a maximum lifetime allowance is hardly complex but I would support the removal though because it is unfair to have both a annual contribution limit and maximum fund limit.
You can already pass on pension funds free of tax up to age 75.
Ahhh just what we need more tinkering, more complexity, more confusion. I thought the idea was to encourage people to save more for their retirement.......Ah no can't have that now, we need to up the tax take now & keep them working (taxed) into their graves (as they won't have any pension provision).
I suppose it's best to wait until the final proposals rather than getting worked up about it.
Enacting all of the above proposals IMHO would completely destroy the pensions industry but no doubt we shall see.
If people perceive changes to be fair they tend to play ball. If they perceive them as unfair they look for every loophole and avoidance scheme they can lay their hands on.
Enacting all of the above proposals IMHO would completely destroy the pensions industry but no doubt we shall see.
If people perceive changes to be fair they tend to play ball. If they perceive them as unfair they look for every loophole and avoidance scheme they can lay their hands on.
Well on the whole he has boosted pension provision I feel.
Yes he has restricted the maximum lifetime allowance and annual allowance but that affects relatively few, but the introduction of flexi-access drawdown and tax free asset transfer on death before age 75 will encourage many to make provision where they didn't before I feel.
I agree that the biggest hurdle is the constant meddling with the regulations though. If you really want the public to put money away that they potentially cannot get access to for 30 years you must stop constantly moving the goalposts.
Yes he has restricted the maximum lifetime allowance and annual allowance but that affects relatively few, but the introduction of flexi-access drawdown and tax free asset transfer on death before age 75 will encourage many to make provision where they didn't before I feel.
I agree that the biggest hurdle is the constant meddling with the regulations though. If you really want the public to put money away that they potentially cannot get access to for 30 years you must stop constantly moving the goalposts.
PurpleMoonlight said:
Well on the whole he has boosted pension provision I feel.
Yes he has restricted the maximum lifetime allowance and annual allowance but that affects relatively few, but the introduction of flexi-access drawdown and tax free asset transfer on death before age 75 will encourage many to make provision where they didn't before I feel.
I agree that the biggest hurdle is the constant meddling with the regulations though. If you really want the public to put money away that they potentially cannot get access to for 30 years you must stop constantly moving the goalposts.
Maximum lifetime allowance impacts a lot more people than you think - consider all those gold plated final salary public sector pensions even modest previous and current salaries mean it could be beyond the lifetime allowance already and those (without question left wing supporters) will get a nasty surprise come pension drawing time. Gulp gulp / why doesn't anyone give them illustrations on what this really means?Yes he has restricted the maximum lifetime allowance and annual allowance but that affects relatively few, but the introduction of flexi-access drawdown and tax free asset transfer on death before age 75 will encourage many to make provision where they didn't before I feel.
I agree that the biggest hurdle is the constant meddling with the regulations though. If you really want the public to put money away that they potentially cannot get access to for 30 years you must stop constantly moving the goalposts.
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