Increased lifetime allowance - would you work longer?
Poll: Increased lifetime allowance - would you work longer?
Total Members Polled: 179
Discussion
Terminator X said:
With the exception of the PH powerfully built Directors I doubt many people will breach the cap; it will mean didly squat to 99% of the population.
TX.
A lot will get a lot closer to the existing limit than they realise with reasonable growth. TX.
A million pound pension pot is hardly a luxury lifestyle either.
This will almost certainly allow/cause me to work longer.
I see it as a good thing for the country - people building their pension pots are doing the responsible thing & providing for the future; they're not planning to spend their time being a burden to the state.
As others have said, the current cap certainly doesn't buy an exorbitant lifestyle.
I see it as a good thing for the country - people building their pension pots are doing the responsible thing & providing for the future; they're not planning to spend their time being a burden to the state.
As others have said, the current cap certainly doesn't buy an exorbitant lifestyle.
What would make me, an early retiree, consider going back to work is giving me a separate tax allowance
At the moment I have a pension which I pay tax on at 20% once the tax free limit is reached and that means that even if I took a minimum wage job it would see me paying tax on the entirety of it and very quickly into 40% + NI (40%+13.5%) leaving me with what £9k for a 40 hour working week .. not worth it
Now, if they separated the two and gave me a 12k allowance on my pension and a separate allowance on my new wage, well
Then, I’d consider it very seriously as I’m such would many others
I win, employer wins, and Gov gets more tax take
But they won’t do that, so I’ll stay at home thanks very much
At the moment I have a pension which I pay tax on at 20% once the tax free limit is reached and that means that even if I took a minimum wage job it would see me paying tax on the entirety of it and very quickly into 40% + NI (40%+13.5%) leaving me with what £9k for a 40 hour working week .. not worth it
Now, if they separated the two and gave me a 12k allowance on my pension and a separate allowance on my new wage, well
Then, I’d consider it very seriously as I’m such would many others
I win, employer wins, and Gov gets more tax take
But they won’t do that, so I’ll stay at home thanks very much
Scolmore said:
This will almost certainly allow/cause me to work longer.
I see it as a good thing for the country - people building their pension pots are doing the responsible thing & providing for the future; they're not planning to spend their time being a burden to the state.
As others have said, the current cap certainly doesn't buy an exorbitant lifestyle.
Would you actively choose to work longer though? And if so, how much longer?I see it as a good thing for the country - people building their pension pots are doing the responsible thing & providing for the future; they're not planning to spend their time being a burden to the state.
As others have said, the current cap certainly doesn't buy an exorbitant lifestyle.
Obviously a lot for me depends on investment growth, as I'm on DC pensions, not DB, so I do understand it being a more clear-cut issue for those on DB such as doctors, but for me, if I do hit even the current LTA, it wouldn't be before I reach around 62 or 63, and I'd view every year worked beyond 60 as a year of retirement lost rather than an extra year of pension contributions gained.
I think Earthdweller makes a very valid point, as I may in theory want to continue with some sort of part time work in retirement - or at least have the option to if I start to get bored - but I see no incentive in doing that if I'm getting clobbered very quickly for tax, given that I'd effectively be starting out on a zero tax allowance as that'll all be going on my pension.
People like GT03ROB saying that £1m doesn't exactly buy you a luxury lifestyle should be a little careful where they voice that sentiment though, as I'm sure there's quite a few pubs around the country where expressing that sort of view might result in a certain amount of disdain from the rest of the clientele!
Even if you see no investment return whatsoever on your capital once you retire, once you take in to account the fact that 25% is tax free, a £1m pot equates to around 30 years' earnings for someone earning the UK median average of £38,131, and once you add in the actual State pension of £10.6k from whenever your retirement age is, you're not going to be a million miles from having more in your pension pot - at a time where you're not going to be paying a mortgage or rent and likely have much lower outgoings as well - than many people will actually earn in their entire careers before they even think about saving some of it for their retirement. £1m is also not far off 10x the average retirement pot of £107k according to the ONS.
No, it wouldn’t make me work longer. I plan to be retired by 58-60, so 20 years of contributions left to go and my pot will be what it will be - hopefully somewhere around the existing LTA.
What does worry me, and extending the cap only makes me even more suspicious, is that they’ll means test the state pension. I’ve been doing all my calculations based on receiving the state pension at 68 but should probably base it around receiving none at all.
What does worry me, and extending the cap only makes me even more suspicious, is that they’ll means test the state pension. I’ve been doing all my calculations based on receiving the state pension at 68 but should probably base it around receiving none at all.
Crumpet said:
No, it wouldn’t make me work longer. I plan to be retired by 58-60, so 20 years of contributions left to go and my pot will be what it will be - hopefully somewhere around the existing LTA.
What does worry me, and extending the cap only makes me even more suspicious, is that they’ll means test the state pension. I’ve been doing all my calculations based on receiving the state pension at 68 but should probably base it around receiving none at all.
Whilst I know a lot of people fear means testing happening, I really can't see it. I think it would be viewed as just too big a betrayal of the social contract even by people not directly impacted by it. At best, they might be able to get away with it by providing 10-15 years' notice, but even then I can't see it.What does worry me, and extending the cap only makes me even more suspicious, is that they’ll means test the state pension. I’ve been doing all my calculations based on receiving the state pension at 68 but should probably base it around receiving none at all.
Kermit power said:
People like GT03ROB saying that £1m doesn't exactly buy you a luxury lifestyle should be a little careful where they voice that sentiment though, as I'm sure there's quite a few pubs around the country where expressing that sort of view might result in a certain amount of disdain from the rest of the clientele!
Even if you see no investment return whatsoever on your capital once you retire, once you take in to account the fact that 25% is tax free, a £1m pot equates to around 30 years' earnings for someone earning the UK median average of £38,131, and once you add in the actual State pension of £10.6k from whenever your retirement age is, you're not going to be a million miles from having more in your pension pot - at a time where you're not going to be paying a mortgage or rent and likely have much lower outgoings as well - than many people will actually earn in their entire careers before they even think about saving some of it for their retirement. £1m is also not far off 10x the average retirement pot of £107k according to the ONS.
I think I may be more subtle than to wander into a random pub stating a £1m pension pot doesn’t buy luxury. However that wouldn’t change the fact that it doesn’t!Even if you see no investment return whatsoever on your capital once you retire, once you take in to account the fact that 25% is tax free, a £1m pot equates to around 30 years' earnings for someone earning the UK median average of £38,131, and once you add in the actual State pension of £10.6k from whenever your retirement age is, you're not going to be a million miles from having more in your pension pot - at a time where you're not going to be paying a mortgage or rent and likely have much lower outgoings as well - than many people will actually earn in their entire careers before they even think about saving some of it for their retirement. £1m is also not far off 10x the average retirement pot of £107k according to the ONS.
You other number may be correct but so what? A £1m pot will probably yield around the Uk median average salary based on the recommended 3-4% drawdown. So as I say not luxury.
Kermit power said:
Would you actively choose to work longer though? And if so, how much longer?
I think Earthdweller makes a very valid point, as I may in theory want to continue with some sort of part time work in retirement - or at least have the option to if I start to get bored - but I see no incentive in doing that if I'm getting clobbered very quickly for tax, given that I'd effectively be starting out on a zero tax allowance as that'll all be going on my pension.
That’s exactly where my thoughts are, I don’t want to go back to the high stress, hard work, good remuneration job that I had before, but I wouldn’t mind part time work at a lower level, but there is a real disincentive because even at basic rate on a minimum wage job I’d be working for about £6.50 an hour and at the higher rate about £4 an hour from the get go I think Earthdweller makes a very valid point, as I may in theory want to continue with some sort of part time work in retirement - or at least have the option to if I start to get bored - but I see no incentive in doing that if I'm getting clobbered very quickly for tax, given that I'd effectively be starting out on a zero tax allowance as that'll all be going on my pension.
By the time you’ve got there, paid for parking, bought a bit of lunch it’s almost costing me money to go to work
GT03ROB said:
I think I may be more subtle than to wander into a random pub stating a £1m pension pot doesn’t buy luxury. However that wouldn’t change the fact that it doesn’t!
You other number may be correct but so what? A £1m pot will probably yield around the Uk median average salary based on the recommended 3-4% drawdown. So as I say not luxury.
There are online calculators that will calculate annuity rates for a £1m pot. This is the main way to guarantee an income for life. You other number may be correct but so what? A £1m pot will probably yield around the Uk median average salary based on the recommended 3-4% drawdown. So as I say not luxury.
Obviously it will depend on age taken, spousal benefits, inflation linked etc but I think people might get a surprise at the size of the figure. It ain’t huge.
If it goes ahead I welcome it. I’m in a defined benefit pension and I’m already exceeding the 40k limit and well on track to exceed the LTA. This means I get an annual self assessment tax bill for income I’ve yet to receive which is unfair. Only thing I could do is opt out of the pension scheme (stupid) or retire early, instead I can carry on working until 62 as planned (another 10 years) and retire on a 85-90k pension. 5 years after that I’d get the 9k state pension so 6 figs in retirement including the wife’s pension. It also means I can offset the recent 125k 45p income tax change by maxing out to the 60k annual allowance, if that’s what’s proposed.
Olivera said:
More stick than carrot would be required to 'encourage' retirees back into work 
Indeed. And as ive stated elsewhere, when this pointless round of meddling doent achive its objective, the next budget will see a big stick. Punitive additional tax, and raping of pensions. Do enough of that and people will have no choice but to return to work.You read it here first!
Crumpet said:
What does worry me, and extending the cap only makes me even more suspicious, is that they’ll means test the state pension. I’ve been doing all my calculations based on receiving the state pension at 68 but should probably base it around receiving none at all.
This is what i have done. I just dont see it surviving in its current form. GT03ROB said:
Terminator X said:
With the exception of the PH powerfully built Directors I doubt many people will breach the cap; it will mean didly squat to 99% of the population.
TX.
A lot will get a lot closer to the existing limit than they realise with reasonable growth. TX.
A million pound pension pot is hardly a luxury lifestyle either.
TX.
wormus said:
If it goes ahead I welcome it. I’m in a defined benefit pension and I’m already exceeding the 40k limit and well on track to exceed the LTA. This means I get an annual self assessment tax bill for income I’ve yet to receive which is unfair. Only thing I could do is opt out of the pension scheme (stupid) or retire early, instead I can carry on working until 62 as planned (another 10 years) and retire on a 85-90k pension. 5 years after that I’d get the 9k state pension so 6 figs in retirement including the wife’s pension. It also means I can offset the recent 125k 45p income tax change by maxing out to the 60k annual allowance, if that’s what’s proposed.
Unfair? I imagine you might be in the Chancellor’s sights.Any money purchase scheme member would need a very serious pot to deliver your level of stated income.
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