Pension LTA under threat?

[Royal Jelly]

anonymous said:

[redacted]

[gangzoom]

NickCQ said:

18 months of NHS worship and pot bashing has really warped your sense of perspective. What fraction of senior consultants on £150k+ do you think are getting their hands dirty in ICUs? The anecdotes I heard from family members in hospitals last year was the opposite - they'd never known it so quiet.

Your 'anecdotes' are totally warped.

We had the most senior consultants in our hospital volunteering doing manual handling and washing on ITU, as this freed up ITU nurses to do their job better.

We also lost quite a few very senior staff due to COViD, one in particular taught most of us the ropes on CCU. He could/should have retired long a go, but was doing emergency cardiac procedures oncall - which is almost certainly how he caught COVID.

I don't know what/how your family members see the NHS, but the problem with anecdotes is they only bare a passing resemblance to reality.

We are actually so busy now none of us have had time to 'reflect' on COVID. For me its shown up how much work we need to do to change many parts of the system, the result is the last 12 months has been the buisssiet ever, and the next 12 months more so.

Anyone twiddling their thumbs in the NHS wondering what to do with 'spare' time needs to start doing some QIP, the whole system needs it!!

[NickCQ]

Royal Jelly said:

I’m not saying the taxpayer funds a lavish retirement. I’m questioning the point of having a limit on your pension pot size before getting hammered with punitive taxes, not tax-breaks on contributions.

The limit on the size of the pension pot is, implicitly, a limit on the amount of tax-free growth permitted on pension assets. I don't see why it's a priori inequitable to say that at a certain point, investment returns on assets held in the pension wrapper should be taxed. Just like you'd pay CGT or dividend taxes outside the wrapper.

[Cheib]

randlemarcus said:

Carbon Sasquatch said:

The biggest loophole to me seems to be that a SIPP is outside your estate for IHT and can be passed on through the generations as a fund to draw from.

Shhh. Don't remind them

IHT is under long term review apparently so the chances of this still being the case when the people reading this thread die are not high !

This was a kicker when I cashed in my work pension but not the main reason. Be great if it is still the case but I doubt it will be.

[Royal Jelly]

anonymous said:

[redacted]

It’s true, though; you’ve acknowledged such, as it was in response to you saying not many folks would sympathise with those with an 800k pension pot.

[Royal Jelly]

NickCQ said:

The limit on the size of the pension pot is, implicitly, a limit on the amount of tax-free growth permitted on pension assets. I don't see why it's a priori inequitable to say that at a certain point, investment returns on assets held in the pension wrapper should be taxed. Just like you'd pay CGT or dividend taxes outside the wrapper.

I can appreciate your logic - but even in that realm, it should be a far higher bar than 1m - the pot size that’ll get you 35k a year. The old 1.8m LTA is far more reasonable in my opinion.

[NickCQ]

Royal Jelly said:

I can appreciate your logic - but even in that realm, it should be a far higher bar than 1m - the pot size that’ll get you 35k a year. The old 1.8m LTA is far more reasonable in my opinion.

How does the LTA work between couples - can they pool their entitlement and get £2 mm between them? That really does feel like "enough" in the context of the UK income distribution.

[dingg]

gangzoom said:

Your 'anecdotes' are totally warped.

We had the most senior consultants in our hospital volunteering doing manual handling and washing on ITU, as this freed up ITU nurses to do their job better.

We also lost quite a few very senior staff due to COViD, one in particular taught most of us the ropes on CCU. He could/should have retired long a go, but was doing emergency cardiac procedures oncall - which is almost certainly how he caught COVID.

I don't know what/how your family members see the NHS, but the problem with anecdotes is they only bare a passing resemblance to reality.

We are actually so busy now none of us have had time to 'reflect' on COVID. For me its shown up how much work we need to do to change many parts of the system, the result is the last 12 months has been the buisssiet ever, and the next 12 months more so.

Anyone twiddling their thumbs in the NHS wondering what to do with 'spare' time needs to start doing some QIP, the whole system needs it!!

Wifes brother in law is registrar neurosurgeon and still sometimes has to do what l consider ridiculous shifts, put it this way I wouldn't want him to be poking about in my brain at the end of one of his longest shifts....

[Carbon Sasquatch]

NickCQ said:

How does the LTA work between couples - can they pool their entitlement and get £2 mm between them? That really does feel like "enough" in the context of the UK income distribution.

Not as far as I know.

I have a non-working wife - I can't use her tax allowance, annual pension contribution allowance or LTA.

[98elise]

Cheib said:

randlemarcus said:

Carbon Sasquatch said:

The biggest loophole to me seems to be that a SIPP is outside your estate for IHT and can be passed on through the generations as a fund to draw from.

Shhh. Don't remind them

IHT is under long term review apparently so the chances of this still being the case when the people reading this thread die are not high !

This was a kicker when I cashed in my work pension but not the main reason. Be great if it is still the case but I doubt it will be.

Depends where you live. We're moving to Portugal where IHT is zero

[LeoSayer]

Carbon Sasquatch said:

NickCQ said:

How does the LTA work between couples - can they pool their entitlement and get £2 mm between them? That really does feel like "enough" in the context of the UK income distribution.

Not as far as I know.

I have a non-working wife - I can't use her tax allowance, annual pension contribution allowance or LTA.

A pension sharing order on divorce has a similar effect.

[NickCQ]

Carbon Sasquatch said:

Not as far as I know.
I have a non-working wife - I can't use her tax allowance, annual pension contribution allowance or LTA.

Just looked this up quickly, it seems that the answer is you can but it's really de minimis at <£3k p.a.
https://eqinvestors.co.uk/library/making-pension-c...

[Carbon Sasquatch]

NickCQ said:

Just looked this up quickly, it seems that the answer is you can but it's really de minimis at <£3k p.a.
https://eqinvestors.co.uk/library/making-pension-c...

Thanks - I discovered that one in March, just in time to contribute for last year, so she now has 2 years worth in her own IM SIPP.

Seems another oddity, that non-tax payers can claim even a small amount of relief on tax they haven't even paid. There must be some logic somewhere but it's lost on me.

Pension recycling is another one - under some circumstances (that seem broad & vague) I will be able to make the same payment level into a SIPP when my only income is a pension.....

[Dixy]

The thing that is missed here is that the size of the pot is not relevant to the pension that will be paid. So even if there is £5 million the pension is based on salarie and service. But any work done for the NHS has both employer and employee contribution.

[Dixy]

The thing that is missed here is that the size of the pot is not relevant to the pension that will be paid. So even if there is £5 million the pension is based on salarie and service. But any work done for the NHS has both employer and employee contribution and it is on that the doctor gets penalised.

[Sheepshanks]

Dixy said:

The thing that is missed here is that the size of the pot is not relevant to the pension that will be paid. So even if there is £5 million the pension is based on salarie and service. But any work done for the NHS has both employer and employee contribution.

There isn't a pot at all is there?

There's a virtual one, and it is relevant. It's just that it's backwards from normal, the value being calculated (very generously) based on pension payable.

[NickCQ]

Dixy said:

The thing that is missed here is that the size of the pot is not relevant to the pension that will be paid. So even if there is £5 million the pension is based on salarie and service.

I'm not sure I totally catch your drift here. As I understand it, in a DB scheme there is no "pot" as such, just an agreement to pay a certain amount, which for tax purposes is valued using a multiplier. IIRC for NHS pensions that's 20x, so £20k pa equates to a virtual pot of £400k.

Of course, if you had to buy £20k of index-linked guaranteed income for life in the market it would cost you much much more than £400k (think £800k).

[p1doc]

it is a generous pension but also includes automatic opt out of full pension as nhs pensions do this saying as it is so good you will not get full state pension, this has happened to a lot of people who get NI contributions paid back and think no more of it.....
at age 47 i have already maxed out LTA as working f/t as GP partner till last year so was paying employer and employee contributions for 15 yrs -it should hopefully slow down as now salaried

[IJWS15]

For those who think you have to be rich to be hitting the LTA . .

I graduated as a mechanical engineer and started work for BR in 1981, since then I moved jobs in 1995, 97, 99, 2015, 16 (contracting) and 18 (back to employed) I have 23 years in DB schemes, 13 in DC schemes and 3 years with no pension contributions at all. I have never earned anywhere near £100k a year but have been saving 9-10% of gross into pension and don't consider myself as rich, SWMBO is concerned that we won't have enough money when I retire..

If I work to state pension age I will just about hit the current LTA, may exceed it if the DC scheme investments grow too much. If it hadn't been for Gordon Brown I would be well over it.

Do they really want to encourage middle managers / professional people like me not to save into pensions (schemes which then invest in stocks and shares benefiting the economy) but instead to take the cash and invest in second homes, exotic cars, rental property and the like . . . and for them to be more dependent on the state when they are older! Or, as I am considering, retiring earlier and taking the expertise gained over 40 years out of the job market?

[NickCQ]

p1doc said:

at age 47 i have already maxed out LTA ... contributions for 15 yrs

Back of envelope maths suggests that to achieve this in a private DC scheme you would have to contribute the max £40k every year AND get 8% compounding growth the whole time. I suspect very few people earning GP-level salaries (£75-125k?) in the private sector do this!