SIPP age increased to 58?
Discussion
I'm 50 this year. If anyone under 40 wants to swap ten years of life with me I don't mind not getting at my SIPP as early as thought.
Besides, anyone under 35 or so has a very good possibility of living healthy extra years to 140. We will be popping down to Staples to pick up 3d printed organs pretty soon.
Besides, anyone under 35 or so has a very good possibility of living healthy extra years to 140. We will be popping down to Staples to pick up 3d printed organs pretty soon.
I think what irritates me most is that not only does the retirement age move later but the lifetime limit reduces as well - if one is going to argue that we are are all living longer then surely the lifetime allowance should increase to budget for living longer?
Who else but judges were exempt from the lifetime limit ? Let me guess - we are all in this together!
Who else but judges were exempt from the lifetime limit ? Let me guess - we are all in this together!
Reducing the lifetime allowance for saving into a pension is a done deal it seems. Currently, at a Lifetime Allowance (LTA) of £1.25 million, active members of most defined benefit or final salary schemes will be affected if their income at retirement exceeds £62,500 (the deemed value of a DB scheme is 20 x the pension).
However, members of public sector schemes (such as NHS, AFPS etc) will currently be affected if their projected pension exceeds £54,347 net of gratuity (20 x the pension PLUS the tax free cash of 3 x the pension). If the LTA reduces to £1 million of course, so too, does the threshold. Pension protection can either be Fixed, or Individual.
It isn't what you make, it's what you keep -
https://www.moneyadviceservice.org.u...ension-savi...
http://www.hmrc.gov.uk/pensionschemes/ip14online.h...
However, members of public sector schemes (such as NHS, AFPS etc) will currently be affected if their projected pension exceeds £54,347 net of gratuity (20 x the pension PLUS the tax free cash of 3 x the pension). If the LTA reduces to £1 million of course, so too, does the threshold. Pension protection can either be Fixed, or Individual.
It isn't what you make, it's what you keep -
https://www.moneyadviceservice.org.u...ension-savi...
http://www.hmrc.gov.uk/pensionschemes/ip14online.h...
Just spread it out. The tax advantages are good - but I don't have any kids so I cant even leave it to anyone (of any significance) so I am going to split it (roughly) 3 ways now, pension, property and cash. If I can get all 3 to a similar level by 55 I think I will be ok if one fails for some reason. The risk I am taking at the moment is my cash element is in shares and various funds. These will need cashing in towards my early 50s. There is also a property element but this is also variable and we will always need a house.
The problem with the expected reduction of the LTA to £1m is that it will start to catch an awful lot of people who are by no means wealthy.
Someone starting work at 21 on an average salary of £26k pa and staying at that sort of earnings level could feasibly breach the LTA simply by paying auto-enrolment contributions throughout their career.
That does rely on some fairly racy assumptions (e.g. 8% pa investment returns) and that the LTA doesn't increase. But, given the LTA was £1.8M just a few years ago and is now expected to be £1.0M, I think it's reasonable to assume it will be a long while before it increases significantly.
Someone earning a bit more than average or paying a bit more into their pension scheme should be thinking really carefully about whether they will get hit for a huge amount of tax on retirement.
Someone starting work at 21 on an average salary of £26k pa and staying at that sort of earnings level could feasibly breach the LTA simply by paying auto-enrolment contributions throughout their career.
That does rely on some fairly racy assumptions (e.g. 8% pa investment returns) and that the LTA doesn't increase. But, given the LTA was £1.8M just a few years ago and is now expected to be £1.0M, I think it's reasonable to assume it will be a long while before it increases significantly.
Someone earning a bit more than average or paying a bit more into their pension scheme should be thinking really carefully about whether they will get hit for a huge amount of tax on retirement.
If you're older than your mid forties, you're (currently) ok (still access at 55). If you're a few years younger than that, you (currently) get access to your personal pension at 58. For Generation Y (c.35 and younger), it's currently 59. For anyone younger, it will be at least 60.. probably, 62/63. Those are the best-case scenarios, in reality things will probably be much gloomier.
CoolHands said:
if they make things too gloomy noone young is ever going to pay into a pension. It's bad enough now.
Exactly that. I pour money into mine for the tax relief, but it's getting that I'm not sure I want to continue that strategy as the goalposts keep moving.All it will take is a Labour government to be in power when I do go to retire and I'll end up with a butt reaming on the tax that will have made all the current sacrifice a sick joke.
I already work with young teachers (which admittedly is an excellent pension!) many of whom have opted out! I try to encourage them to stay / join but they already consider the monthly cost is too much. So if they aren't doing it, who else young would be, considering private pensions etc. don't have much return?
CoolHands said:
I already work with young teachers (which admittedly is an excellent pension!) many of whom have opted out! I try to encourage them to stay / join but they already consider the monthly cost is too much. So if they aren't doing it, who else young would be, considering private pensions etc. don't have much return?
No one has really been doing it. Returns are fine, in reality but people just prefer to spend the money now rather than save it for when they need it. It's why the most lucrative and stable business to be running in about ten years time is battery farms for pauper pensioners. Van dumps them outside and you have your minimum wage third world staff drag them inside to hide them away from decent society and you just need to keep them subsisting on penny gruel until you can let an 'illness' take them and flog the carcass into the Findus food chain. All underwritten by the State via the tax payer.
Assuming of course that we don't do the sensible thing and just outsource all the unwanted and unsightly old people to somewhere like Vietnam for processing.
Well, it won't be lowering. The only feasible reason it would do, would be if we needed to thin out the aged labour force. That was its original reason during the Agrarian and Industrial revolutions, we needed to chuck folk on the scrap heap and get youngsters into work. Then, retirement entered its second phase - namely, smiling, bronzed fifty year olds walking on golden sands in linen shirts, before gin and a round of golf.
The Cridland Review is going to (IMHO) offer an olive branch. Of sorts. It's going to, I think, suggest that the state pension may allow early access but with an actuarial reduction to reflect for the fact it'll be taken for longer. It will extend this to workers in industries that see them clapped out earlier; trawlermen, farmers, steelworkers, miners, service personnel etc. Those in office jobs, probably won't get the deal.
I'm posting this picture with permission. It's a forecast which arrived yesterday, for a client who has deferred benefits and who has the chance of taking them as income at 55 or 65. You can see the difference. The client's current age is 55 - so, would you take it early/earlier?
One size doesn't fit all, and from an advisory perspective, it's a potential minefield. Does the state require advice before opting for it, how is the advice underwritten, will it be paid for by the state somehow (likely)? Planners refer to it as hyperbolic discounting - the ability to relate a present value against an increased and uncertain future one. In this instance, we are considering many factors; gilt yields, other assets, cash flow, health, tax position now and in the future etc, but above all - quality of life (now and potentially in the future, if we pull the pin).
The Cridland Review is going to (IMHO) offer an olive branch. Of sorts. It's going to, I think, suggest that the state pension may allow early access but with an actuarial reduction to reflect for the fact it'll be taken for longer. It will extend this to workers in industries that see them clapped out earlier; trawlermen, farmers, steelworkers, miners, service personnel etc. Those in office jobs, probably won't get the deal.
I'm posting this picture with permission. It's a forecast which arrived yesterday, for a client who has deferred benefits and who has the chance of taking them as income at 55 or 65. You can see the difference. The client's current age is 55 - so, would you take it early/earlier?
One size doesn't fit all, and from an advisory perspective, it's a potential minefield. Does the state require advice before opting for it, how is the advice underwritten, will it be paid for by the state somehow (likely)? Planners refer to it as hyperbolic discounting - the ability to relate a present value against an increased and uncertain future one. In this instance, we are considering many factors; gilt yields, other assets, cash flow, health, tax position now and in the future etc, but above all - quality of life (now and potentially in the future, if we pull the pin).
Not really the point asked though Ginge, is it?
It's about having the option to take it (which that chap has) as opposed to continually moving goalposts for us in our 40's and younger that are removing that option.
Getting a bigger return for leaving it in longer is something we are all familiar with already and don't need illustrated.
It's about having the option to take it (which that chap has) as opposed to continually moving goalposts for us in our 40's and younger that are removing that option.
Getting a bigger return for leaving it in longer is something we are all familiar with already and don't need illustrated.
Hainey said:
Not really the point asked though Ginge, is it?
It's about having the option to take it (which that chap has) as opposed to continually moving goalposts for us in our 40's and younger that are removing that option.
Getting a bigger return for leaving it in longer is something we are all familiar with already and don't need illustrated.
The question was, would the state pension age be lowering. Answer, yes and no. Access could, for some, be allowed earlier via early a reduced payment. If so, with what consequence?It's about having the option to take it (which that chap has) as opposed to continually moving goalposts for us in our 40's and younger that are removing that option.
Getting a bigger return for leaving it in longer is something we are all familiar with already and don't need illustrated.
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