This is a good reminder that pension savings are, almost by definition, dealt with in circumstances of illness, dementia, depression or loneliness. The rules regarding tax on pensions are simply too complex, not fit for purpose and can be inhumane. They are used by wealthy people to play a harmless game with the Inland Revenue but young people are instinctively repulsed by the whole thing and have to be nudged into saving by having to opt out of government schemes.
Not a political point or aimed at the finance industry in general. And certainly not anybody here! Just felling a bit fed up this morning!
Can't argue the rules are too complicated. Worse, they keep changing them, which is very counter-productive given you are making decisions on a 30 year time frame.
Ever since Gordon Brown raided pensions, every chancellor since has worked out that by the time people realise they've been robbed, it won't affect their re-election prospects - it's too remote for people to feel at the time it happens.
I've said here many times, I think the fairest way of doing things is to allow a flat overall amount of tax relief for everyone, sufficient for people to live build a pot big enough for.a (median) income. Anything above that should be a luxury and not supported by tax relief. I'd take a similar approach re energy use and how that is taxed.
I missed all the inter-generational fun and games last week - but the real issue is cheap money. Pension income is almost impossible to build and asset prices have rocketed. It's not good for anyone (except governments and - maybe - the super wealthy) and it encourages ever more cycles of excess risk in the hunt for yield.
As Adam Smith said, there's no productive use in the capital used to rent out property but cheap money doesn't encourage bigger risks. Too many of our FTSE 100 companies look like bonds and might as well be rentals, so it's not just BTL.
Unless we get back to a sensible trade-off of risk and return, we won't build the right companies and build genuine, sustainable wealth. That's why I can't understand people's issues with Bezos. He tied his own fortune to a company, took a long-term view and continued to plow money back into the company when 'the Street' wanted him to pay dividends. We need a few Jeff Bezos over here (or more Ratcliffes, Dysons and Martins - none of them lawyers or accountants, you'll notice).
This is a good reminder that pension savings are, almost by definition, dealt with in circumstances of illness, dementia, depression or loneliness. The rules regarding tax on pensions are simply too complex, not fit for purpose and can be inhumane. They are used by wealthy people to play a harmless game with the Inland Revenue but young people are instinctively repulsed by the whole thing and have to be nudged into saving by having to opt out of government schemes.
Not a political point or aimed at the finance industry in general. And certainly not anybody here! Just felling a bit fed up this morning!
I see the person who "liked" your post is the poster you replied to & who has taken out all his tax-free money and put into potentially taxable deposits & NS&I products that are paying diddly squat.
I agree that pension rules are complex but they are certainly not "inhumane" or fit for purpose and what it tells me is that more & more people need to take professional financial advice. I understand that you might want access to money when illness or unforeseen circumstances come around, but then I could say that your critical illness policy would have paid out in the first instance so no need to touch the money put by to pay for when you retire.
This is a good reminder that pension savings are, almost by definition, dealt with in circumstances of illness, dementia, depression or loneliness. The rules regarding tax on pensions are simply too complex, not fit for purpose and can be inhumane. They are used by wealthy people to play a harmless game with the Inland Revenue but young people are instinctively repulsed by the whole thing and have to be nudged into saving by having to opt out of government schemes.
Not a political point or aimed at the finance industry in general. And certainly not anybody here! Just felling a bit fed up this morning!
Can't argue the rules are too complicated. Worse, they keep changing them, which is very counter-productive given you are making decisions on a 30 year time frame.
Ever since Gordon Brown raided pensions, every chancellor since has worked out that by the time people realise they've been robbed, it won't affect their re-election prospects - it's too remote for people to feel at the time it happens.
I've said here many times, I think the fairest way of doing things is to allow a flat overall amount of tax relief for everyone, sufficient for people to live build a pot big enough for.a (median) income. Anything above that should be a luxury and not supported by tax relief. I'd take a similar approach re energy use and how that is taxed.
I think we are coming to the time of a flat, at least flat rate, of tax relief.
The issue I've always had on things like a median income/tax relief - that might be £20k to one person and £75k to another as will depend on so many things, one example whether you live in a 2 bed terrace or a 8 bed detached and the relevant expense.
A flat rate will solve most of those issues as has limiting the LTA.
Pensions in the wider sense (planning for retirement) when used and planned correctly are vital IMHO. Giving one example, I've built a very nice pot ready for my retirement and not all in a true pension, i've been in a pension since I turned 21 some 27 years ago. My sister, for various reasons started a pension last month (she's 51!), the only other pension she has is a small school teachers one, about 4 years worth. She's suddenly released she's going to be a bit poor otherwise (and I waxed lyrical at her for many years about getting one and in particular the relevant tax benefit but she preferred to go on Safari etc).
Be interested in some people's comments. I haven't yet used my ISA for the current tax year. I am probably overweight in equities for my age, don't want to reduce that element but don't think I should increase much. My thought is buy into a corporate bond fund. I would use the L&G as I have several ISA's already on that platform and don't want to overcomplicate.
Be interested in some people's comments. I haven't yet used my ISA for the current tax year. I am probably overweight in equities for my age, don't want to reduce that element but don't think I should increase much. My thought is buy into a corporate bond fund. I would use the L&G as I have several ISA's already on that platform and don't want to overcomplicate.
If you are looking at Bonds then look at an Absolute Return fund. The one I currently like is the Jupiter Strategic Absolute Return Bond fund.
This is a good reminder that pension savings are, almost by definition, dealt with in circumstances of illness, dementia, depression or loneliness. The rules regarding tax on pensions are simply too complex, not fit for purpose and can be inhumane. They are used by wealthy people to play a harmless game with the Inland Revenue but young people are instinctively repulsed by the whole thing and have to be nudged into saving by having to opt out of government schemes.
Not a political point or aimed at the finance industry in general. And certainly not anybody here! Just felling a bit fed up this morning!
Can't argue the rules are too complicated. Worse, they keep changing them, which is very counter-productive given you are making decisions on a 30 year time frame.
Ever since Gordon Brown raided pensions, every chancellor since has worked out that by the time people realise they've been robbed, it won't affect their re-election prospects - it's too remote for people to feel at the time it happens.
I've said here many times, I think the fairest way of doing things is to allow a flat overall amount of tax relief for everyone, sufficient for people to live build a pot big enough for.a (median) income. Anything above that should be a luxury and not supported by tax relief. I'd take a similar approach re energy use and how that is taxed.
I think we are coming to the time of a flat, at least flat rate, of tax relief.
The issue I've always had on things like a median income/tax relief - that might be £20k to one person and £75k to another as will depend on so many things, one example whether you live in a 2 bed terrace or a 8 bed detached and the relevant expense.
A flat rate will solve most of those issues as has limiting the LTA.
Pensions in the wider sense (planning for retirement) when used and planned correctly are vital IMHO. Giving one example, I've built a very nice pot ready for my retirement and not all in a true pension, i've been in a pension since I turned 21 some 27 years ago. My sister, for various reasons started a pension last month (she's 51!), the only other pension she has is a small school teachers one, about 4 years worth. She's suddenly released she's going to be a bit poor otherwise (and I waxed lyrical at her for many years about getting one and in particular the relevant tax benefit but she preferred to go on Safari etc).
PS - big day tomorrow. - Premium Bonds!!!!!!!
I think that is on the cards for the Budget on Wednesday. A flat rate of 25% for all is favourite.
Also the LTA to be frozen. Currently at £1.08m which might seem a large figure but seeing as when it was introduced in 2006 it was £1.5m and went up to £1.8m before being reduced back down with the Coalition Government - which doesn't help advisers like myself trying to gauge with clients how much they should put into their pensions as over time the goalposts are not only moved but cut in half !!
Be interested in some people's comments. I haven't yet used my ISA for the current tax year. I am probably overweight in equities for my age, don't want to reduce that element but don't think I should increase much. My thought is buy into a corporate bond fund. I would use the L&G as I have several ISA's already on that platform and don't want to overcomplicate.
Whatever you do, get it into an ISA, even if for now just a cash one, can always transfer it later, but use it or lose it (the allowance).
This is a good reminder that pension savings are, almost by definition, dealt with in circumstances of illness, dementia, depression or loneliness. The rules regarding tax on pensions are simply too complex, not fit for purpose and can be inhumane. They are used by wealthy people to play a harmless game with the Inland Revenue but young people are instinctively repulsed by the whole thing and have to be nudged into saving by having to opt out of government schemes.
Not a political point or aimed at the finance industry in general. And certainly not anybody here! Just felling a bit fed up this morning!
Can't argue the rules are too complicated. Worse, they keep changing them, which is very counter-productive given you are making decisions on a 30 year time frame.
Ever since Gordon Brown raided pensions, every chancellor since has worked out that by the time people realise they've been robbed, it won't affect their re-election prospects - it's too remote for people to feel at the time it happens.
I've said here many times, I think the fairest way of doing things is to allow a flat overall amount of tax relief for everyone, sufficient for people to live build a pot big enough for.a (median) income. Anything above that should be a luxury and not supported by tax relief. I'd take a similar approach re energy use and how that is taxed.
I think we are coming to the time of a flat, at least flat rate, of tax relief.
The issue I've always had on things like a median income/tax relief - that might be £20k to one person and £75k to another as will depend on so many things, one example whether you live in a 2 bed terrace or a 8 bed detached and the relevant expense.
That's my point, Rob. It should be national median income for the tax relief. If you choose to retire in an eight bedroom detached house, then that's a luxury and tax payers shouldn't be subsidising that excess income need.
This is a good reminder that pension savings are, almost by definition, dealt with in circumstances of illness, dementia, depression or loneliness. The rules regarding tax on pensions are simply too complex, not fit for purpose and can be inhumane. They are used by wealthy people to play a harmless game with the Inland Revenue but young people are instinctively repulsed by the whole thing and have to be nudged into saving by having to opt out of government schemes.
Not a political point or aimed at the finance industry in general. And certainly not anybody here! Just felling a bit fed up this morning!
Can't argue the rules are too complicated. Worse, they keep changing them, which is very counter-productive given you are making decisions on a 30 year time frame.
Ever since Gordon Brown raided pensions, every chancellor since has worked out that by the time people realise they've been robbed, it won't affect their re-election prospects - it's too remote for people to feel at the time it happens.
I've said here many times, I think the fairest way of doing things is to allow a flat overall amount of tax relief for everyone, sufficient for people to live build a pot big enough for.a (median) income. Anything above that should be a luxury and not supported by tax relief. I'd take a similar approach re energy use and how that is taxed.
I think we are coming to the time of a flat, at least flat rate, of tax relief.
The issue I've always had on things like a median income/tax relief - that might be £20k to one person and £75k to another as will depend on so many things, one example whether you live in a 2 bed terrace or a 8 bed detached and the relevant expense.
That's my point, Rob. It should be national median income for the tax relief. If you choose to retire in an eight bedroom detached house, then that's a luxury and tax payers shouldn't be subsidising that excess income need.
What do you do then for those in Final Salary schemes ? It's always been said that its difficult for HMRC & Companies to work round a flat rate for tax relief as it comes out of gross pay & therefore tricky when you have 2 or 3 levels of tax.
I have many clients in the NHS Pension Scheme who get 40% tax relief - how do they only pay 1 flat rate. Also, there are heavy penalties for exceeding both the Annual Allowance and the Lifetime Allowance. The former being a retrospective tax as in a final salary scheme you dont generally know you've exceeded the AA until after that tax year has ended - for the NHS it's 6 months until you get any AA input figures.
This is a good reminder that pension savings are, almost by definition, dealt with in circumstances of illness, dementia, depression or loneliness. The rules regarding tax on pensions are simply too complex, not fit for purpose and can be inhumane. They are used by wealthy people to play a harmless game with the Inland Revenue but young people are instinctively repulsed by the whole thing and have to be nudged into saving by having to opt out of government schemes.
Not a political point or aimed at the finance industry in general. And certainly not anybody here! Just felling a bit fed up this morning!
Can't argue the rules are too complicated. Worse, they keep changing them, which is very counter-productive given you are making decisions on a 30 year time frame.
Ever since Gordon Brown raided pensions, every chancellor since has worked out that by the time people realise they've been robbed, it won't affect their re-election prospects - it's too remote for people to feel at the time it happens.
I've said here many times, I think the fairest way of doing things is to allow a flat overall amount of tax relief for everyone, sufficient for people to live build a pot big enough for.a (median) income. Anything above that should be a luxury and not supported by tax relief. I'd take a similar approach re energy use and how that is taxed.
I think we are coming to the time of a flat, at least flat rate, of tax relief.
The issue I've always had on things like a median income/tax relief - that might be £20k to one person and £75k to another as will depend on so many things, one example whether you live in a 2 bed terrace or a 8 bed detached and the relevant expense.
That's my point, Rob. It should be national median income for the tax relief. If you choose to retire in an eight bedroom detached house, then that's a luxury and tax payers shouldn't be subsidising that excess income need.
Not sure I agree, appreciate not 100% of the time, but hasn't the 8 bedroomed house owners more than likely paid for this 'subsidy' themselves in tax through their life? They are after all tax payers themselves? Some of the existing rules are already highly restrictive.
I spoke to Golfie today (which might be why he specifically talked about final salary) as one of my friends got promoted last tax year in the Met to Inspector. This means he's over his annual allowance by 44k and for him a big tax bill (he found out more than 6 months after the end of the tax year). This isn't some massive earner, about £58k plus bit of overtime so maybe £65k.
£25 premium bonds for me. A bit more from the stock market rises yesterday, though down on where I was in early February. Good increases in sustainable energy.
Disappointing outcome here. £25 for Mrs Chaz but bugger all for me and the boy
At least you haven't got my Father In Law crowing at you, think it must be 3 years now since he didn't have a win, £100 again this month......... he was juts born lucky.
i know you're an art collector/investor, what do you think of the NFT art market?
Tbh I don't really understand the concept, everything i buy usually gets displayed for a short period of time... feel like you're buying a limited jpeg to me.
Damien hirsts current release, you can pay with crypto and avoid VAT (short term) by leaving it in there vault.. thats probably as close to it as I'd like to get and il be jumping on before the deadline tomorrow
This is a good reminder that pension savings are, almost by definition, dealt with in circumstances of illness, dementia, depression or loneliness. The rules regarding tax on pensions are simply too complex, not fit for purpose and can be inhumane. They are used by wealthy people to play a harmless game with the Inland Revenue but young people are instinctively repulsed by the whole thing and have to be nudged into saving by having to opt out of government schemes.
Not a political point or aimed at the finance industry in general. And certainly not anybody here! Just felling a bit fed up this morning!
Can't argue the rules are too complicated. Worse, they keep changing them, which is very counter-productive given you are making decisions on a 30 year time frame.
Ever since Gordon Brown raided pensions, every chancellor since has worked out that by the time people realise they've been robbed, it won't affect their re-election prospects - it's too remote for people to feel at the time it happens.
I've said here many times, I think the fairest way of doing things is to allow a flat overall amount of tax relief for everyone, sufficient for people to live build a pot big enough for.a (median) income. Anything above that should be a luxury and not supported by tax relief. I'd take a similar approach re energy use and how that is taxed.
I think we are coming to the time of a flat, at least flat rate, of tax relief.
The issue I've always had on things like a median income/tax relief - that might be £20k to one person and £75k to another as will depend on so many things, one example whether you live in a 2 bed terrace or a 8 bed detached and the relevant expense.
That's my point, Rob. It should be national median income for the tax relief. If you choose to retire in an eight bedroom detached house, then that's a luxury and tax payers shouldn't be subsidising that excess income need.
Not sure I agree, appreciate not 100% of the time, but hasn't the 8 bedroomed house owners more than likely paid for this 'subsidy' themselves in tax through their life? They are after all tax payers themselves? Some of the existing rules are already highly restrictive.
I spoke to Golfie today (which might be why he specifically talked about final salary) as one of my friends got promoted last tax year in the Met to Inspector. This means he's over his annual allowance by 44k and for him a big tax bill (he found out more than 6 months after the end of the tax year). This isn't some massive earner, about £58k plus bit of overtime so maybe £65k.
I agree, it's our money to start with and the government apparently wants to encourage saving (though I'm not convinced they really do in a consumer society ...).
I've got mixed feelings about final salary people. On the one hand, they signed up for a career and a contract and are now being penalised in a way they didn't expect. Is it realistic to expect people to switch careers when that contract changes? Well, I think so, as that happens all the time in the private sector - you have to reinvent yourself and follow the money; and if they did that in numbers, we'd find out if the package was 'wrong' and needed to be upped. They are being subsidised by tax payers for something most tax payers wouldn't have a hope of acquiring - an index linked pension from the age of 45 for life. I've been working 30 years in the private sector and have never had access to a final salary scheme.
Cheap money is a big cause of this. But it's also, I think, people being unrealistic about how a pension can be funded. If you don't start work until you are 23, want to retire before you're sixty and hope to live until you are 85, that's maybe 35 years' earnings funding almost 30 years' income. Not too long ago, people would have worked almost 50 years to fund a handful of retirement years. Clearly we ALL are much better off than our forebears but people still like to moan. And I think that's where the next generations have got it wrong. I don't think they fully appreciate that, whatever it feels like, they are and will be much better off than the previous generations.
This is a good reminder that pension savings are, almost by definition, dealt with in circumstances of illness, dementia, depression or loneliness. The rules regarding tax on pensions are simply too complex, not fit for purpose and can be inhumane. They are used by wealthy people to play a harmless game with the Inland Revenue but young people are instinctively repulsed by the whole thing and have to be nudged into saving by having to opt out of government schemes.
Not a political point or aimed at the finance industry in general. And certainly not anybody here! Just felling a bit fed up this morning!
Can't argue the rules are too complicated. Worse, they keep changing them, which is very counter-productive given you are making decisions on a 30 year time frame.
Ever since Gordon Brown raided pensions, every chancellor since has worked out that by the time people realise they've been robbed, it won't affect their re-election prospects - it's too remote for people to feel at the time it happens.
I've said here many times, I think the fairest way of doing things is to allow a flat overall amount of tax relief for everyone, sufficient for people to live build a pot big enough for.a (median) income. Anything above that should be a luxury and not supported by tax relief. I'd take a similar approach re energy use and how that is taxed.
I think we are coming to the time of a flat, at least flat rate, of tax relief.
The issue I've always had on things like a median income/tax relief - that might be £20k to one person and £75k to another as will depend on so many things, one example whether you live in a 2 bed terrace or a 8 bed detached and the relevant expense.
That's my point, Rob. It should be national median income for the tax relief. If you choose to retire in an eight bedroom detached house, then that's a luxury and tax payers shouldn't be subsidising that excess income need.
Not sure I agree, appreciate not 100% of the time, but hasn't the 8 bedroomed house owners more than likely paid for this 'subsidy' themselves in tax through their life? They are after all tax payers themselves? Some of the existing rules are already highly restrictive.
I spoke to Golfie today (which might be why he specifically talked about final salary) as one of my friends got promoted last tax year in the Met to Inspector. This means he's over his annual allowance by 44k and for him a big tax bill (he found out more than 6 months after the end of the tax year). This isn't some massive earner, about £58k plus bit of overtime so maybe £65k.
I agree, it's our money to start with and the government apparently wants to encourage saving (though I'm not convinced they really do in a consumer society ...).
I've got mixed feelings about final salary people. On the one hand, they signed up for a career and a contract and are now being penalised in a way they didn't expect. Is it realistic to expect people to switch careers when that contract changes? Well, I think so, as that happens all the time in the private sector - you have to reinvent yourself and follow the money; and if they did that in numbers, we'd find out if the package was 'wrong' and needed to be upped. They are being subsidised by tax payers for something most tax payers wouldn't have a hope of acquiring - an index linked pension from the age of 45 for life. I've been working 30 years in the private sector and have never had access to a final salary scheme.
Cheap money is a big cause of this. But it's also, I think, people being unrealistic about how a pension can be funded. If you don't start work until you are 23, want to retire before you're sixty and hope to live until you are 85, that's maybe 35 years' earnings funding almost 30 years' income. Not too long ago, people would have worked almost 50 years to fund a handful of retirement years. Clearly we ALL are much better off than our forebears but people still like to moan. And I think that's where the next generations have got it wrong. I don't think they fully appreciate that, whatever it feels like, they are and will be much better off than the previous generations.
I explained to my mate the long term benefit of his promotion in retirement (as well as whilst still working) but for someone on that sort of salary to have to pay a double figure tax bill is a tough pill, he doesn't have a spare £10k+ especially as Gross the rise was only around £5-6k so it's near on 5 years net extra salary.
Although it sounds tough working for 40 years to fund up to another 40 years, if you start saving early enough compounding should see you alright. For me that's the most important, when you start and where you invest rather than necessarily the amount you pay (although clearly that helps), someone putting £4k in a pension at 23 for 40 years (with 7% growth and 2.5% increase in contribution a year) will have over £1m after those 40 years
This is a good reminder that pension savings are, almost by definition, dealt with in circumstances of illness, dementia, depression or loneliness. The rules regarding tax on pensions are simply too complex, not fit for purpose and can be inhumane. They are used by wealthy people to play a harmless game with the Inland Revenue but young people are instinctively repulsed by the whole thing and have to be nudged into saving by having to opt out of government schemes.
Not a political point or aimed at the finance industry in general. And certainly not anybody here! Just felling a bit fed up this morning!
Can't argue the rules are too complicated. Worse, they keep changing them, which is very counter-productive given you are making decisions on a 30 year time frame.
Ever since Gordon Brown raided pensions, every chancellor since has worked out that by the time people realise they've been robbed, it won't affect their re-election prospects - it's too remote for people to feel at the time it happens.
I've said here many times, I think the fairest way of doing things is to allow a flat overall amount of tax relief for everyone, sufficient for people to live build a pot big enough for.a (median) income. Anything above that should be a luxury and not supported by tax relief. I'd take a similar approach re energy use and how that is taxed.
I think we are coming to the time of a flat, at least flat rate, of tax relief.
The issue I've always had on things like a median income/tax relief - that might be £20k to one person and £75k to another as will depend on so many things, one example whether you live in a 2 bed terrace or a 8 bed detached and the relevant expense.
That's my point, Rob. It should be national median income for the tax relief. If you choose to retire in an eight bedroom detached house, then that's a luxury and tax payers shouldn't be subsidising that excess income need.
Not sure I agree, appreciate not 100% of the time, but hasn't the 8 bedroomed house owners more than likely paid for this 'subsidy' themselves in tax through their life? They are after all tax payers themselves? Some of the existing rules are already highly restrictive.
I spoke to Golfie today (which might be why he specifically talked about final salary) as one of my friends got promoted last tax year in the Met to Inspector. This means he's over his annual allowance by 44k and for him a big tax bill (he found out more than 6 months after the end of the tax year). This isn't some massive earner, about £58k plus bit of overtime so maybe £65k.
I agree, it's our money to start with and the government apparently wants to encourage saving (though I'm not convinced they really do in a consumer society ...).
I've got mixed feelings about final salary people. On the one hand, they signed up for a career and a contract and are now being penalised in a way they didn't expect. Is it realistic to expect people to switch careers when that contract changes? Well, I think so, as that happens all the time in the private sector - you have to reinvent yourself and follow the money; and if they did that in numbers, we'd find out if the package was 'wrong' and needed to be upped. They are being subsidised by tax payers for something most tax payers wouldn't have a hope of acquiring - an index linked pension from the age of 45 for life. I've been working 30 years in the private sector and have never had access to a final salary scheme.
Cheap money is a big cause of this. But it's also, I think, people being unrealistic about how a pension can be funded. If you don't start work until you are 23, want to retire before you're sixty and hope to live until you are 85, that's maybe 35 years' earnings funding almost 30 years' income. Not too long ago, people would have worked almost 50 years to fund a handful of retirement years. Clearly we ALL are much better off than our forebears but people still like to moan. And I think that's where the next generations have got it wrong. I don't think they fully appreciate that, whatever it feels like, they are and will be much better off than the previous generations.
Whilst I don't disagree with you regarding how lucky a public sector worker is by having a FS pension (and the cost to the taxpayer to fund it), I do disagree with a couple of your points regarding "re-inventing" yourself or "following the money".
My extensive knowledge of FS pensions is largely around the NHS scheme seeing as I've been advising Doctors for the past 20 years & I would say that once trained as a Doctor a minisicue amount would ever consider leaving to do something else.
No one can take their pension before age 55 (except footballers & other elite sportsmen). The Police could retire at 50 but I dont know if that has now changed. The NHS used to have a retirement age of 60 (55 for those in mental health) but it is now your state pension age (although that is now changing again due to the Mcloud judgement). All NHS workers used to pay in 6% of their salary (5% for cleaners & porters) but that has changed to increase on line with incomes. Maximum now is 14.2% for the highest earners - which I'm sure you'll agree is quite jump from 6% and especially as these employees are also hit with the reduction of the Personal Allowance. For one example, GP partners are self employed & being an "owner" of a practice means they have to pay the employers contribution as well. Many GP's are paying 26% of their income in pension contributions on top of 40% tax & NI. Then they find 6 months after the end of the tax year those earnings have made their pension "grow" in excess of the AA & therefore have a further tax bill - with no way of knowing before the event or being able to do anything about it apart from to leave the pension scheme entirely - which has no impact on what has happened previously.
If you want to look at why you cant get an appointment with your GP on the day you ring them up you may want to look at how many have left in the past 6 years & how many aren't now joining up.
Markets on the way to recovering all the losses that people were fretting about on here a week ago.
And to underline the point I made last week, that fund-based mug punters can't play the market short term even if they want to, here is an example. On the 22Feb I tried to "buy the dip" with some Baillie Gifford Europe, on the H-L platform. I now find that according to the graph, I bought and then it immediately lost 4% of value the next day. WTAF?
Now, can anyone give me any example of another huge retail market where it is perfectly legal to sell the goods to punters and not be able to tell them, in advance, the price you will pay for those goods????
And can anyone give me a good reason why these unit trust funds cannot be priced and traded live in real time, when ETFs apparently can? I mean, I understand that it might be relatively complicated and expensive to make the necessary changes, but I don't think that's a good reason. It's just a convenience for the loaded, skillfully lobbying industry, allowing them to fleece mug punters. Just as for many years they fleeced us with their ridiculous, and as it turns out, entirely unnecessary 5% bid-offer spread pricing.
Comments
Ever since Gordon Brown raided pensions, every chancellor since has worked out that by the time people realise they've been robbed, it won't affect their re-election prospects - it's too remote for people to feel at the time it happens.
I've said here many times, I think the fairest way of doing things is to allow a flat overall amount of tax relief for everyone, sufficient for people to live build a pot big enough for.a (median) income. Anything above that should be a luxury and not supported by tax relief. I'd take a similar approach re energy use and how that is taxed.
As Adam Smith said, there's no productive use in the capital used to rent out property but cheap money doesn't encourage bigger risks. Too many of our FTSE 100 companies look like bonds and might as well be rentals, so it's not just BTL.
Unless we get back to a sensible trade-off of risk and return, we won't build the right companies and build genuine, sustainable wealth. That's why I can't understand people's issues with Bezos. He tied his own fortune to a company, took a long-term view and continued to plow money back into the company when 'the Street' wanted him to pay dividends. We need a few Jeff Bezos over here (or more Ratcliffes, Dysons and Martins - none of them lawyers or accountants, you'll notice).
I agree that pension rules are complex but they are certainly not "inhumane" or fit for purpose and what it tells me is that more & more people need to take professional financial advice. I understand that you might want access to money when illness or unforeseen circumstances come around, but then I could say that your critical illness policy would have paid out in the first instance so no need to touch the money put by to pay for when you retire.
The issue I've always had on things like a median income/tax relief - that might be £20k to one person and £75k to another as will depend on so many things, one example whether you live in a 2 bed terrace or a 8 bed detached and the relevant expense.
A flat rate will solve most of those issues as has limiting the LTA.
Pensions in the wider sense (planning for retirement) when used and planned correctly are vital IMHO. Giving one example, I've built a very nice pot ready for my retirement and not all in a true pension, i've been in a pension since I turned 21 some 27 years ago. My sister, for various reasons started a pension last month (she's 51!), the only other pension she has is a small school teachers one, about 4 years worth. She's suddenly released she's going to be a bit poor otherwise (and I waxed lyrical at her for many years about getting one and in particular the relevant tax benefit but she preferred to go on Safari etc).
PS - big day tomorrow. - Premium Bonds!!!!!!!
Also the LTA to be frozen. Currently at £1.08m which might seem a large figure but seeing as when it was introduced in 2006 it was £1.5m and went up to £1.8m before being reduced back down with the Coalition Government - which doesn't help advisers like myself trying to gauge with clients how much they should put into their pensions as over time the goalposts are not only moved but cut in half !!
I have many clients in the NHS Pension Scheme who get 40% tax relief - how do they only pay 1 flat rate. Also, there are heavy penalties for exceeding both the Annual Allowance and the Lifetime Allowance. The former being a retrospective tax as in a final salary scheme you dont generally know you've exceeded the AA until after that tax year has ended - for the NHS it's 6 months until you get any AA input figures.
I spoke to Golfie today (which might be why he specifically talked about final salary) as one of my friends got promoted last tax year in the Met to Inspector. This means he's over his annual allowance by 44k and for him a big tax bill (he found out more than 6 months after the end of the tax year). This isn't some massive earner, about £58k plus bit of overtime so maybe £65k.
Damien hirsts current release, you can pay with crypto and avoid VAT (short term) by leaving it in there vault.. thats probably as close to it as I'd like to get and il be jumping on before the deadline tomorrow
I've got mixed feelings about final salary people. On the one hand, they signed up for a career and a contract and are now being penalised in a way they didn't expect. Is it realistic to expect people to switch careers when that contract changes? Well, I think so, as that happens all the time in the private sector - you have to reinvent yourself and follow the money; and if they did that in numbers, we'd find out if the package was 'wrong' and needed to be upped. They are being subsidised by tax payers for something most tax payers wouldn't have a hope of acquiring - an index linked pension from the age of 45 for life. I've been working 30 years in the private sector and have never had access to a final salary scheme.
Cheap money is a big cause of this. But it's also, I think, people being unrealistic about how a pension can be funded. If you don't start work until you are 23, want to retire before you're sixty and hope to live until you are 85, that's maybe 35 years' earnings funding almost 30 years' income. Not too long ago, people would have worked almost 50 years to fund a handful of retirement years. Clearly we ALL are much better off than our forebears but people still like to moan. And I think that's where the next generations have got it wrong. I don't think they fully appreciate that, whatever it feels like, they are and will be much better off than the previous generations.
Although it sounds tough working for 40 years to fund up to another 40 years, if you start saving early enough compounding should see you alright. For me that's the most important, when you start and where you invest rather than necessarily the amount you pay (although clearly that helps), someone putting £4k in a pension at 23 for 40 years (with 7% growth and 2.5% increase in contribution a year) will have over £1m after those 40 years
and watches!
My extensive knowledge of FS pensions is largely around the NHS scheme seeing as I've been advising Doctors for the past 20 years & I would say that once trained as a Doctor a minisicue amount would ever consider leaving to do something else.
No one can take their pension before age 55 (except footballers & other elite sportsmen). The Police could retire at 50 but I dont know if that has now changed. The NHS used to have a retirement age of 60 (55 for those in mental health) but it is now your state pension age (although that is now changing again due to the Mcloud judgement). All NHS workers used to pay in 6% of their salary (5% for cleaners & porters) but that has changed to increase on line with incomes. Maximum now is 14.2% for the highest earners - which I'm sure you'll agree is quite jump from 6% and especially as these employees are also hit with the reduction of the Personal Allowance. For one example, GP partners are self employed & being an "owner" of a practice means they have to pay the employers contribution as well. Many GP's are paying 26% of their income in pension contributions on top of 40% tax & NI. Then they find 6 months after the end of the tax year those earnings have made their pension "grow" in excess of the AA & therefore have a further tax bill - with no way of knowing before the event or being able to do anything about it apart from to leave the pension scheme entirely - which has no impact on what has happened previously.
If you want to look at why you cant get an appointment with your GP on the day you ring them up you may want to look at how many have left in the past 6 years & how many aren't now joining up.
And to underline the point I made last week, that fund-based mug punters can't play the market short term even if they want to, here is an example.
On the 22Feb I tried to "buy the dip" with some Baillie Gifford Europe, on the H-L platform. I now find that according to the graph, I bought and then it immediately lost 4% of value the next day. WTAF?
Now, can anyone give me any example of another huge retail market where it is perfectly legal to sell the goods to punters and not be able to tell them, in advance, the price you will pay for those goods????
And can anyone give me a good reason why these unit trust funds cannot be priced and traded live in real time, when ETFs apparently can? I mean, I understand that it might be relatively complicated and expensive to make the necessary changes, but I don't think that's a good reason. It's just a convenience for the loaded, skillfully lobbying industry, allowing them to fleece mug punters. Just as for many years they fleeced us with their ridiculous, and as it turns out, entirely unnecessary 5% bid-offer spread pricing.
There, I feel better now