Don't let facts get in the way of the narrative though.
Quote from: petejh on March 17, 2023, 10:45:53 amBut... the tax-free lump sum of 25% of total pension pot that you're allowed to withdraw from your pension has been frozen for the last decadeThat is not correct. The lump sum tax free allowance has always been 25%, with no monetary limit; I.e. it was unaffected by inflation given it's a proportion rather than an amount. The monetary limit is a new restriction implemented only in this budget.
But... the tax-free lump sum of 25% of total pension pot that you're allowed to withdraw from your pension has been frozen for the last decade
I'm not saying this is not a very nice issue to have to consider, just pointing out the oversimplification of some misses the nuances.
It's only beneficial if you stand likely to have pension benefits outside of the state pension worth over a million quid. Literally about 1% of the population. The idea that it is beneficial for "a large section of working people" is frankly utter bollocks. Bloomberg estimates there are 8,000 people with pension benefits above the LTA, that seems low to me, but even if it was ten times as many that's a v small part of the working pop.And that's not what you originally said, you said that the wealthy will pay more in tax on their pensions than they otherwise would, which is not true.
And that's not what you originally said, you said that the wealthy will pay more in tax on their pensions than they otherwise would, which is not true.
That's simply untrue though isn't it. Just look at the change in the annual pension contributions - by 50% - from £40k to £60k per year. That allows anyone on a decent middle-to-high income to contribute more to their pension. That isn't the top 1% of holders of wealth in the UK. And the direction of wages is clearly upward. Train drivers are on nearly £60k! (although they're also massively overpaid imo).
It will make big difference to anyone who sells a house and downsizes, receives a windfall, gets a good bonus one year, maybe does well from investing..., there are countless edge cases where it will be beneficial for tens of thousands of people who aren't 'the 1%'. Also the direction of wages is clearly upward which will take more and more people into this zone of being able to benefit. But more than that, why is it not a good thing?
Ali - for example the nuances of how to incentivise high-earners in crucial roles to continue working, via attractive pension systems, while trying to make this beneficial for other levels of earners as well, while trying to make all this seem 'fair' (whatever that is) for as many people in work as possible. I'm intrigued how you'd square this circle.
I simply fail to see how subsidising the pensions of the very well off is something we should be doing...There really are lots of reasons why this is a terrible idea.
For the docs: couldn't they just introduce an exemption for NHS pension schemes, or modify the NHS pension contribution system slightly (e.g. allow you to stop contributing once you hit 1m) without having to give a tax break to the bankers.
For the docs: couldn't they just introduce an exemption for NHS pension schemes, or modify the NHS pension contribution system slightly (e.g. allow you to stop contributing once you hit 1m) without having to give a tax break to the bankers. Though what really baffles me is why anyone with a £1m pension pot wouldn't have already retired long ago!
Though what really baffles me is why anyone with a £1m pension pot wouldn't have already retired long ago!
Quote from: seankenny on March 17, 2023, 03:07:27 pmI simply fail to see how subsidising the pensions of the very well off is something we should be doing...There really are lots of reasons why this is a terrible idea.Why is it a terrible idea to incentivise some of the people we need to remain in work - if those people happen to be high-earners? And how do you propose to incentivise those people differently Sean - if not by trying to make it financially worthwhile to remain working versus retiring?
As per my question to Sean, can you come up with a better way to incentivise these people?
I have argued that the benefits of this aren't restricted to the fabled '1%' as some claim
My point remains, why is people having more flexibility to contribute more into their pensions because they have more spare money than you, even if you personally can't, necessarily a bad thing in principle? Especially when as pointed out it's a tax deferral scheme not an absolute tax break