Retirement

[Edinburgh Black Cat]

I think it just depends on the scheme if they have transitional arrangements for those who just miss out.

I was born in the 80s, so don't exactly miss out by a baw hair. But the link mentions the protection applying in the scheme was open before 2021 - which is true, what I'm not clear about is whether that applies for those who aren't in the transition period from 55 to 57.

 

[elder]

In Oz you can’t touch your super/private pension until you’re 60 which is shite.

The state pension (67yrs) is also a means tested benefit - also shite

There is a threshold for the state pension where you can earn a certain amount per week without it affecting your pension. My UK pension (only ten years NI contributions) will thankfully be just under the threshold

 

[42]

I was born in the 80s, so don't exactly miss out by a baw hair. But the link mentions the protection applying in the scheme was open before 2021 - which is true, what I'm not clear about is whether that applies for those who aren't in the transition period from 55 to 57.

You won't get it, it's just for those who just miss out so there isn't a cliff edge.

However it does mean you get to put more money (because it is gross, not net, at that point) into a pension, which is basically a long-term locked savings scheme. Also has the advantage that the employer pays a contribution too.

That bit makes no difference. £1000 in gets £250 added. £1250 taxed at 20% means to get £1000 back. Or if taken directly from salary, you put £1250 in, you pay £250 less in tax. The net effect is all the same.

Where it does make a difference in taxation is that you get the benefit of future years personal allowances, 25% tax free & if on salary sacrifice get the extra benefit from NI that isn't charged on pension.

 

[Edinburgh Black Cat]

I think it just depends on the scheme if they have transitional arrangements for those who just miss out.


I don't think the tax free lumper will go as without it, it massively reduces the appeal of pensions. Minimal in to get upto personal allowance, then rest in ISA. What might happen is that they could reduce it to 20%

The other thing that'll happen (is already happening) is that they'll freeze the threshold for the tax free element and inflation will eat away at the benefit.

The LTA was a bastard of a rule. That is now gone.
But it was quietly replaced with the LSA (Lump Sum allowance) which means you 'only' get the 25% free lump sum on £1.07m.

Still sounds a hell of a lot of money but if you are in your 30s/40s and that allowance doesn't rise with inflation then it'll be eroded over the next 20+ years.

 

[Darlo1973]

Does that also apply for anyone born after 1973?

I was born after 73, reading your link my existing pension may be protected at 55 but it's unclear to me.

My understanding (and happy to be corrected as it's complex stuff) is that anyone born on or after 6 April 1973 is likely you see their minimum pension age move to their 57th birthday. However, worth double checking with your provider(s) and individual schemes may have slightly different rules

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[BILLY BUS PASS]

However it does mean you get to put more money (because it is gross, not net, at that point) into a pension, which is basically a long-term locked savings scheme. Also has the advantage that the employer pays a contribution too.

Almost certainly.

Things change though. We get jobs, we lose jobs. Robots and AI take our jobs, other opportunities arise. Products, software and websites have lifetimes. Companies go bust and others get started.

We always have to adapt to changing circumstances. The inheritance tax changes are no different. Would most people have ploughed as much as they could into private pensions if they knew any remainder would be taxed on inheritance? Probably not. Those that are so minded will now put their money somewhere else. Others (I am one of them) don't have a problem with tax on inheritance. I actually think it is a good thing as money flows back into society. If there is any left in the pot when I croak it then my children will still get a freebie. It's not the end of the world for them that it gets taxed. With any luck it will be under the threshold by then anyway, but if it's not... they still get a decent freebie. I"ve never seen the issue with inheritance tax. It makes for a fairer society.

everyone’s different mate and everyone’s circumstances are different IHT for a single person is a bigger concern than for a married person, it would be interesting to see the outcry if the IHT changes made it impossible to inherit your partners allowance.

getting people to put their savings in a ring fenced pot then change the laws around it is at best immoral for me.

 

[Edinburgh Black Cat]

everyone’s different mate and everyone’s circumstances are different IHT for a single person is a bigger concern than for a married person, it would be interesting to see the outcry if the IHT changes made it impossible to inherit your partners allowance.

getting people to put their savings in a ring fenced pot then change the laws around it is at best immoral for me.

(IMO, morally) There should really be protection for schemes already open prior to the rule change.

That's what I'm trying to get my head around for my own circumstance. I'm not totally sure whether that applies. I think the following says it does:

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You won't get it, it's just for those who just miss out so there isn't a cliff edge.

Are you sure? That link suggests the protection applies

 

[Kent_Mackem]

everyone’s different mate and everyone’s circumstances are different IHT for a single person is a bigger concern than for a married person, it would be interesting to see the outcry if the IHT changes made it impossible to inherit your partners allowance.

getting people to put their savings in a ring fenced pot then change the laws around it is at best immoral for me.

I get that. I'm not disagreeing as such. Everybody is different. Inheritance tax doesn't both me. I think it is a good thing for society, but I also understand why others have a foot-stamp about it.

My understanding (and happy to be corrected as it's complex stuff) is that anyone born on or after 6 April 1973 is likely you see their minimum pension age move to their 57th birthday. However, worth double checking with your provider(s) and individual schemes may have slightly different rules

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Plus you've been alive to see your team win a major trophy.

 

[Tuono]

That bit makes no difference. £1000 in gets £250 added. £1250 taxed at 20% means to get £1000 back.

What a dick I am, I completely missed 25% in will be equal to 20% back out.

 

[42]

(IMO, morally) There should really be protection for schemes already open prior to the rule change.

That's what I'm trying to get my head around for my own circumstance. I'm not totally sure whether that applies. I think the following says it does:

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Are you sure? That link suggests the protection applies

Just going on what they did when it went from 50 to 55, all the people who were in schemes well before didn't get that sort of protection

 

[Fletch]

You won't get it, it's just for those who just miss out so there isn't a cliff edge.


That bit makes no difference. £1000 in gets £250 added. £1250 taxed at 20% means to get £1000 back. Or if taken directly from salary, you put £1250 in, you pay £250 less in tax. The net effect is all the same.

Where it does make a difference in taxation is that you get the benefit of future years personal allowances, 25% tax free & if on salary sacrifice get the extra benefit from NI that isn't charged on pension.

if you're a higher rate tax payer then you get the tax added when goes into your pot and then you can claim more tax back when do self assessment

also IF you are only drawing down say £16k per year - 25% of that will be tax free - so £4k tax free and the remaining £12k is not high enough to warrant any income tax - therefore you can get the full ?£16k tax free . That is my understanding of it - disclaimer alert though

 

[Matt Hopkins]

also IF you are only drawing down say £16k per year - 25% of that will be tax free - so £4k tax free and the remaining £12k is not high enough to warrant any income tax - therefore you can get the full ?£16k tax free . That is my understanding of it - disclaimer alert though

Yep that is correct £16760 into drawdown = £4190 tax free then the remainder £12570 just happens to be the same as your PA so no tax paid.
So anyone taking early retirement can take X years totally tax free from their pension before their state pension kicks in, may need other savings if you need more than £1400/ month, but I'd dare say anyone thinking of retiring at say 55 has more than the pension to back them up.

 

[The Great Soprendo]

if you're a higher rate tax payer then you get the tax added when goes into your pot and then you can claim more tax back when do self assessment

also IF you are only drawing down say £16k per year - 25% of that will be tax free - so £4k tax free and the remaining £12k is not high enough to warrant any income tax - therefore you can get the full ?£16k tax free . That is my understanding of it - disclaimer alert though

This is correct if you don't take your tax free part up front.

I just hope I have sufficient marbles left by then to handle a drawdown pension... managing tax implications, investment choices etc. Can see the appeal of a simple annuity in some ways but don't want to go down that route really. Perhaps one option is to buy an annuity later on (eg at age 70 or 75) to offer some consistent income in very old age if needed, but handle it all via drawdown for the more complex earlier part where you'll want to juggle tax allowances, higher spends as a younger retiree etc.

Obviously annuity rates will be much more generous the longer you leave it, too.

 

[Select coaches]

if you're a higher rate tax payer then you get the tax added when goes into your pot and then you can claim more tax back when do self assessment

also IF you are only drawing down say £16k per year - 25% of that will be tax free - so £4k tax free and the remaining £12k is not high enough to warrant any income tax - therefore you can get the full ?£16k tax free . That is my understanding of it - disclaimer alert though

Plus up to £6k internet tax free, so worth having a bit of cash too.

 

[Matt Hopkins]

Plus up to £6k internet tax free, so worth having a bit of cash too.

Yep often overlooked that, probably be something else that changes before too long

 

[Fletch]

Plus up to £6k internet tax free, so worth having a bit of cash too.

eh?

 

[Select coaches]

eh?

Lower earners get a savings allowance up to £6k

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[Matt Hopkins]

eh?

Aye expensive internet that Better link I think

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[Select coaches]

Aye expensive internet that

Ah spotted that now

 

[WHD]

That's what I'm doing, maxing my ISA's while reducing my private pension contributions.

What is the advantage in doing that, considering you get 25% added to pension contributions?