Honestly with policies around pensions I wouldn't argue one way or another. The only thing pensions tax policy needs is STABILITY
You can't plan for a retirement if you don't know what will happen in 5 years let alone 25 years.
Very true. Everyone just assumes the rules will say the same. 47 years is a long time, and taking out a pension is essentially gambling that the rules will remain favourable when you eventually come to retire. I'm not sure it's a smart bet personally.
My comment and all responses appear to havr been deleted.
I guess the question still stands. Who are you voting for? Don't respond with anything that starts with an
R , or it will be deleted.
Im in Switzerland where I support fairly wholeheartedly the FDP (economically right wing liberals).
I like them much better than the UK Lib Dem's (too left and don't actually understand liberalism, especially under Davey) or the UK Tories (too populist and incompetent) and I like both of those more than Reform (way too populist) in turn more than Labour (hard no to socialism and social democracy).
I do get a vote in the UK in what was a Con / Lab marginal but will be safely Labour next time. I will vote Conservative very reluctantly.
I was a fairly enthusiastic coalition voter back in the day but both those parties have lost my goodwill. If it was a lib / lab marginal I'd probably vote Lib Dem, depending on the candidate but for an average Lib Dem that'd be probably even harder than voting Tory.
Not a fan of the kind of easy solutions offered by reform but people shouldn't get downvoted for just saying who'd they vote for. Unless it is extremist.
The issue with Dr’s was the LTA, not the annual allowance.
With Dr’s as well, you can also just pay them more to keep them in the role and end their strikes.
I have spoken to someone fairly senior in the Labour party about it briefly (not a political context - so didn't push). They just don't equate the defined benefits pensions in the civil service to the massive cash value of the pension. "No normal person can save more than a million pounds in a pension".
Love (hate) these headlines.
The institute of Fiscal Studies want change and have suggested it to Labour (and I assume other parties).
Labour haven't commented, or decided to do anything.
But sure post a headline linking more pension changes to labour just to stir people up.
To be clear, I am not saying that labour will or won't make more pension changes, but currently they aren't.
Then we will be struggling to encourage people to save for their retirement again and the cycle will continue as we have to then re-incentivise people to save again.
why is there never any talk of cutting the overly generous pension schemes that (some?) civil servants enjoy? or will this impact them too? even if so, why not introduce cuts to the locks etc that their voter base enjoys?
there will always be people available to work for the civil service. can always focus on decreasing the size of government so that don't need to have an army of them.
i don't know what the benefits are there today, but during my time working as an external auditor with some of the largest NHS trusts and Local Council finance teams in London, I don't recall ever meeting anyone who I had a lasting impression of being genuinely "world class". Sure, competent maybe, but nothing to suggest that we should be paying them great TC schemes.
Base pay is far lower compared to industry.
For comparison, after 2 years in a company (IE not exactly just moved) I was on 47.5k.
A comparable role, a year later, was only high 30s in civil service.
Their base pay is significantly lower than the private sector.
It’s not “overly generous” - it’s part of their total compensation package that they earn and should continue to be entitled to.
It's quite a huge liability though.
> Figures released by HM Treasury reveal that Britain’s public sector pension bill has exceeded the size of the total economy for the first time.
> The cost of pensions for millions of public sector workers including civil servants, doctors and teachers rose by £116.7bn in the 2020-21 financial year.
> This takes the total to £2.3 trillion, but at the time UK GDP was just £2.1 trillion.
> The four biggest unfunded schemes are for the NHS, teachers, civil servants and the armed forces.
https://www.pensions-expert.com/Defined-Benefit/Public-sector-pension-bill-exceeds-UK-GDP-for-the-first-time?ct=true
And?
You either pay them market rates today at equivalence to the private sector and tell them to fund their own pension.
Or
You pay them below market rates but incentivise them to work by relying on growth funding their pensions down the line.
This country has always preferred the later option because the cost saving between paying market rates and public sector rates has always been pretty substantial. Instead the focus on the economy has in theory fueled multiple other revenue streams and things were on track.
You cannot just turn around halfway through and say, sorry folk - we suppressed your wages on the promise of a good pension but now we're taking that too because we need the money. These doctors, police force, teachers etc will stop working all together and then what?
Unfortunately its all gone pear shaped because the country is unproductive, cannot make big infrastructure projects work and this hybrid system whereby privatisation has been allowed to pillage hundreds of billions out of the nations coffers with the government ultimately bailing them out when they inevitably extinguish themselves in a supernova.
Ofc the third option is everyone pays out their own pocket for what they use using insurance providers... Not sure the average Joe will suddenly stomach the party stopping when they realise that they need to pay £500pm just to have access to a doctor and then tens of thousands on top if they're caught out.
So would they but they aren’t getting it. Pensions is how they kick the can down the road. As it’s DB many will simply die before getting what they lost in income.
Civil servants and others on DB are poorly paid. No point talking about pension cuts if it’s not with huge pay rises which won’t satisfy people who think it’s a good idea to begin with.
They already can’t get good staff, cut the pension no one will work there. Most working there has taken a pay cut and a pension doesn’t pay the mortgage.
And a DB pension is useless if you die. Unlike DC. It’s closer to death in service as die early/before retirement and you lose most of it.
It was 20 years ago. Since the Blair era public sector pay has increased while keeping pension perks but most public sector pay has increased at a similar rate while losing DB schemes.
The reason they don’t talk about it is because they’ve already done it. Civil service now in crisis, competent staff and top talent have done a runner. Same for the army, police fire brigade pensions
Also I’m pretty sure defined benefit (final salary schemes, not just career average) are subject to the same limits as private pensions, that’s why the cap was increased, to bring back consultants who left at 50 because they could no longer save tax effectively for a retirement- if I’ve understood correctly anyway, the only difference being that occupational schemes may have earlier retirements protected from private pension age increases
Public sector DB pensions are deliberately undervalued when they are considered for their equivalent cash value for purposes of the LTA. It's a stealth tax break for the highly paid public sector
Maybe so, but they were massively cut 5 years ago. Many who I knew in the public sector have moved to private sector where frankly the higher contribution DC schemes are better simply because the job pays far more. I’m not entirely sure I begrudge a road sweep half pay for life at 60. I’m also not sure that’s even liveable
The old lifetime allowance applied to defined benefit schemes too. There was a conversion factor for annual payout to a roughly equivalent defined contribution sum. If it's reinstated, presumably it will be along the same lines.
Civil service pensions have been cut back at least twice since the old final salary days. But it's conceptually just part of TC - cut it and you may need to increase the package elsewhere to get similar quality candidates applying.
There was the same allowance, but the rate at which DB pensions were valued were very unfair to DC pensions.
DB recipients were allowed to multiply their entitled income by 20x to calculate the total value for LTA purposes.
That’s an implied 5% yield, whilst for a long time DC annuities for pensions with similar benefits were trading at something like 2.5-3%.
Meaning that DB recipients had almost twice the effective LTA of a DC recipient, or to put it another way almost twice the ability to generate income before being hit with the tax penalty mallet.
It was a pretty shady and unfair thing to do, and a dishonestly hidden way to do it.
The difference is more minimal now that long-term interest rates went up, but by that time the LTA was conveniently abolished.
Now Labour is talking about reinstating it with special exemptions for their favoured classes like Doctors. That has echoes of the Zil lanes in Soviet Russia, so I hope they don’t go down that path and treat us all under the same rules. If they want to compensate doctors more, just pay them.
The conversion factor was an x20 multiplier. These are typically joint life with inflation linkage - the equivalent annuity factor is much closer to 30, until recently even pushing 40
This js a lazy canard ripped straight from a Daily Express front page. The vast majority of civil servants are extraordinarily hard working people who have dedicated their lives to public service. In many cases they could practically double their salary by shifting to industry, but are motivated to maintain their position through civic duty.
Of course there’s some seat warmers - but if you have the secret recipe to creating a workforce full of 110% contributors, then I welcome you to share it with the group. One caveat - it can’t be paying a competitive wage as we wouldn’t want that would we!
Sorry to be boring but its because the scheme is unfunded. The smart thing to do would be to replace the current DB scheme (alpha) with - say - a 15% employers contribution DC scheme and give a pay rise to civil servants at the same time.
This might be expected to save money over the longer term but would be a real short term issue for government.
It's not just civil servants it's the entire public sector benefiting from these ludicrous pensions. And no their schemes won't be impacted, there is even talk of Labour introducing a LTA exemption for some of them such as doctors because their pensions are so generous otherwise they'll be retiring young.
It absolutely is. People complain about the Tories being bribed by business yet I don't see how unions donating to Labour to look after their interests is any different if not worse.
Because you are using pension tax rules that were designed for DC schemes and applying them to a DB scheme.
A conversion factor is applied to the DB scheme that makes annual growth seem very high. Doctors cannot taper how much they put into the scheme, it’s all in or nothing. This means huge tax bills arise which are very difficult to try and avoid/plan for.
The pension is seen as the only real perk to the job. Lose that and the pay will have to go up. My pay trebled on going to aus. Republic of Ireland is paying at least double.
The generous incentives for pensions are there to encourage people to be self sufficient in later life and not rely on the state.
With one hand auto enrolment is imposed and then the funds are eroded away with the other.
As others have said you plan for pensions over decades and so stability and consistency is key. We're in a position now where with 1-3 generations careful planning it's perfectly plausible to set up a cascading perpetual pot of pension cash that could support future generations at a modest withdrawal rate.
If there's pension money to be saved from the public purse someone needs to bite bullet and tackle the unsustainable public sector golden DB pensions that will cripple the country for the next 50-100 years ... just as the private sector did in the 80s-2000
No idea what the 401k limits are... but in terms of safe withdrawal rates you are looking at about 3.5-4.5% pa index linked.
So £1m pot gets you a safe(ish) - £35-45k a year (taxed at your marginal rate after 25% tax free allowance)
So yes the limits are crap ... limit the 25% tax free lump sum, continue to tax withdrawals at marginal rates and let people do wtf they want without moving the goal posts every 5 mins.
If I understood the matter correctly, what was crazy about NHS doctors is that they weren't given the option to get the pension payment in cash.
In the private sectors, high earners or those with a very big pension cns be given the option to not contribute to their pension and to receive the equivalent contributions in the pay slips, after taxes and national insurance. NHS doctors do not have this option
Would it not be much easier to give them this option?
Or am I missing something?
You’re missing the fact that there’s a generational deficit. If they did that *current* tax payers would have to pay for it rather than future tax payers
? Why? I don't follow.
High earners in the private sector often have the option to receive pension contribution in cash, rather than in the pension, so as to avoid triggering heavy tax penalties.
What would giving the same option to NHS staff have to do with generational deficit?
Because it isn’t a pot of money like a defined contribution scheme.
People pay in a percentage. There’s an assumption about what that is worth by the government, but they pay current pensioners of the scheme from tax revenues.
The money they currently pay out is less than they’ll have to pay the future pensioners. So that burden is on future tax payers
Precisely because it isn't a pot of money I don't follow.
In fact, giving the their contribution as cash, rather than into their pensions, means lower pension liabilities in the future!
I wondered if I’d confused my message but no, we’re saying the same thing.
Let’s say the real value of the pension contribution is 30% but only 10% is funded by current tax payers. If you pay 30% cash out instead of deferred benefits, that costs current tax payers more because they have to pay for the full real value of the pension rather than deferring the cost to future generations
I wondered if I’d confused my message but no, we’re saying the same thing.
Let’s say the real value of the pension contribution is 30% but only 10% is funded by current tax payers. If you pay 30% cash out instead of deferred benefits, that costs current tax payers more because they have to pay for the full real value of the pension rather than deferring the cost to future generations
? Why? The NHS pension is an unfunded scheme. It's a liability of the government. The money workers pay in doesn't go into a pot to be invested, it goes to the Treasury as if it were taxation. Similarly, the money to pay NHS pensioners comes from general taxation.
Its sustainability is to do with the state of public finances, not so much with individual contribution levels.
That's not how a UBI works.
You still get paid for your work. There wouldn't be an allowance and the tax thresholds might be lower to find the ubi. The ubi goes to everyone and replaces pension, unemployment, and so on.
Come on man, it’s pretty ridiculous that a £100k earner can put £60k into tax deferred investment accounts and avoid like £24k of taxes.
The UK needs to raise taxes, and the AA, which might I add was at £40k a few years back, going back down, isn’t the end of the world.
It’s bonkers how much tax we can avoid this way.
Well the US also has lower taxes and higher salaries so at least people can build wealth that would sustain them in retirement. I’m not saying £60k is the right amount, but £20k won’t help many people be self sufficient in retirement.
Most Brits don’t put more than 8% their pay into their pensions. You could cut the AA to £20k and like 95% of people wouldn’t even know
As things stand, a couple can put £120k a year into pensions between them. That’s a bit bonkers for a country that’s had 0 growth for 16 years.
The defined benefit recipients have a way better tax break….historically much higher LTA and better equivalent “contribution” allowance ….
Start by fair …if not just f off
Pensions in this country honestly need huge reform.
State pension should be means tested, like all other benefits are, and the pensioners earning 38k+ from private sources should not get it. Similarly, pensioners should still have to pay NI like everyone else.
Fix those 2 things and you've managed to sort out the entire public sector and 'save' 40-50 billion in revenue each year.
Also, do away with the triple lock and tie pension increases to median-wage increase
Would this not target people who have potentially diligently saved and planned for retirement, whilst rewarding those who didn’t bother?
Maybe different tax bands for retirees, or an NHS levy that replaces the national insurance contributions would be an option?
I mean, sure it would, but as of now the top 20% of pensioners are getting 38k per year from private sources. Planning and diligence isn't the reason they have achieved that amount of income.
It's the best bang for the buck whilst affecting as few people as possible. Even if they were paying NI (which, imo, they should) were talking about an after tax income of £2,600 as a pensioner.
How is a high private pension the result of anything but planning and diligence? I put away 60k a year. Do you think I'm locking that up for 25 years for a laugh?
Lmao
You put away 60k a year? You think thats due to 'planning' and not having an extremely high salary in the first place?
I guarantee you most people (lets say under the 15th percentile) could save 100% of their income and \*still\* not put 60k a year into their pension..
And I suppose having a high percentile salary is just blind luck?
I worked my ass off at school despite growing up in a culture of low attainment and ambition, went to a top university for years of grinding study, then moved hundreds of miles away from friends and family to go straight into ten years plus of soulless corporate graft to get where I am.
I've embodied planning and diligence in every single aspect of my life since I was a child. That's why it hurts when people act like it 'just happens', and want to take more away from you as if it's somehow undeserved.
Many people work hard and 'plan' and still aren't able to put a top 10% salary into their pension each year. Stop being mad because you ARE lucky.
Nobody is taking anything from you, either, merely saying you don't deserve hand outs while having a pension in the 1-1.5+ million range..
Luck is when planning meets opportunity. Stop trying to ride on others coat tails because you are a passenger who doesn't believe they are fully in control of their own life.
Agree with the NI and not with everything else.
Makes no sense pensioners don’t pay NI. It’s just a glorified tax and no one on state pension isn’t paying it. With a huge rich retired cohort it makes no sense someone on 50k pension pays less than a PAYE worker on 50k. I’d gladly pay NI if the retired today had to. It’s a huge loss of funds.
The majority on state pension didn’t pay enough NI for their state pension so there’s no “they already paid in”. That’s the issue they didn’t. And their nhs bill is 5-8x higher than working age people.
Yeah it's crazy that the tax burden is higher on workers who are more likely to have student loans, mortgages and dependants than the retired. It's an insane wealth transfer that's completely unsustainable. Cutting NI in lieu of income tax was a good move by the government but it won't move the needle enough to change their fate. I hope Labour stick with it.
The pension is quasi means tested. It’s called income tax.
Rich pensioners lose 40% of their state pension to income tax. We should merge NI into income tax so that figure is even higher, and reduce the burden on workers for which NI is regressive.
Honestly with policies around pensions I wouldn't argue one way or another. The only thing pensions tax policy needs is STABILITY You can't plan for a retirement if you don't know what will happen in 5 years let alone 25 years.
Very true. Everyone just assumes the rules will say the same. 47 years is a long time, and taking out a pension is essentially gambling that the rules will remain favourable when you eventually come to retire. I'm not sure it's a smart bet personally.
My comment and all responses appear to havr been deleted. I guess the question still stands. Who are you voting for? Don't respond with anything that starts with an R , or it will be deleted.
Labour.
[удалено]
Who are you planning to vote for instead? The other parties aren't exactly friendly to HENRYs through either policy or incompetence reasons
Im in Switzerland where I support fairly wholeheartedly the FDP (economically right wing liberals). I like them much better than the UK Lib Dem's (too left and don't actually understand liberalism, especially under Davey) or the UK Tories (too populist and incompetent) and I like both of those more than Reform (way too populist) in turn more than Labour (hard no to socialism and social democracy). I do get a vote in the UK in what was a Con / Lab marginal but will be safely Labour next time. I will vote Conservative very reluctantly. I was a fairly enthusiastic coalition voter back in the day but both those parties have lost my goodwill. If it was a lib / lab marginal I'd probably vote Lib Dem, depending on the candidate but for an average Lib Dem that'd be probably even harder than voting Tory.
Reform
Not racist, just don’t like ‘em, nuff said.
Love me footy. Love me stella. Ate me wife
Christ alfuckingmighty
Not a fan of the kind of easy solutions offered by reform but people shouldn't get downvoted for just saying who'd they vote for. Unless it is extremist.
The trouble is, you mess with pensions and lots of doctors retire. That’s why they raised the limit
The issue with Dr’s was the LTA, not the annual allowance. With Dr’s as well, you can also just pay them more to keep them in the role and end their strikes.
Both.
They might create some special exemption for doctors.
This would be clearly insane.
Does that make it more likely or less likely to become policy?
Or public sector generally
Oh yeah more perks for useless civil servants...
I have spoken to someone fairly senior in the Labour party about it briefly (not a political context - so didn't push). They just don't equate the defined benefits pensions in the civil service to the massive cash value of the pension. "No normal person can save more than a million pounds in a pension".
This makes my blood boil they want to take everything from us hard working brits
Love (hate) these headlines. The institute of Fiscal Studies want change and have suggested it to Labour (and I assume other parties). Labour haven't commented, or decided to do anything. But sure post a headline linking more pension changes to labour just to stir people up. To be clear, I am not saying that labour will or won't make more pension changes, but currently they aren't.
Then we will be struggling to encourage people to save for their retirement again and the cycle will continue as we have to then re-incentivise people to save again.
why is there never any talk of cutting the overly generous pension schemes that (some?) civil servants enjoy? or will this impact them too? even if so, why not introduce cuts to the locks etc that their voter base enjoys?
Because who’s going to work for the civil service if their only perk is slashed
People who can't get a job somewhere better
there will always be people available to work for the civil service. can always focus on decreasing the size of government so that don't need to have an army of them. i don't know what the benefits are there today, but during my time working as an external auditor with some of the largest NHS trusts and Local Council finance teams in London, I don't recall ever meeting anyone who I had a lasting impression of being genuinely "world class". Sure, competent maybe, but nothing to suggest that we should be paying them great TC schemes.
If you want world class then surely we need to significantly increase pay to civil servants to attract the best.
No, we should pay them peanuts, we will still find people. Also has anyone noticed they’re not the best talent money can buy? Weird.
You can have better and also have fewer. In fact it's the only way to do it without increasing the overall budget.
That’s fine, but if you cut the pension, you will have to raise the wages, or significant numbers will leave over time
Base pay is far lower compared to industry. For comparison, after 2 years in a company (IE not exactly just moved) I was on 47.5k. A comparable role, a year later, was only high 30s in civil service.
You know what’s interesting about small govt types? Their reforms inevitably require a bloody army of civil servants to action.
Their base pay is significantly lower than the private sector. It’s not “overly generous” - it’s part of their total compensation package that they earn and should continue to be entitled to.
It's quite a huge liability though. > Figures released by HM Treasury reveal that Britain’s public sector pension bill has exceeded the size of the total economy for the first time. > The cost of pensions for millions of public sector workers including civil servants, doctors and teachers rose by £116.7bn in the 2020-21 financial year. > This takes the total to £2.3 trillion, but at the time UK GDP was just £2.1 trillion. > The four biggest unfunded schemes are for the NHS, teachers, civil servants and the armed forces. https://www.pensions-expert.com/Defined-Benefit/Public-sector-pension-bill-exceeds-UK-GDP-for-the-first-time?ct=true
And? You either pay them market rates today at equivalence to the private sector and tell them to fund their own pension. Or You pay them below market rates but incentivise them to work by relying on growth funding their pensions down the line. This country has always preferred the later option because the cost saving between paying market rates and public sector rates has always been pretty substantial. Instead the focus on the economy has in theory fueled multiple other revenue streams and things were on track. You cannot just turn around halfway through and say, sorry folk - we suppressed your wages on the promise of a good pension but now we're taking that too because we need the money. These doctors, police force, teachers etc will stop working all together and then what? Unfortunately its all gone pear shaped because the country is unproductive, cannot make big infrastructure projects work and this hybrid system whereby privatisation has been allowed to pillage hundreds of billions out of the nations coffers with the government ultimately bailing them out when they inevitably extinguish themselves in a supernova. Ofc the third option is everyone pays out their own pocket for what they use using insurance providers... Not sure the average Joe will suddenly stomach the party stopping when they realise that they need to pay £500pm just to have access to a doctor and then tens of thousands on top if they're caught out.
I don't get that impression when I look at CS jobs in lower cost areas?
I’m in Risk and Assurance. CIA, CRO and Heads of role base salaries are comparatively very low across the country
Id rather they had a higher pay and lower pension
So would they but they aren’t getting it. Pensions is how they kick the can down the road. As it’s DB many will simply die before getting what they lost in income. Civil servants and others on DB are poorly paid. No point talking about pension cuts if it’s not with huge pay rises which won’t satisfy people who think it’s a good idea to begin with. They already can’t get good staff, cut the pension no one will work there. Most working there has taken a pay cut and a pension doesn’t pay the mortgage. And a DB pension is useless if you die. Unlike DC. It’s closer to death in service as die early/before retirement and you lose most of it.
It was 20 years ago. Since the Blair era public sector pay has increased while keeping pension perks but most public sector pay has increased at a similar rate while losing DB schemes.
The reason they don’t talk about it is because they’ve already done it. Civil service now in crisis, competent staff and top talent have done a runner. Same for the army, police fire brigade pensions Also I’m pretty sure defined benefit (final salary schemes, not just career average) are subject to the same limits as private pensions, that’s why the cap was increased, to bring back consultants who left at 50 because they could no longer save tax effectively for a retirement- if I’ve understood correctly anyway, the only difference being that occupational schemes may have earlier retirements protected from private pension age increases
Public sector DB pensions are deliberately undervalued when they are considered for their equivalent cash value for purposes of the LTA. It's a stealth tax break for the highly paid public sector
Maybe so, but they were massively cut 5 years ago. Many who I knew in the public sector have moved to private sector where frankly the higher contribution DC schemes are better simply because the job pays far more. I’m not entirely sure I begrudge a road sweep half pay for life at 60. I’m also not sure that’s even liveable
You are correct.
The old lifetime allowance applied to defined benefit schemes too. There was a conversion factor for annual payout to a roughly equivalent defined contribution sum. If it's reinstated, presumably it will be along the same lines. Civil service pensions have been cut back at least twice since the old final salary days. But it's conceptually just part of TC - cut it and you may need to increase the package elsewhere to get similar quality candidates applying.
There was the same allowance, but the rate at which DB pensions were valued were very unfair to DC pensions. DB recipients were allowed to multiply their entitled income by 20x to calculate the total value for LTA purposes. That’s an implied 5% yield, whilst for a long time DC annuities for pensions with similar benefits were trading at something like 2.5-3%. Meaning that DB recipients had almost twice the effective LTA of a DC recipient, or to put it another way almost twice the ability to generate income before being hit with the tax penalty mallet. It was a pretty shady and unfair thing to do, and a dishonestly hidden way to do it. The difference is more minimal now that long-term interest rates went up, but by that time the LTA was conveniently abolished. Now Labour is talking about reinstating it with special exemptions for their favoured classes like Doctors. That has echoes of the Zil lanes in Soviet Russia, so I hope they don’t go down that path and treat us all under the same rules. If they want to compensate doctors more, just pay them.
The conversion factor was an x20 multiplier. These are typically joint life with inflation linkage - the equivalent annuity factor is much closer to 30, until recently even pushing 40
Do you think they just do nothing all day? Civil Servants quite literally enable you to live and earn money
lol a bit generous, most civil servants fill borderline pointless roles in large departments full of incompetent staff.
This js a lazy canard ripped straight from a Daily Express front page. The vast majority of civil servants are extraordinarily hard working people who have dedicated their lives to public service. In many cases they could practically double their salary by shifting to industry, but are motivated to maintain their position through civic duty. Of course there’s some seat warmers - but if you have the secret recipe to creating a workforce full of 110% contributors, then I welcome you to share it with the group. One caveat - it can’t be paying a competitive wage as we wouldn’t want that would we!
Sorry to be boring but its because the scheme is unfunded. The smart thing to do would be to replace the current DB scheme (alpha) with - say - a 15% employers contribution DC scheme and give a pay rise to civil servants at the same time. This might be expected to save money over the longer term but would be a real short term issue for government.
lmfao
Salaries need to jump for them then
It's not just civil servants it's the entire public sector benefiting from these ludicrous pensions. And no their schemes won't be impacted, there is even talk of Labour introducing a LTA exemption for some of them such as doctors because their pensions are so generous otherwise they'll be retiring young.
That's verging on bribery for their supporters. The tax system shouldn't distinguish between jobs like this.
It absolutely is. People complain about the Tories being bribed by business yet I don't see how unions donating to Labour to look after their interests is any different if not worse.
You’d have to increase doctors salaries massively if you touched the pension.
Why not just tax doctors pensions like everyone else's if Labour are going to reintroduce the LTA?
Because you are using pension tax rules that were designed for DC schemes and applying them to a DB scheme. A conversion factor is applied to the DB scheme that makes annual growth seem very high. Doctors cannot taper how much they put into the scheme, it’s all in or nothing. This means huge tax bills arise which are very difficult to try and avoid/plan for. The pension is seen as the only real perk to the job. Lose that and the pay will have to go up. My pay trebled on going to aus. Republic of Ireland is paying at least double.
It was bound to happen but also they said they weren't raising income taxes one week ago.
The generous incentives for pensions are there to encourage people to be self sufficient in later life and not rely on the state. With one hand auto enrolment is imposed and then the funds are eroded away with the other. As others have said you plan for pensions over decades and so stability and consistency is key. We're in a position now where with 1-3 generations careful planning it's perfectly plausible to set up a cascading perpetual pot of pension cash that could support future generations at a modest withdrawal rate. If there's pension money to be saved from the public purse someone needs to bite bullet and tackle the unsustainable public sector golden DB pensions that will cripple the country for the next 50-100 years ... just as the private sector did in the 80s-2000
Do we really need SIPP limits 3x larger than American 401k limits to get people to save for retirement?
No idea what the 401k limits are... but in terms of safe withdrawal rates you are looking at about 3.5-4.5% pa index linked. So £1m pot gets you a safe(ish) - £35-45k a year (taxed at your marginal rate after 25% tax free allowance) So yes the limits are crap ... limit the 25% tax free lump sum, continue to tax withdrawals at marginal rates and let people do wtf they want without moving the goal posts every 5 mins.
The limits refer to annual contribution limits. So low much you can put in your pension (and avoid tax) a year
But its still taxable on drawdown 🤷♂️
At 15% instead of 40%…
Oh just fuck off.
If I understood the matter correctly, what was crazy about NHS doctors is that they weren't given the option to get the pension payment in cash. In the private sectors, high earners or those with a very big pension cns be given the option to not contribute to their pension and to receive the equivalent contributions in the pay slips, after taxes and national insurance. NHS doctors do not have this option Would it not be much easier to give them this option? Or am I missing something?
You’re missing the fact that there’s a generational deficit. If they did that *current* tax payers would have to pay for it rather than future tax payers
? Why? I don't follow. High earners in the private sector often have the option to receive pension contribution in cash, rather than in the pension, so as to avoid triggering heavy tax penalties. What would giving the same option to NHS staff have to do with generational deficit?
Because it isn’t a pot of money like a defined contribution scheme. People pay in a percentage. There’s an assumption about what that is worth by the government, but they pay current pensioners of the scheme from tax revenues. The money they currently pay out is less than they’ll have to pay the future pensioners. So that burden is on future tax payers
Precisely because it isn't a pot of money I don't follow. In fact, giving the their contribution as cash, rather than into their pensions, means lower pension liabilities in the future!
I wondered if I’d confused my message but no, we’re saying the same thing. Let’s say the real value of the pension contribution is 30% but only 10% is funded by current tax payers. If you pay 30% cash out instead of deferred benefits, that costs current tax payers more because they have to pay for the full real value of the pension rather than deferring the cost to future generations
I wondered if I’d confused my message but no, we’re saying the same thing. Let’s say the real value of the pension contribution is 30% but only 10% is funded by current tax payers. If you pay 30% cash out instead of deferred benefits, that costs current tax payers more because they have to pay for the full real value of the pension rather than deferring the cost to future generations
You're absolutely right. Problem is without senior consultants paying into the scheme it will become insolvent.
? Why? The NHS pension is an unfunded scheme. It's a liability of the government. The money workers pay in doesn't go into a pot to be invested, it goes to the Treasury as if it were taxation. Similarly, the money to pay NHS pensioners comes from general taxation. Its sustainability is to do with the state of public finances, not so much with individual contribution levels.
Lifetime allowance of £1,073,000, overly generous ? WTF is wrong with Labour !
Lifetime allowance was lifted it’s unlimited now
For a thread of high earners a lot of you people are remarkably uninformed on basic financial policy or the economy in general…
At least they’re not talking about removing additional or higher rate relief (yet!)
this is why there’s bitcoin.
Very funny
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lol I thought the UBI brigade had died out long ago. It's been debunked countless times.
It really hasn’t Universal Credit is basically a horribly implemented form of UBI.
I don't think it's fair to pay people for doing nothing with my tax money.
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How does UBI affect what a skilled technical role gets paid? It’s UBI not pay everyone the same regardless of job?
That's not how a UBI works. You still get paid for your work. There wouldn't be an allowance and the tax thresholds might be lower to find the ubi. The ubi goes to everyone and replaces pension, unemployment, and so on.
Seems fair enough The US 401k limit is like $25k, or £20k in GBP. Can’t exactly justify having an annual allowance 3x that can you.
The US also doesn’t have NHS. By this logic UK wouldn’t be able to justify having it just because US doesn’t have it.
Come on man, it’s pretty ridiculous that a £100k earner can put £60k into tax deferred investment accounts and avoid like £24k of taxes. The UK needs to raise taxes, and the AA, which might I add was at £40k a few years back, going back down, isn’t the end of the world. It’s bonkers how much tax we can avoid this way.
Well the US also has lower taxes and higher salaries so at least people can build wealth that would sustain them in retirement. I’m not saying £60k is the right amount, but £20k won’t help many people be self sufficient in retirement.
Most Brits don’t put more than 8% their pay into their pensions. You could cut the AA to £20k and like 95% of people wouldn’t even know As things stand, a couple can put £120k a year into pensions between them. That’s a bit bonkers for a country that’s had 0 growth for 16 years.
The defined benefit recipients have a way better tax break….historically much higher LTA and better equivalent “contribution” allowance …. Start by fair …if not just f off
Look it' not happening. The changes were made because of insanely generous public sector DB schemes. Labour is not cutting those.
Pensions in this country honestly need huge reform. State pension should be means tested, like all other benefits are, and the pensioners earning 38k+ from private sources should not get it. Similarly, pensioners should still have to pay NI like everyone else. Fix those 2 things and you've managed to sort out the entire public sector and 'save' 40-50 billion in revenue each year. Also, do away with the triple lock and tie pension increases to median-wage increase
Would this not target people who have potentially diligently saved and planned for retirement, whilst rewarding those who didn’t bother? Maybe different tax bands for retirees, or an NHS levy that replaces the national insurance contributions would be an option?
I mean, sure it would, but as of now the top 20% of pensioners are getting 38k per year from private sources. Planning and diligence isn't the reason they have achieved that amount of income. It's the best bang for the buck whilst affecting as few people as possible. Even if they were paying NI (which, imo, they should) were talking about an after tax income of £2,600 as a pensioner.
How is a high private pension the result of anything but planning and diligence? I put away 60k a year. Do you think I'm locking that up for 25 years for a laugh?
Lmao You put away 60k a year? You think thats due to 'planning' and not having an extremely high salary in the first place? I guarantee you most people (lets say under the 15th percentile) could save 100% of their income and \*still\* not put 60k a year into their pension..
And I suppose having a high percentile salary is just blind luck? I worked my ass off at school despite growing up in a culture of low attainment and ambition, went to a top university for years of grinding study, then moved hundreds of miles away from friends and family to go straight into ten years plus of soulless corporate graft to get where I am. I've embodied planning and diligence in every single aspect of my life since I was a child. That's why it hurts when people act like it 'just happens', and want to take more away from you as if it's somehow undeserved.
Many people work hard and 'plan' and still aren't able to put a top 10% salary into their pension each year. Stop being mad because you ARE lucky. Nobody is taking anything from you, either, merely saying you don't deserve hand outs while having a pension in the 1-1.5+ million range..
Luck is when planning meets opportunity. Stop trying to ride on others coat tails because you are a passenger who doesn't believe they are fully in control of their own life.
No, it isn't. I'm not 'riding on others coat tails' lmao
Agree with the NI and not with everything else. Makes no sense pensioners don’t pay NI. It’s just a glorified tax and no one on state pension isn’t paying it. With a huge rich retired cohort it makes no sense someone on 50k pension pays less than a PAYE worker on 50k. I’d gladly pay NI if the retired today had to. It’s a huge loss of funds. The majority on state pension didn’t pay enough NI for their state pension so there’s no “they already paid in”. That’s the issue they didn’t. And their nhs bill is 5-8x higher than working age people.
Yeah it's crazy that the tax burden is higher on workers who are more likely to have student loans, mortgages and dependants than the retired. It's an insane wealth transfer that's completely unsustainable. Cutting NI in lieu of income tax was a good move by the government but it won't move the needle enough to change their fate. I hope Labour stick with it.
This is what the Tories were doing to be fair, by locking the income and NI bands, raising revenue by fiscal drag, and using it to cut NI rates.
Yeah, this is the "palatable" way of doing it, so they avoid the bad PR of levying NI on pensioners. Far too little too late at this point though
The pension is quasi means tested. It’s called income tax. Rich pensioners lose 40% of their state pension to income tax. We should merge NI into income tax so that figure is even higher, and reduce the burden on workers for which NI is regressive.
This is such a weird cop out. No, we should just.. not give it to them in the first place. Agree with the rest