Government scraps pension cap

[motorbiking]

Finally we see a government strategy that encourages people to save for their retirement and not become a burden on the state.

 

[charliegolf]

Yes, it might help keep doctors and other high earners in the job market*. What's it mean to people earning less than say, £50k? If they could put 10% away a year for 40 years (ignoring the fact that not many start on £50k and stay there) they'd be nowhere near the old cap.

Or it will encourage them to pile in the dosh and leave at 50.

 

[ellal]

Finally we see a government strategy that encourages people to save for their retirement and not become a burden on the state.

Was there any move on not taxing the 75% that people wishing to cash in if taking the whole amount of their meagre pensions savings in one go?

Which many are having to do just to get by!

It's a concession to the more well off, as is the tory wont...

I'll personally benefit, but that doesn't make it right!

 

[motorbiking]

Someone on 50k with an employer matching contributions, getting 5% pay rise each year and 8% pension growth would exceed the old cap.

 

[ellal]

Someone on 50k with an employer matching contributions, getting 5% pay rise each year and 8% pension growth would exceed the old cap.

Care to tell us what the average UK wage is?

Or indeed what the minimum wage in the UK is?

Can you tell us whether they can afford to pay in to a pension fund at all?

 

[JP_]

Finally we see a government strategy that encourages people to save for their retirement and not become a burden on the state.

It only benefits those that have million plus pension funds though. Most people don't have that luxury.
It's just another way tor rich people to save a load of cash away without paying tax. Benefits those approaching retirement, such as wealthy politicians and their friends on the boards of big business.

 

[motorbiking]

You do both understand that tax is paid when the pot is converted to an income?

Previously we had an unfair system where older people could apply for cap protection while younger people couldn’t.

Now you can save as you want and pay tax when you receive the income.

 

[JohnD]

There are tremendous benefits to anyone lucky enough to be able to build up a big pension fund.

This is an increase in benefits for people who already have over a million and can afford still more.

Totally irrelevant to the ordinary working man or woman.

 

[JohnD]

You do both understand that tax is paid when the pot is converted to an income?

Some of it.

"You can usually take up to 25% of the amount built up in any pension as a tax-free lump sum. The tax-free lump sum doesn’t affect your Personal Allowance."

Another benefit is that you can avoid inheritance tax. This is particularly useful to our more prosperous citizens, but quite irrelevant to the ordinary working man or woman.

"In most cases, any pensions you have can be passed outside of your estate and so won't be subject to Inheritance Tax."

 

[JohnD]

You do both understand that tax is paid when the pot is converted to an income?

A very popular ploy is to pay into your pension when you are paying a high rate of tax. Quite likely, your taxable income will be lower once you retire. So when you put money in, you avoid high tax, and when you take it out, you pay low tax. And on some of it (see above) no tax at all, which might help you stay in a lower tax band

A big advantage if you are lucky enough to have lots of money. Quite irrelevant to the ordinary working man or woman

 

[JohnD]

a burden on the state.

People who already have well over a million, you mean?

 

[JohnD]

Finally we see a government strategy that encourages people to save for their retirement and not become a burden on the state.

How will this help the poor? Do they have well over a million in their pensions?

 

[Mottie]

Totally irrelevant to the ordinary working man or woman.

I guess some in this thread consider that they are not an ordinary working man or woman.

 

[diy_fun_uk]

As with many things relating to income and/or government policy and legislation that touches it, it often boils down to jealousy, and no I'm not immune from having those feelings myself on occasion (before anyone helpfully tries to point that out!)

Someone with a meagre pension pot might moan and groan about those with a large pension pot ... however in reality they would also LOVE a large pension pot and if they had one would be keen to defend it and their right to have it.

Dad: It's absolutely disgusting that tier 1 footballers earn hundreds of thousands a WEEK!
(fast forward a decade, his now 21 year old son is playing for Man United first team)
Dad: Son, I demand you ask for a 90% pay cut, your salary is OBSCENE!!!

Where we end up on the financial scale is down to various factors, however I've never envied or begrudged those who have more than me money wise.

 

[JohnD]

You don't have to be jealous to think that giving extra tax breaks to the rich

Is no help to the poor.

And will not prevent them being being a burden in old age.

What next?

Free doughnut handouts to the obese?