Government scraps pension cap

[JohnD]

I disagree. One of the main drivers of this policy is doctors, so absolutely not a red herring.

Wrong. The doctors are used in publicity as an excuse.

 

[JohnD]

eg to put money into a pension to reduce the demand on the state

A person who already has well over a million in his pension scheme, and much more cash burning a hole in his pocket, is not among those who need extra help to protect him from poverty. If he has another million or more ready to lob in, he does not "need" tax benefits.

There are plenty of people in far greater need.

 

[JohnD]

As for there being no relationship between being rich and being skilled, that is an either naive or poorly thought through concept. more etc etc.

I said "There is no particular relationship between being rich and working hard or being skilled"

Do you think Boris Johnson works harder than a care assistant on minimum wage?

Do you think Paris Hilton is more skilled than a clock repairer?

Do you think Gary Lineker works more hours than a dairy farmer?

 

[motorbiking]

Do you think a tube driver deserves a bigger pension than a pilot? Do you think it would be fair for him to pay less tax on his bigger pension?

 

[JohnD]

Do you think a tube driver deserves a bigger pension than a pilot?

That's funny, you haven't come up with any figures. Why's that?

Pensions are not calculated on what people "deserve". If they did, Boris Johnson would get far less than an ambulanceman.

A tube driver's pension accrues at 1/60th per year of pensionable earnings.

If he retires at 60 having done 30 years he would get 50% of final salary.

So £33,000 if he was on £66,000

Surely you're not jealous?

Do you think it would be fair for him to pay less tax on his bigger pension?

If he lives in England, I'd expect him to get £12,570 tax free within his personal allowance, and pay normal tax rates on the rest.

Were you expecting something different?

 

[motorbiking]

Did this tube driver not work for first 12 years of adulthood. Did you think he was off at University studying for a PhD in train driving?

Revealed: London Tube drivers 'earn £100,000 a year'

The salaries of some London Tube drivers are now higher than £100,000, more than most airline pilots, new data has revealed.

www.standard.co.uk

 

[JohnD]

Did this tube driver not work for first 12 years of adulthood. Did you think he was off at University studying for a PhD in train driving?

Revealed: London Tube drivers 'earn £100,000 a year'

The salaries of some London Tube drivers are now higher than £100,000, more than most airline pilots, new data has revealed.

www.standard.co.uk

"Some"

And what do "some" pilots earn? "Some" plumbers? "Some" Prime Ministers?

Are "earnings" the same as "salary?"

Do you know what "pensionable earnings" are?

 

[motorbiking]

and now all the some-bodies have the ability to save for their retirement and have a nice pensions equivalent to a person with a final salary pension without paying double tax. They will also be able to work longer, paying tax for longer without the risk of screwing up their pension pot.

 

[JohnD]

Can you turn that into a meaningful statement?

 

[JohnD]

I have a feeling that @motorbiking is writing from a position of ignorance, so I will help him.

"Pensionable Salary
Both your contributions and benefits are based on your pensionable salary. Your
pensionable salary is your basic or contractual salary and may include permanent allowances if
agreed by your employer and the Trustees, but excludes overtime earnings. For London
Underground Limited Company Plan Employees pension benefits for pensionable service before
6 April 1998 are based on 90 per cent of this rate and for pensionable service from 6 April 1998
on 100 per cent. For New Members a deduction of the Lower Earnings Limit will be made."

https://content.tfl.gov.uk/tfl-pension-fund-glossary-july-2021.pdf

 

[Justin Passing]

I expect a lot of employees can pile AVCs in to get more, like NHS workers can, even Nurses. Their salaries go up to about 50k.
I know a doc who did something like that. He hit the max so they stuffed money into his nurse wife's pot. She's a specialist, probably on £45k or so.


£4bn they say - it should be possible to work out how many that is?

It may actually be aimed more at tube drivers than doctors. I don't know any tube drivers.

It's obviously not for just doctors. Odd. Dunno.

 

[charliegolf]

The consultant doctor aspect is a red herring. Their contracts require them to pay into their pensions and so get taxed on it.

I'm fairly certain they could opt out. My thinking is, opt out for 3-4 years, then take the pension, all the while trousering the the employee element and being taxed on that.

 

[charliegolf]

Do you think a tube driver deserves a bigger pension than a pilot? Do you think it would be fair for him to pay less tax on his bigger pension?

That's a proper red herring. All pilots under 50 (90% anyway) chose to sell their soul for the glamour associated with 4 trips a day to Malaga and back. They paid £100k+ for their licence outright; or hocked themselves to Easy and Ryanair. None of them were ignorant of the pay and conditions. They could be tube drivers AND £100k up. Plus interest.

 

[motorbiking]

I have a feeling that @motorbiking is writing from a position of ignorance, so I will help him.

"Pensionable Salary
Both your contributions and benefits are based on your pensionable salary. Your
pensionable salary is your basic or contractual salary and may include permanent allowances if
agreed by your employer and the Trustees, but excludes overtime earnings. For London
Underground Limited Company Plan Employees pension benefits for pensionable service before
6 April 1998 are based on 90 per cent of this rate and for pensionable service from 6 April 1998
on 100 per cent. For New Members a deduction of the Lower Earnings Limit will be made."

https://content.tfl.gov.uk/tfl-pension-fund-glossary-july-2021.pdf

No you are writing with your usual arrogance and assuming everyone else is less intelligent than you.

You cannot argue that those with high defined benefit pensions can end up with a Lower tax bill than those who have to build up their pension in a pot and convert it (under the old model). Removing the cap gives parity. It also avoids the young from being penalised while the older could apply for cap exemption if they had exceeded the life time allowance. Why should a person who had a pension worth £1.5m in 2014 be able to protect it from tax, when a person in 2022 with the same, could not? That simply wasn't fair, though it would have been unfair to retrospectively tax people who had gone over. The whole cap thing was bonkers and Labour will raid around 2M peoples pensions if they get in to power and reinstate it.

This model could actually have positives on the housing market as people will invest in their pensions instead of buy to lets.

That's a proper red herring. All pilots under 50 (90% anyway) chose to sell their soul for the glamour associated with 4 trips a day to Malaga and back. They paid £100k+ for their licence outright; or hocked themselves to Easy and Ryanair. None of them were ignorant of the pay and conditions. They could be tube drivers AND £100k up. Plus interest.

It was to illustrate that those with high defined benefits pensions get better tax treatment than those with a pot, which they have to convert.

 

[JohnD]

You cannot argue that those with high defined benefit pensions can end up with a Lower tax bill than those who have to build up their pension in a pot and convert it (under the old model).

As that is something I did not say, your post is irrelevant.