Pension?

Or inheritance tax, which I believe is the fairest tax when looked at from the "original position".

Another idea I just had is the Govt could get into the annuities business.
 
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EvilRob said:
Expectations clearly vary significantly from person to person, but according to UK Pensions, "Comfortable" spending for a retired couple is just over £5k a month.
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Interesting that website states £100 per person for fortnight in the med but £400 per person for a long weekend in the UK.

Have they been to the "med" recently?
 
Mr Badger said:
There is already a problem in the UK with a lot of people not saving enough for their retirement and the government has taken steps such as introducing auto enrolment into company pension schemes to push people to improve their private pension provision. Introducing means testing of the state pension will only make that situation worse. Why save for your retirement if the government is going to punish you by taking away your state pension? Also financial expectations have been set, particularly for those that have already built up an entitlement to the state pension, but may still be many years away from claiming it.

There's a whole other debate about the impact of AI/technology on jobs and the long term need to move to a Universal Basic Income. But sticking to pensions I really can't see a UK government introducing means testing, unless they completely take leave of their senses. Or at least set it at such a high level that it only impacts on the genuinely rich, rather than working class people who have been prudent in planning for their retirement.

Steps that seem more likely:
  • Weakening the triple lock
  • Further increases in the state pension age
  • Increasing the amount of qualifying years needed (it previously changed from 30 to 35 years and I can imagine a future change to 40 years contributions being required for a full state pension)
  • Additional taxation to claw back more money from better off pensioners
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I've mentioned this a few times, but I foresee binning off NI (which is just a lever to collect more general taxation) and rolling that into income taxation. The bands and thresholds could then be adjusted accordingly, with the changes applied equally to all, including pensioners.

e: this removes the qualifying years nonsense, as everyone, including pensioners, should be paying for public and social services et al if their income hits the thresholds.

A minimal basic state pension would be provided to everyone at state pension age as a base, with additional tiers introduced for extra and enhanced benefits depending on income, or the lack of it, and savings.
 
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I wouldn't worry about the pension not being around in 20-30 years. The national debt interest is just beginning to get properly out of control, we will be lucky to avoid a fiscal crisis before the end of this Government term. Then we'll see truly eye watering cuts benefit spending, sorry all Government spending.
 
Successive governments have failed to grasp the nettle when it comes to pensions and telling people to save more is admittedly not going to get a flood of votes.

It's easier for them to invent money.

I'm a bit late to the party with retirement planning, but am investing as much as I can.
 
I can see them changing the national insurance rules, I think that would be better than pushing retirement age back or allowing inflation to get it's teeth in to things by binning the triple lock.
 
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throwaway4372 said:
Or inheritance tax, which I believe is the fairest tax when looked at from the "original position".

Another idea I just had is the Govt could get into the annuities business.
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Is it fair? I don't think so. You're being taxed, when dead, on something you've already paid tax for.

I would imagine the only people who really support it are people who aren't getting any inheritance.
 
Inheritance tax does not tax the deceased; instead, it places a tax on the beneficiaries of the estate, as it is classed as unearned income or an asset. It seems sensible to me, however, good luck getting any value from it when the richest estates place everything in trusts to avoid paying it altogether.
 
dirtychinchilla said:
Is it fair? I don't think so. You're being taxed, when dead, on something you've already paid tax for.

I would imagine the only people who really support it are people who aren't getting any inheritance.
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If your estate qualifies for the full exemption (married couple leaving their house to their children) then the current rules aren't too bad with a £1M allowance. Although including the value of the family home and (going forward) pension pots as well, an increasing number of families who don't consider themselves to be rich will find that they are impacted. If you are single and not leaving your house to your descendants, then the allowance for IHT is only £325,000 and I suspect that will catch a lot more people in future.

There is certainly a place for IHT, but it shouldn't be so punitive that it feels as though even modest estates hoping to pass something on to relatives, friends etc. will get hammered by 40% tax when they die. I suppose the current limits may actually be about right, although there needs to be more work done on the seriously wealthy who manage to evade avoid IHT using loopholes. Unfortunately the recent government steps that help address the issue of rich people buying up farmland to avoid IHT didn't exactly go down well with farmers and some sections of the press.
 
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Firegod said:
The Pensions and Lifetime Savings Association say "comfortable retirement" for a single person household needs an annual income of £43,900. That means with a 4% drawdown I'd need £1.1 million in my pension pot.

Who has £1.1 million saved!!

Surely that can't be right, have I messed up somewhere? :D
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I'd ignore what the LSA says tbh. Different 'experts' also come up with different figures. It very much depends on the individual. By retirement most will have their mortgage paid off and will likely have savings too. So, after taking the 25% lump sum, you'd probably want to minimise the tax you pay. I'm not sure if company pensions will let you do that however but with some pensions you'll be able to take what you want, when you want. So, living off a combination of savings (assuming people have some) and pension would be more tax efficient, rather than paying tax on £44k a year, when they don't necessarily need all that income to live off of.
Going through their 70's, and especially into their 80's, I think many will not have the energy to be spending nearly £44k a year on getting out/holiday's etc.
 
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Mr Badger said:
If your estate qualifies for the full exemption (married couple leaving their house to their children) then the current rules aren't too bad with a £1M allowance. Although including the value of the family home and (going forward) pension pots as well, an increasing number of families who don't consider themselves to be rich will find that they are impacted. If you are single and not leaving your house to your descendants, then the allowance for IHT is only £325,000 and I suspect that will catch a lot more people in future.

There is certainly a place for IHT, but it shouldn't be so punitive that it feels as though even modest estates hoping to pass something on to relatives, friends etc. will get hammered by 40% tax when they die. I suppose the current limits may actually be about right, although there needs to be more work done on the seriously wealthy who manage to evade avoid IHT using loopholes. Unfortunately the recent government steps that help address the issue of rich people buying up farmland to avoid IHT didn't exactly go down well with farmers and some sections of the press.
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I mostly agree with you, but having £1m at 90 years old when you own a property, I wouldn't consider to be overly wealthy. It's above average, certainly, but my grandparents died with about that amount in their estate - they had no cash, it was just that they bought their house many, many years ago and the area went up in value substantially.
 
I've consolidated my pots into 1 pot, via a wealth management/financial advisor team - however my pension portfolio is reasonable (I've always paid as much as I could into it, even if I couldn't really afford it as it means I can't spend it! :o :D ). The only one I haven't touched is one of these golden final salary ones, albeit it's a small amount, but compound interest doing it's thing it'll add a little bit every month which I can't complain about. I am not going to be comfortable when I retire, but hopefully I'll be able to afford the heating, but hopefully I won't be in the country any more! I left it way too late to do anything with my pension unfortunately :(

No one can really advise you here what to do - speak to a professional / certified wealth manager or financial advisor. I do 6 monthly check ins and review my portfolio, explore options etc... I also transfer extra towards it every month to keep growing it actively.

I wish I had taken pensions more seriously and started earlier in my life, but hey ho. It's good to see you thinking about it and wanting to deal with it properly - speak to an expert.
 
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darkgen said:
I've mentioned this a few times, but I foresee binning off NI (which is just a lever to collect more general taxation) and rolling that into income taxation. The bands and thresholds could then be adjusted accordingly, with the changes applied equally to all, including pensioners.

e: this removes the qualifying years nonsense, as everyone, including pensioners, should be paying for public and social services et al if their income hits the thresholds.

A minimal basic state pension would be provided to everyone at state pension age as a base, with additional tiers introduced for extra and enhanced benefits depending on income, or the lack of it, and savings.
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So the more I work and save the less I get, or the opposite?
 
Ive always seen traditional ones as a scam tbh. My mum and dad paid into them for years and while dad reached retirement, he died not long after. All the money paid in meant nothing and we had nothing from either. Same with mums pensions, although she never reached retirement dying at 58.

I won't see retirement so Im putting money into a savings account that will hopefully cover funeral etc.
 
Freefaller said:
I wish I had taken pensions more seriously and started earlier in my life, but hey ho. It's good to see you thinking about it and wanting to deal with it properly - speak to an expert.
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Yeah same. 16 years in games industry, there was no company pension scheme, and I had no spare each month to start a private one. Whish I'd started putting something away though.
Putting a fair amount in now these days, but I'm not gonna be able to retire at 55.
 
Begbie said:
So the more I work and save the less I get, or the opposite?
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As an income, the more you work, save and / or invest in to a private pension would support and secure a much more comfortable life-style in later years.

In my example, you would also get the basic or reduced state pension when hitting state pension age, until a point, if and when other income fails below the thresholds for a higher state pension (extra / enhanced). The example here could be that the enhanced state pension is equivalent to what is received today as a full state pension, extra would be 75% of that and base is 50%.

Meeting the thresholds for each would align to other income to ensure it always promotes working, saving, private pensions etc. Secure yourself financial through working life, reap the benefits and have a comfortable life-style versus do nothing and bum about and end up with a subsistence living in later years.

This is just an idea btw (:
 
A decent option IMO is just leave the state pension as it is but change taxation so those retirees with big pensions simply pay more tax. What's said above would lead to more taxpayer funded government bloat and complication, as would any other kind of means testing.
 
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