Anyone here put over £40k per year in their pension pot?

OK, that rule never really concerned me

 

I suppose that is possible. The problem the government is trying to respond to now is inactivity by people over 50 in the work force. The pension pot limit had dropped too much, you would be surprised who would fall foul of it, especially public service pensions, ie last I looked a £40k a year pension would probably burst the £1,000,000ca. pot limit, hence high earners had a disincentive to stay in work as the tax implications were punitive. However, I see no reason for abolishing the limit altogether. just taxing pension income at normal rates allows very high earners to effectively store up their income and choose to take it to escape tax. As for the limit on contributions that makes no sense. A 52 year old surgeon is going to whack up AVCs and be able to retire earlier
Also and all chancellors do this whatever party, whoop whoop we are knocking 11p off a pint of draft beer in pubs. No-one will notice, it will still be £3.50, £4.50 or £5.50 etc (or £1 in Weatherspoons if you can find one still open and like your feet sticking to the carpet)

 

I don't think the new pension tax benefits to the high earners will make much difference to the majority of them staying in work, if they've got a million quid in their pot they'll manage im sure . Basically, especially post covid people have had enough of working 50+ hours a week when they get to their mid 50's. I'm certainly not a big earner, approaching my mid 50's but still, I've had enough, the thought of working full time for another 13 years doesn't bare thinking about .

 

100!

 

People are retiring in their 50s(and rightly so) due to the new pension rules that allow you to do a “drawdown” as opposed to the traditional “annuity “ type of pension.......I reckon you should retire as soon as you can and let the youngsters replace the oldies!!!

 

If I put everything I take home into my pension and got a second job paying the same as my first, plus an additional 3 grand to cover the extra tax I'd pay, and I gave up my house and lived on the street and gave up my car and walked everywhere and I didn't eat I could do it. Just.

 

FWIW - the annual allowance isn't measured by how much you've contributed to your pension in the last year - but how much your pension has grown in the past year. If you had an old 'final salary' pension (even if locked) then taking on some overtime would mean that you would be using some of your annual allowance without contributing an additional penny. NHS consultants have been taking on additional work - only to find that the annual allowance charge is costing them more than the additional salary. Working more and getting less is a mugs game no matter what your salary - and lots of them aren't willing to do that.

 

Take 5 years out and study to be a doctor, go on strike for a bit then retire at 55.

 

I don’t know the exact details but I was talking to a couple of Psychiatrists a few years ago saying it wasn’t worth them doing extra on call shifts anymore due to tax on pension contributions , maybe it’s aimed at them

 

I’ve worked for Leeds university medical school for the last 9 years. Since then I’ve known about a dozen consultants retire (semi (whay!) or otherwise) from the NHS and several have stated the additional tax on pensions has factored into their decision to retire.

Clearly the new policy will benefit the already wealthy but if it keeps more health professionals in the NHS or somehow even encourages some to return to work, surely that can only be a good thing especially with the current state of the NHS.

Only time will tell I suppose.

 

A rather expensive way of doing it. Especially when we’ve got NHS workers striking left right and centre at the minute.

 

Some experts talking about it simply being used as a tax loophole for Inheritance tax

 

You wouldn't and the helping people return to work is a Tory smoke screen. There is an issue within the NHS with experienced consultants taking early retirement because of the old rules but that could have been sorted with change to the NHS pension scheme. The Tories have just used the Consultants issue as an excuse to give all Millionaires yet another tax break.

 

and how did you feel about those discussions, Durks? do you want to talk about it?

 

This

 

I think they have used the NHS example thinking that was likely to be supported but this is a real problem across many industries at the moment. Anyone with a final salary (DB) pension scheme earning around £65k a year needs to be very careful otherwise they are severely penalised, it's currently impacting engineering, councils, utilities massively so it's not just about a few NHS millionaires.
As someone else said most people think the the 40k a year allowance increase to 60k means that now people will be able to elect to put that much cash into the pension each year because they can afford to but it doesn't work like that in DB schemes. On DB schemes you don't decide what to put in it's fixed by the scheme and in the 40k is measured on scheme value increase over 12months which in some respects you have no control of as it's linked to inflation etc, so you get a few grand pay rise for a promotion or doing some addition work and you are hammered with a tax penalty. People are leaving at 55 to avoid it all over the place, even coming out of really great pensions schemes a few years early, the rules needed to be change.

The government made a massive error in dropping and then freezing the LTA for the next 5 years, effectively further reducing it in real terms. This is just a correction of the mistake as its impacting too many middle earners negatively. Everybody seems to think it's giving the rich a massive tax break, it isn't the money in pension schemes is taxed as income when it's withdrawn so really it's just to avoid folk paying tax on income twice which is effectively what happens in you bust the annual or lifetime allowance

 

Rachel Reeves says they should scrap it, but leave it in place specifically for doctors.

Which is possibly the most moronic thing I have ever heard uttered by an MP.

 

Sorry to come over all lowest common denominator and that, but it's pretty hard to have sympathy with run of the mill civil servants who've racked up incredible pension pots - many, many multiples of what they've put in - because of defined benefit schemes that anyone under 45 has had no opportunity to access. Them paying a bit back to the state that has gifted them what is an unimaginable sum for those born at the wrong time seems fair enough to me.

 

Cheers
And that is the part I don't get. ^
An experienced consultant under the old rules can walk away when their pension pot hits £1.07m with no tax penalty.
Now they can throw money at it and make it grow bigger, so can potentially walk away even earlier with an even bigger pension and no tax penalty.

What part of that scenario invites them to keep working past 50?

Stumped.