Mike
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Post by Mike on Mar 16, 2023 15:55:14 GMT
I'm still a bit too young to worry about the LTA - whatever it is now isn't much bearing on what it will be in 30 years' time.
But if I was 25 or 30 years older, and had a nice fat pension that was over the LTA as-was, I would have stayed in work in the hope that the LTA would be increased (as has seemed overdue for some time). Now it has been, doesn't that just make it the perfect time to retire, while I don't have to pay the tax?! And absolutely before the next GE.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Mar 16, 2023 16:08:24 GMT
Not sure how much you have to earn / contribute to hit the £1 Million, many in Civil service and Local Government etc pay into a fund they don't have individual pots, in my case I was never a really high flyer, I took my pension in 2019 at 59 Pension £19,000 and £100,000 lump sum. Given life expectancy of 80 that's 21 years So I will draw at least £500,000 For DB You multiple final salary by 20 & add any lump sum to get final pot to compare to LTA. For DC it's just the pot. So for the former £37,500-£50,000 which is just above the top end of average nurses salary.
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Post by bracknellboy on Mar 16, 2023 16:29:24 GMT
Not sure how much you have to earn / contribute to hit the £1 Million, many in Civil service and Local Government etc pay into a fund they don't have individual pots, in my case I was never a really high flyer, I took my pension in 2019 at 59 Pension £19,000 and £100,000 lump sum. Given life expectancy of 80 that's 21 years So I will draw at least £500,000 For DC it's just the pot. So for the former £37,500-£50,000 which is just above the top end of average nurses salary. I suspect you may not have meant what the words convey, but the words are incorrect. And the final sentence suggests you did mean that. It is of course the actual benefit that counts, not the salary from which it is derived. So a £50k pa pension calculates out to a £1m LTA. So if that benefit was on a 2/3rds final salary scheme that was fully accrued, then the salary that would equate to would be £75k. Which I think is somewhat higher than the top end of average nurses salary ? The whole things a bit of a cludge when it comes to DB schemes, as no account is taken as to how long you are going to take the pension for. So a final salary pension taken at age 55 with a starting benefit of £50k has the same LTA as a pension of the same value taken at age 65. Whereas of course the poor benighted DC pensioner would need a significantly larger sum in the former case than the latter.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Mar 16, 2023 16:41:40 GMT
For DB You multiple final salary by 20 & add any lump sum to get final pot to compare to LTA. For DC it's just the pot. So for the former £37,500-£50,000 which is just above the top end of average nurses salary. I suspect you may not have meant what the words convey, but the words are incorrect. And the final sentence suggests you did mean that. It is of course the actual benefit that counts, not the salary from which it is derived. So a £50k pa pension calculates out to a £1m LTA. So if that benefit was on a 2/3rds final salary scheme that was fully accrued, then the salary that would equate to would be £75k. Which I think is somewhat higher than the top end of average nurses salary ? The whole things a bit of a cludge when it comes to DB schemes, as no account is taken as to how long you are going to take the pension for. So a final salary pension taken at age 55 with a starting benefit of £50k has the same LTA as a pension of the same value taken at age 65. Whereas of course the poor benighted DC pensioner would need a significantly larger sum in the former case than the latter. Yeah, misread it as salary not pension income.
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Post by mostlywrong on Mar 16, 2023 18:25:50 GMT
I'm still a bit too young to worry about the LTA - whatever it is now isn't much bearing on what it will be in 30 years' time. But if I was 25 or 30 years older, and had a nice fat pension that was over the LTA as-was, I would have stayed in work in the hope that the LTA would be increased (as has seemed overdue for some time). Now it has been, doesn't that just make it the perfect time to retire, while I don't have to pay the tax?! And absolutely before the next GE. Assuming that the Government can get the Finance Bill through Parliament (and they still have a considerable majority), the LTA has gone. But the words of Sir Keir indicate that he will aim to bring it back assuming that he gets his hands on the levers of power in 2024-25.
The LTA (and it remains in force for this tax year) is cumulative. As you start taking a pension (other than the State Pension), you will be told by your pension provider that you have used up x% of your LTA and it is your responsibility to do the final calculation and tell HMRC, via Self Assessment, that you have exceeded the LTA.
I am willing to bet that the pension providers will not withdraw this tool, just in case a future government reinstates it.
And of course, anyone close to retirement affected by the LTA will be adjusting their plans as I type!
MW
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ilmoro
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Post by ilmoro on Mar 16, 2023 19:19:34 GMT
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duck
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Post by duck on Mar 16, 2023 19:29:55 GMT
The only people complaining about the LTA were a bunch of very well off doctors who... Doctors are a complete and utter red herring. ..... I believe so as well. Remember the G'ment had the same problem with judges and they gave them their own scheme.
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Post by mostlywrong on Mar 16, 2023 19:59:15 GMT
The only people complaining about the LTA were a bunch of very well off doctors who... Doctors are a complete and utter red herring. HMRC say that 8,610 people were taxed for going over the LTA in 2020-21. The government say 15,000 more people will stay in work because of the removal of the LTA - but won't say how many are doctors. The NHS employs about 164,000 doctors. I have nicked this bit from this week's Investors' Chronicle:
"targeted those thinking of taking early retirement – specifically medical professionals given that at least 34 per cent of all people who exceeded the annual allowance in 2019/20 were members of the NHS pension scheme, according to data from Quilter."
One year earlier than your data but probably a good guide.
MW
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daveb
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Post by daveb on Mar 16, 2023 20:31:31 GMT
I see this as a posion pill by Jeremy Hunt. He knows that the next Labour Health secretary will start their job with a sudden influx of consultant and GP retirements.
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Post by bracknellboy on Mar 16, 2023 20:47:38 GMT
I think it is worth bearing in mind that when it comes to "tax traps" and high value DB pensions and high earnings, it isn't just the LTA that is in play. It is also the annual allowance (esp. so when tapering started at 150k).
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Mar 16, 2023 20:53:41 GMT
Doctors are a complete and utter red herring. ..... I believe so as well. Remember the G'ment had the same problem with judges and they gave them their own scheme. Friend of P2P John Glen  now Chief Secretary said that NHS only option was thought to be open to significant legal challenge, I suspect due to the numbers it would benefit/not benefit compared to judges (only 3000 of which about 1000 breached the limits)
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adrianc
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Post by adrianc on Mar 16, 2023 21:00:27 GMT
Doctors are a complete and utter red herring. HMRC say that 8,610 people were taxed for going over the LTA in 2020-21. The government say 15,000 more people will stay in work because of the removal of the LTA - but won't say how many are doctors. The NHS employs about 164,000 doctors. I have nicked this bit from this week's Investors' Chronicle:
"targeted those thinking of taking early retirement – specifically medical professionals given that at least 34 per cent of all people who exceeded the annual allowance in 2019/20 were members of the NHS pension scheme, according to data from Quilter."
One year earlier than your data but probably a good guide. So 2/3 aren't.
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Post by mostlywrong on Mar 16, 2023 21:30:00 GMT
But that depends on how quickly each pension scheme accrues - and there can be huge variations.
The other factor that everyone has forgotten is that the increase of 10.1% in CPI has not yet fed through into current wages and future pension figures - although the unions are working on that.
This is a slow but inexorable process.
MW
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Post by mostlywrong on Mar 16, 2023 21:33:22 GMT
Friend of P2P John Glen now Chief Secretary said that NHS only option was thought to be open to significant legal challenge, I suspect due to the numbers it would benefit/not benefit compared to judges (only 3000 of which about 1000 breached the limits) When I heard about the judges' scheme some time ago, it occurred to me that it would only be a matter of time before other special interest groups claimed the same exemption.
Members of Parliament, perhaps? 
MW
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duck
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Post by duck on Mar 17, 2023 2:12:27 GMT
Friend of P2P John Glen now Chief Secretary ......  that is really below the belt 
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now Chief Secretary said that NHS only option was thought to be open to significant legal challenge, I suspect due to the numbers it would benefit/not benefit compared to judges (only 3000 of which about 1000 breached the limits)
