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Post by moneyball on Oct 4, 2015 0:02:46 GMT
...you really trust pensions? Yes, for the time that is relevant to me. Fair enough.
Personally, I don't trust the powers at be, not to move goal posts, change the rules, get tempted/desperate enough to dip their hand etc... like they have done before. I view all taxation as theft/stealing anyway so Im certainly not going to trust multiple future groups with a "we promise not steal more if you give us more now" type pleas. Hence my different approach.
I agree though, assuming an individual does possess such trust, its a worthwhile avenue to investigate.
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james
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Post by james on Oct 4, 2015 3:51:27 GMT
Personally, I don't trust the powers at be, not to move goal posts, change the rules, get tempted/desperate enough to dip their hand etc... like they have done before. Please give one example of a UK government having done each of these things: 1. moving goal posts to the detriment of personal pension holders, preferably without reasonable notice (I'll tell you two possible answers to this one except that the notice given may have been sufficient: since it's easy: changing the age for pension access from 50 to 55 and the announcement that from 2028 the age will be linked to life expectancy). 2. change the rules in a manner materially detrimental to personal pension holders. The trend has been to increased freedom, not decreased, notably the removal in 2006 of the requirement to buy an annuity at age 75. 3. dipped their hand in to personal pensions to confiscate money in them for personal or government use. The potential for rule changes is real and for those with sufficient time to go before reaching age 55 there's ample opportunity for them. Once a person gets within a few years of 55 and previously of 50, the time horizon used for rule changes starts to make it moot because the individual is likely to have time to react or be covered by grandfathering rules. It's entirely possible that I'm somewhat baised here. You see, a while ao I filled out a survey where I gave detailed examples of how the capped drawdown pension rules forced people to not use pensions for part of their retirement provision. The changes introduced in April 2015 addressed every issue that I mentioned, from being unable to get a 100% lump sum to buy an immediate needs annuity when likely to live for only a couple of years in care to being unable to draw at a high enough rate when it was most needed, before state and defined benefit pension ages are reached.
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wapping35
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Post by wapping35 on Oct 4, 2015 15:10:27 GMT
A government moving the goal posts on pensions.
Well I would go with Gordon Brown ending of the dividend tax credit refund for non-tax payers in 1998.
I agree it cost all non-tax payers not just pension funds (person or corporate) but it was a goal post mover and did hugely impact the pension industry.
And it was done as a stealth tax.
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Post by moneyball on Oct 4, 2015 15:36:11 GMT
A government moving the goal posts on pensions. Well I would go with Gordon Brown ending of the dividend tax credit refund for non-tax payers in 1998. I agree it cost all non-tax payers not just pension funds (person or corporate) but it was a goal post mover and did hugely impact the pension industry. And it was done as a stealth tax. You beat me to it wapping.
Seeing as this was one of the very first things Brown did in office (after making the Bank Of England "Independent") this would be an example of a Government "dipping their hand in" as opposed to being desperate. This was a planned decision and one where huge amounts of "trapped" money could be targeted without any immediate, visible detriment being imposed on the public and pension investors.
Pensions are by nature, very politicised, very long term investment vehicles/approaches. Things that don't necessarily go very well together. Can you imagine what might happen if a Government (regardless of party leaning) got desperate?
If someone asks themselves the question and decides that a pension is still right or worth it to them, that's great, nothing wrong with it. If someone decides they cant possibly trust the dynamics at play, fair enough, as long as they make alternative plans and steps accordingly. My concern lies with 99.9% in between though that never ask the question and simply take things as is.
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james
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Post by james on Oct 4, 2015 22:25:37 GMT
A government moving the goal posts on pensions. Well I would go with Gordon Brown ending of the dividend tax credit refund for non-tax payers in 1998. I agree it cost all non-tax payers not just pension funds (person or corporate) but it was a goal post mover and did hugely impact the pension industry. And it was done as a stealth tax. Two problems with that: 1. It's not pension-specific and couldn't be avoided by not using a pension, so it's not a useful anti-pension argument. 2. Advance Corporation Tax was introduced in 1973. Brown stopped the ACT relief in 1997 and ended ACT itself in 1999. Strangely, very few people who criticise Brown for abolishing the ACT relief seem to praise him for abolishing ACT a couple of years later. Did you know that ACT was abolished two years after the ACT relief was removed?
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wapping35
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Post by wapping35 on Oct 5, 2015 14:55:56 GMT
Yes I was aware of the end of ACT, thanks. And how it worked under the tax imputation system.
ACT was brought in as an advance of Corporation Tax (hence the name and was payable when a dividend was paid, irrespective of profits) and ACT was (when it applied) offset against that final Corporation Tax bill.
ACT itself was designed to at least partially offset the process in which corporate profits are doubly taxed. (The Imputation system).
That is the profits are taxed under corporation tax and then they are taxed again to the individual (income tax) as a dividend (paid out of taxed corporate profits).
The ACT / tax relief that existed before meant effectively non-tax payers (and tax payers) got a real tangible relief for underlying Corporation tax. Effectively mitigating the double taxation.
Brown gave some relief to tax payers (not non-tax payers) for the change by making the dividend (income) tax rate lower (effectively a 10% credit). I know Osborne is making further changes to that system from next April (2016).
All in however the end of ACT and tax relief for it (the end of the corporate tax imputation system) cost the Pension Industry £67 billion (I refer to the Freedom of Information request obtained by the Times in April 2007). I was involved at my employer at the time in pulling the defined benefit pension plan they had and rolling out a defined contribution plan to replace it, due to that change and the resulting increased cost of funding the pension. And most employers have done the same.
As I said in my original post I agree it was not designed purely to hit pensions, but it did so all the same.
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