|
|
Post by albermarle on May 7, 2018 18:28:43 GMT
So " if you meet the correct criteria" is short for you are already very close to 55, preferably older; are currently a higher rate taxpayer; will soon be a lower rate tax payer; have a current pension provision significantly below the current and future cap (and will remain below that when projected forward to your crystallisation events); know that any income from the pension won't have an impact on state benefits; and are happy with the investments available in the pension now and when drawdown begins, then perhaps you have a point! Regarding the criteria: - Being close to or over 55 obviously helps, as you can have your hay anytime you like
- No need to currently be a higher rate tax payer - salary sacrifice benefits from savings in NI (in my case 25.8%)
- I suspect most people will be lower rate tax payers in retirement
- Not too many people going to get near the £1m pension cap, so no issues there
- It also helps if you have a separate stash of cash to help with the cost of living (this helps to maximise the amount you can sacrifice).
If you were approaching retirement and had £40k a year spare, where would you put it if you don't like SS?
It's reassuring to hear some of these comments, because I fit the 'correct criteria' almost exactly and am mainly putting in spare/extra cash into my pension funds . So maybe doing something right ! Just a couple of comments : Not all salary sacrifice schemes allow you to take the NI benefit, the employer is allowed to pocket it if they wish ( seems like a loophole but is clearly the case ) . I have just held back from max investment in Pension funds due to the fact the financial/stock markets have a good bull run, and probably that party has come to an end for the time being. So even if my pension funds are in lower risk funds , I would be wary about pumping max money in until there is some kind of market correction first.
|
|
macq
Member of DD Central
Posts: 1,934 
Likes: 1,199
|
Post by macq on May 7, 2018 18:52:57 GMT
Regarding the criteria: - Being close to or over 55 obviously helps, as you can have your hay anytime you like
- No need to currently be a higher rate tax payer - salary sacrifice benefits from savings in NI (in my case 25.8%)
- I suspect most people will be lower rate tax payers in retirement
- Not too many people going to get near the £1m pension cap, so no issues there
- It also helps if you have a separate stash of cash to help with the cost of living (this helps to maximise the amount you can sacrifice).
If you were approaching retirement and had £40k a year spare, where would you put it if you don't like SS?
It's reassuring to hear some of these comments, because I fit the 'correct criteria' almost exactly and am mainly putting in spare/extra cash into my pension funds . So maybe doing something right ! Just a couple of comments : Not all salary sacrifice schemes allow you to take the NI benefit, the employer is allowed to pocket it if they wish ( seems like a loophole but is clearly the case ) . I have just held back from max investment in Pension funds due to the fact the financial/stock markets have a good bull run, and probably that party has come to an end for the time being. So even if my pension funds are in lower risk funds , I would be wary about pumping max money in until there is some kind of market correction first. pretty sure some schemes will let you keep money in cash when first invested while waiting for market timing(sure i read on MSE that some people close to retirement just recycle the cash rather then investing)
|
|
|
|
Post by bracknellboy on May 7, 2018 21:12:02 GMT
talk about chinese whispers. This particular part of the thread started out as a recommendation on making additional contributions into a final salary pension (http://www.p2pindependentforum.com/post/265859) and without any hint of a knowing change of tact has morphed into commentary on DC pensions ;-)
|
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on May 7, 2018 21:21:19 GMT
and to continue that theme  i must ask my employer why they are not paying more in so i can be a rich person? |
|
locutus
Member of DD Central
Posts: 1,059
Likes: 1,622
|
Post by locutus on May 8, 2018 7:21:12 GMT
And you don't think that there is any risk in the next few years that basic tax might increase (JC & JMcD), or that NI might be added to "unearned income" (JC & JMcD), or that pensions might be raided in some other way (every chancellor of the exchequer since and including Gordon Brown, perhaps except the current one)? Or that the minimum age at which you can take it out might increase (again)? And that is without considering the possible opportunity cost of having the money tied up in a restrictive wrapper. Looks like you might not have to wait too long - from today's BBC news: Tax on pensioners proposed to heal inter-generational divide
|
|
cb25
Posts: 3,528
Likes: 2,668
|
Post by cb25 on May 8, 2018 9:17:45 GMT
And you don't think that there is any risk in the next few years that basic tax might increase (JC & JMcD), or that NI might be added to "unearned income" (JC & JMcD), or that pensions might be raided in some other way (every chancellor of the exchequer since and including Gordon Brown, perhaps except the current one)? Or that the minimum age at which you can take it out might increase (again)? And that is without considering the possible opportunity cost of having the money tied up in a restrictive wrapper. Looks like you might not have to wait too long - from today's BBC news: Tax on pensioners proposed to heal inter-generational divideI could see the NI for pensioners coming in (but not the £10K for the young based on many other changes)
|
|
|
|
Post by sayyestocress on May 8, 2018 9:33:35 GMT
I'm (only just) categorised as a millennial, so can one of you grown ups give me 10k? I promise not to spend it on iPhones, avocados, artisanal coffee and leasing audis  |
|
Yintara
Member of DD Central
Posts: 61
Likes: 83
|
Post by Yintara on May 8, 2018 10:47:45 GMT
I'm (only just) categorised as a millennial, so can one of you grown ups give me 10k? I promise not to spend it on iPhones, avocados, artisanal coffee and leasing audis I'm (only just) a Gen X on the cusp of a millenial, so sure, young whippersnapper. And I'll only charge you 400% p.a. interest mate's rates.  Honestly though, even though I was a financially responsible 25 year old I still didn't really have a clue what I was doing at first. I think most 25 year olds would end up pocketing far more than £10k if part of that money was used to fund free financial courses for them. They could of course also get a proper financial education in school but a) by the time they're earning a stable wage and able/expected to invest and get pensions all the info would be out of date and b) who actually cares at 16??
|
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on May 10, 2018 9:25:32 GMT
I'm (only just) categorised as a millennial, so can one of you grown ups give me 10k? I promise not to spend it on iPhones, avocados, artisanal coffee and leasing audis Having listened to a few youngsters i think you will find it should be covered under your human rights!
|
|
|
|
Post by nesako on May 10, 2018 12:23:59 GMT
I'm (only just) categorised as a millennial, so can one of you grown ups give me 10k? I promise not to spend it on iPhones, avocados, artisanal coffee and leasing audis Audi leasing came out at £420 per month (Q5), so just over 20K over a 4-year lease + servicing and other related costs, 10K will not cut it for me... 
|
|
|
|
Post by p2plender on May 11, 2018 1:40:49 GMT
or you drop dead before retirement age... This is the line frequently peddled by those selling pension products, but it is rarely true. Remember that the money will be subject to income tax on the way out, so the extent to which you gain depends on your marginal tax rate now and your marginal tax rate when you draw on the pension. You will only get the full benefit if you will be a non-taxpayer when you draw on the pension. Otherwise you will pay tax on 75% of the value of the pension (because of the 25% tax free lump sum option). The best case, of course, is if you are a higher rate payer now and will be a lower rate payer in the future. In the worst case, if you saved assiduously and invested well, or if future governments change their minds about tax rates, you might end up being on a higher tax rate in retirement than you are when working, in which case you would lose out from this process. Yeah - my IFA said it was only worth topping up if it didn't drop you into basic rate tax |
|
|
|
Post by lynnanthony on May 11, 2018 6:55:46 GMT
Anyone who thinks that taking money from one generation to give to another is going to "heal" anything is particularly naive. If anything the proposals will create more divisions. 26 year olds are going to be mighty p'd off. And to the entitled 25 year olds it won't be enough, nothing is ever enough.
|
|
r00lish67
Member of DD Central
Posts: 2,692
Likes: 4,048
|
Post by r00lish67 on May 11, 2018 7:27:56 GMT
Interesting how academic/political circles now seem to be settling around those born in the early 1980's onwards as a millennial. When i reviewed the term a year or so ago to understand what it meant, it was clear that no-one had a clue. Most seemed to think it was those born after the year 2000, which is understandable given the name.
So that makes me a millennial, apparently, just. In reality, I've 'suffered' some of the noted effects i.e. buying a home was incredibly expensive, I required a student loan (my dad was given a grant), and the Defined Benefit pension had long gone by the time I set off on my career.
I've still done very well, but I do really feel for the early 20-something generation. My student loan was small and at a low rate of interest. I paid it off at about age 27. Today's graduates stand little chance of doing that and so are subject to, in effect, an additional layer of income tax. Property is, incredibly, even more expensive then when I bought.
In my view, in the UK's case, property is a huge part of the problem. The ongoing neglect of Governments of all shades to provide genuinely affordable housing has caused massive distortions. Many of the older generation feel very rich because they've technically become very wealthy through housing appreciation. Very few actually realise that wealth though as that would require selling up. Young people feel, and largely are, comparatively destitute.
I don't believe young people are entitled to be able to buy a house, in fact in many cases with the requirements of job flexibility, it doesn't make sense to. The very poor rights they are afforded as tenants however means that I can fully understand why they continue to want to do so.
The £10k seems a bit of a gimmick to me. More housing in the right places, and more rights for private tenants would be a better place for investment IMV.
|
|
m2btj
Member of DD Central
Posts: 631
Likes: 772
|
Post by m2btj on May 11, 2018 8:07:58 GMT
Many Baby Boomers as parents & grandparents already provide financial support to their children & grand children. The idea that millennials are entitled to a £10k handout is preposterous. I watched a TV quiz the other night in which a 23 year old had a chance to win £6k. When asked by Bradley Walsh, the quizmaster, what he'd spend it on he replied, a holiday in Bali or maybe a deposit for a house. Therein lies the problem! At that age I was working every hour to raise a deposit for a house. I was prepared to wait for the holidays, Iphones & other luxuries until I was on the property ladder. When I got my first mortgage in 1976 I was paying 11% pa interest which was the prevailing rate at the time.
|
|
cb25
Posts: 3,528
Likes: 2,668
|
Post by cb25 on May 11, 2018 9:07:36 GMT
I think the best thing the 'boomers' could do for the millenials is to pressure government to:
-build many more houses
-allow councils to borrow money to build houses
-relax the greenbelt
-make planning easier and cheaper
The greenbelt was - and is - a good idea, but I find it simply ridiculous that we have to stick to boundaries established arbitrarily decades ago (60+ years) despite a large increase in population over that time. Though some will say the country will be 'concreted over', that is not backed up by facts. I believe only something like 12% of the country is developed, hence even if we extended all built up areas by 10%, we'd still only have 13% of the country developed.
Homeowners have a huge incentive not to allow much house building, i.e. the protection of the value of their house.
|
|
i must ask my employer why they are not paying more in so i can be a rich person?
