The Pensions Bill Amendments 2014
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The Pensions Bill Amendments 2014
There are a few suggested amendments to the new Pensions Bill. They are not particularly contentious although these ones will have particular relevance to more senior, or older and/or retired military families and widows (prescient in light of the recent hassle experienced by ForPen at the hands of Soldier Magazine and RAF News).
The amendments of course, still have to be considered and although some clauses have been argued over, these particular ones have still not been. The detail may be interesting to older members here as it seems there is scope to apply for additional state pension benefits for spouses between 1975 and 2010.
The Pensions Bill as brought from the House of Lords on 12 March 2014. - Echelon Wealthcare
The amendments of course, still have to be considered and although some clauses have been argued over, these particular ones have still not been. The detail may be interesting to older members here as it seems there is scope to apply for additional state pension benefits for spouses between 1975 and 2010.
The Pensions Bill as brought from the House of Lords on 12 March 2014. - Echelon Wealthcare
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Thanks for the info Al,
I actually wrote to Steve Webb (through my MP) about 18 months ago on this very subject. Given that wives suddenly had to make 5 more years of National Insurance contributions to get a full pension under the new single tier pension scheme (35 years NI rather than 30), I thought it was a bit unfair on Mrs F.O.D, who has loyally followed me around Europe for 10 of my 30 years in the RAF. Clearly, I can't have been alone in flagging this up and am pleasantly surprised that HM Govt is actually considering fixing it for Service families who were overseas prior to 2010.
F.O.D
I actually wrote to Steve Webb (through my MP) about 18 months ago on this very subject. Given that wives suddenly had to make 5 more years of National Insurance contributions to get a full pension under the new single tier pension scheme (35 years NI rather than 30), I thought it was a bit unfair on Mrs F.O.D, who has loyally followed me around Europe for 10 of my 30 years in the RAF. Clearly, I can't have been alone in flagging this up and am pleasantly surprised that HM Govt is actually considering fixing it for Service families who were overseas prior to 2010.
F.O.D
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F.O.D
You never know, your letter may have been the one that sowed the seed.
Steve Webb is getting a mixed press these days but he seems to be well meaning and fair. I did think it strange that the Commons didn't push the vote catching military aspect though. Either way, it could make quite a difference. As you say, your wife followed you in the service of the country, and in doing so she gave up the chance of a steady career and independent retirement benefits.
You never know, your letter may have been the one that sowed the seed.
Steve Webb is getting a mixed press these days but he seems to be well meaning and fair. I did think it strange that the Commons didn't push the vote catching military aspect though. Either way, it could make quite a difference. As you say, your wife followed you in the service of the country, and in doing so she gave up the chance of a steady career and independent retirement benefits.
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I've just read Steve Webb's response to their Lordships. Having said he is fair minded, his response to one Labour suggestion received short thrift. It was suggested to him that workers might aggregate more than one low paid, part time job (someone holding down part time cleaning/shop jobs on the patch maybe?), in order to accrue national insurance contributions (NIC) to qualify for the full basic state pension.
Some jobs don't pay enough to accrue NIC and since to qualify for the new flat rate state pension workers now need a 35 year NIC record, the amendment would have allowed people to combine several part time jobs to reach the NIC threshold. In the crudest of terms, yesterday's news about helping with childcare costs needs to be paid somehow - long after Webb is retired - caviar today jam tomorrow?
Webb suggested that although there was evidence that out of a "50 year average working life", people could afford to spend "15 years" working in jobs that didn’t accrue NIC. In itself, bizarre, given the auto enrollment pensions adverts we seem to hear every two minutes (you do if you listen to Talksport) and the fact many workers spend far longer than 15 years with this working pattern anyway.
Aside from his subtle confirmation everyone will be working until at least aged 70 unless they nail retirement provision, there was also a bit of a bunfight over pension charges. The moral of the story is though, a career or an overseas posting is absolutely vital for your OH's state pension - every little helps! But apart from that and the bit about the state quietly shedding its responsibility for retirement, it seems that F.O.D's law got through..
I will keep an eye on it and hopefully, over the next 12 months as the regulations evolve, offer one or two letter templates to help partners register/clawback/claim the new entitlement.
Some jobs don't pay enough to accrue NIC and since to qualify for the new flat rate state pension workers now need a 35 year NIC record, the amendment would have allowed people to combine several part time jobs to reach the NIC threshold. In the crudest of terms, yesterday's news about helping with childcare costs needs to be paid somehow - long after Webb is retired - caviar today jam tomorrow?
Webb suggested that although there was evidence that out of a "50 year average working life", people could afford to spend "15 years" working in jobs that didn’t accrue NIC. In itself, bizarre, given the auto enrollment pensions adverts we seem to hear every two minutes (you do if you listen to Talksport) and the fact many workers spend far longer than 15 years with this working pattern anyway.
Aside from his subtle confirmation everyone will be working until at least aged 70 unless they nail retirement provision, there was also a bit of a bunfight over pension charges. The moral of the story is though, a career or an overseas posting is absolutely vital for your OH's state pension - every little helps! But apart from that and the bit about the state quietly shedding its responsibility for retirement, it seems that F.O.D's law got through..
We are on the home straight of the Pensions Bill. It has been all the way through this House and their lordships’ House, and we have come back to it today to deal with amendments that, with one exception, make it a better Bill. I am grateful to my noble Friends Lord Freud and Lord Bates who, from the ministerial Benches, took the Bill through another place. I am also grateful to all my colleagues who have contributed to the Bill, and to peers on both sides of the House of Lords who have made insightful contributions and improved the Bill in a number of ways.
We have made a number of amendments in response to concerns raised by noble Lords, so I emphasise that our decision to ask this House to disagree with their amendment 1 is exceptional. Indeed, that is the only amendment with which we are asking the House to disagree, so I hope that we will be seen to have taken a constructive approach and that we have sought to improve the Bill on a cross-party basis wherever possible. For reasons that I will explain, however, we ask the House to disagree with this amendment.
We have made a number of amendments in response to concerns raised by noble Lords, so I emphasise that our decision to ask this House to disagree with their amendment 1 is exceptional. Indeed, that is the only amendment with which we are asking the House to disagree, so I hope that we will be seen to have taken a constructive approach and that we have sought to improve the Bill on a cross-party basis wherever possible. For reasons that I will explain, however, we ask the House to disagree with this amendment.
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New £15,000 combined ISA, new pensioner bond, access to Defined Contribution pension funds not just prized open, but blasted completely apart. Blimey. I feel a little faint.
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AlR,
rumours abound that the tax haul from pensions withdrawls could be quite substantial.
As rosy as it was made out by Osborne? 15K per annum investible in shares is pretty sweet though!
38K total for the family including chillibubs
rumours abound that the tax haul from pensions withdrawls could be quite substantial.
As rosy as it was made out by Osborne? 15K per annum investible in shares is pretty sweet though!
38K total for the family including chillibubs
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Unprecedented. I never thought, as I used to dig in all over the place, that one day, I'd be staring at my TV completely and totally gobsmacked at pension news on budget day. Yes, raising the annual ISA limit to be raised to £15000 and savings and investment ISAs fused. Good news, very good news!
Good news too, for someone with £10k in a pension is that they can simply take it as cash, no tax - no questions asked, perfect for (typically) 'wives of' in their late 40s and 50s who want tax relief, simplicity and no tax. All the way up to £30,000 access too, under triviality rules, with some tax. That's such good news for some clients, really good news.
If ever anyone was worried about personal pensions right now, this budget is one of the most unprecedented in history. Especially as his mutterings over public sectot pensions 30 minutes before was ominious. Definitely a vote winner, but what about when pension savings have all been spent?
The radical nature of it also means that from April the flexible drawdown minimum income requirement will reduce from £20,000 to £12,000, bringing it easily into Flt Lt/ Sqn Ldr territory. That means so many more people can take their entire pots as cash, at far lower tax rates too.
The maximum income a person in income drawdown can take will rise from 120% of GAD to 150% too. I'm so pleased that annuities have, effectively, been killed off. I'm seeing 6 clients later today - if you're reading this, apologies in advance if I appear distracted..
Good news too, for someone with £10k in a pension is that they can simply take it as cash, no tax - no questions asked, perfect for (typically) 'wives of' in their late 40s and 50s who want tax relief, simplicity and no tax. All the way up to £30,000 access too, under triviality rules, with some tax. That's such good news for some clients, really good news.
If ever anyone was worried about personal pensions right now, this budget is one of the most unprecedented in history. Especially as his mutterings over public sectot pensions 30 minutes before was ominious. Definitely a vote winner, but what about when pension savings have all been spent?
The radical nature of it also means that from April the flexible drawdown minimum income requirement will reduce from £20,000 to £12,000, bringing it easily into Flt Lt/ Sqn Ldr territory. That means so many more people can take their entire pots as cash, at far lower tax rates too.
The maximum income a person in income drawdown can take will rise from 120% of GAD to 150% too. I'm so pleased that annuities have, effectively, been killed off. I'm seeing 6 clients later today - if you're reading this, apologies in advance if I appear distracted..
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rumours abound that the tax haul from pensions withdrawls could be quite substantial.
Yes, but taxed at someone's marginal rate and not the punitive high rates we have seen. I imagine that the tax revenue will be higher because of the novelty value but just trusting savers NOT to blow an entire pot on a mid life crisis Porsche will be a challenge. I can see this one not lasting for ever..
PS: Putting it like that, yes, put in family perspective, 38k per annum will be very good news for you. You just watch for the Inheritance Tax threshold to plummet in a few years to make up for it..
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Once a stockbroker..
A quick look reveals, shares down Aviva -3.6%, Legal & General -6%, Prudential -2.2%, Standard Life -2.2% on scrapping of compulsary annuities. Stand by for next big miss-selling scandal too - clients taking all their money from pensions and then living 30 years in poverty.
A quick look reveals, shares down Aviva -3.6%, Legal & General -6%, Prudential -2.2%, Standard Life -2.2% on scrapping of compulsary annuities. Stand by for next big miss-selling scandal too - clients taking all their money from pensions and then living 30 years in poverty.
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You really wouldn't want to be a shareholder in an assurance company that specialises in annuities, and looking at your intra-day actuals, after a budget like that.
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AlR,
A pretty big ticking off from the government then to the insurance industry... the days of milking people for negative return looks as if they are over....
How milliband can argue that cameron and co are looking after the banks and the rich when they have freed pensions customers from annuities i dont know...
it appears to me there is possibly going to be a pretty big flood of cash from psonal pensions into savings, i bet gideon is banking on that cash being invested in uk industries to help the reecovery.
very clever and very conservative!
A pretty big ticking off from the government then to the insurance industry... the days of milking people for negative return looks as if they are over....
How milliband can argue that cameron and co are looking after the banks and the rich when they have freed pensions customers from annuities i dont know...
it appears to me there is possibly going to be a pretty big flood of cash from psonal pensions into savings, i bet gideon is banking on that cash being invested in uk industries to help the reecovery.
very clever and very conservative!
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You mean.. just in time for next year's General Election? Yes, and UKIP will be feeling pretty sick.
And yes - I'm pleased that the annuity market has been, effectively, sunk. I feel for those who have annuitised recently though. There has to be a line drawn somewhere but as the g'ment concurrently laid into them for ripping folk off, it would have also known what it was about to announce.
And yes - I'm pleased that the annuity market has been, effectively, sunk. I feel for those who have annuitised recently though. There has to be a line drawn somewhere but as the g'ment concurrently laid into them for ripping folk off, it would have also known what it was about to announce.
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Stand by for next big miss-selling scandal too - clients taking all their money from pensions and then living 30 years in poverty.
Excellent posts btw AL R...thanks for all the info you give us here on pprune.
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Lift Time Allowance
Al R
I too am gobsmacked, but that's probably because I haven't properly grasped what they are saying.
Does this mean that those of us who have retired from the mob and have a LTA of say £750K, could now take some or all of that money as a cash payout, whilst paying a ?% back to the Govt in tax?
Our pension would then be cut in line with the % taken out?
Regards stablelad
I too am gobsmacked, but that's probably because I haven't properly grasped what they are saying.
Does this mean that those of us who have retired from the mob and have a LTA of say £750K, could now take some or all of that money as a cash payout, whilst paying a ?% back to the Govt in tax?
Our pension would then be cut in line with the % taken out?
Regards stablelad
This should get all the cognoscenti sniggering, but what the hell? Al, is there a possibility that market forces might force a move in annuity rates on the basis that suddenly there will be a big drop in demand for them? In other words, can competition produce the same kind of changes that airline seat prices showed following liberalisation?
All right, I heard that! You boy, at the back, name?
All right, I heard that! You boy, at the back, name?
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Stablelad,
No, today's earthquake bomb only related to Defined Contribution (DC) pensions - not Final Salary ones. Osborne made a very brief mention of them, when he said that he would continue to maximise value for the tax payer. Doesn't sound too hot. If you had a DC pension fund of £750k though, in theory you could take it when and how you liked, taxed merely at your Marginal Rate.
It's going to make AVCs pointless, personal pensions a bit of a no brainer and transferring out of AFPS a much more seductive proposition.
Chuggers,
How are you?! Well, I hope.
An annuity, however good the rate, will never be able to compete with someone having their pension parked in a cash account, that's the problem. In principle market forces and supply and demand could go head to head with the freedoms of hard cash vs the restrictions of an annuity but thats like two bald men fighting over a brush and comb. Rates are determined, not by market forces, but by fear and greed - demographics (fesr) and provider profits (greed).
You could take it one stage further than that even - life companies do good business from income drawdown rather than annuity. It's almost as if drawdown is dead, we can forget about annuities completely. If drawdown is dead, what of the life companies? Let's assume that someone takes their £250k pension fund, what do they then do with it - give it back to the life company but with 20/40% less?
I think we'll see some very interesting product innovation; folk, generally, are poorly informed - there will be billions out there, just sloshing around in either crappy savings accounts or expensive investments. We live in interesting times.
No, today's earthquake bomb only related to Defined Contribution (DC) pensions - not Final Salary ones. Osborne made a very brief mention of them, when he said that he would continue to maximise value for the tax payer. Doesn't sound too hot. If you had a DC pension fund of £750k though, in theory you could take it when and how you liked, taxed merely at your Marginal Rate.
It's going to make AVCs pointless, personal pensions a bit of a no brainer and transferring out of AFPS a much more seductive proposition.
Chuggers,
How are you?! Well, I hope.
An annuity, however good the rate, will never be able to compete with someone having their pension parked in a cash account, that's the problem. In principle market forces and supply and demand could go head to head with the freedoms of hard cash vs the restrictions of an annuity but thats like two bald men fighting over a brush and comb. Rates are determined, not by market forces, but by fear and greed - demographics (fesr) and provider profits (greed).
You could take it one stage further than that even - life companies do good business from income drawdown rather than annuity. It's almost as if drawdown is dead, we can forget about annuities completely. If drawdown is dead, what of the life companies? Let's assume that someone takes their £250k pension fund, what do they then do with it - give it back to the life company but with 20/40% less?
I think we'll see some very interesting product innovation; folk, generally, are poorly informed - there will be billions out there, just sloshing around in either crappy savings accounts or expensive investments. We live in interesting times.
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Hey Al R,
Do you mind if I put you on the spot? We could go PM or even, I'll contact you thru' your website, but for now I'm sure this would be of interest to the wider community.
Her indoors has a significant DCS pot and she is 55 in 21 months. I note (and agree) your point re product innovation, but as things stand, as of today...what would you do with a significant pot?
Do you mind if I put you on the spot? We could go PM or even, I'll contact you thru' your website, but for now I'm sure this would be of interest to the wider community.
Her indoors has a significant DCS pot and she is 55 in 21 months. I note (and agree) your point re product innovation, but as things stand, as of today...what would you do with a significant pot?
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Without insight and not as advice, my first instincts would be to make sure that the funds Mr TOFU are invested in, are as low volatility and as safe in terms of investment returns as she feels they need to be. She has grown the fund, what she needs to do now is ensure she doesn't expose it to volatility or the potential of loss in sight of the finishing line.
Assuming that you are both joined at the hip for life, the exercise would then be one of working out cash flow modeling for both of you, taking into account cash flow and some one off needs and then some reverse engineering to determine the best way and the best tax wrappers in order to achieve that.
If Mrs TOFU is inclined towards low volatility funds, maybe even parking in cash if the objective has been secured, then make sure that she has considered whether or not to place her money into a passive fund. The passive vs active debate is a hot topic right now, and although the jury is still out, why would you need or want to be in an expensive active fund when you don't have to be. The a some seriously shocking passive funds out there mind. I am in London next week for another 2 day seminar on them - unless you're an investment wonk, it would be hell on earth.
Also, have her ensure that the actual personal pension fund provider that she is with offers her the flexibility to achieve what she needs it to achieve for her. If she doesn't take much from it, it is still going to be there for the long term if she is only 55, so is it a cheap one, or an expensive one? The pension wrapper itself is a filing cabinet, somewhere to simply deposit and arrange investments. Do you need or want Aldi, or is the rather pricy Waitrose the order of the day? Cheap is not always best, but for Mrs TOFU, it might be.
Finally, think big - work out the bigger picture.. work out your cash flow - think of the pension funds that you both have as money held by an employer who pays you. Since yesterday of course, you have far more choice in how that happens. Consider absolutely EVERYTHING - are you going to swim with dolphins for the next 3 years, then sail around the world followed by a period of calm, are you going to do the house up, take a part time job or buy a new car every 3 years? Paint a picture of what life over the next 25 years is going to be like, and over time, from that, extract backwards and identify the financial tactics required to achieve that.
Finally, finally right now.. think principles of defence (no, not offensive spirit, mutual support, logistics, interlocking arcs, good communications - you can take the boy out of the Regt, but you can't etc). Rather, have you got in place protection to cover you in the event the worse happens? The last thing you will want is for an accident to happen and your lifetime's hard work go on medical care and domestic ongoing help and rehab.
Look upon this phase as a 30 year plan - planning now is more complicated than it would have been when you were 25 - then, you were 'just' accumulating. Now, you also have to decumulate as well. And what about Inheritance Tax - what are your thoughts on that?(rhetorical). Lots to think about. You have time, and 2 years is about as short a time scale that you need.
Assuming that you are both joined at the hip for life, the exercise would then be one of working out cash flow modeling for both of you, taking into account cash flow and some one off needs and then some reverse engineering to determine the best way and the best tax wrappers in order to achieve that.
If Mrs TOFU is inclined towards low volatility funds, maybe even parking in cash if the objective has been secured, then make sure that she has considered whether or not to place her money into a passive fund. The passive vs active debate is a hot topic right now, and although the jury is still out, why would you need or want to be in an expensive active fund when you don't have to be. The a some seriously shocking passive funds out there mind. I am in London next week for another 2 day seminar on them - unless you're an investment wonk, it would be hell on earth.
Also, have her ensure that the actual personal pension fund provider that she is with offers her the flexibility to achieve what she needs it to achieve for her. If she doesn't take much from it, it is still going to be there for the long term if she is only 55, so is it a cheap one, or an expensive one? The pension wrapper itself is a filing cabinet, somewhere to simply deposit and arrange investments. Do you need or want Aldi, or is the rather pricy Waitrose the order of the day? Cheap is not always best, but for Mrs TOFU, it might be.
Finally, think big - work out the bigger picture.. work out your cash flow - think of the pension funds that you both have as money held by an employer who pays you. Since yesterday of course, you have far more choice in how that happens. Consider absolutely EVERYTHING - are you going to swim with dolphins for the next 3 years, then sail around the world followed by a period of calm, are you going to do the house up, take a part time job or buy a new car every 3 years? Paint a picture of what life over the next 25 years is going to be like, and over time, from that, extract backwards and identify the financial tactics required to achieve that.
Finally, finally right now.. think principles of defence (no, not offensive spirit, mutual support, logistics, interlocking arcs, good communications - you can take the boy out of the Regt, but you can't etc). Rather, have you got in place protection to cover you in the event the worse happens? The last thing you will want is for an accident to happen and your lifetime's hard work go on medical care and domestic ongoing help and rehab.
Look upon this phase as a 30 year plan - planning now is more complicated than it would have been when you were 25 - then, you were 'just' accumulating. Now, you also have to decumulate as well. And what about Inheritance Tax - what are your thoughts on that?(rhetorical). Lots to think about. You have time, and 2 years is about as short a time scale that you need.