Originally Posted by
Onceapilot
Hi Al,
Has the limitation of the public pension not actually being a "pension saved from pay" ie, it is not cash in a bank, been explored fully? I think one huge restriction is, that a public pension cannot be accessed as cash, or drawn down etc. The limitations upon a public pension that favour the taxman could be argued as leverage towards a higher lifetime allowance. Cheers
OAP
.. as you know, it can’t be transferred so the entire public sector which has future benefits wrapped up in a ps pension is a hostage to fortune, or more importantly, the whim of government. To an extent, we all are, but at least if you’re in a D.C. scheme, you have slightly more flexibility and options.
The Lifetime Allowance is a Regulator on Saving vs Spending. Yes, we all know that setting aside tax relief costs money, but in itself that draws in business to the UK, and of course, retirees tend to spend in local goods and services, which translates into jobs and liquid cash which gets churned and washed around the economy quickly, instead of younger people who tend to spend into illiquid organisations paying down, for instance, their mortgage. There is a school of thought which regards the lifetime allowance as facile, or unreasonably low, and I’d go along with that.
Could it change? Absolutely - it’s just a tap which has changed often over the past ten years. Will it? I don’t think so. I think we’ll see a further (modest) reduction in the annual allowance and a cap on the amount of tax free cash that may be drawn when benefits are taken. We could also/instead see a change in the factors which value a pension at crystallisation (when you take benefits), but that’s unlikely.
Hope you’re well matey.