What might the impact on ‘us’ be (I know I’m no longer in – old habits, etc) if the annual allowance was cut? If the annual allowance was reduced from £50,000 to say, £30,000, it would affect servicemen and women in final salary linked schemes but only if they have already built up substantial benefits; in other words, officers in middle/senior manager equiv positions. This is because those in final salary linked schemes have a contribution that is based on the increase in value of their pension benefits each year, and not just what you put in each year.
Al,
That is exactly my concern, but the way the issue is being presented in the press is clearly a carefully worked influence op to portray anyone with a decent pension scheme as being rich. The government happily leak these rumours about 30,40 or 50k limits, figures which are generally above the average wage. Given the tough times we are living in, many people hear them or read about them and automatically jump on the bandwagon that if you can afford to put 50k in a pension you must be rich and therefore can be fleeced.
But the way the government is presenting these leaks is disingenous at best. They fail to mention that to get a 50k increase in your pension pot doesn't actually equate to a 50k cash injection. Because of this factor of 16 (I think that is the correct figure) you have multiply your contributions by for a given input period, it probably only takes a cash input of 3-4k to reach that 50k limit. So all of a sudden, a 50k increase is actually not the stuff of multi millionaires, its actually the stuff of your average man on the street working hard in his career and occasionally having a bit of luck with a promotion and a pay rise. And this is clearly shown on the HMRC's own website where they run through examples of how easy it is to hit a 50k pension uplift.
And that is what niggles me most. The government are being very selective in how they present this issue. They know they can whip up a frenzy with a carefully worded leak or press statement, knowing full well that the vast majority of the population will simply read the headlines without understanding the mechanics behind it. And once the outrage bus is trundling down the road, hey presto, the Chancellor now feels he has a mandate to hit the average man in the street once again. It's little short of mob rule through ignorance.
So drop the annual limits to 30k by all means, but in doing so Cameron, Clegg et al shouldn't be surprised when said outrage bus does a u-turn and runs them over as very ordinary people suddenly find they have been caught up in a revenue raising scheme, originally designed to hit the top 1 or 2% of earners. And this amongst others is one of the very reasons that I won't touch a pension with a barge pole outside of the AFPS that I'm a member of through work. A totally incoherent pensions policy with too much red tape, too much uncertainty and a deck stacked so far in the government's favour it's just not sport. I'll stick to other means of providing for my old age where I at least stand a fighting chance.